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Small business, big opportunities: Tips for women focused on managing their small businesses
The Great Recession will probably be a subject of discussion and debate for decades to come, but one certain ideology has emerged from it: small businesses have had to reassess how they manage cash flow.
Lost and slow sales continue to be a top concern for nearly half of all small businesses, according to a recent Kauffman Firm Survey.
“In light of the recent economic challenges, many small businesses find it more important than ever to preserve cash flow by scrutinizing potential and current relationships with customers, vendors and other businesses,” says Adam Fingersh, senior vice president of Experian’s Business Information Services.
Large companies have always evaluated the viability and cash flow of potential and current customers, vendors and other business relationships. The economic challenges of the past few years now have many small-business owners doing the same thing.
“Maintaining a profitable business is a challenge that all business owners face,” Fingersh says. “Small-business owners especially feel this pressure because access to tools that enable them to effectively manage their business relationships have been too costly, too complex or too difficult for a small business to use.”
The Internet is helping small businesses overcome those obstacles. Online tools like Experian’s BusinessIQ Express, which launched in early May, help small businesses access, evaluate and monitor important financial information about current and potential customers, suppliers and other business partners. The idea is that the more informed small-business owners are about those they do business with, the better equipped they will be to make decisions that can help improve their company’s cash flow.
Knowledge of another company’s financial health can help small-business owners in scenarios such as these:
* A small company is approached by a potential customer whose business would represent a 50 percent increase in the small company’s revenue – and workload. The small company would need to hire employees and purchase supplies in order to meet the demand generated by the new customer. Knowing that potential customer’s payment history could minimize the risk of not getting paid in a timely manner by helping the small company decide whether to ask for money up front, and if so, how much – or decline the business altogether.
* A small company is competing with others to secure a significant piece of business from a new customer. Checking into the new client’s financial background, the small business learns that this customer has a strong payment history and no black marks on its financial records. Comfortable that the new customer will be able to pay its bills, the small business offers the client favorable payment terms that help win the business away from its competitors.
* A small business depends on suppliers to provide key materials for its products. Checking the background of those suppliers, the small-business owner discovers the supplier has stopped paying its bills – a red flag that the supplier is having financial trouble that will affect its ability to continue meeting the small company’s needs. The small-business owner begins to search for alternative sources of materials to ensure its ability to meet demand won’t be impacted if their current vendor goes out of business.
Online tools like BusinessIQ Express can help small businesses evaluate other companies to determine how likely they are to pay bills or deliver products or services on time, provide alerts and notifications of key changes in the financial condition of business relationships, and know when and how to collect outstanding debts and avoid future losses.
“Monitoring small-business relationships is essential,” Fingersh says. “Being able to evaluate, monitor and collect from business partners can help small businesses level the playing field as they compete in the marketplace with larger businesses that have historically had access to these types of tools and resources.”
Evaluating and monitoring each business relationship is a key component for small businesses to experience profitable growth. The more informed small businesses are about their current and potential customers, suppliers and business partners’ financial information, the better equipped they will be to make better business decisions and improve cash flow.
(ARA)
