THE QUESTION EVERY SMALL BUSINESS OWNER MUST BE ASKING THEMSELVES IS HOW CAN I SURVIVE AND PROSPER IN THIS UNPREDICTABLE AND DANGEROUS ECONOMY? Let’s start with this sobering reality, the days of easy credit and buyers who couldn’t spend their money fast enough are gone and will not return for many years. Let me repeat this statement and add this caveat, the days of easy credit and buyers who could not spend their money fast enough, may be gone forever. There are two major problems killing small businesses today. One of the killers of small businesses is having too many expenses in this brutal economy. The other is a lack of cash; or liquid assets which can be turned into cash. Let's examine the first problem. A new day has dawned for the small business owner in America. Most owners of small businesses who have been in business for more than five or six years, have seen the normal ups and downs, or peaks and valleys which are part and parcel of the small business landscape. You live the good life when times are good and suffer when times are bad. A great many small business owners don't survive; when the economy is as dismal and dangerous as it is now. I believe the future for small business is more severe and distressing as it has ever been, except during the Great Depression. There may be some of you living today who saw the horrific effects of the Great Depression and remember how terribly devastating that period really was, especially for small businesses. In this day and time, the term business as usual, does not apply for small business owners. For those business owners who are suffering and losing their businesses, it does not mean they are not good business people, or they are not smart enough or not competent enough to survive in today’s environment, It just means these business owners have to develop new strategies and methods to survive in this kind of economic downturn and the economic predicament we find ourselves in today. I fear these tough economic conditions will be with us for a long time. A phrase I like to use concerning business “expenses are profits which you will never see” I will explain this later in this discussion. As a small business owner you have always lived with risk. That risk is there, even when times are good and the economy is stable. I'm sure we are all aware of the failure statistics of small businesses. 50% gone after the first year, 90% gone after the fifth year and this is in a stable economy and a stable business climate. We are now in one of the toughest economic downturns we've seen in the last 50 years, and it’s not expected to get any better for many years to come. This is the new business climate you must learn to operate your business in the future. You must learn to cope in this new and harsher environment if you plan to stay in business. As a small business owner you face a unique set of financial problems which set you completely apart from the much larger and well-financed businesses. Even in a good economy, finances are usually a problem for many small businesses. Many are within one mistake or one bad year of closing their doors and going out of business. Large businesses have survival lifelines such as a massive credit lines, potential bank loans, and cash on hand or liquid assets which can quickly be turned into cash. Now, that we've outlined the problem. What are the answers to successfully stay in business in such a tough economy, with such a dark outlook for the future? You must put yourself in a survival mode. Your new motto has to be, I must change my thinking completely or my business will fail. In your survival mode, you must examine every expense involved in running and managing your business. You're going to cut your expenses by 50% top end, 40% on the low end. You're going to do a microscopic examination of every single expense. You're going to examine these expenses every single day for as long as it takes. You must diligently keep looking for cuts and adjustments to reach the goal of cutting expenses 50% top end 40% low end. You cannot stop until you have accomplished that goal. Break this task down to 30 day segments, at the end of the 30 day period, look at what you've accomplished, and what you plan to accomplish in the next 30 days and beyond. Picture of all the different kinds of scenarios you can do to achieve this task. This is a battle you cannot afford to lose. It could be the difference of you staying in business or going under.
This may require you to be more hands-on working more days and working more hours. I will not attempt to list all the expenses to be cut. There are too many different kinds of businesses and too many different kinds of expenses connected with those businesses. Every business owner knows every single expense connected with their own business. Most small business owners are individuals who have the utmost faith and confidence in themselves and their own abilities; otherwise they would not have gone into business to begin with. Most of these owners have a great deal of ego and are used to getting good solid results from their efforts. This might have worked great in the past. This new tough economy will require new tactics and new strategies. The business owners who understand this will survive those who don't will be gone. I've always said the only thing constant in life is change. You cannot resist change; your goal is to be prepared when it happens. The one thing I do know, it is going to happen with or without you. When we mention cutting expenses by 40 to 50%, you may have to give up some luxuries and perks you have become accustomed to. It may involve taking a smaller space for your business. It may involve letting some people go. Again, I will not try to identify all the kinds of expenses you should cut or may have to cut, but you and I both know it is imperative you began this process immediately. Put away your ego; do not worry about what your peers think of you when they see what you are doing to save your business. I've got news for you, if your peers don't prepare for the new tough economic climate themselves; they won't be around. They will be out of business and probably wishing they had followed your lead. Regardless of what your peers think, don’t let ego get in the in the way of making smart business decisions. I repeat again expenses are profits; these expenses are monies which are being paid out for something or to someone. These expenses must be cut. Remember every dollar of expense that is cut will go straight to your bottom line.
