Several weeks ago, I discussed starting your business in a recession and also mentioned a few famous companies that launched during economic slumps. So if you’re thinking about starting a business, don’t give up just because the economy looks bleak. But, do make decisions now that will help you succeed.
Read more about succeeding during a recession. I’d love to hear your stories of how you made the transition from employee to entrepreneur. Or, if you have specific questions about transitioning, please leave a comment below.
Upcoming Small Biz Contests
Intuit Biz Story Competition
Grand Prize: $25,000 grant and $2,500 in products
Deadline: March 23, 2009
Dell Small Biz Contest
Grand Prize: $50,000 in Dell products and services
Deadline: April 3, 2009
Women 2.0 Startup Competition
Grand Prize: Win a meeting w/ Michael Moritz (Sequoia Capital) and more
Deadline: April 10, 2009
-Jacalyn Barnes, SCORE
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Q: How do I cut my business costs during a bad economy?
A: Look at both fixed and variable expenses and start cutting variable expenses. Your variables are discretionary items. For example, you may postpone an equipment purchase or the launch of a new product. Continue to spend on critical marketing expenses. You need to promote your business. Look to cut costs that don’t produce a sale or drive client service.
Your fixed costs are overhead items, such as a lease, phone service, etc. You have to have these items. The key with fixed overhead is to ensure that you are getting a competitive rate and not paying any more than you absolutely must.
The first step in good financial management is to really understand how your company is doing financially. If you don’t have a Profit and Loss Statement and Cash Flow Report–gather your info and get these reports. You can meet with a SCORE counselor near you to help get an understanding of what these reports are and how to use them.
The second step is to get your financial record-keeping in a system that holds your data and makes it easy to use a menu and select a report that auto-generates. You might use Quickbooks or another accounting software that puts a system in place for consistently tracing your expenses.
The third step is to know your target. Ask yourself, “Am I on target?” A savvy entrepreneur knows the numbers, because sales, cash flow and profits are what the success of business comes down to in a bottom-line way. In this economy, you can use financial reports to closely monitor what’s happening in your business.
For help with financial management or reporting, contact a SCORE business mentor. Find SCORE near you or Ask SCORE online. Also, check out SCORE’s Business Tools and Template Gallery. If you have a question, post a comment.