Whether you’re a freelancer, an entrepreneur or a small business proprietor, 2009 promises to be a year of challenges. We still can’t see the bottom of the global financial downturn, credit is going to be much scarcer, and many of the businesses we deal with are going to be tightening their belts in an effort to lower their costs. Nevertheless, there are steps you can take to start 2009 with a sure footing.
1. Examine your Cash Flow
If you’ve been in business for more than 18 months, cast a sceptical eye over your books. Even if you’re not facing an audit, it is always a good idea to know how much you’re spending, and on what. Check to see if there are any periods of time when you spend more money than usual, or if there are periods where your activity drops to nothing. Use this information to plan ahead. Remember to make hay while the sun shines, and to hoard when the well runs dry.
2. Cut your Costs
So you started your business when the times were good and you took whatever deals were available. Don’t worry: you may be looking to cut costs, but businesses are also looking to hang on to their customers. First, approach your current suppliers and ask them if they are willing to offer you a discount if you continue to trade with them. Next, if they are unwilling, start shopping around. Provided you are not operating in a niche where there is only one specific supplier, you are almost guaranteed to find a business who is willing to offer you cheaper terms. Unless you are so slick that you have already found the cheapest supplier for the quality you demand.
3. Build Up Your Emergency Stash
This is what is known as your “contingency fund,” or your “miscellaneous expenses.” Either way, put as much money aside as you can afford. This is the fund of last resort, the piggy-bank you turn to when the banks, your venture capitalists, your relatives and even under your sofa have proved to be inadequate. Do not think of it as spending; the only time you will touch it is when you think that your business is going to go under. Every business or entrepreneur needs something to fall back on, and the landing will hurt less the bigger the cushion you can rely on.
4. Become the Life and Soul of the Party
While it may seem counterintuitive to be throwing yourself into social events as the world around you burns, it is actually a good self-preservation strategy. Not only do you need to make sure that the suppliers and clients that you already deal with are on your side, but it is also a good idea to develop some new ones, just to make sure that you still have money coming in. So go to the industry parties, sign up to the local directories, and make sure that you always have some fresh business cards ready to give out. You never know: your next casual meeting could end up supporting you throughout the downturn.
5. Consider a Change
You may have gained some experience and expertise in your current position. You might see that your industry niche may not survive, or that there are too many competitors have entered the market. So, why not consider a change? If you have any transferable skills, think about the sectors where they might be useful. If you have struck out on your own, think about all the things you have learned that might be useful later on, either at somebody else’s company or in a new venture of your own. Walking away is not defeat, it is simply recognising that you have done all you can. If you cannot progress any further, prepare to do something different.
I am not willing to make any predictions for what will happen or how businesses will fare in 2009. As far as I’m concerned, it is going to be a rollercoaster and not everybody is going to be wearing a seatbelt. But, provided that you take the appropriate action, you may be one of the lucky few cheering in twelve months’ time, rather than weeping for lost opportunities.
[Image by AndreaKW]