Small Business Survival Tips

December 15th, 2008

As the Federal Reserve contemplates another interest rate cut, possibly to an all time low, small businesses face an economy that continues to sink deeper into a recession. The hope is that this action will help halt the downward spiral by reducing borrowing costs and enticing consumers and businesses to spend more. So far, unprecedented federal actions have not broken a vicious cycle created by nervous banks who are reluctant to lend and consumers who have lost their investments and fear for their jobs.

According to an Associated Press report yesterday, employers cut 533,000 jobs in November alone, driving unemployment up to 6.7 percent, and 2 million jobs have been lost since the start of this recession, with analysts predicting an additional loss of 3 million jobs between now and 2010. General opinion is that an interest rate cut tomorrow will do little to turn the economy around at this time, and small business should expect to face a challenging environment for some time.

In the meantime, there are many actions for small business owners to consider that may help them weather the storm. Professionals are offering advice about everything from operations and marketing, to finding loans, to managing existing lines of credit, to finding support services.

Operations and Marketing

1. Emphasize customer service
2. Cater to your best customers
3. Target higher income customers
4. Offer innovative products at competitive prices
5. Have efficient operations and cut costs where you can—avoid overstocking and overstaffing
6. Increase, rather than decrease, your marketing
7. Utilize an online strategy

Loans and Alternatives

1. Go to smaller community banks instead of larger banks for loans
2. Try credit unions
3. Consider private lenders, non-bank companies
4. Look into microlenders (nonprofit lenders)
5. Consider peer-to-peer loans
6. Research barter exchanges
7. Look into merchant cash advances
8. Apply for business credit cards

Credit Management

1. Don’t use too much of your cash to pay down debt right now; you might need it if an existing credit line is reduced or eliminated.
2. If a bank makes adverse changes to your credit terms, try negotiating and threaten to take your business elsewhere.
3. Look for a business credit card with better terms and transfer balances if necessary.

Support Services

1. Locate an SBA Small Business Development Center near you here
2. Contact SCORE, another SBA resource partner