The Small Business Recession Plan “b”: How to Create the Six-part Contingency Plan That Will Help You Guide Your Business Through the Storm

The recession of the Small Business Plan “B”: How to create the six part of the plan that will help guide your business through the storm

If you own a small business, their list of concerns seems never ending. To begin with, is consumer confidence and sales are starting to reflect that reality. And as experts predict a deep recession, it is doubtful that things start looking any time soon. Yes, you have been wringing their hands and the financial news obsessing for months, while coding to keep their customers happy and your business stronger. But action is the best antidote to the agony-and now is the perfect time to create a contingency plan for recession that will help guide your business through any difficult future.

Too often, when the economy goes south, a small business owner is paralyzed by anxiety and is unable to act quickly enough to save his company. Having devised a contingency plan in place gives you peace of mind when you hit problems and allows you to act quickly.

For small business owners, contingency planning is one of the best and most effective preventive measures you can take a down economy.

Contingency planning will allow you to make the best decisions possible for your business if things continue to worsen before improving. Even if you are an eternal optimist, after all, many of us entrepreneurs are you’ll be wise to have a contingency plan in place if, for example, one of its largest customers succumbs to bad economy, or whether face the difficult decision of whether or not to dismiss an employee.
If you’re not sure where to begin when developing its contingency plan, here is an explanation of the critical elements that you want to include:

People Plan. For small business owners, employees are often regarded as a family. This means that the most difficult decisions will have to probably deal with them. That said, it is important to remain objective in creating the “people” of their contingency plan:

1. What people are assets that are critical to maintain? Why?

2. Who can “afford” a cut in salary?

3. Who could do more responsibility?

4. Who are the ultimate guardians?

5. If you had to cut 10 percent of its workforce, thereby leaving politics?

6. How to deal with people leaving in order to generate trust, respect and loyalty of the other?

7. How to implement a people “cut”?

In answering these questions with sincerity and depth will be much easier for you to make decisions about what to do with their workforce during the slow economy. Sometimes reducing its work force, at least temporarily, is a necessary evil. Knowing that by doing so you are following a plan to help manage part of the blame if it will have to let someone go or reduce employee pay.

A key to the client plan. It is likely that your customers feel like the anxiety as you now, so it is better to handle with kid gloves. Do not and you risk damaging a relationship that will not only help you through these difficult times, but can be very profitable when things pick back up. Here are some things to consider when developing your client contingency plan:

1. Who are your most profitable customers?

2. Who are the most loyal?

3. Who should keep the long term at all costs?

4. How is the recession affecting each of your customers?

5. How can you approach them?

6. That customers have their own pressures that force it to ask for lower prices? And how should you respond? Should extend credit, make agreement on a payment plan-a, etc?

7. What can be done to attract new customers?

You and your customers are in the same boat. Face the same struggles as you. In its relations with them, it is important to find a balance between the safe management of their best interests and the management of your account. The plan will help you do that and will help you make decisions that will strengthen its relationship with the client now. When things pick back up, your customers will remember how they tried and we want to do more business with you.

A plan to reduce costs. When deciding where you can cut expenses, it is important to consider what you can do to immediately reduce costs by 10-15 percent. You should also go through your expenses line by line and consider that the costs are not necessary for survival. Be sure to involve your employees when you create this section of the plan. Why are the front line every day, can have a better idea of what can be cut. For example, you may have noticed that has a supply of paper that could be reduced. It should also include in its plan of what to do if the amount you pay to rent office space or warehouse becomes unmanageable.

Naturally, the decision to cut certain expenses will be easier to make than others. Just remember that now is the time to go back to basics. You do not need a lot of bells and whistles to run a successful business and taking a look at your expenses will help you separate the needs of the decorations.

A cash flow plan. The cash flow is essential to the life of any small business, management, and yours is more important than ever in a difficult economic period. That’s why you should include the management of cash flow in its contingency plan. There are two specific groups to consider: clients and their suppliers. First, think about how you can get delinquent customers to pay. Talk to your customers and help them establish a payment plan with you so that you know you will have paid when you need it most. Also, consider giving a discount to customers who agree to pay in cash. You should also think about how you can defer their cash outflows, such as payments to suppliers. Ask if you can go to a 60 – or 90-day payment cycle.

