5 Steps to Side-Step a Crunch in Your Business
You’ve been reading about the credit crunch as it affects on the biggest banks and the lower credit home owners in the country for the past several months. This week you’ve been reading about stock market turmoil and the fear of a “global recession”.
This economic storm has worsened recently and in the next 30-45 days you’ll begin to feel the effects in your business in one (or more) of the following ways.
- Slower paying customers
- Reduced consumer demand
- Disappearing personal and business credit
- More conservative business spending
- Better buying opportunities
Counter to press reports, recession is not necessarily bad. In fact, it is a normal and regular economic cycle. A slowing economy does, however, seem to finish off weaker businesses and it will weaken even good businesses.
If you resolve to survive the next one or two economic quarters of “slowing economic growth” then you should consider the following steps to protect your business now and position it for a stronger post-recession future.
- Take steps now, regardless of current need, to arrange for additional capital. Increase credit lines, get approved for additional credit cards, establish credit with vendors, and pre-qualify for merchant cash advance. Whatever the source, take steps now, before your capital needs increase or your credit standing decreases.
- Confirm existing credit terms and amounts. Citi Bank recently announced that it is “re-underwriting” existing credit it already has extended to both business and consumer borrowers. Many Citi Bank clients will discover they do not have the credit amount they thought they had.
- Merchant Cash Advance has been a working capital source for thousands of business owners over the past several years and will now have a great opportunity to move out from the shadows as an excellent financial tool for small business owners. Understand this marketplace and be a wise consumer. (Free merchant advance report).
- Whenever possible, have customers pay in advance or on credit card. If you do not accept cards, apply to accept Visa and MasterCard now. You’ll be surprised how many business customers will use credit cards and how much accepting them improves your cash flow.
- Take advantage of renewed buying power. In slower economic times, buying opportunities are more available. If you’ve arranged credit, keep an eye out and ask about better terms and prices if you are able to buy more aggressively.
Recession is a normal economic cycle and this one may last for several months. A recession will likely eliminate some of your competition and leave you financially stronger with greater opportunities in the future.
{ 2 comments… read them below or add one }
It’s been about 90 days since this blog article was written. I’m curious if people have experienced the predictions that the author has made? (To me, things don’t really seem to be worse, although there’s been lots of fluctuation in the markets).
Bob:
We’ve seen a lot of validation to this crunch in particular industries.
Business owners tell us they continue to have a harder time accessing capital from home equity lines and credit cards. Traditional bank lending has become even tighter as confirmed my almost all of the larger banking companies.
Additionally, merchant cash advance companies are seeing sales rise significantly even as new funding companies continue to enter the business.
I’d be real interested to hear observations from others and what you are seeing from your site?
TT