6 Tips for Surviving This Economy

For anyone in custom electronics, keeping up with fast-paced change is hardly anything new. There have been plenty of turns to keep you on your toes — from the battle for HD disc supremacy to advances in home security and wireless networking.

But when it comes to keeping up with turns in the economy, even those familiar with rapid change can feel a little daunted.

Today, business owners in all industries find themselves pressed to keep up with uncertain economic conditions and the rising costs of doing business. According to Small Business Monitor, a semi-annual survey of business owners conducted by American Express Open, these two concerns were most cited as the greatest challenges in growing a small business.

But even in the fast-paced times of an economic downturn, there are opportunities to be had — if you're prepared to take advantage of them.

The following tips will help you assess where you stand and help you prepare for the surprises and opportunities the current market sends your way.

Plan for Challenging Times

It's certainly important to keep up on the economic and market realities around you, but mere knowledge isn't necessarily enough to help your business. The real difference in who weathers the storm well and who doesn't often boils down to one factor: planning.

Although no one sets out to fail, business owners sometimes don't have explicit enough plans to help them avoid failure. The trick is to not only recognize your challenges, but also create a plan.

Put challenges — and potential solutions to them — in writing. Take the time to write down 10 specific challenges or dilemmas that your business faces, along with some possible solutions that could help you overcome them. The more specific you can be, the better.

No doubt some of your challenges will immediately be obvious, but others may involve “what if” scenarios. For example, what if the vendor you rely on exclusively for a specific product raises prices or, worse yet, goes out of business? What will you do? What if your landlord refuses to renew your lease? Where will you go?

The relatively short amount of time that it will take to ponder big challenges could make all the difference.

Reassess Budgets, Expenses & Credit Terms

As the saying goes, cash is king — particularly in a slow economy, when business is uneven, profit margins are slimmer and payments are slow to arrive. Take a look at how successfully you predict expenses. Are you leaving enough leeway to cover the unexpected?

While running a little over budget in one area may not be a crisis, doing so consistently in several areas can quickly drain cash from a business. Few things go as planned. So, budget pessimistically by allowing for a little extra time and money. A little padding goes a long way in helping to accommodate the unexpected turns the economy may take.

You should consider cutting back on recurring expenses wherever possible. Look at your business relationships and obligations. There may be room, for example, to renegotiate a variety of contracts and agreements, such as leases or services.

One possibility is to try to renegotiate payment terms with trade terms that reward early payment with a small discount. You may also be able to negotiate slightly longer payment terms that will enable you to hold on to cash a little longer. The better your credit and the better your relationship with a vendor, the more likely you are to receive these benefits.