Entrepreneur's Journal: What does the financial meltdown mean for your business?


This week, I received a number of calls from friends and family about the incredible events in the financial markets. I've tried to be optimistic, but it wasn't easy. Every day, there seemed to be a new avalanche of bad news.

So what does this all mean for your business?

Well, I think it's critically important to be careful and conservative. Basically, assume the following:

  • It's going to take longer to raise capital -- and the terms will be tougher.
  • It's going to take longer to get customers.
  • Oh, and customers will take longer to pay you (and that's assuming they actually do pay you).

In other words, you need to find ways to manage your cash flow. You can use some nifty online tools, such as NetBooks. There are also some great books on the topic, like Tim Berry's The Plan-As-You-Go Business Plan.

And another thing: Be sure to focus on your existing customers. In tough times, it can be easy to lose them. And, of course, it's always expensive to get new customers.

But there is a balance. "Make sure the customers are making efforts to pay in a reasonable time," said Ridgely Evers, who is the founder of NetBooks. After all, it can be costly to finance your customers' spending habits.

At times, it may be tempting to delay paying your own bills. However, this can result in bad relations with your vendors and may even hurt your company's credit.

Finally, I would try to raise some capital. This will certainly be tough, but you can make the case that there will be lots of growth when the economy gets back on track. With a decent amount of capital, you can snag qualified employees and invest in R&D. You may even be able to buy an ailing competitor at a great price.

It's scary stuff. But often it's times like these when opportunities are the most compelling.

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Symbol Lookup
IndexesChangePrice
DJIA-89.2312,801.23
NASDAQ-23.352,903.88
S&P 500-9.311,342.64

Last updated: February 13, 2012: 03:23 AM

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