Career Advice - A Community Blog

Erik Larson writes about the job market, resume improvement, and career advice

Tips for Small Business Owners During Tough Times

Written by Erik Larson, Community Blogger | Sep 29, 2017 6:29 PM

A recession can be difficult for a small business. If the necessary measures are not put in place during financially challenging seasons, one's business is likely to crumble. Learning to survive tough financial seasons is a crucial lesson for small entrepreneurs and start-ups. Here are a few tips that can help you weather tough economic storms.

Be Careful How You Spend Money

Spending without accounting for your income and expenses is a huge mistake, especially during difficult financial seasons. A budget gives you a road map for your business and also enables you to track personal expenses. It is advisable to examine every purchase that will result in additional debt. Determine whether the expenditure will be able to generate enough money to sustain itself. If this is not the case, you need to defer the purchase.

Keep Communication Lines With Your Creditors Open

During tough financial times, debtors are often tempted to avoid their creditors because they are not in a position to settle their debts. If you find yourself falling behind your payments, do not keep quiet. It is preferable to negotiate fresh terms with your creditors. Creditors are often more agreeable when they have no reason to question your honesty and reliability.

Make Calculated Changes

Tough times present businesses with an opportunity to review what is working and what is not. Are your investments giving you maximum returns? If this is not the case, what might be the problem? Are your non-business assets providing you with a maximum return? If not, can you sell them to boost your company's financial position? During hard financial times, survival is the main goal and you cannot afford having useless assets lying around. However, if you are in the middle of a divorce, you need to consult a divorce mediation expert to advise you on the best way to handle your business and non-business assets.

Learn From Your Mistakes and From the Experiences of Others

One of the smartest ways of coming out victorious during a financial drought is to learn from experience and to consult a mentor. Many people beat themselves up when they fail, interfering with the processing of learning and eventually mastering their trade. Learn from your failures and determine a way to address issues the next time they emerge. Having a plan the next time you face a disaster is a good way of dealing with a problem when it recurs. Additionally, it is impossible to beat difficult times without help. Find a person who you respect, who is seasoned in the business, and who has overcome financial hardships before. Learn from your mentor's experiences and advice.

Consult Your Bank For Support

If you are experiencing financial problems, review your balance sheets, cash flows, and inventories with your banker. Your banker will not only advise you on ways to resolve financial issues, they can also organize how you can obtain credit if you experience a cash flow. If your bank is not in a position to lend to you during financial emergencies, they will suggest to you alternatives of remaining afloat during a crisis.

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