Tips on how to make it through tough times

Even in tough economic times, businesses can be successful if they follow a few simple guidelines.

RECOGNIZE THE SITUATION: Make a plan and anticipate. Prepare a worst-case monthly cash flow scenario. Assume a 10 percent to 20 percent drop in sales revenue, and identify what changes you would make and when. Be proactive, not reactive.

CONSERVE CASH: Control inventory. The last thing you want in a slowdown is to be stuck with needless inventory. Collect receivables. Reduce costs. Lock in prices for supplies.

CUT COSTS: Re-examine your business. Where can you save dollars? Reduce overhead. Keep operating expense as low as possible, especially fixed expenses that occur repeatedly such as rent and utilities, and are not reduced by slow sales or revenues. Renegotiate contracts and leases. Eliminate unprofitable customers unless you can make them profitable.

INVOLVE EMPLOYEES: They usually have great ideas when you involve them. Set targets and communicate with staff. Offer vacations and time off as incentives.

FOCUS ON SERVICE: Retain existing customers. When money is tight, customers expect more for their dollar, so be prepared. Service can add value without costing money and can be as simple as clean restrooms, courteous staff, eye contact or a handshake.

INTENSIFY MARKETING: Advertising must be focused and targeted. Intensify public relations, networking and community involvement. Use e-mail, blogs and online newsletters.

DIVERSIFY CUSTOMER BASE: Re-examine your customer base, then refocus products and services.

EXPAND YOUR BUSINESS: Take a look at the competition. If they are in trouble, you may be in a position to pick up that business at bargain prices.

MAINTAIN A HIGH CREDIT

RATING: Business borrowing often depends on personal credit. Curb spending. Don’t give banks a reason to charge you more for being late.

STAY FOCUSED: Keep an eye on long-term goals and objectives.

SOURCE: CARROL R. PRUETT, DIRECTOR RABOBANK, N. A. PRUETT OFFERED THIS ADVICE TO BUSINESS OWNERS AT THE ANNUAL TRI-CHAMBER OF COMMERCE MEMBERSHIP LUNCHEON EARLIER THIS YEAR.