Survival Advice For Small Businesses

You may be in some Business, or you may be a local merchant with 150 employees; whichever, however or whatever you've got to know how to keep your business alive during economic recessions. 

Anytime the cash flow in a business, large or small, starts to tighten up, the money management of that business has to be run as a "tight ship."

Some of the things you can do include protecting yourself from expenditures made on sudden impulse. 

We've all bought merchandise or services we really didn't need simply because we were in the mood, or perhaps in response to the flamboyancy of the advertising or the persuasiveness of the salesperson. 

Then we sort of "wake up" a couple of days later and find that we've committed hundreds of dollars of business funds for an item or service that's not essential to the success of our own business, when really pressing items had been waiting for those dollars.

If you are incorporated, you can eliminate these "impulse purchases" by including in your by-laws a clause that states: "
All purchasing decisions over (a certain amount) are contingent upon approval by the board of directors.

" This will force you to consider any "impulse purchases" of considerable cost, and may even be a reminder in the case of smaller purchases.

If your business is a partnership, you can state, when faced with a buying decision, that all purchases are contingent upon the approval of a third party.

 In reality, the third party can be your partner, one of your department heads, or even one of your suppliers.

If your business is a sole proprietorship, you don't have much to worry about really, because as an individual you have three days to think about your purchase, and then to nullify that purchase if you think you don't really need it or can't afford it.

While you may think you cannot afford it, be sure that you don't "short-change" yourself on professional services. 

This would apply especially during a time of emergency. 

Anytime you commit yourself and move ahead without completely investigating all the angles, and preparing yourself for all the contingencies that may arise, you're skating on thin ice.

 Regardless of the costs involved, it always pays off in the long run to seek out the advice of experienced professionals before embarking on a plan that could ruin you.

As an example, an experienced business consultant can fill you in on the 1244 stock advantages. 

Getting eligibility for the 1244 stock category is a very simple process, but one with tremendous benefits to your business.

The 1244 stock encourages investors to put equity capital into your business because in the event of a loss, amounts up to the entire sum of the investment can be written off in the current year. 

Without the "1244" classification, any losses would have to be spread over several years, and this, of course, would greatly lessen the attractiveness of your company's stock. 

Any business owner who has not filed the 1244 corporation has in effect cut himself off from 90 percent of his prospective investors.

Particularly when sales are down, you must be "hard-nosed" with people trying to sell you luxuries for your business

When business is booming, you undoubtedly will allow sales people to show you new models of equipment or a new line of supplies; but when your business is down, skip the entertaining frills and concentrate on the basics. 

Great care must be taken however, to maintain courtesy and allow these sellers to consider you a friend and call back at another time.

Your company's books should reflect your way of thinking, and whoever maintains them should generate information according to your policies. 

Thus, you should hire an outside accountant or accounting firm to figure your return on your investment, as well as the turnover on your accounts receivable and inventory. 

Such an audit or survey should focus in depth on any or every item within the financial statement that merits special attention. 

In this way, you'll probably uncover any potential financial problems before they become readily apparent, and certainly before they could get out of hand.

Many small companies set up advisory boards of outside professional people. These are sometimes known as Power Circles, and once in place, the business always benefits, especially in times of short operating capital. 

Such an advisory board or power circle should include an attorney, a certified public accountant, civic club leaders, owners or managers of businesses similar to yours, and retired executives. 

Setting up such an advisory board of directors is really quite easy, because most people you ask will be honored to serve.

Once your board is set up, you should meet once a month and present material for review. Each meeting should be a discussion of your business problems and an input from your advisers, relative to possible solutions. 

These members of your board of advisers should offer you advice as well as alternatives, and provide you with objectivity. 

No formal decisions need to be made either at your board meeting, or as a result of them, but you should be able to gain a great deal from the suggestions you hear.

You will find that most of your customers have the money to pay at least some of what they owe you immediately. 

To keep them current, and the number of accounts receivable in your files to a minimum, you should call them on the phone and ask for some kind of explanation why they're falling behind. 

If you develop such a habit as part of your operating procedure, you'll find your invoices will magically be drawn to the front of their piles of bills to pay. 

While you should maintain a courteous attitude, don't be hesitant, or too much of a "nice guy" when it comes to collecting money.

Something else that's a very good business practice, but which few business owners do is to methodically build a credit rating with their local banks. 

Particularly when you have good cash flow, you should borrow $100 to $1,000 from your banks every 90 days or so.

 Simply borrow the money, and place it in an interest bearing account, and then pay it all back at least a month or so before it's due.