The other major problem killing small businesses particularly in a tough economy is lack of fallback capital, or liquid assets which can be quickly turned into capital. Let me qualify this statement, not only is a lack of capital a devastating problem in tough economic times. It is a major reason why many small businesses fail even in good times. Capital can be compared to gasoline in a car, when the car runs out of gas it stops. The same thing happens to your business when the money runs out. I have observed countless small businesses that go under because they couldn't borrow anymore money. I've always advocated, a small business must have a war chest which are savings put aside from profits. I will explain the term ‘war chest’ later. Many small businesses that depend upon borrowing money to operate their business can be making a grave or sometimes fatal mistake. The landscape of this new economy will not permit poor financial decisions going forward. To create this emergency fund or war chess, a small-business owner must put a minimum of 15 to 20% of the net profit into this fund. You are probably asking, where is all this money, coming from. This will be the money you saved from reducing your expenses. If you have cut your expenses to the maximum as we have advocated earlier, this should not be difficult to do. You must set a final goal for the amount of this fund. The amount of the fund should be enough to operate your business for two years if you made no profit for those two years. Only you would know what your monthly operating expenses are, and what that specific amount should be in that fund. Think of the peace of mind and the mental well-being of knowing no matter how bad the economy could be, you will keep your business operating. Just think of the personal satisfaction and pride you will feel knowing you had the business savvy and business ingenuity, to make the decisions which saved your business, while other businesses such as yours are falling by the wayside. Am I telling you not to borrow money, no, I'm saying only borrow money when absolutely necessary. Many businesses borrow money, sometimes unnecessarily or just because they can, find in tough economic times they cannot pay it back which results in their failure. You must begin to work on that emergency fund or war chess now. Very few saw this economic downturn coming; or its severity, which could be the worst since the Great Depression. We now know it could last for many years to come. I've used the phrase war chest before. Let me explain my version of a war chest. I've always compared being in business the same as being at war. Winners in business and in battles are the ones who are best prepared. A winner in business or in battle is the one who has the best arms, these arms in business could be the best and latest equipment and the best and most effective management techniques which are available. A winner has the best intelligence; in business this could mean having the best technology and having the people, who are able to make the most effective use of this technology. A winner has the greatest will to win, in business, this means going inside yourself and bringing out those qualities, you know you possess. Having the will to out work, your competition, you must acquire the mental toughness to persevere and have the tenacity to not give up, until the battle is won. This analogy may not fit every business or business owner. Let me simplify this, in one sentence. The only certain winners of this battle who are going to survive and stay profitable are the businesses who cut their expenses to the bone, and have a Rainy day fund, War chest, or and emergency fund.
It does not matter what name it is known by. The fund must be there and available when needed. As a small business owner, Here are some of the battles you must fight daily. 1. The battle to stay profitable. 2. The battle to keep employees satisfied and content. 3. The battle to make sure all parts of your business are working harmoniously. 4. The battle to find the right business formula to insure you are maximizing every aspect and every part of your business. The winner of this battle to survive will have to find a new way of thinking about his business and discover new and innovative ways of cutting expenses and maximizing profits. It is my firm belief the economic climate in this country has changed forever. You must never forget what I reiterated earlier, about the days of easy credit and buyers who just couldn't spend their money fast enough. We all must face this brutal truth, those days are gone and may never return, we must learn to conduct our business accordingly. Most of us have never seen or experienced this kind of economic catastrophe which is now taking place. As a business owner you must become much more astute in running your business in this new kind of economy. A business owner must anticipate and be prepared for problems and negative situations before they happen and be able to react very quickly when they do. Don’t be afraid to ask for help, we are entering into an unknown economic dark hole where there are only two outcomes, one is bad and the other is much worse. In the end cutting your expenses and having a war chest also known as an emergency fund, will go along way in helping you prepare for the momentous battles which lie ahead. Whatever problems and circumstances you and your business are confronted with, you and your business will come out a winner because you prepared well for the battle.
MANIFESTO FOR SMALL BUSINESSES.
