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Is Your Business Storm Proof? Part 1

Guest post by: Brenda Parker

Article Overview: What can you do to keep your business healthy and in the black especially during difficult economic times?

Is Your Business Storm Proof? Part 1

Many will agree that the past year or sofelt endless with the constant doom and gloom reported in the media about the failing economy. Now hopefully we are turning the corner, maybe the outlook on the economy will improve soon.

The worries among business owners are very real as they keep an eye on where things are headed. As we go through this cycle though, there are some proactive steps which can be taken to make sure that your business weathers the storm. It is imperative that business stays strong, supports employment and in turn promotes spending in our economy.

Where should you begin ? Take a look at your bank account. Is it continually running tight? Do you feel an inability to do anything with your business because the money is not there to work with? If there is no money to advertise with? Who will hear about you? If you have no money to keep your storefront up to date, who will want to go into a rundown establishment? If you don't have money for a website, will your business be perceived as "lagging behind"? The lack of cash flow is often the signs of a growing business, so don't despair. You just need to gain control.

Where does the money go? Look around at your inventory. Are you seeing items which have been sitting around for a while? What are your chances of getting your money back and more? On one hand you want to have enough inventory available when customers come, but you don't want to take the risk of putting your money in to something which you may never sell. Carrying inventory ties up your cash and you are paying for it either as interest expense or missed opportunities for that money. Quick turnover is the key along with a good understanding of what consumers need.

Many businesses use personal credit cards to run their business either because it's there only option of financing or for convenience. Watch out for the interest rate which you are paying on those cards. Talk to your creditors to see if you can negotiate a lower rate of interest. For those who have many cards on the go, look into getting them consolidated into a line of credit. It will calm the nerves as well when you are doing the bookkeeping!

Has your business invested in larger capital items in the past year such as equipment or a building? Where did the money come from to pay for this? Did it come out of your operating cash or did you borrow additional money to finance it? Capital items have a longer life and therefore, the funding period for them should match that life. If you invest in a building which will last for twenty years, look at cash sources which allow for repayment over a longer period of time. Don't try to pay it off in five years. Use your operating cash for immediate expenses and find other sources for the long term.

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Article Tags: bookkeeping, business health, cost savings, economic times, recession



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