Since the onset of the economic crisis, lenders have made significant cuts in credit and have actually begun rejecting loans requested by successful businesses. This crunch on capital has affected the stability and success of many small manufacturers and retailers. However, the credit crisis has also encouraged small businesses to focus on ways to maintain and even enhance their stability during difficult times.
There are ways to defend your capital but you must make an effort to do so by maximizing the value of your employees, tightly managing inventory, and using technology to keep track of the financial parameters that make a difference. Bill Harrison, an expert on cost control and president of Demand Solutions, which provides software for the full spectrum of supply chain management, suggests techniques small businesses can use in these three areas to minimize the damage of a credit crisis.
Managing employees so they are equipped with the tools and knowledge they need is an important responsibility during a credit crisis. Employees are a company’s most valuable resource. You should maximize their value by training them to be efficient with their work. There are many ways that tools, new software, or other helpful approaches can make employees’ jobs simpler; and when employees’ jobs are simpler, they have more time to invest in other tasks at the company. Employees should train for duties outside of their current ones. Giving them a variety of work will keep them from getting bored with their jobs and make hiring another person to fill an empty seat unnecessary.
Inventory is a company’s second most valuable resource. Knowing your inventory and managing it well will save your business from excessive costs. Start with the obvious step of eliminating products that don’t sell. This will free up time, money, and storage to invest in products that do sell. Next, reduce safety stock.
Stay in close contact with your customers and suppliers so you can avoid overstocking and purchasing more than you need. Take advantage of close customer contact, in particular to recognize which products your customers value and trust most. Avoid changing those key products so you can maximize the value of customer brand loyalty.
Technology helps your employees make decisions faster and more efficiently. Investing in technology can also benefit your business’s inventory and financial stability during an economic downturn. For example, software is available that helps small businesses manage the ups and downs of finances and make decisions that encourage capital preservation. Inventory management software is particularly useful when a business is under financial stress.