THE QUESTION EVERY SMALL BUSINESS OWNER MUST BE ASKING THE MSEL VES IS HOW CAN I SURVIVE AND PROSPER IN THIS UN PRED ICTABLE AND DANGEROUS ECONOMY?
Let’s start with this sobering reality, the days of easy credit and buyers who couldn’t spend their money fast enough are gone and will not return for many years. Let me repeat this statement and add this caveat, the days of easy credit and buyers who could not spend their money fast enough, may be gone forever.
There are two major problems killing small businesses today. One of the killers of small businesses is having too many expenses in this brutal economy. The other is a lack of cash; or liquid assets which can be turned into cash. Let's examine the first problem. A new day has dawned for the small business owner in America . Most owners of small businesses who have been in business for more than five or six years, have seen the normal ups and downs, or peaks and valleys which are part and parcel of the small business landscape. You live the good life when times are good and suffer when times are bad. A great many small business owners don't survive; when the economy is as dismal and dangerous as it is now. I believe the future for small business is more severe and distressing as it has ever been, except during the Great Depression. There may be some of you living today who saw the horrific effects of the Great Depression and remember how terribly devastating that period really was, especially for small businesses. In this day and time, the term business as usual, does not apply for small business owners. For those business owners who are suffering and losing their businesses, it does not mean they are not good business people, or they are not smart enough or not competent enough to survive in today’s environment, It just means these business owners have to develop new strategies and methods to survive in this kind of economic downturn and the economic predicament we find ourselves in today. I fear these tough economic conditions will be with us for a long time. A phrase I like to use concerning business “expenses are profits which you will never see” I will explain this later in this discussion. As a small business owner you have always lived with risk. That risk is there, even when times are good and the economy is stable. I'm sure we are all aware of the failure statistics of small businesses. 50% gone after the first year, 90% gone after the fifth year and this is in a stable economy and a stable business climate. We are now in one of the toughest economic downturns we've seen in the last 50 years, and it’s not expected to get any better for many years to come. This is the new business climate you must learn to operate your business in the future. You must learn to cope in this new and harsher environment if you plan to stay in business. As a small business owner you face a unique set of financial problems which set you completely apart from the much larger and well-financed businesses. Even in a good economy, finances are usually a problem for many small businesses. Many are within one mistake or one bad year of closing their doors and going out of business. Large businesses have survival lifelines such as a massive credit lines, potential bank loans, and cash on hand or liquid assets which can quickly be turned into cash. Now, that we've outlined the problem. What are the answers to successfully stay in business in such a tough economy, with such a dark outlook for the future? You must put yourself in a survival mode. Your new motto has to be, I must change my thinking completely or my business will fail. In your survival mode, you must examine every expense involved in running and managing your business. You're going to cut your expenses by 50% top end, 40% on the low end. You're going to do a microscopic examination of every single expense. You're going to examine these expenses every single day for as long as it takes. You must diligently keep looking for cuts and adjustments to reach the goal of cutting expenses 50% top end 40% low end. You cannot stop until you have accomplished that goal. Break this task down to 30 day segments, at the end of the 30 day period, look at what you've accomplished, and what you plan to accomplish in the next 30 days and beyond. Picture of all the different kinds of scenarios you can do to achieve this task. This is a battle you cannot afford to lose. It could be the difference of you staying in business or going under.
This may require you to be more hands-on working more days and working more hours. I will not attempt to list all the expenses to be cut. There are too many different kinds of businesses and too many different kinds of expenses connected with those businesses. Every business owner knows every single expense connected with their own business. Most small business owners are individuals who have the utmost faith and confidence in themselves and their own abilities; otherwise they would not have gone into business to begin with. Most of these owners have a great deal of ego and are used to getting good solid results from their efforts. This might have worked great in the past. This new tough economy will require new tactics and new strategies. The business owners who understand this will survive those who don't will be gone. I've always said the only thing constant in life is change. You cannot resist change; your goal is to be prepared when it happens. The one thing I do know, it is going to happen with or without you. When we mention cutting expenses by 40 to 50%, you may have to give up some luxuries and perks you have beco me accustomed to. It may involve taking a smaller space for your business. It may involve letting some people go. Again, I will not try to identify all the kinds of expenses you should cut or may have to cut, but you and I both know it is imperative you began this process immediately. Put away your ego; do not worry about what your peers think of you when they see what you are doing to save your business. I've got news for you, if your peers don't prepare for the new tough economic climate themselves; they won't be around. They will be out of business and probably wishing they had followed your lead. Regardless of what your peers think, don’t let ego get in the in the way of making smart business decisions. I repeat again expenses are profits; these expenses are monies which are being paid out for something or to someone. These expenses must be cut. Remember every dollar of expense that is cut will go straight to your bottom line.
