It seems fair to say that some of the businesses that have succumbed to the credit crunch would have appeared to be completely safe even a couple of years ago. Although this recession has been in the pipeline for the last few years, it would have been easy until ealry last year to have the impression that the overall financial situation would be far from problematic for the foreseeable future. Things move fast however, and once one bank experiences capital cash flow problems, it is a matter of time before another reports similar difficulties, and one by one even the most seemingly secure banks start to post poor financial results. The knock on effect of this affects business in almost a blanket fashion.
The problem with a financial crisis such as the one the world is currently experiencing is that it puts a pinch on lending. A lack of personal lending hurts consumer spending, while a pinch on business lending leads to difficulties in retooling a business that needs continual improvement. As the situation gets worse, more and more businesses, both large and small, will suffer as a result. This affects jobs, which in turn affects spending, and before too long the crisis is all but inescapable. For the small business, it is a fearful time in which to operate.
The only way to be fully confident of getting through the tricky times in which we are living, and the future which will continue to be problematic for some time to come, is to take steps to recession proof your business. If you want to be sure of survival, it requires taking a close look at your figures and seeing where cuts can be made without harming your bottom line. This may mean reducing your orders from suppliers - which is unfortunate for the supplier, who needs to make a living, but essential for you. Cutting back on non-essential spending such as business class travel is never fun, but may well be a non-negotiable matter. Ensuring that you have the disposable funds to see your business through the dark days is the one and only priority.
If it is possible to diversify your output without spending excessively, you will give yourself all the more chance of negotiating a difficult time. Making yourself as attractive to potential customers - if possible, making your business essential - is something towards which you simply have to concentrate as much of your effort as possible. Never has the term "sink or swim" so completely summed up the financial reality.
Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solutions - Six Sigma Online ( http://www.sixsigmaonline.org ) offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.
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