Money Matters: Small-business ownersPosted: Updated:
PHOENIX -- It hasn't been an easy year for small-business owners. In fact, many have struggled to stay afloat.
One small business in the East Valley began seeing some hard times at the beginning of the year.
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What they did to adjust to the economy might help out your small business.
Tracy Markie owns a small business called Engenuity Systems, which basically sells and distributes high-tech gadgets to other companies.
For years, Markie says business has always been profitable until earlier this year when the turbulent economy started to make him lose money.
"The first couple of months I was like, it will come back, but then I started hearing about the economy and I was like, we need to take action," Markie said.
That action included rounding up his 19 employees and informing them that things were not quite as good as they had been.
"Here's what's going on," Markie told his employees. "We started off well, but we are losing money and there's going to have to be some changes."
Besides communicating with your employees, Markie also suggests you should review and cut your company expenses no matter how insignificant they may seem.
For instance, Markie saved by getting his business bank statements through e-mail instead of regular mail.
"If you receive a bank statement via regular mail instead of e-mail, they charge you $10 a month so we started getting our statements via e-mail," he said.
Markie says little cuts like these add up.
"We identified 30 to 40 items that we were able to cut and that saved $5,000 a month," Markie said.
Slashing $5,000 a month in expenses kept Engenuity Systems in check.
But Markie says one thing he did not slash was his advertisement.
"This is a very common mistake your competitors are doing so if you advertise, you will increase your market share and that's important," he said.
Besides maintaining or even increasing advertisement, Markie suggests keeping your overhead in line with your revenue.
If that means decreasing your workforce, do it.
Markie was forced to eliminate six positions.
Shorten your cash conversion cycle. For Engenuity Systems, that meant implementing quicker production and quicker collections.
"The faster you are in spending money and collecting money, the better you are overall," Markie said.
Finally, Markie says ask for help. No one will know you need a helping hand unless you ask.
"And it took me a long time to understand that there are a lot of resources out there like the Small Business Administration willing to give assistance in these tough times.
By following these steps, Markie says he stopped his financial bleeding, kept his business from going under and is actually back to making a profit.
"Business is business," he said. "It doesn't matter what industry you're in, we all face the same problems."