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Easing out of Recession not so Easy for Small Service Companies

Written by: Merra Lee Moffitt

Article Overview: Very recently, several of my clients have begun sharing that their sales have turned up over the last couple months. Yeah, finally! Since I talk to business owners every day, and no one has expressed that sales are getting worse, this constitutes a trend, albeit an unscientific one. But, hey, any good news brings a sigh of relief at this point.

Easing out of Recession not so Easy for Small Service Companies

Very recently, several of my clients have begun sharing that their sales have turned up over the last couple months. Yeah, finally! Since I talk to business owners every day, and no one has expressed that sales are getting worse, this constitutes a trend, albeit an unscientific one. But, hey, any good news brings a sigh of relief at this point. With sales up and seeing your business operate in the black, at least on paper, you might think your troubles would be over soon. Not to burst your bubble, but don't forget about a brand new kind of cash flow squeeze. How could such a squeeze be new when you've already been dealing with cash deficit issues for well over a year?

During the recession, clients who pay an invoice began paying slower. Now with your sales going up, your expenses are probably going up too. So while your sales and billings might increase, the number of days to get paid has gotten longer. This is causing the new kind of cash squeeze. One where expenses go up because but the cash to pay for those sales doesn't come in until 30 to 45 days later. Before the recession took hold your invoices might have been paid in 15 to 30 days. Now, you are carrying additional cost with slower pay and may already have drawn upon your credit line too much for comfort. This leaves you squeezed in a new and more uncomfortable ways even as your sales look more promising.

So, how do you compensate?

1) Your cost cutting days may not be over, even with light on the horizon and sales increasing.

2) Yes, delaying your own payments may still be necessary.

3) Invoice more often, for partial payments at start of contract and at delivery points.

4) Drawing on your credit line may be required even if you were lucky enough to have avoided it so far.

5) Get creative, or call me and we'll get creative together.

And lastly, don't forget to count your blessings. Slashing of prices just to stay competitive may soon be over. Wondering when it will end is a thing of the past. You survived the Great Recession of 2008-2009. And while you may never return to the glory days of 2004-2005-2006, you are now better prepared. Remember, good habits get formed in bad times, but we get to keep those good habits forever.

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Article Tags: blessings, business owners, cash deficit, cash flow, delivery points, drawing, horizon, invoice, invoices, leaves, partial payments, recession, sigh of relief, squeeze



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Re: Service Or Product? - I agree with starting a Service-based Business in the economy. Here is what I think is critical: 1. Researching that your Service business has a market. 2. Marketing the Service with as much leverage as possible. 3. Product-izing the Service (aka Package Expert Knowledge). This will only help elevate you as "the" expert in your niche and make you accessible to people in different price points.
What makes you keep coming back for more? - I am researching on personal preferences that keeps the visitors coming back to a web site. What would be great is if people would list out their preferences of what keeps them interested to keep visiting a website in order or importance. For me it is:- 1. Content – Value, Depth and Recency of Information provided 2. User Friendliness – Easy Navigation, Simple graphic design etc. 3. Service – download time, contactability etc.
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