Maintaining a healthy cash flow is vital in a sluggish economy. You may have to have difficult conversations with clients who have to pay or a seller you want to defer payment, but if these talks will help keep the cash in your business when you need it most, which is worth .

A financial safety net of the Plan. What to do when all of its customers have paid and which has expanded its payments to vendors, and you still have cash flow problems? Just to consider more drastic ways to put cash in your business. It is time to use the financial safety net that have created for your company. What will be your safety net? Will you use the equity in your home? Stop taking a salary? Ask friends or relatives for an infusion of cash? Sell some of the assets of the company? Reduce employee salaries? Apply for a small business loan?

You do not want to be making these decisions when they are in desperate need of cash. While you are in good shape, the first plan of three ways you could increase your cash flow immediately. And do everything possible to ensure you’re protecting your credit so if you do not need a small business loan you can get one. Make sure you pay your bills on time. Do not let anything fall through the cracks. If you have problems making a payment, not to mention the company or bank know why. If there is a dispute over a payment, get something in writing that says not to blame. Becomes a collection agency will tank your credit score. They absolutely can not afford.

An exit plan. There are some situations that simply can not plan. You can not know with certainty how your industry is affected by the economy down. It is possible that no matter what the economy will slow too difficult for you to keep their doors open or too difficult for you to navigate your account.

The exit plan is the most difficult for any small business to put together. Employer does not want to give up a business, but sometimes you have to face reality. Therefore, think about what lengths you’re willing to go to in order to keep their doors open. If you are willing to accept a partner, what kind of person who will add the necessary skills for the business that will keep the doors open? Or if you decide to sell the company, who wishes to remain and continue working for the company or to go your separate ways?

Of course, take into account the time that these transitions will be made. As a small business owner who naturally have a strong attachment to their business. When you put so much blood, sweat and tears into your business can be difficult to pull the plug at the right time. If you decide what your exit strategy before they are experiencing serious problems, you can take your emotions out of decision-making process and reach a clear head to protect their interests.

Creating a contingency plan will help minimize the risk of a surprise to see that, “During a slow economy. But note there are some basic things that you absolutely can not lose focus during a recession.

You must aggressively go after new customers, marketing your business without stopping and giving its customers world-class service. Yes, these are difficult times for small business owners, but the obstacles are not insurmountable. With a plan in place, can build strong and lasting relationships with customers and a business that can weather any storm.

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About the authors:

Ed Hess lives in Charlottesville, Virginia, and spent most of his life and business advice to entrepreneurs finance their businesses. Went to college at the University of Florida and law school at the University of Virginia and graduate law school at New York University. Ed’s career was spent with firms like Atlantic Richfield Company, Warburg paribus Becker, Boettcher and Company, Robert M. Bass Group, and Andersen Corporate Finance and has built three service businesses.

In 1999, he began teaching business Ed. part-time students in the Goizueta Business School, Emory University, during which time he created and taught the course in entrepreneurship. In 2002, Ed joined the Goizueta faculty full time as Associate Professor where he became the founder and Executive Director of the Center for Entrepreneurship and corporate growth and value-based Leadership Institute.

Ed has written five books:

• Hess, Edward D. make it happen! 6 Tools for Success (EDHLTD, 2001).

• Hess, Edward. Successful Family Business: the proactive management of the family and the Business (Praeger: Westport, Connecticut, 2005).

• Hess and Kazanjian, eds. The search for organic growth (Cambridge University Press: New York, 2006).

• Hess and Cameron, eds. Leading with Values: Positivity, Virtue and High Performance (Cambridge University Press: New York, 2006).

• Hess, Edward. The Road to Organic Growth: How Great Companies Consistently Grow Within market share (McGraw-Hill: New York, 2007).

In July 2007, Ed joined the Faculty of the Darden School of Business at the University of Virginia Professor of Business Administration and Batten Executive-in-Residence where he teaches courses on small business creation and growth organic.

Charlie Goetz earned his college degree at Emory University and an MBA from the University of Texas. Charlie is a successful serial entrepreneur. He built several successful businesses, which in total employ more than 1,500 people. He sold most of their business and substantial amounts of money from their sales. Charlie then began teaching entrepreneurship at Emory University in the Goizueta Business School, where he was again a success. Their courses are always oversubscribed, and has won several teaching awards.

Today, Charlie lives in Atlanta, Georgia, and is an investor in new businesses, and several consultations with people starting businesses. His specialties are marketing, customer acquisition and product development.