Surviving the slow times as a small business

Slow times require fast thinking for small-business owners. Because smaller companies typically do not have the financial resources to weather dry periods as effectively as larger companies, it is critical to move quickly when business shows signs of slowing down. With the U.S. economy recovering from the recent recession, the time for action is at hand for many small businesses.

As a business owner, you have a choice in terms of how you view a slowdown. It can either be a time of frustration, stress and panic – or you can approach the situation as an opportunity to upgrade your business processes and put new initiatives in place to enhance your efficiency and weather the downturn, and position yourself for even greater profitability when the economy fully recovers.

In the past few years, many small companies cut areas that are considered non-essential because they may not have a direct impact on sales or profits.

Although cutting is an easy way to save money, many experts agree that slashing items that are commonly targeted when business is sluggish – such as advertising, employee training and business travel – is precisely the opposite of what a company should do during slow periods.

The key to making budget cuts is to carefully evaluate each area of your business and indentify those that are not as efficient as they could be. You also should re-evaluate your association memberships and your suppliers of insurance, payroll services, telephone service, Internet service and other business services to ensure that you are getting the most for your money.

Bringing in new business

While it is questionable to cut your marketing budget during slow periods, it is a great time to refine and improve your marketing program to generate better – or more targeted – results. You can start by revisiting your marking plan and adding new initiatives to help bring in business. Here are some things to consider:

· Follow up with existing customers

Most small businesses focus more on attracting new customers than retaining their existing ones. A business slowdown is a great time to get in touch with existing customers to find out what needs they have and to remind them of your capabilities.

· Offer something free

Promotions are a great way to attract new prospects. Consider targeting prospective customers and offering them a free consultation or a free sample of your product or service.

· Create an email survey

Send out an email survey to your customer base and ask them about the biggest issues they face related to your field of business. Compile their answers and prepare a brief report on the results. You can publicize the results on your website and leverage the report as a basis to set up a meeting with prospective customers.

Making the most of your cash flow

When business slows, maximizing your cash flow can be critical to the survival of your business. Here are some areas where you should focus your attention:

· Accelerate the collection of payment

You can improve your cash position by streamlining your systems for collecting payments with merchant services, remote deposit, lockbox and other treasury management services.

· Improve processes for making payments

Consider utilizing online bill pay services to reduce the time and costs involved with paying your bills, as well as online payroll services to make tax payments more efficiently.

· Invest your excess cash effectively

Put your excess cash to work in a business money market account or business certificate of deposit.

· Explore solutions for cash shortfalls

Establish a business line of credit that you can access in case of a cash crisis, as well as to take advantage of unexpected opportunities.

· Utilize information reporting tools

Online information reporting tools can help you make better business decisions by providing you with the latest information on your cash position.

Position yourself for profitability

While economic cycles and business slowdowns might be inevitable, they don’t have to lead to doom and gloom for your business.

Use the slow periods as an opportunity to make improvements in the way you manage your business. Doing so will help you weather the stormy economic conditions, and you’ll be well positioned for greater profitability when economic conditions turn brighter.

Shay Harold is the Central Florida business banking manager for PNC Bank. He can be reached at 407-428-3067or at [email protected]