Last Updated: May 18, 2009
These are tough times if you own a small business. Revenues are falling and costs are rising. However, the economic downturn may also present opportunities for small-business owners, according to an article in the May Journal of Financial Planning.
No doubt you've trimmed your budget and you're mostly, if not entirely, on your core competencies. And that means when the recession ends, you'll likely emerge with leaner, more efficient-and profitable-operations.
If you haven't taken steps to weather the downturn, consider this advice from FPA member, Matthew Davis, CFP®, CPA:
- Reduce overhead to help stabilize the business in the short-term and position the firm for greater long-term profitability.
- Review accounts receivable policies and make sure employees adhere to them. This will minimize exposure to bad debt — especially important to small firms whose large-firm clients have suddenly become unstable.
- Refinance or restructure current debt.
- Freeze salaries and suspend owner savings to bolster cash flow.
- Eliminate "extras," such as staff parties and non-essential technology upgrades.
- Think differently. Be willing to reassess your mix of services and products, alter your office hours to accommodate customer needs, and make other changes on the fly.
A financial planner can also help you weigh your options to financially support your small business in these tough economic times. Find a planner at FPA PlannerSearch®.