Imagine this…you’re flying along comfortably in the first class cabin of one of those new 787s, and suddenly the engines conk out and you begin plummeting to the earth…insert cartoon whooshing and whistling sounds here, and eventually the horrible crashing sound that comes when your comfortable seat in first class meets the pavement. Now imagine this as your small business. Your business is going along smoothly and you see great things on the horizon. Unfortunately, the economy takes a nose dive and your business begins to see the effects of terminal velocity. What can you do to pull up on the nose of your small business and start climbing into the skies of success again?
A lot of businesses are looking for a way to stop the crashing, and many of them are choosing to take out more loans, or decrease their inventory, or even downsize their workforce. Fortunately, there are some options that aren’t as drastic as firing employees. A lot of money management gurus are touting the idea of small businesses spending only cash, or at least spending only the cash on hand. Is this even possible when so many small businesses work using only credit on the books with vendors? Well, there are a lot of small business owners who think the idea of spending only cash is like asking a drowning man to only take one breath once they’ve finally surfaced…it’s impossible.
Honestly, spending only cash would be impossible with large businesses who have most if not all of their money locked up in stocks, but small businesses still use money from the till to buy supplies. If your small business has its own gold, platinum, or black credit card, you should consider setting them aside for a few weeks and seeing how well you manage without incurring additional debt.
How? Well, ask your bank for a business debit card that links directly to your business bank account. Using your business DEBIT card means that you are spending only what you actually have in the account to spend rather than pulling out your CREDIT cards. Most, if not all, vendors and suppliers accept debit card and cash payments – they actually prefer these payments because they don’t have to deal with the paperwork involved in accepting credit card transactions.
While you cannot pay your employees with cash, their paychecks do come directly from your business bank account, so you are already paying them with ‘cash’. Paying for cleaning services, shipping, and other business expenses using your business debit card can get tricky when the end of the month arrives and the account balance is low. You can plan ahead for these instances by cutting back on unnecessary spending – you don’t need Starbucks every morning (this shouldn’t be put on the business books anyway), you don’t need the brand name cleaning products, you can save on printing costs by printing in house using a well maintained printer.
Small business money management is the key to surviving the economic nose dive and to eventually pulling up and getting back on a straight path towards success.