Advocates for small businesses are asking Congress to remember them as money is doled out in the name of economic recovery. There is about $300 billion left out of the Rescue Act that was passed last autumn, and legislators are trying to figure out ways to spend it effectively.
The National Small Business Association wants about $75 billion of the $300 billion to be targeted at small business lending. The National Development Council wants a new cabinet-level position created that would encourage and oversee spending on small businesses.
That is all good stuff that would help to improve the economy. If you are already in a business that is being battered by that economy, though, the odds are that these programs are not going to be of any assistance. While they will improve the prospects for newer businesses, they won’t be much help to the vast majority of existing small enterprises. There is simply no mechanism in place – other than an air drop of currency — to move money into the small business sector in time to do much good.
The truth is, then, that we’re on our own. We either manage our way through this or we fail.
The strategy most likely to help smaller businesses at this time is a “back to basics” plan. There are some critical parts of any business and they simply have to be executed better if you are going to survive. Not surprisingly, the critical parts all involve people or cash; sometimes both. One aspect of the people side is important even before you begin your hard look at your business: don’t forget to smile and keep a positive attitude. It’s easy, especially in this hostile economic environment, to be caught up in anxiety and worry. And most of us show our emotions one way or another. That’s why we don’t win poker tournaments.
It is your responsibility as a leader, though, to present a positive attitude. Most of your team is aware of the situation — if not in detail, certainly in general terms. They are looking to you to set the tone, to establish the level of energy and confidence you are going to apply to overcoming this adversity. It is your responsibility to provide it and the positive attitude that results will increase the firm’s energy and raise the odds of success.
On the cash side, there are several things you can and should do.
(1) Postpone all capital expenditures, including even small equipment. Buy some duct tape. Make the best of what you have.
(2) If you are in a business involving inventory, find ways to reduce your purchases. Negotiate with your suppliers for longer payment terms. You should even consider consignment inventory.
(3) Hiring is always a judgment call, based on what is best for the firm, but when people leave the first assumption should be that they will not be replaced. Again, make the best of what you have. (No duct tape here, though.)
(4) Convert every dollar in accounts receivable into cash that you possibly can. Keep good records of your contacts with slow-pay or delinquent customers, and review them frequently — every day if possible but at least once a week. Give your better customers a chance to make partial or installment payments, and explain why it is important to the relationship. Advise the others that today’s economic conditions mean seriously delinquent accounts will be given over to collection agents — and if they don’t respond, do it.
(5) Convert your overstocked, unseasonal, or otherwise unnecessary inventory into cash by selling it. The Web was made for this, but there are other outlets, too. Find them.
(6) If you have bank credit or investors, stay close to them. They want you to succeed, but they read the news, too, and they’re worried. It is up to you to maintain and reinforce their confidence in you.
(7) Stay close to your team, too. They have a lot invested also and are capable of delivering a lot more than they, or you, imagined.
One thing you absolutely must do isn’t included on the list… because it is its own list. Don’t lie to anyone, including yourself. Every business functions on good faith, credit, and credibility — qualities that once lost are extremely difficult (almost impossible) to get back.
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