Recession-Proof Your Small Business
These five strategies can help women business owners weather the economic storm.
Times are tough, especially for small businesses – and extra-especially for women-owned businesses, 97 percent of which bring in less than $1 million a year. But it's not hopeless – if you know how to brace yourself to survive the worst.
"No matter what size business you have, you're undoubtedly feeling the stress of today's economy," says Beth Wood, assistant vice president of business and women's affiliation marketing at Massachusetts Mutual Life Insurance Co. (MassMutual). "This is a time when business owners need to re-examine what they're doing today while also preparing plans for tomorrow's rebound."
Here are five strategies to help keep your company strong:
1. Revisit bank and credit card fees, shop for overhead services and lease instead of buy. Re-examine bank and credit card processing fees to find more competitive rates. Review the cost of your overhead services – such as payroll and printing – to determine if you can save by switching vendors or negotiating more favorable pricing or additional services from your existing ones. It's a great economy in which to bargain! Also consider outsourcing some functions – like HR, IT and more. Plus, leasing equipment rather than buying it enables a business owner to hold onto cash while still growing her business.
2. Diversify into a complementary business. A bad economy often causes business owners to retreat into their core business, but in doing so they might be missing a chance to leverage existing infrastructure. For example, a coffee shop owner might be able to grow revenue by launching a catering business. Are there additional services you can offer that give you an advantage over your competitors – or even just an additional revenue source?
3. Make your benefits plan work harder for you. Add voluntary benefits as a low- to no-cost way of rewarding employees. And consider tapping into your whole-life insurance policy's cash value if stuck for credit. Many businesses hold whole-life insurance policies for a variety of reasons, including key-person insurance, succession planning and buy-sell arrangements. If no policy already exists, consider buying one now to address strategic-planning needs while creating cash value that you can tap into during a future credit crunch.
4. Determine the value of the business – and develop an exit strategy and succession plan. Undertaking a business valuation is an important but often overlooked part of strategic business planning. Knowing how much the business is worth – and what it can bring in sales – is important for a host of reasons, not the least of which is preparing for a sale, whether desired or necessary, or if you are approaching retirement and counting on the sale of your business for retirement income.