 By doing this, you will increase the borrowing power of your signature, and strengthen your ability to obtain needed financing on short notice. 

This is a kind of business leverage that will be of great value to you if or whenever your cash position becomes less favorable.

By all means, join your industry's local and national trade associations. 

Most of these organizations have a wealth of information available on everything from details on your competitors to average industry sales figures, new products, services, and trends.

If you are given a membership certificate or wall plaque, you should display these conspicuously on your office wall. 

Customers like to see such "seals of approval" and feel additional confidence in your business when they see them.

Still another thing often overlooked: If at all possible, you should have your spouse work in the business with you for at least three or four weeks per year. 

The important thing is that if for any reason you are not available to run the business, your spouse will be familiar with certain people and situations about your business. 

These people should include your attorney, accountant, any consultants or advisers, creditors and your major suppliers. 

The long-term advantages of having your spouse work four weeks per year in your business with you will greatly outweigh the short-term inconvenience. 

Many couples share responsibility and time entirely, which is in most cases even more desirable.

Whenever you can, and as often as you need it, take advantage of whatever free business counseling is available. 

The Small Business Administration published many excellent booklets, checklist and brochures on quite a large variety of businesses. 

  These publications are available online. 

Most universities and many private organizations hold seminars at minimal cost, and often without charge. 

You should also take advantage of the services offered by your bank and local library.

The important thing about running a small business is to know the direction in which you're heading; to know on a day-to-day basis your progress in that very direction; to be aware of what your competitors are doing and to practice good money management at all times. 

All this will prepare you to recognize potential problems before they arise.

In order to survive with a small business, regardless of the economic climate, it is essential to surround yourself with smart people, and practice sound business management at all times.

Getting In On The Ground Floor

Tractors that steer themselves, property that knows it’s been stolen, airplanes that land without pilots – that sounds like science fiction. It’s all a result of the global positioning system which is mind-boggling.   The industry is set to skyrocket and opportunities for the entrepreneur are there.

Governments have launched its next generation GPS satellite to complement the 30 older models already in use.   The aim is to create stronger signals, increased bandwidth, and lots of potential for smart entrepreneurs.

Since the Defense Department made its GPS signals available for commercial use years back, the market for location-based services has swelled to nearly $5 billion, and that’s just the beginning.
 The demand for these services is expected to double in the next few years. 

 The three hot growth areas – tracking, navigation, and hardware promise to be multi billion dollar markets by 2020. Though start ups are springing up all over the place, plenty of technologies remain untapped.  One of the untapped areas are automated navigation systems in family cars that keep drivers a safe distance from other vehicles.

 

Huge companies such as UPS plan to outfit 75,000 drivers with GPS-enabled handhelds this year to help them reach destinations more efficiently.  Some savvy entrepreneur who offered similar navigation and tracking services could also make out nicely.

Consider AtRoad, a Fremont, Calif. firm that went public in 2000.  It offers “geo-fencing” software that triggers email alerts if a company’s vehicle speeds or goes into unauthorized areas. 
 They charge a monthly fee of $45 per head to track more than 133,000 employees of clients such as SBC, Verizon, and the city of San Francisco. 

 For the fiscal year ending in December, AtRoad’s revenue grew 19% to $75.2 million.  That was a whopping 12.2% net profit margin.

 

This lucrative game was also played by Steve Wozniak, Apple co-founder, who started Wheels of Zeus in 2002.  This company combines GPS data with local wireless networking.  The technology helps parents keep tabs on their children, or can alert IT managers when company-owned computers leave the premises.

The agriculture and manufacturing companies are getting a taste of the technology by a company that outfits tractors with antennas that pick up signals to automatically guide the equipment and control the amount of pesticides used.

 

There are companies that are using this technology to guide and navigate giant trucks around cliffs and mine shafts. The maritime industry is predicted to invest hundreds of millions in coming years to outfit cargo containers and ships with GPS receivers. Chipmakers already cashing in are charging about $13 per device to put GPS chipsets in phones, electronics, and car navigation systems.  

And with a new federal regulation that is forcing wireless operators to include GPS in their phones and networking equipment, chip demand is sure to explode.

 

Remember the day when we said that expecting to buy drinking water in bottles was something the American consumer would never do. Pay for water that comes out of the kitchen sink faucet?  How silly!  Look at the industry that’s grown up in that area! Entrepreneurs - the GPS opportunity is out there, if only you know where to look.  Remember, you heard it here first!