Surving a Meltdown

IN AN ECONOMIC SLOWDOWN, small-business owners become more vulnerable, because they often do not have a great deal of capital to carry them through tough times. Susan Carlisle, a certified public accountant (http://www.carlislecpa.com/) from Woodland Hills, California, says “On the
other hand, small businesses are well positioned to become lean and mean. They can respond quickly to the changing marketplace.” She offers these tips.

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1. Watch inventory and supplies turnover. If sales are slowing down, order in quantities that offer a discount.

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2. Revisit accounts receivables regularly and send out bills more frequently. Consider giving bigger discounts for prepayments, CODs and cash. Offer to take credit cards instead of waiting for checks in the mail—especially to those customers who tend to need second reminders to pay.
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3. Stay in contact with customers to make sure they’ll still be in business when your invoice arrives. You should be staying in contact with them anyway. Right?

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4. On the selling side, customers purchase more basic items and cut back on discretionary items. If you sell only discretionary products, emphasize value.

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5. Keep well-trained, good employees through the downturn. If you must cut back, offer to cut hours across the board instead of firing good people, as this will keep employees’ spirits up. It will also show that you care about your people.

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6. Look at your fringe benefits. You may have to cut back on some of these.

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7. Bring your bookkeeping up to date. Use it to budget for the year ahead.

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8. Visit your CPA to do a tax projection now instead of waiting until April. She or he may give you some tax-saving ideas and change your estimated
payment schedule based on a projection for this year and the next.