Monday, March 28, 2011

3 Biggest Risks For Small Business In A Down Economy

In any down economy small business seems to be hit the hardest. Listed below are three risks every small business should be aware of ... so you can roll with the punches and survive standing.

1. Running out of cash. Many business owners don't realize how much working capital it takes to run their business. They think about how much cash it takes to acquire a company, but not how much it takes to run the company.

2. Too much customer concentration. It is a big risk to have too few customers. If a company has a large customer that provides 75% of its sales, they are in a very risky position. All it takes is one decision for a customer to change where they purchase from and you are out of business. Take the time and effort to diversify your customer base so that your largest customer represents less than 10% of your business.

3. Giving up and waiting for something to happen. During these slow times in the economy, I find far too many business owners giving up on innovating and just waiting for the economy to "turn around". When the economy slows down, you need to increase marketing efforts and become more creative, not less. If you are waiting for the economy to turn around, you will be watching the innovative players in the market earning all of the market share.

Do whatever you have to avoid the above 3 situations. Any one of them can end up making you close your doors if you're not careful.