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Weathering the storm: 10 tips for tough times

By Robyn A. Friedman

It’s tough out there. Everyone is feeling the effects of the recession, but small- and medium-sized businesses are facing growing challenges. The stock market has plummeted; consumer confidence has skidded, leading to fewer purchases of goods and services; real estate values have crashed; and the unemployment rate is skyrocketing.

It’s a virtual perfect storm of challenging economic data.

Some businesses are responding by laying off staff; others are cutting salaries and marketing budgets. And there are plenty of small businesses struggling to avoid going out of business.

So what’s a small business owner to do? Here are 10 tips to help you weather whatever comes next.

1. Revisit your business plan. If you have a business plan (you should, but unfortunately, many small businesses don’t), review it. It’s essential to tweak it and “reset” it to the current environment, updating business assumptions such as rates of return, inflation, taxes, marketing budget, etc.

And if you don’t have a business plan, prepare one. It will serve as a roadmap to help you navigate the treacherous waters of this recession.

2. Look for ways to reduce expenses. Review your budget, looking for ways to save cash, and reduce spending. For example, consider cutting back on the frequency of routine services, said J. Nelson Bradshaw, cityj-nelson-bradshaw-8-08 president of BBVA Compass ( in Jacksonville, Fla. Often, cleaning services and other vendors can be cut back slightly—or business functions brought in house—without significantly affecting operations. Similarly, look for other opportunities to reduce costs, such as slashing debt service by refinancing at some of today’s historically low interest rates—or cutting out that over-the-top holiday party.

3. Watch receivables closely. Keep a close eye on your accounts receivable. You will probably notice that clients or customers—even good tom-comollo-smallones who used to pay promptly—are now delaying. But their delay affects your cash flow, and cash flow is the key to survival in a tough economy.

So, a tough collection policy—and sticking to it—is essential. “Consider strategies to get paid currently, such as increased communications with your customers’ accounts payable departments or placing some customers on credit holds if they don’t clean up their accounts,” said Thomas Comollo, a partner with B2B CFO in Ponte Vedra Beach, Fla. “Problems with receivables will not go away.”

4. Be tough on yourself. Comollo also suggests taking an objective look at why and how you’re operating your firm. Make sure your procedures and policies still work. “Everything has to be justified for today’s operating environment,” he said.

5. Concentrate on your core business. Although many experts recommend diversifying in a tough economy, Louise H. Anderson, CPA, a partner withlouise-anderson-small Davis, Monk & Co. in St. Augustine, Fla., advises her clients to exercise caution. “Too often when business starts to deteriorate, people start to grasp at straws and look at other things, but they shouldn’t do that to the extent that they lose their core,” she said.

6. Build rapport with your professionals. “Stay in contact with your professional advisors, whether they are bankers, insurance people, CPAs or attorneys,” said Anderson. “Make sure they’re aware of what’s going on with your business. If trouble is looming on the horizon, it’s better to talk before than afterward.”

7. Be honest with your staff. Don’t be afraid to keep employees in the loop—or to ask them for help. Bradshaw, of BBVA Compass, suggests meeting with staff and advising them that costs need to be cut to avoid layoffs. Frequently, employees can recommend expenses that can be cut—especially when their jobs are on the line.

8. Assess employees for productivity. When a business is struggling to survive, every employee must be productive, especially those in sales. Eliminate those who aren’t contributing to the bottom line. Due to the rise in unemployment, today’s labor pool contains exceptional talent; these individuals can now be hired for reasonable salaries.

9. Expedite your succession plan. If you’re already planning to involve family in the business, consider doing so now. “There is an extraordinary michaelfisher-small2opportunity at this time for small business owners to transfer business interests to their family members,” said Michael W. Fisher, a partner with Fisher Tousey Leas & Ball ( in Jacksonville. “It’s a way of getting talented family members involved in your business with a plan that’s less expensive.”

Two advantages exist for transferring ownership interests now, he added. First, valuations are low due to the stock market decline. That lowers any estate or transfer taxes that may be due. Second, the Internal Revenue Code permits very low interest rates to be charged for business owners who want to provide intra-family financing. Those rates are at historic lows now due to the economy, Fisher said.

10. Position yourself to take advantage of the coming recovery. Many asset classes, such as real estate and stocks, are at depressed prices. That means that there are opportunities for those who have capital—or access to it—to pick up bargains.

Prepare yourself now by plowing cash into savings or lining up credit so you can act quickly when opportunities arise. In addition, keep marketing your products or services. Business owners frequently cut marketing budgets to save money. You can evaluate your marketing plan to make sure it yields a return, but don’t cut it entirely. By doing so, you’ll be eliminating the very thing that attracts new business.

Most important, small- and medium-sized business owners need to be nimble so they can better plan for and respond to changing conditions. With proper planning, business owners can survive nearly any challenge.

Robyn A. Friedman is an award-winning journalist with more than two decades of professional experience. Her publication credits include Business Week Online,, The Real Deal, the Robb Report, the New York Post,, Florida Realtor, Florida Trend, CBS HealthWatch,, and the Chicago Tribune. She can be reached through her Web site,, or by e-mail at










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