How to Manage Your Small Business Out of the Credit Crisis
article courtesy of allbusiness.com

Since the onset of this current economic crisis, financial institutions have made significant cuts in credit availability and are often rejecting loan applications made by creditworthy small businesses. And while this "crunch on capital" has affected the stability and success of many small manufacturers, this situation has encouraged businesses to focus on ways to maintain and even enhance their financial stability.

Recently, AllBusiness.com asked Bill Harrison, President of Demand Solutions and an expert on cost control, about techniques small businesses can use to minimize the impact of a credit crisis. They fall into three categories: employees, inventory, and technology.

Train Employees
True to the old adage, employees are a company's most valuable resource. Companies should maximize employee value through consistent training in work process efficiency, as well as, cross training in duties outside of their current scope. Providing employees with challenges will help companies avoid turnover and keep overall company morale high. Managing employees so they are equipped with the tools and knowledge they need is an important responsibility during a credit crisis.

Manage Inventory
Inventory is a company's second most valuable resource - managing it well will save businesses from excessive costs. Starting with the obvious step of eliminating products that don't sell should be followed by the reduction of safety stock. This will free up time, money and storage to invest in products that do sell.

Successful companies manage the supply chain up and down - staying in close contact with customers and suppliers to avoid over-stocking and purchasing more than needed. Market analysis allows companies to leverage customer feedback and purchasing habits, determining both valuable products and most valued customers. Avoid changing key products in order to maximize the value of customer brand loyalty.

Manage Technology
Technology assists companies to make decisions more efficiently - an investment in technology can have a ripple effect and assist in the management of inventory, employee training, cash flow and capital preservation.

The credit crunch has not crushed everyone and the good news is that there are ways that businesses can defend capital - but companies must make a concerted effort to do so through maximizing the value of employees, tightly managing inventory and using the right technologies to keep track of the financial parameters that make a difference.