Appendix A: Staying in Business Tips

Despite the best of intentions, many small businesses run into serious difficulties, and many of them are forced to go out of business. Many successful businesspeople have previously experienced business failures. However, they learned from their experience and ultimately established a winning formula. The following is a list of tips to help you avoid potential problems and to stay in business through both the good and tough times:

1. Keep good business records. These records tell you where your company stands at all times and form the basis for good business planning and decision-making.
2. Make a realistic budget and stick to it. Make realistic projections of how much revenue your business will generate, and keep expenses in line with those revenues.
3. Make realistic cash flow projections. Plan carefully for how the money will flow into (revenue) and out of (expenses) your company.
4. Keep debt load manageable. Borrow only the amount of money you need to keep the business running.
5. Protect your cash by renting or leasing such things as property, machines, equipment and vehicles.
6. Cultivate and maintain long-term customers. In tough times, these are the customers you will depend on to keep your business viable.
7. At the same time, diversify your customer base as much as possible. Avoid staking your future success on the viability and loyalty of a few customers.
8. Customer service is key to business success. Establish high product and service quality standards and guard them fiercely, even as sales increase and you are scrambling to meet new demand.
9. Keep a close watch on your competition, including their pricing, service, and marketing policies. Learn to anticipate and to respond, if necessary, to the moves of your competitors.
10. Keep a close watch on the overall market for your product or service. How can you adapt your product or service to the changing demands of the market?
11. Keep a close watch on your inventory. Poor inventory control will result in too much capital being tied up in inventory.
12. Keep a close watch on both accounts receivable and your credit policy. Bad lending decisions will result in too many overdue or delinquent accounts receivable.
13. Look for innovative and inexpensive ways to promote and to advertise your product or service.
14. Regularly reassess the number and quality of your employees. Do you have the right number of staff with the right skills and attitudes?
15. As your business grows, delegate more. Use your employees' skills and protect your own time for key decisions and activities.
16. Have a clear succession plan in place. Be prepared for the eventuality that one of your partners or key personnel will leave the business.
17. Develop a positive working relationship with your lenders and investors. If your business runs into financial difficulty, a good working relationship with your lender will assist renegotiation of the terms of a loan and the repayment schedule