The other major problem killing small businesses particularly in a tough economy is lack of fallback capital, or liquid assets which can be quickly turned into capital. Let me qualify this statement, not only is a lack of capital a devastating problem in tough economic times. It is a major reason why many small businesses fail even in good times. Capital can be compared to gasoline in a car, when the car runs out of gas it stops. The same thing happens to your business when the money runs out. I have observed countless small businesses that go under because they couldn't borrow anymore money. I've always advocated, a small business must have a war chest which are savings put aside from profits. I will explain the term ‘war chest’ later. Many small businesses that depend upon borrowing money to operate their business can be making a grave or sometimes fatal mistake. The landscape of this new economy will not permit poor financial decisions going forward. To create this emergency fund or war chess, a small-business owner must put a minimum of 15 to 20% of the net profit into this fund. You are probably asking, where is all this money, coming from. This will be the money you saved from reducing your expenses. If you have cut your expenses to the maximum as we have advocated earlier, this should not be difficult to do. You must set a final goal for the amount of this fund. The amount of the fund should be enough to operate your business for two years if you made no profit for those two years. Only you would know what your monthly operating expenses are, and what that specific amount should be in that fund. Think of the peace of mind and the mental well-being of knowing no matter how bad the economy could be, you will keep your business operating. Just think of the personal satisfaction and pride you will feel knowing you had the business savvy and business ingenuity, to make the decisions which saved your business, while other businesses such as yours are falling by the wayside. Am I telling you not to borrow money, no, I'm saying only borrow money when absolutely necessary. Many businesses borrow money, sometimes unnecessarily or just because they can, find in tough economic times they cannot pay it back which results in their failure. You must begin to work on that emergency fund or war chess now. Very few saw this economic downturn coming; or its severity, which could be the worst since the Great Depression. We now know it could last for many years to come.
I've used the phrase war chest before. Let me explain my version of a war chest. I've always compared being in business the same as being at war. Wi nners in business and in battles are the ones who are best prepared. A winner in business or in battle is the one who has the best arms, these arms in business could be the best and latest equipment and the best and most effective management techniques which are available. A winner has the best intelligence; in business this could mean having the best technology and having the people, who are able to make the most effective use of this technology. A winner has the greatest will to win, in business, this means going inside yourself and bringing out those qualities, you know you possess. Having the will to out work, your competition, you must acquire the mental toughness to persevere and have the tenacity to not give up, until the battle is won. This analogy may not fit every business or business owner. Let me simplify this, in one sentence.
The only certain winners of this battle who are going to survive and stay profitable are the businesses who cut their expenses to the bone, and have a Rainy day fund, War chest, or and emergency fund.
It does not matter what name it is known by. The fund must be there and available when needed. As a small business owner,
Here are some of the battles you must fight daily. 1. The battle to stay profitable. 2. The battle to keep employees satisfied and content. 3. The battle to make sure all parts of your business are working harmoniously. 4. The battle to find the right business formula to insure you are maximizing every aspect and every part of your business. The winner of this battle to survive will have to find a new way of thinking about his business and discover new and innovative ways of cutting expenses and maximizing profits. It is my firm belief the economic climate in this country has changed forever. You must never forget what I reiterated earlier, about the days of easy credit and buyers who just couldn't spend their money fast enough. We all must face this brutal truth, those days are gone and may never return, we must learn to conduct our business accordingly. Most of us have never seen or experienced this kind of economic catastrophe which is now taking place. As a business owner you must become much more astute in running your business in this new kind of economy. A business owner must anticipate and be prepared for problems and negative situations before they happen and be able to react very quickly when they do. Don’t be afraid to ask for help, we are entering into an unknown economic dark hole where there are only two outcomes, one is bad and the other is much worse. In the end cutting your expenses and having a war chest also known as an emergency fund, will go along way in helping you prepare for the momentous battles which lie ahead. Whatever problems and circumstances you and your business are confronted with, you and your business will come out a winner because you prepared well for the battle.
