Survive the Recession – Business Ideas and Recession-Proof Tips For the Small Business Owner
You can thrive in a slow economy! Ask leaders and consultants about recession-proof businesses and you get examples that go far beyond the inevitable death and taxes-related occupations.
But most are also quick to point out that any business can be vulnerable to an economic downturn and any business can take steps to protect itself from a financial roller-coaster ride. "To protect against a recession, a business needs an inventive, flexible team that learns together, practices competitive intelligence together and collaborates together." said industry consultant and analyst Steve Koss, who specializes in the business of large stadiums and other sports and entertainment venues.
But what do you do to protect your bottom line if you don't have a naturally recession-resistant business? Besides focusing on your current marketing niche, you may follow the trend of many small business owners by diversifying where your income is coming from. Use your downtime to build a 'business within the business'. Offering a new service that can be handled online, such as Internet Marketing, can make the best use of your time and build an income that has proved more stable during a recession.
Tom Mulhall, who was an accountant in Chicago for 15 years before opening a small luxury guest resort nine years ago in Palm Springs, says some of the same tricks that inoculate a business like his from economic downturns can help any business. When asked how to recession-proof a Chicago-area business, Mulhall said: "If you are in retail, diversify. If you're in the suburbs, promote ways to encourage Chicago business, and vice versa. If you are a brick and mortar business, develop an on-line business." Denise O'Berry gives four general guidelines to help any business keep going and growing even in hard times. "Focus on customer loyalty and retention, minimize debt, involve employees and be visible to your customers, your employees and your community," said O'Berry, president of The Small Business Edge Corp. in Tampa, Fla. "Success in business is a lot about who knows you and what your company does. Make sure your marketing and public relations is done consistently; don't just market when business is slow."
What is Commercial Loan Modification?
You may have heard recently about commercial loan modification, and are not sure what exactly it is. Due to these tough economic times, many small business owners have had to become very creative in order to keep their business alive. Cutting back is always the first and usually most helpful way to working your way out of trouble.
There are cut backs on things like; expenses, labor, advertising, utilities and much more. For example, lets say your office or store has five people working at all times. What many stores have done is cut back to four people working; this saves a lot of money over the course of the month. Another example is if you are spending hundreds of dollars a month on things like office supplies and vendors. In less than a day of shopping you could find cheaper suppliers and save hundreds and even thousands of dollars a month. Saving money is the cornerstone to any business whether a million dollar company or a small fish store on the corner being able to survive in this economy.
That is where commercial loan modification comes in. With loan modification you can lower your monthly property payment by hundreds of dollars. That leads to big savings over the course of a year. These companies work directly with the banks to help settle on a smaller payment plan that saves you tons. With hands on experience with most of the lenders in your area, they know the ins and outs to getting a deal done fast, and they won't take no for an answer. The process of dealing with your bank yourself usually is a long and aggravating one that either ends with a rejection or you giving up. That's why these companies are so useful, they get the job done fast and with little to no effort from you.
Credit Card Act Does Not Cover Business Credit Cards
The current unemployment rate is still much higher than many would like. According to the U.S. Labor of Statistics, 8.2% of women are unemployed. The same report goes on to say approximately 9.2 million Americans are only employed part time, due to employers not being able to afford employees full time. These statistics have compelled people to become entrepreneurs to gain employment. The Credit Card Act of 2009 could give relief to these unemployed entrepreneurs, but only on their personal credit cards.
The Credit Card Act of 2009 was signed by President Obama last May. With some provisions already started this act will be in full swing Feb. 22, 2010.
What are the benefits of this act?
- Cardholders will be able to avoid interest rate increases on their existing card balances and have more time to pay their monthly bills.
- Before the bill passed, many card companies could change their due dates without notice, giving you less time to pay your bill. Now credit card companies will have to give you no less than 21 days to pay your bill, and will not be able to raise interest rates without notice.
According to the National Small Business Association as of 2008, credit cards were the most common source of financing for small business owners. The New York Times reported in September of 2009 that a study from Monmouth University said, "every $1,000 increase in credit card debt increases the probability a firm will close by 2.2 percent." And with this increase in debt, lead companies are now able to buy debt leads from these card companies and make a profit.
This new act will benefit many Americans, however, it does NOT cover business/corporate card holders. This is an important thing to keep in mind when starting your business. We could see credit card companies being harsher to business owners since they will be forced to ease up on customers with personal accounts.
Banks are a lot harsher these days when it comes to giving out loans. They are looking at personal debt as a factor for small business loans. Because of this, it is important to first look at your credit card debt before going into business. If you have acquired some debt, debt consolidation or credit card counseling may be options to consider.
These types of programs can streamline your personal debt and make it easier to get out of debt. This will help you get your finances in order which should help your chances of getting a loan for your business. If your business is already up and running, however, take a look at your current debt levels. If it is a significant amount, decide if you can manage the debt or if you need to take advantage of a debt management program.
For now we will just have to wait and see if credit card companies will be harsher towards their business/corporate card holders in the upcoming months. Until then, take a look at your personal credit cards and see if you can utilize the act to help you get a business loan to start your business.
Investing For Small Business
Whether a sole-proprietorship, partnership, or a limited liability corporation, all small business owners know that they are already investors in their own business. With so much involved in the day-to-day operations of running a business, many small business owners place investing in the back of their minds. However, this can be a dangerous way to operate. After all, when you're the boss, you're also in charge of your own retirement plan and in finding ways to reinvest in the company without damaging the capital you've already built.
Here are a few key tips in small business investing:
- Your business is part of your portfolio. When deciding on an investment strategy for your small business, do not neglect to consider your business as a part of your investment portfolio, since you may be able to tap into some of your existing equity or value in order to make new gains.
- Tone down the entrepreneur. When considering your investment strategy for your small business, consider risk. While the entrepreneurial spirit can make a person a successful business owner, it may also make them a horrible investor by encouraging them to take on too much risk. Slow down and understand when and where to be aggressive in your investments.
- Strategize for capital preservation. While your personal portfolio may be built around simple growth, your small business investment portfolio should strategize for capital accumulation and preservation. That way, when lean economic times come, your small business can lean on its portfolio to help generate income.
- Diversify outside your business. Small business owners may want to invest in their industry; after all, it is the industry they know best. But try to avoid putting all of your investments in one industry. If the industry falls on hard times, your business and your portfolio will both take a beating.
- Allocate your assets. It may be tempting to put all of your money in one place, but you need to properly allocate your assets to make them work for you. Stocks can make you a lot of money in the long term but can be risky short term; bonds are less volatile than stocks but also have a lesser yield, and cash in the form of savings and money market accounts do not earn much in comparison. Talk to a financial planner about properly allocating your assets to make your money work best for you and your goals.
This last step, talking to a financial planner, is probably one of the most important you can make. When making decisions on how to build your small business investment portfolio, consult someone who is as good as his or her job as you are at yours. Your financial planner can look at your business, manage risk, and help you to define goals that make sense for your business. Talking to a financial planner will ensure that you create an investment portfolio that makes good financial sense now and for the future.