The cash crunch is always an issue for small businesses (and some not so small businesses the past few years) as we go through the last quarter of the year. This year it is likely to be even tougher.
With economists predicting a continuation of the business doldrums at least through mid 2011, another ho-hum holiday-shopping season that retailers are trying to jump start with a series of ‘Black Friday’ specials (kind of loses the intent and smacks of desperation), and corporate budgets that had already received the Bob and Jillian Biggest Loser treatment already spent for this year, small business owners are going to have to put their thinking caps on if they want to keep afloat with cash in the bank and revenue coming in the door.
Here are five year-end survival strategies to get you through January 2011:
Take your business plan off the shelf
It comes as no surprise to any of us that the economy and business climate have taken a beating over the last few years. When you first penned that tome known as your business plan, you more than likely did not anticipate all (or even some) that has transpired over the last few years. It is time to take the plan off the shelf, dust it off and READ it. Oh, yes, and after you read it, take some time to evaluate how your company has to change to deal with the new environment that you are facing. In a perfect world, you would be doing this quarterly or semi-annually, but we don’t live in a perfect world. Look at whatever isn’t working and send it to the business recycling dump.
While the fundamentals of your business, namely your goals and mission, may not have changed, the environment in which you are operating certainly has. Perhaps you need to assess a new approach to meeting your goals, a new marketing strategy, reconsideration of your pricing model, the challenge of new competitors or the potential for new products or services. The point is to be brutally honest in your assessment of what is working as well as being open to new concepts that you may have shied away from in the past.
Conserve cash
Defer paying bills that you can until after the New Year. Meet with your accountant or bookkeeper to prioritize your payables and see what may be appropriate to defer. Accountants will typically advise small-business owners to pay their bills at the end of the year in order to maximize deductions; this year it may be wiser to conserve your cash in case sales don’t rebound next year.
You may also want to consider financing your payables over time rather than paying bills in full. Obviously, you would be responsible for interest expense on the unpaid balance, but your interest expense may be tax deductible.
Consult with your accountant or tax advisor to determine the best strategy for you and your business. Accountants and tax advisors welcome the opportunity to do year-end tax planning. With the expiration of tax credits, changes in capital gains rates and the unknowns of if or when the business climate will change, year-end 2010 is an especially critical time to meet with your advisors.
Shift your business development energies to 2011
Okay, your clients’ 2010 budget started out anemic and is already committed. 2010 is a goner. Now is the time to ramp up your business development efforts for 2011. Get in the door now, ahead of your competition and you are perfectly poised to strike when the new budget year rolls around. Relationship marketing thrives on the end of year opportunities of saying thanks and celebrating with your clients. Leveraging face time and building rapport now when your clients don’t have any money to spend are ways to stand out with your target clients and position you to be remembered when they do.
Reassess your marketing strategy
Block out a day or two and go through your marketing program. Review the investments of money and time against the programs you implemented for developing business this past year. Where did you get your clients? Did that pricey print ad generate any leads that you were able to convert? What aren’t you doing that you could be? Are you appropriately leveraging low or no cost new outlets such as blogs and social media?
Develop an ROI for each of your investments and track which strategies are generating leads and clients and which ones are not. Redirect your investments (and yes, time is an investment) to those activities that are keeping you and your business top of mind and abandon or cut back on those that are not producing. You wouldn’t keep a non-producing employee around; don’t keep a non-producing strategy either.
Cash out on reward programs
You signed up with that credit card or airline in part to take advantage of their reward points. Now is the time to convert those paper points to tangible items, whether for business travel, holiday gifts or even office equipment. Conserve your greenbacks for items that you are not able to source through reward programs.
While it may feel that you are rearranging the deck chairs on the Titanic as the economic iceberg is looming, think of these 5 action steps as your lifeboat opportunity to survive 2010 and steer your way to 2011. “If you can keep your wits about you while all others are losing theirs” (Rudyard Kipling), you can be in a better position to weather the storm and come out ahead in the survival of the fittest, business edition.
