Here are some of the key economic challenges that small businesses are grappling with and some recommended ways to deal with them. The ultimate goal: Keep your business profitable, viable. What are the financial hardships for small business? Inconsistent cash flow, limited or no budgeting.
Of course, cash flow is critical to all small business owners. Cash needs must be met by either increasing inventory, reducing non-cash expenses like leases, or cutting fixed costs. Business owners must analyze their cash flow trends and manage accordingly. Here are some small business management tips and considerations:
The first and the most important thing is to determine your SME’s purpose. Some small business owners use their enterprises as a “work from home” venture to earn extra money, while others build it to become a full-fledged corporation. Still others use small businesses to build their net worth, then sell it to investors or fellow small business owners when the business is booming. A small business needs to have a clearly defined objective or reason before anything else. It must have a clear target market and goals.
Once you’ve determined your SME’s mission, take a close look at your own personal finances. Are there any unexpected expenses in the current year? These might be difficult for small business owners to plan for, but it is imperative to budget for them. While it is true that it will be tough times, these expenses must be included in the business’s income statements.
Another important issue to review and strategize about is your Accounts Payable (Accounts Receivable). This category of accounts is used primarily for invoicing, and it is essential to make sure that you always have enough funding to cover these expenses. The good news is that small businesses can obtain funds from their accounts payable and receivable accounts at predetermined intervals. However, this is not to say that you don’t incur expenses. Your business may need to obtain finance on these accounts at different times of the year. Your finance department should assist you with any unusual circumstances such as seasonal sales spikes or other unavoidable situations.
If you are a small business owner looking forward to tough times in the future, it is important that you have an appropriate contingency plan. The small business sector reacts especially well to recession, and it may not be too early or too late for you to prepare your business for tough times. It is advisable for business owners to develop a ten-year business plan that outlines their expectations for profits, operating costs and other factors. If you base your business’s operations around this plan, you will have a realistic outlook and be able to better cope with both ups and downs.
The Small Business Administration provides advice and support to small business owners during tough economic times. Many state agencies and independent organizations offer small business assistance programs as well. To receive these assistance programs, you must demonstrate a financial need and a need for small business financing during tough times. While there are many small business assistance programs available to assist small business owners during such times, you must ensure that you fully understand all of your options before accepting any funding. You should also consider working with a small business attorney to help you obtain the most suitable funding options for your particular situation.
As with any loan, your business credit history will play a key role in whether or not you are approved for this funding. For example, if you are applying for small business financing and you have poor credit scores, your application may be rejected. In such cases, you may wish to work with your small business credit counselor to improve your personal credit scores in the future to better qualify for small business financing.