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Don’t let a lagging economy get your down! Use these cost-cutters

By Lewis Hunter, CPA    

Experts say the economy is improving, but Jacksonville unemployment reached 12%, and many businessmoney cutting.small owners are worrying about a double-dip recession. Good planning requires business owners to consider their alternatives in case the economy does not improve as quickly as everyone hopes. This means transitioning your business practices to save money during a long-term recession.

Here are some cost-cutting strategies will help support your business’s bottom line while the economy perks up.

• Switch to a recession-time loan. The recession has changed lenders’ attitudes. They are much more skeptical and hesitant to give loans. Businesses that depend on loans will need to revise their pitch to lenders in order to get the financial backing they need.

You can do this by working the recession into your pitch for a loan. Present a realistic business plan to lenders that incorporates the recession, and mention how you plan to adjust your business to meet the challenges of the economy. 

Lenders don’t want to hear a “business as usual” approach because the economy has prevented business as usual for most companies. The more realistic you are about finances, the more likely lenders will be to give you a loan.

• Shorten your business cycle. During a recession, smart business owners review business activity more frequently so they can act swiftly on cash flow changes.

With shorter business cycles, you can see upward trends sooner and respond accordingly. If you were reviewing your finances quarterly in the past, you may want to start reviewing them bi-monthly or even monthly.

• Outsource services. It’s tempting to keep everything in-house when finances are tight, but outsourcing time-consuming services could save your business money in the long run.

Start by examining the services that take your team longest to complete. Focus the majority of your employees’ time on bringing in new business. Tasks such as bookkeeping, IT support, direct marketing, public relations, writing, and Web design are all good options to outsource if they are not a central part to your business.

In addition, the recession has put an abundance of freelancers into the market, giving business owners a chance to work with these specialists on contract to get quality work on a project-by-project basis.

• Update business technology. Although it’s difficult to justify investing in new technology during a recession, your business could lag behind competitors who have newer, faster equipment. Not only will your business processes become more efficient with new technology, but potential customers will also be impressed that your business continues to improve during a recession.

Many retailers are selling equipment at a discount, so you may be able to get a better deal now than if you wait until the recession passes.

• Increase your online presence. Although you may not have enough cash for an all-inclusive marketing campaign, you can still get your name into the market without breaking the bank. Start with your Web site. Invest in search engine optimization (SEO) software to bring your site out of hiding and make it easy to find online.

Also, if you don’t have control over editing your Web site, consider switching over to a site host that will allow you to maintain and update pages on your own. This will save time and money in working with a Web developer for all site changes.

Social media is one of the best ways to market online, and it is free. Create Twitter, Facebook and LinkedIn accounts and post to them regularly. Don’t forget to include links to your Web site or blog in each post to drive additional traffic to your Web site. 

• Market your company effectively. Don’t stop marketing and advertising because of the recession. Customers will want to see that you are still around and operating in any economy. Because finances are strained for everyone, you might be able to negotiate better advertising or printing deals now for external promotions.

Another way to market your company is to do some old-fashioned networking. Attend local business events, non-profit fundraisers, and community functions. This way, you can promote your company personally.

• Use a mentor. Confiding in an experienced mentor is extremely useful during business challenges. A mentor will help you pick out opportunities or threats you might have missed, as well as offer guidance during business growth or decline. Most of all, a mentor will keep you accountable.

Remember that even the strongest business plans can be deterred by unexpected changes in the economy. In your business plans, include a scenario that could test your revenue, expenses and cash flows.

Your business should be prepared to adapt as the economy changes to get the most out of every situation. 

Lewis Hunter is a certified public accountant and owner of Hunter & Associates, P.A. He specializes in financial planning, tax planning and business coaching for small businesses. Visit www.huntercpa.com.


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