There has been a lot of attention in the media lately on the downturn in the economy and what it has meant to small businesses across the country: stories of businesses closing, employees losing their jobs and even homes, as well as the domino effect on other businesses caused by one company’s failure.

So what is the reality of what is happening to small businesses? How are they really faring in our region? What is being done to help business owners avoid the potential loss of their companies?

The Small Business Development Center (SBDC) and the Minority Contractors Business Assistance Program (MCBAP) at the Toledo Regional Chamber of Commerce help business owners every day to communicate with their lenders, find possible solutions to financial issues and even identify potential new markets.

Since the beginning of 2009, the majority of clients coming in for no-cost confidential business counseling are existing companies. They are businesses that are facing serious peril in the economic crisis. Assistance is available. But the responsibility of facing the problems head on and asking for assistance lies with the business owner.

There are steps that business owners can take to help protect their businesses in these times and ways to be proactive in looking for new opportunities. But the first step is in taking a hard look at their companies and a reality check of where they are and what steps need to be taken.

Know your financial situation. Make sure you are up to date on all your books. Perform due diligence on your finances. Submit your financials to your bookkeeper or accountant in a quick and timely manner. Know when your money is coming in and going out. Ensure that your tax returns have been filed on time. All of your paperwork must be in place so you have an accurate picture of your financial situation. Business is moving quickly and you must know where you are so you can react quickly.

Communication is key. Many times, business owners facing financial difficulties are afraid to interface with their lenders and avoid contact with them. But lenders want to hear from their clients. It is much easier to negotiate and work out a solution with your lender when you have established a relationship with them.

For business owners who are extending credit to their customers, do you know if your customer is still credit-worthy? Lenders take steps to find out but many small businesses do not. If you have extended credit to a customer beyond 60 days, there is a possibility you will never be paid. Review carefully how you extend credit to customers.

Employee theft is on the rise. Desperate people, even longtime trusted employees, can steal in desperate times. Make sure to have proper checks and balances in place to protect against theft.

No one employee should be opening the mail, making all the bank deposits and signing checks without review.

What are you doing to better your company and find new markets? Do you know what your North American Industry Classification System (NAICS) code is for your company? Your NAICS code can help identify your competitors. You then can research how well they are doing or if they are still in business, who is buying from your industry and how to reach out to new markets.

A valuable resource is the Business and Technology Department at the Main branch of the Toledo-Lucas County Public Library. They can help you identify your NAICS code and research your competition.

Evaluate where you make money. While it seems contradictory to suggest firing a customer, sometimes you must evaluate how much you make from a customer versus the return.

Business owners must maintain their own health and well-being. The stress of a business in crisis can be devastating and unless you are healthy, you cannot make the efforts to get your business healthy.

Most of all, know you are not alone. There are solutions. The key is to not be afraid to reach out and ask for assistance. The staff at the SBDC and MCBAP can help you communicate with your lenders, take financial inventory and find new possibilities. By taking a reality check and facing your business issues head-on, you can give your company the best chance of surviving this economic crisis.

Bill Wersell is director of the Small Business Development Center. Contact the SBDC or MCBAP at the Toledo Regional Chamber of Commerce at (419) 243-8191 or www.toledochamber.com.

This entry was posted on Friday, July 24th, 2009 at 12:00 am and is filed under Guest Column, Toledo Business Link.
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