Making predictions is never easy, especially for small business owners and managers. Unlike their larger counterparts, small firms don’t always have the resources necessary to monitor and adapt to new consumer trends or economic changes. Even entrepreneurs who’ve experienced numerous business cycles face new circumstances that confound their instincts and knowledge.
It’s important at the beginning of a new year to assess the economic landscape and determine the best course to grow and expand your business. While there’s no crystal ball to accurately predict the future, small business owners can take steps to help their companies endure the worst of times and take advantage of the best of times. As the economy continues to move beyond the COVID-19 pandemic, it’s a good time to perform a top to bottom assessment to determine if your business is ready for the challenges and opportunities ahead.
Step one: Strengthen the relationship with your lender. Knowing your lender not only builds trust, but also enables them to better understand you and your business. Discuss your company’s overall financial health and take advantage of their expertise. Have them review your year-end financial statements and offer an honest evaluation of ways to stabilize your cash flow position in 2023.
Step two: Strengthen relationships with creditors.
It could be time to renegotiate terms or change payment amounts on overdue bills. Past due accounts payable and inconsistent payment practices won’t help your long-term credit position. What’s more, your creditors could be experiencing financial difficulties as well. Any flexibility will hinge on whether they perceive you as a reliable partner or risk they want to eliminate.
Step three: Keep a close watch on your accounts receivable. Review who owes your company money and make sure they’re meeting all terms. Be firm when dealing with problem accounts, but remain willing to negotiate when appropriate. With a little encouragement, a struggling customer could become a long-term source of income. Remember, the longer an accounts receivable ages, the harder it becomes to collect on that debt.
Step four: Conduct a cyber hygiene checkup. Review and renew your cybersecurity policies, even if you’re a one-person business. It’s critical to update passwords, software and hardware to make sure they meet compliance standards.
Step five: Ensure you’re up to speed on your human resource policies and practices. HR encompasses employment status, benefits, wages, contractor versus employee and more. Failing to abide by state and federal laws can result in fines, penalties, possible legal actions and a stain on your company’s reputation.
Step six: Increase your marketing efforts. Many business owners mistakenly see marketing as a luxury when money is tight. This is the time when increased marketing could be needed. Promoting your business not only reassures current customers you’re still there to serve them, but also reaches new consumers who can grow your business today and in the future.
At the start of a new year, a business health checkup just makes good sense. Several resource partners can help, including local chambers of commerce and economic development organizations. That’s not to mention the network of Small Business Development Centers, including the center in Grand Junction.