The consumer price index is rising towards, and by some measures surpassed, levels that we have not seen in the country in 40+ years. The Fed has responded by raising interest rates in an attempt cool off the economy. Where we go from here is up for debate but there are things you can do right now to better position your business regardless of whether we are simply riding a short term wave or we are running headlong into a financial tsunami.
Connect with your business banker and assess whether or not they are the right fit for you and your business. Are you having conversations that are meaningful and centered around your company’s performance and maximizing your potential? If not give our PyraMax Bank Business Bankers a call immediately.
Your banker is a great sounding board to run through “what if” scenarios and assess the probabilities of all those possibilities happening. In short, is your business prepared if the following occurs: What if your suppliers costs continue to rise and this flows to you? What if your customers need to cut spending and your business is affected? What if your landlord refinances their loan and needs to raise your rent? Potential scenarios are seemingly endless but think through those that could have the largest impact to your business and have a contingency plan.
Connect with your suppliers and solidify those relationships. Trade credit is almost always the cheapest form of credit for business owners. Make sure you are in the loop with any potential changes that they may be going through and make sure your positioned to flex appropriately with any of those changes. Conversely, make sure that those your have extended trade credit to remain in a position to pay you back in a timely manner. It is often the “squeaky wheel” that gets the most attention so remember to stay in regular contact with your customers that start to slow their payments.
Finally, look to maximize your cash flow and profits by optimizing your financial management. A customer of mine said during and in the wake of the last recession that it was more important then than ever to be on their “A” game by being aware of where their pennies were flowing. Business owners often have a number of different financial levers that they can pull to maximize cash flow even when profits are squeezed. One resource that clients have found of value is an online course called Profit Mastery. Profit Mastery helps business owners drive better performance by teaching the following (and more):
- Diagnose and monitor your company's financial performance
- Use Break-even analysis to make better decisions relating to cost, price, and profits
- Avoid cash crunches and increase cash flow
- Plan for and manage growth
- Communicate more effectively with bankers and other financial professionals
- Structure a loan that's the right fit for your business
Profit Mastery’s website can be found here.
There essentially is never an “easy” time to own and operate a business, but some times are easier than others. With what has been thrown at business owners and the entire globe over the past few years it is safe to say that we are facing “hard” times. It is our job at PyraMax Bank to help you navigate through these difficult waters with a steady measured approach. If your current bank is not helping in the same way, we would LOVE to hear from you.
By Eric Hurd