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By: Thomas H Judge, EA, RFC

So, things are tough.  Sales are down, customers are not paying you. Your stretching your payables as far as you can, you cant sleep at night.  When will it all end?

Not soon enough!

Small business owners not only need to run their businesses, they need to spend time managing their business too.  You must learn how to run the business, not let the business run you!

How do you do that?  What can you do?

1.        Raise your prices and/or fees.  When was the last time you raised your price or fee?  Sure, you may be passing on vendor price increases, but what about your overhead items?  Your employee benefits go up, insurance goes up, the rent goes up, utilities, freight & postage, professional fees, etc.  If you do not raise fees or prices at least once per year, then these overhead increases are being taken right out of your wallet. You have to cover these cost increases.  I know what youre thinking, I cant raise my prices, and my customers will stop doing business with me and go somewhere else.  That mind set is all in your head.  Never try to assume what a customer is thinking.  Price is not the only factor why customers use you.  The point is you have to charge enough to cover your costs and make a small profit.

2.       Do you have a sales and marketing plan?  Is it in writing?  If its not written down, it doesnt count! What methods do you use to find and get new customers?  How do you know its working?  How do you measure the results? Can you think of new ways to attract new business?  Write them down and then start initiating the new plan.

3.       Control your receivables.  Do you establish credit limits for customers and monitor them?  Do you have an aged accounts receivable that you check weekly?  Stay on top of people who are getting behind.  You are not a bank!!  Make sure your terms of payment are clear and that everyone understands them.  Enforce the terms.  Keep on top of slow payers.

4.       Watch your own accounts payable.  You want to make sure that you do not hurt your credit rating.  Do not spend cash for the purchase of fixed assets; finance them so your cash remains free.  To get you over short term cash crunches, get a line of credit.  Lines of credit are used for short term borrowings, term loans and leases are used for long term borrowing.

5.       Develop a realistic budget and monitor it monthly!  The process of developing a good budget gives you better insight and control over your business.  Sure, it takes work, but it will be worth it in the end and you will have a better understanding of income, expenses and cash flows.

6.       Meet with your accountant at least quarterly and discuss problem areas with him or her.  Even if he has the numbers to look at, only you know what the real every day issues and problems are.  Talking with a professional helps to focus on solutions and new ideas to solve these problems. Share your concerns and anxieties, dont keep them bottled up.  The answers are almost never simple and probably require time & effort on your part.  Thats part of owning and running a business.

7.       Do you have the appropriate number of employees, and the right employees, to get the work done?  Good employees are becoming harder to find and they cost more.  Personnel issues are one of the biggest challenges employers have.  In New Jersey it is even more complicated because of the high cost of living.  Employees need more money to survive here.  They also want benefits.  If you are going to pay people a decent wage with appropriate benefits, you have to find the right ones.  This is another reason you have to review pricing and fees.  Hired help is expensive here!


When times are good and there is money in the bank, no one seems to care about management and procedures.  Well, thats not right.  If you are in business long enough, you know that economics go in cycles.  Nothing lasts forever, good or bad.  The question is this:  Are you going to run your business or are you going to let your business run you?


By the way, if you have not taken at least a ten day vacation in the last several years, you are doing something wrong.  Fix it!  Successful business owners have a balance in their lives between the time they spend on personal issues and time spent on work.


Recognize the problem(s), figure out how to fix them, make a plan and then take action.  In tough times you have to take the initiative, roll up your sleeves and do something.  Taking action starts the process.


Develop a plan today and take action now!


Thomas H Judge, EA, RFC

Century Business & Financial Services



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