The key to small business survival frequently depends on solving critical problems and avoiding serious risks. Success in problem solving and risk avoidance rarely happens by accident. At the center of most successful small business owner survival strategies is business planning to help evaluate and resolve potential difficulties before they reach a crisis stage.
This kind of strategic thinking is increasingly needed by small businesses when dealing with the current and future financial health of their company. Banks and other sources of commercial financing are frequently at the forefront of any small business survival efforts because lenders are directly or indirectly involved with so many aspects of small businesses.
No matter whether we are talking about the U.S. government or a small business, sooner or later there will be key people asking to see the plan for moving forward. But business planning should not be thought of by small business owners as something that they are being required to do by a banker or anyone else. A more prudent approach is to develop business strategies and plans that identify and review business risks and problems before they become a threat to business survival.
Business Survival With or Without Banks — Is Firing Your Banker a Survival Strategy?
Avoiding risks and problems is a key element for small businesses attempting to survive difficult circumstances. Some small businesses have already been confronted with their bank pulling the plug on their commercial mortgage or working capital loan with little or no advance warning. Unfortunately, very few small business owners have prepared in advance for this possibility.
The harsh reality is that banks have changed and we are now operating in a changing financial climate in which bankers might need to be fired and replaced. Beyond such a fire-your-banker mentality when faced with a bank that keeps saying no, there are other viable business strategies such as reducing commercial debt and operating expenses.
Contingency Strategic Plans — What Could Go Wrong?
One small business owner strategy that seems even more valuable and practical because of stubborn economic uncertainties is the use of contingency business planning. As noted above, small businesses are rarely prepared in advance for the possibility that their bank will abruptly cancel a commercial loan that is current and in good credit standing. Nevertheless, this type of bank decision has become common, and preparing for it ahead of time is smart and prudent. Likewise there are plenty of similar business and financial possibilities that would benefit from asking: What could go wrong?
Communication and Negotiation Strategies
Effective negotiating is perhaps the ultimate skill needed for business survival. Attempts to improve communicating and negotiating are possibly as under-utilized as planning strategies. While business negotiation and communication require some skills that small business owners might need to develop further, the effort to do so should prove to be worth it. Alternatively, because of the potential strategic value of better negotiating and communicating, the possibility of using professional experts in these fields should be evaluated.
Whatever you do, remember to include “Plan B” in your business survival strategy — Always Have a Plan B.