10 Tips To Keep Business Afloat

Brockblake.com: Kent Thomas (CFO Solutions), put together an interesting article called “10 Tips for Recession-Proofing your Business.” Kent provides a much-needed out-sourced financial services for the small & growing business. He has been fantastic to work with and I highly recommend him. Here are the details of his recent article:
1. Diversify Customers. Evaluate your customer base and identify concentrations of customers in the same industry and / or geographic region. Also look at how much business you do with each customer (make a list of your top 10 or 20 customers with total sales in the past 12 to 24 months and calculate the percentage of your total sales that comes from each. Establish a strategy to expand your customer base and to watch the “concentration risks” carefully.
2. Cut costs. If three employees are doing the job of one, you may need to make job cuts. “When times are tough, it’s best to focus on core markets and spend money in those areas, not in areas that haven’t been more profitable,” says Lenhart, the national director of business restructuring at BDO Consulting in New York
3. Ratchet down inventory. When a recession hits, the last thing you’ll want to do is get stuck with shelves of needless inventory. Keep an eye on leading consumer indicators such as those offered by the National Retail Federation and the Conference Board. Also, establish inventory targets and make sure the sales and purchasing departments are talking.
4. Maintain prices. You may be tempted to slash prices to free up cash flow. That’s a mistake, says Bradley J. Sugars, a business coach in Las Vegas. Sure, you’ll sell products but you’ll also cut your profit margins and likely dilute your brand in the process. Plus, if customers decide to buy again from you in the future they may expect similar discounts.
5. Reserve discounts. “Don’t go into a discounting war,” says Sugars. Since you don’t want to dilute your brand’s value and you especially don’t want to start competing on price with discounters such as Wal-Mart Stores and Target.
6. Focus on service. While expanding your business into markets abroad may be avenues for growth, many small-business owners should focus on their existing customers and clients for a boost in revenue. With this in mind, Sugars suggests focusing on service. “It is one of the best ways to add value without costing money,” he says.
7. Invest in employees. When the going gets tough, the employees you have will be your productivity all-stars, says Lenhart. Make boosting productivity within reason, of course a focal point. For those that rise to the top, be sure to reward them accordingly. “You don’t want to lose your most productive people at this time,” he says.
8. Free up cash flow. While you’re attempting to cut costs and grow sales, “now is the time to call in favors,” says Howard Applebaum, chief lending officer of Sterling National Bank in New York. Be sure to free up your business’s cash flow by asking to have payments to suppliers extended.
9. Renegotiate contracts. If a contract, a lease or other obligation will soon be up for renewal, try to negotiate lower prices. At this point, you may be able to also make cuts, says Applebaum. If you don’t need 50,000 square feet of office space, consider paring down. “It is really a reality check that requires a tough look at your expenses,” he says.
10. Look to expand your business. If, on the other hand, you’re sitting pretty, Carmen Bianchi, director of San Diego State University’s Entrepreneurial Management Center, suggests giving the competition a gander. “Look for weaknesses and instability,” she says. If they’ve been having trouble, you may be in a good position to pick up their business at bargain-basement prices.
10 Tips for Recession-Proofing your Business [Brockblake.com]