The current economy is the worst Mark O”™Sullivan has experienced in his 35 years as an accountant. The managing partner of Sedore & Co. in Poughkeepsie says his firm has been telling its clients both to control costs and not to let their good names wither on the vine.
“We”™ve been telling them all the same thing: watch your overhead, especially in hard times,” O”™Sullivan said. “Be careful about how you spend money. Look at every line item and ask yourself, ”˜What is this doing for me? Is it doing for me what it did when I incurred it?”™ If it is a marketing expense, business owners have to ask themselves if it is still working. If advertising, are they getting the right bang for their buck?”
It”™s also time to take stock of insurance needs, said O”™Sullivan. Whether you discover you are overinsured or underinsured, every well-run business should be checking this line item every year.
“This may be a time for better rates,” he said of insurance. “Wages are a major part of a company”™s bottom line and many have had to scrutinize how they are spending. Many have found ways of doing more with less. The trick to doing good business is having right balance. A business can make a mistake by cutting too much. In times of recession, it”™s a time to make inroads, so when things do take off, you are in an advantageous position. If your business is prepared when that time arrives and a decent marketing strategy has been in place, a company will be a couple of steps ahead of its competition,”
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What works for mid-sized business, however, may not be a good fit for the small business owner, continued O”™Sullivan. “He or she has to be careful how they spend their time and effort is ultimately most profitable. The small-business owner is the driving force behind the company, knows their clientele and product. For a small business owner, their time is better spent taking care of business than running to the bank to make deposits, writing checks and doing filing.”
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With the glut of commercial real estate available, now may be the time to have a heart-to-heart with your landlord. “While going down your expenses line by line, if you are renting, it may be time to sit down and talk about lowering your rent.”
When small businesses plan for the future, what does the big picture look like? That”™s a major problem for many, said O”™Sullivan. “What”™s hurting the small-business community is all the talk about what”™s happening with health care and with state and federal taxes; people don”™t know what is coming down the line. No one likes the unknown. All the proposals coming out of Congress are detrimental to small business. You”™d think they”™d want to make the ground fertile, but it”™s been the opposite. As a result, small business is concerned. ”˜What is the burden I will have to pay, not only employment but health care? Who will pay for this?”™ To our small-business community, it sounds like employers are going to foot the bill.
“The result is it may keep employers from hiring. The whole black cloud of doubt about what future costs may be stopping people from making hiring decisions and it certainly is making it hard to plan ahead for many.”
O”™Sullivan notes that some of his competition has not made it. “That means more potential for us. On the other hand, some are lowballing prices and hurting reputable firms. As business people and entrepreneurs, we have to concentrate on the bright light. Find the silver lining, even if it”™s pewter right now. Access to capital is essential and banks need to be there for the business community.
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“This spring, in an effort to balance the budget, the state raised rates on upper age earners. We just can”™t do that. States in our vicinity have rates 3 to 4 percent lower; Florida and New Hampshire have no income tax. In my opinion, we”™re bleeding our most productive members. This is not just a Hudson Valley problem; it is affecting us on a state and national level.”
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Beth Blecker, CEO of Eastern Planning in Pearl River, agrees a line-by-line budget is a must for every company today, from the single proprietor to the small- and mid-sized businesses, the backbone of the Hudson Valley”™s economy.
“It”™s essential to go over all your expenses,” she said. “When you”™re making money, you buy things you don”™t really need. Things have definitely changed. When you”™re doing your budget, going line by line is the only way to make sure it is what you really need. Many companies are willing to renegotiate to keep your business. The result is, they keep your business and you get a break. But remember, it should be for something that”™s needed.”
Blecker says most insiders advise their peers and clients not to cut their marketing budgets. “It”™s important to keep your name out there. If other companies or consumers don”™t know you”™re there, you”™ll lose them. Despite the recession, maintaining your visibility is important.”
While it may boil down to just sending an invitation to a workshop, you”™re keeping your company name out there, said Blecker. “Don”™t question if it was worth it. You”™re still getting your name out there. It may not be today, but tomorrow, people will remember they”™ve heard from you.” As in the Great Depression, companies that cut advertising also found their competitors who didn”™t stayed viable, while those who were a bit too frugal when it came to marketing themselves finished out of the money.
Questions about what”™s coming down the road plague Blecker”™s clients, as well. “I”™m on the executive board for Rockland”™s People to People food bank. Last year, we served 400 families. This year, we have already served double that number, and many of those people now needing help were once contributing to People to People. Is the economy scary? Yes, but it doesn”™t mean you go into panic mode. While my clients are concerned about health care costs and their assets, I tell every business owner to make long-term plans, to have goals and objectives, and not just act on immediate fears.”
