Entrepreneur’s Journal: Fortify your business from the recession

20 02 2008

Entrepreneur’s Journal: Fortify your business from the recession

Posted by: in Small Business

Filed under: Google (GOOG), Yahoo! (YHOO), Citigroup Inc. (C), Merrill Lynch (MER), Small business, Recession

Lately, the headlines have been scary. Unemployment is increasing. There are concerns from the presidential candidates. Real estate values are sagging and foreclosures are skyrocketing. And, premier companies - like Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER) - have raised billions of dollars to deal with heavy losses.

So, if the economy is slowing down, how can your business deal with things?

Let’s take a look:

Deal with hidden costs: When looking at expense items, some might seem small. But it’s often the case that these items - in aggregate - can turn into a massive deal.

According to Tom Sharples, president of Qorvus Systems: “Typical small- or medium-sized businesses that have been around for a few years can find duplicative costs: unused cell-phone contracts that continue to rack up charges, subscriptions to services associated with long-departed employees and often all sorts of legacy junk that no one even remembers ordering, but that you’re still paying for each month.”

He recommends looking at expenses for:

o. Telecom charges
o. Web hosting costs
o. Yahoo (NASDAQ: YHOO) and Google (NASDAQ: GOOG) search marketing expenses
o. Facilities costs (utilities, janitorial services, and so on)

Establish a Credit Policy: Basically, you need to take preventative measures with customers. So before extending credit, make sure they’re in good standing and up-to-date on all invoices.

“If you have signed credit applications and are authorized to pull credit reports and check with banks and vendors on someone’s payment history, now is the time to revaluate each customer’s credit and credit limits,” said Michelle Dunn, who is the author of Become the Squeaky Wheel: A Credit & Collections Guide for Everyone (Collecting Money Series) and operates a credit advisory business. “Check for things such as late or slow payments, change or loss of jobs, changes in income, change of address, and divorce. Take immediate action if a customer’s mail is returned or the phone is disconnected. Speed is critical. The longer you wait, the less chance you have of getting paid.”

Work with your vendors: As a small business, it won’t be easy to get better terms from vendors. Yet, it’s worth asking for.

Or, it may mean dealing with smaller vendors, who might be more amenable for negotiation.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates DealProfiles.com.