Getting Ready for Tough Times
-- DEVISE A BUSINESS PLAN
A detailed business plan allows a small-business owner to identify trouble spots early and to decide how best to conserve resources if sales turn down.
-- MONITOR FINANCES
Carefully review accounts receivable for slippage. Institute disciplined procedures for collecting and monitoring any money the business may be owed.
-- REVIEW YOUR
CUSTOMERS
Make sure that your customer base is well-diversified. Where it makes sense to do so, lock in long-term contracts with valued customers.
-- REDUCE DEBT
Reduce debt and build up cash reserves. Check that all lines of credit are secure if they are needed.
-- SCRUTINIZE OPERATIONS
Streamline nonessential expenses. Review and pare down inventory levels.
-- CONTROL CAPITAL
OUTLAYS Avoid excessive investments that have no clear payoff. Know the true costs of new software packages.
-- CUT FIXED COSTS
Reward employees with profit-sharing and bonuses in good years rather than giving out big pay raises. Outsource where appropriate.
DATA: BUSINESS WEEK
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