Small Business News

As the credit crunch began to take hold this summer, Annemarie McMullan, president of Annie Shines Cleaning Service in Massapequa, applied for a $40,000 bank loan. She wanted to finance payroll while she began work on a federal contract for cleaning government offices. Despite being in business for 10 years and having a good credit record, she said her bank would give her only a $10,000 personal line of credit. She had to make up the difference with money she had saved for a down payment on a house. She said she had no choice because she doubled her staff to 15 to take on the government job and needed the money to cover payroll while she waited to be paid.

Many small business owners believe you should never go it alone - you should always have a support system, whether it consists of financial advisers, mentors, fellow entrepreneurs or consultants, to guide you. It's true in the best of economic times, and it's certainly the case in the current climate. Business owners seeking help these days aren't necessarily neophytes. This is an extremely difficult economy, and even veterans need a sounding board. They find it from a growing number of resources, among them peer or networking groups, mentors, professional and trade groups and government-sponsored organizations like SCORE, an association of executives that counsels small business owners. Very often, this help comes at no cost.

As the world's economy becomes more and more challenging, small business owners need to find ways to keep their business afloat. Here are some tips to maintaining good customer relations while managing the bottom line: Invest in technology. Maintaining your computer systems is vital to keeping your business running smoothly. If you're not a technical whiz and you don't want to pay for ongoing information technology support, consider Macintosh computers for your business. Although they cost a little more initially, many people find the investment pays back in ease of use and longer life. More companies are releasing business software that runs on the Mac and you can also use a program such as Parallels to run any needed Windows-only software on the Mac. Investing in technology will allow you to implement other cost-saving processes and programs.

Getting paid in a down economy can be quite challenging, particularly for those businesses that have to extend credit to their customers. Maybe you, for instance? Even your best customers may find it difficult now to pay up in a timely manner, which means it's even more important for you to stay on top of your accounts receivable so you don't end up with a cash-flow crunch. "It's critical at these times to get a handle on accounts receivable," says Sean P. Melvin, an attorney, author and associate professor of business law at Elizabethtown College, in Pennsylvania. "It can really start to stack up quick."

Q: Steve, it is no secret that credit and money are still tight, but what is a secret is where small business should go now. My line of credit has dried up last month and I am at a loss. What are our options? - Michael
A: The good news is that there still are options out there, it's just that if you want to find the money to start or expand your business, you may need to look in new places and be more creative. The era of 'easy credit' is over, that's for sure. In fact, according to Senator John Kerry, the chairman of the Senate Committee on Small Business and Entrepreneurship, in a letter to President Bush on this subject, the country's largest source of long-term small business capital, the SBA 7(a) loan program, has fallen by nearly 50% compared with the same period last year.