During an economic downturn, small businesses are often hit the hardest first, and a ripple effect works its way through the rest of the business world. According to the article, Entrepreneurs Finding Ways to Thrive, “When small firms can’t grow, the impact is felt in loss of jobs, revenue stagnation and supplier retrenchment.”
An Atlanta-based SCORE counselor, Steve Bloom, was quoted in the article saying, “There’s no safety net for small businesses…The SBA is not in the business of making loans to small businesses; it only offers financial guarantees to participating lenders.”
So if startup and small businesses are the crux of the business world, and they cannot obtain loans from banks and the SBA during a bad economy, what options are left?
For starters, small business owners can sell their invoices to a factoring firm. (For example, small MTSOs, medical staffing agency owners and medical coding company owners could certainly sell their receivables to PRN Funding, which is an accounts receivable factoring company dedicated to funding healthcare vendors.)
Bloom suggests increasing your networking opportunities by joining trade associations, chambers of commerce and rotary groups to locate private investors. He also suggests that small business owners plan ahead by setting aside 3-6 months worth of operating costs and salaries.
Coauthor of So, You Want to Start a Business? 8 Steps to Take Before Making the Leap, Ed Hess, advised in the article for small business owners to draft a detailed emergency plan.
Some other simple suggestions include sending out invoices promptly and offering discounts for quick payment, lease instead of buying, and hire part-time employees instead of full-time ones.