While the official determination has not yet been made, the economy has definitely seen better days. Small business owners not only have to contend with higher prices that affect their bottom lines, but also a tightening of consumers’ spending habits as they try to wait out the current market. Even if a recession does occur, smart business owners can survive it; here are a few steps you can take financially to protect yourself against a slowdown.

Revisit your budget. The government’s most recent survey on the Consumer Price Index showed that an increase of 5.6% in the past year. Now is a great time to review your budgeted costs to ensure that they are on par with today’s reality. For example, while gas prices have recently declined, August’s national average was still $.75 per gallon higher than it was in December 2007, according to Consumer Reports.org. If you find that you have underestimated your expenses, be prepared to temporarily trim some non-essential items from your budget.

Review your accounts receivable. While profits may still be healthy, the success of your business relies heavily on having enough cash to pay your bills on time, especially now that creditors are tightening up on their lending practices. Keep a close eye on your accounts receivable aging list, and call to check on outstanding payments on a regular basis. Not only will this “remind” your customers to pay their bills in a timely manner, but will also help you gauge whether or not you can afford to keep providing the slow payers with your products or services.

Secure your lending relationships. Make it a priority to meet with the business services consultant at your financial institution. While credit is still available for small business owners, you’re going to have to work harder for it now than in previous years. You want to do everything you can to show that you are determined to be a good borrower and are a low risk for default. In preparation for your meeting, make sure your financials are clean and up-to-date. Think of it in terms of a job interview: with limited funds available for lending, you want to stand out as the most qualified applicant.

How are you surviving the current economy? Let us know if you’ve found success with any of these tips, or have others you’d like to share.

This entry was posted on Friday, October 24th, 2008 at 5:16 am and is filed under Business, Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.