Taking Care of YOur Business, HOW EASY?

Running a business is never easy, and it is even more difficult during an economic recession.
William Katz, University of Kansas Small Business Development Center regional director, talked to audience members at Thursday’s Basehor Chamber of Commerce meeting about how to run a successful small business. He provided some information that he said was vital to developing and maintaining a small business.
Katz said that small businesses were extremely important to the nation’s economy. Such businesses provide jobs, revenue and growth opportunity to cities.
“Mark my words, small businesses will be the ones that get us out of this recession,” Katz said.
Katz had three key pieces of advice for those trying to establish a business and keep it afloat: Practice cash flow management, never stop selling and understand change.
One of the mistakes that business owners make, Katz said, is mismanaging cash flow. He said that owners needed to keep in mind businesses can and do run out of money.
“Once you run out, you’re done,” Katz said. “If you can’t put out payroll, you’re done. It’s over.”
He recommended that small businesses spend money on things like technology, customer service, hiring and marketing. He advised against shelling out money for fancy furniture, rent and useless gadgets.
Part of keeping cash flow in check is also establishing a solid line of communication with the business’s credit facility, Katz said. He encouraged owners to initiate conversation with their bankers.
“Don’t wait for them to call you,” he said. “If you’re late on a payment, if you’re running behind, bankers can do a lot for you, but they’re less willing if they have to call you.”
An effective way to approach late payments, he said, is to create a set procedure for such payments and for accounts receivable. Katz said that scrounging for funds at the last minute was a terrible situation.
“Don’t fall into the trap of dialing for dollars when you need them,” Katz said. “You have to follow procedure to make sure you have your money when you need it.”
Managing inventory is another way that small business owners can control cash flow. Katz said that many businesses spend too much money on inventory. He suggested rearranging inventory schedules to make sure that no money was wasted on unnecessary inventory and that customers were still seeing new items.
Selling the product is essential for success. Katz said that one of a business owner’s highest priorities should always be the top line, revenue earned. He said owners needed to set goals, create milestones, and most of all, communicate within the company.
“Everyone in the business should know the revenue goals and if those are being met,” Katz said. “It’s such a mistake to not inform people. If you all of a sudden need to change things or lay people off, no one knows why, and they feel deceived.”
To ensure consistent revenue, Katz said the focus should be on the organization’s competitive advantage.
The secret to a sustainable competitive advantage, Katz said, is effective marketing. He said businesses needed to examine the efficiency of marketing before cutting back.
“Always ask people how they heard about you,” he said. “It’s so simple, but it tells you a lot. It tells you what’s working. Whatever’s working, do more of it. Whatever’s not working, throw it out. That’s how you save money and make money.”
Katz said that small business owners needed to remember that nothing stays the same. He said it was necessary to always move with change, not against it.
“Get on the leading edge of change,” he said. “Don’t just sit there and watch it happen, watch other people make money off of it. Change happens. Technology happens. Embrace it.”
Bottom line, Katz said, small business owners have to plan.
“No one plans to fail, but a lot of people fail to plan,” he said. “If companies do some effective planning, manage their cash flow, keep on selling and accept change, they will be well-positioned in the marketplace as we move into the future.”

THE PLACE OF CONFIDENCE IN BUSINESS

Being in business takes confidence and courage, especially in times like these. Buyers aren't buying. Lenders aren't lending. Everyone delays making decisions, because everything seems so uncertain.

How do you — how do I — as a business owner survive and thrive in uncertain times?

At times like these, it may help to recall the old saying, "I complained I had no shoes until I met someone who had no feet." As bad as it may be to be self-employed right now, it's probably far worse to have an uncertain job. There are lessons to be learned by remembering exactly why you're in business for yourself and, indeed, how much better off you have it than those people who are waiting for the corporate office to decide whether they'll still have a job next month.
Like virtually every other businessperson, I'm also facing uncertain times. I'm in an industry undergoing dramatic changes and unprecedented threats — book publishing. In case you haven't heard, there's something called the Internet where lots of people now go for information when they used to buy books. And my books are sold in bookstores — like the one down the street from you that's now closed.
Here's what I reminded myself of the other day: I can do something about it. No, I can't change the industry dynamics. But as a person who owns a business or who is self-employed, I can make decisions, take actions. I can help shape my economic destiny. Sure, I don't have complete control — I may have to make major changes in my business, my expenses, the nature of my work — but at least I can do something to help keep my business alive and my employees keep their jobs. (Because, believe me, laying someone off is not something any responsible business owner wants to do.)

I compare my reality to people who have lost their jobs or are waiting to hear whether they're going to lose their jobs. It's not that they have no control over their destiny, but they don't have nearly the day-to-day sense of empowerment that I do — or that you can, for that matter.

In fact, thinking about all the people I know in limbo — wondering whether they'll have a job or not — reminded me of when I first started my business. I lived in a three unit building (a charming Victorian in San Francisco!), and in each of the other two units were single men who worked in one of the nation's largest banks. When I decided to leave my secure job and open my own consulting practice, they were both very concerned: "It's so risky. It's so insecure. It's financially dangerous."

But every day for the next two years, I watched as the bank they worked for was first threatened by a takeover and then was sold. Every day, my neighbors shared their worries over whether they'd have a job, whether they'd have to move away. Meanwhile, every single day, I woke up and went to work creating my own future.
Within two years, they both lost their jobs, but all these years later, I'm still in business. Not the same business exactly — I've had to make changes, evolve. I've had major set-backs and financial scares. But every day, I could go to work and take some measure of control of my destiny.

I don't usually use my column for such long personal TRANCES. I do so now to remind YOU of what it means to be in business for yourself. It means that every single day, you can go to work to make something happen. You may have to work harder to make a sale. You may, like me, have to find new business models in a changing industry. Or, you may have to change the nature of your business altogether.

But I have survived downturns before. I know that many of the strongest businesses were founded during depressions or recessions. I know that I — and you — can survive, thrive.

Uncertain times require you to be certain about something — that you are fortunate to be able to take some measure of control of your destiny. That's what being in business for yourself is all about.