What Not to Do During a Recession: How a Merchant Loan can Help
During a recession, small business owners often make poor financial decisions within their businesses simply because they are unaware of what not to do during a recession.
Managing a business during a recession has a lot more in common with fashion than you may think. Let me explain.
Ever seen the television show "What not to Wear"? During this hour-long makeover program, two well-known fashion experts choose one fashion novice to secretly record walking around his/her home town in his/her most unfashionable outfits for a few days. Finally, the fashion misfit is given a much needed makeover, coupled with fashion advice. Almost everything in his/her closet is overhauled, after receiving $5,000 to start a brand new wardrobe. Usually, the lesson learned is the importance of choosing quality over quantity.
Still not making the connection? Consider this. If you have $60 dollars to spend on clothing, you have the choice of purchasing six $10 dollar cheaply-made shirts (that are long in the arms since you are petite), or purchasing two $25 dollar, well-made shirts and spending $10 to get them tailored to fit.
With option number one, you may get more items, but you’ll look sloppy and you’ll probably have to buy another batch of shirts in a few months due to the cheap quality of the pieces. But with option number two, you will look more presentable and professional and the shirts will last longer.
The lesson that small business owners can learn from this story is, many times you may actually be spending more money and getting less by attempting to "cut costs", when you could be getting more in the long run by spending smart rather than spending less.
According to Todd Thibodeaux, president and CEO of the Computing Technology Industry Association, business owners should not "cut corners on things that relate to quality of service," especially in the area of technology, as quoted in Business Week’s "Recession Cost-Cutting No-Nos."
Don't downgrade from T1 to DSL," he says. "Make sure you're maintaining the security of customers' data, and keep your infrastructure in place. Don't hold off on buying a better piece of equipment," states Thibodeaux.
Marketing is another area that experts advise against cutting corners in. It may seem less expensive to slowdown on marketing, but that marketing is vital in bringing in and keeping customers who are tightening their spending habits.
"…increasing the frequency of communications with customers can boost revenue and stimulate demand for your offerings, especially if competitors are busy slashing prices instead of promoting the quality of their services," writes author, Jennifer Wang in the Business Week article.
Many business owners may be wary of borrowing money during a recession because they are unwilling to pay for that money. But contrarily, receiving a merchant loan may help your business during a recession.
When a business owner borrows money, his/her ultimate goal is to make more money. The money that you receive in your merchant loan can be used for marketing, to maintain technology, or to simply keep your business afloat. Take a look at the bigger picture. Which is a smarter option? Not getting a merchant loan and therefore not having the money to continue to thrive during the recession, or receiving a merchant loan and using it to make more money for your business even after calculating the payback?
Other perks of the merchant loan include, the opportunity to renew the funds every three to four months, the convenience of having the loan repaid automatically through a small percentage of your business’s daily credit card sales, and the ability to receive rewards every time a customer uses his/her credit or debit card to make a purchase.
So what is the moral of this story? During a recession, cutting costs is vital. If revenue (top line) is decreasing, it is important to decrease costs as well, in order to balance out your bottom line. But if you’re not careful, your costs cuts might cause your revenue to decrease even more.
Implementing these strategies and receiving a merchant loan may help get your business through the recession successfully.
Ever seen the television show "What not to Wear"? During this hour-long makeover program, two well-known fashion experts choose one fashion novice to secretly record walking around his/her home town in his/her most unfashionable outfits for a few days. Finally, the fashion misfit is given a much needed makeover, coupled with fashion advice. Almost everything in his/her closet is overhauled, after receiving $5,000 to start a brand new wardrobe. Usually, the lesson learned is the importance of choosing quality over quantity.
Still not making the connection? Consider this. If you have $60 dollars to spend on clothing, you have the choice of purchasing six $10 dollar cheaply-made shirts (that are long in the arms since you are petite), or purchasing two $25 dollar, well-made shirts and spending $10 to get them tailored to fit.
With option number one, you may get more items, but you’ll look sloppy and you’ll probably have to buy another batch of shirts in a few months due to the cheap quality of the pieces. But with option number two, you will look more presentable and professional and the shirts will last longer.
The lesson that small business owners can learn from this story is, many times you may actually be spending more money and getting less by attempting to "cut costs", when you could be getting more in the long run by spending smart rather than spending less.
According to Todd Thibodeaux, president and CEO of the Computing Technology Industry Association, business owners should not "cut corners on things that relate to quality of service," especially in the area of technology, as quoted in Business Week’s "Recession Cost-Cutting No-Nos."
Don't downgrade from T1 to DSL," he says. "Make sure you're maintaining the security of customers' data, and keep your infrastructure in place. Don't hold off on buying a better piece of equipment," states Thibodeaux.
Marketing is another area that experts advise against cutting corners in. It may seem less expensive to slowdown on marketing, but that marketing is vital in bringing in and keeping customers who are tightening their spending habits.
"…increasing the frequency of communications with customers can boost revenue and stimulate demand for your offerings, especially if competitors are busy slashing prices instead of promoting the quality of their services," writes author, Jennifer Wang in the Business Week article.
Many business owners may be wary of borrowing money during a recession because they are unwilling to pay for that money. But contrarily, receiving a merchant loan may help your business during a recession.
When a business owner borrows money, his/her ultimate goal is to make more money. The money that you receive in your merchant loan can be used for marketing, to maintain technology, or to simply keep your business afloat. Take a look at the bigger picture. Which is a smarter option? Not getting a merchant loan and therefore not having the money to continue to thrive during the recession, or receiving a merchant loan and using it to make more money for your business even after calculating the payback?
Other perks of the merchant loan include, the opportunity to renew the funds every three to four months, the convenience of having the loan repaid automatically through a small percentage of your business’s daily credit card sales, and the ability to receive rewards every time a customer uses his/her credit or debit card to make a purchase.
So what is the moral of this story? During a recession, cutting costs is vital. If revenue (top line) is decreasing, it is important to decrease costs as well, in order to balance out your bottom line. But if you’re not careful, your costs cuts might cause your revenue to decrease even more.
Implementing these strategies and receiving a merchant loan may help get your business through the recession successfully.
Merchant Loans
Small business owners can get cash for their businesses with a merchant loan.
Small business owners can get cash for their businesses with a merchant loan.
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