finance

How a small business can profit in slow times

If you believe like I do that the world economy (and to a lesser extent the Canadian economy) will continue to be mediocre at best then small businesses have an additional challenge in front of them in the form of being profitable or seeking ways to grow in the face of current economic times.  The latest news articles relative to capital, money, banking, etc. all paint a picture of shrinking margins with no real line of sight to opportunities for improvement, growth or higher profits.  As a small business owner I can relate to the current environment but unlike the news I have hope that it is in these times that real profit is found as companies are forced to create real value that customers pay for.

But what if you do not share the same hope I do?  How can a small business profit in slow times?  A few years ago it was becoming apparent to us at Bridge Capital that businesses generating less than $20,000,000 a year in annual gross sales revenue all seemed to face the same challenges.  For the most part, businesses that were in this position seemed to lack the ability to get on top of their financial problems.  Cash flow is never enough, there is never a shortage of work to do and strategic planning (both financial and business) was a “forever on the list” task that didn’t get the attention it deserved.  To help, we at Bridge Capital developed a Business Health Check which is a simple to use online tool that provides a basic measurement of how a business is doing.  When approached by a business for financing our Business Health Check has served as a great conversation starter which inevitably leads to conversations about all aspect of a business and how they are working together to create the result.  From the Business Health Check we are able to work with businesses to help them:

1) Understand where the financial stress points are

2) Make strategic decisions about what changes need to be made to address the financial stress points

3) Source new financing or restructure existing financing to provide additional margin for the business

A small business can profit when times are good but that doesn’t always mean that the business is generating value.  Rising tides raise all boats.  It is when the tide goes out that a small business is faced with reality.  Based on my opinion of where the markets are today I believe that all small businesses should be investing in understanding their business from a high level and then digging down to figure out how to earn more profit from the value they create or provide to customers.  Our Business Health Check is certainly a great tool for taking the first step and when used with our Capital Plan can produce a great understanding of what needs to be done and how long it will take.  There is never a better time than the present to know your business inside and out.  Most business have to be good at providing their service or product but most small businesses do not have the opportunity or understanding of how to look past their product or service to determine the value of what they do.  Growing that value is another exercise in and of itself.

Our Business Health Check is available at www.businessmoney.ca and there is no cost or obligation for using it.  We make it available for free because we believe strongly that an informed small business is a small business that has the capacity to not only survive economics ups and downs but also contribute to the economy at large.

How will your business profit in slow times?

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