Dear Captain BUZ:
The economy continues to represent unpredictable challenges for me and my business. I’m not sure what to do or where to begin. Please help!
Lee, New York
Hi Lee:
You’re not alone. Let’s begin by assessing The Four R’s: Restructure, Refinance, Recapitalize and Respond.
- Restructure Restructuring your business under the current economic climate can take many fruitful forms. For example,
- What You Sell: Reposition, repackage, reintroduce and restructure what you sell to capture new market opportunities and new customers. For example, if you’re in new home construction, consider shifting to home renovations or green construction – Both offer incentives under the current economic stimulus package.
- How You Sell: If you don’t yet sell on line or do, but not enough, restructure your ecommerce strategy
- How You Promote: Revisit how you market and promote your offerings using No-Cost Low-Cost Marketing techniques.
- Debt: If you find your cash flow to be going out more than flowing in, evaluate debt restructuring options.
- Overhead: When times are tough, overhead is the first place to restructure to potentially save costs. This includes possibly cutting staff hours, sub-letting space, collaborative marketing strategies that split costs and limiting new spending. Using a comprehensive Breakeven Analysis Worksheet can help you to determine if and where such costs might be possible.
- Refinance If you carry debt, look for ways to reposition it in order to lower monthly payments, reduce interest or save taxes. For example,
- Business Stabilization Loan: Contact your local financial institution or State SBA Office to learn about a new 100% SBA guaranteed loan program created as part of the American Recovery and Reinvestment Act (ARRA) that provides deferred-payment loans of up to $35,000 to viable small businesses that need the money to make payments on an existing, qualifying loan for up to 6 months.
- Cancelled Debt Tax Incentive: Any debt cancelled in ‘09 and ‘10 can be tax deferred with no payments in the first 4 to 5 years and the balance paid off in years 6 through 10. This means that if you negotiate paying off a $100K loan at $75K, the $25K difference that gets booked as income, does not incur a tax payment obligation until 6 years later.
- Recapitalize Examine how your business is capitalized currently to look for ways to save. For example,
- New Loan Programs: Contact your local financial institution or State SBA Office to learn about new SBA Loan Programs where application fees are reduced or waived; guarantee levels are increased; and micro and expanding businesses are particularly targeted.
- Investor Incentives: Check out Angel Investment venues because American Recovery and Reinvestment Act (ARRA) has increased capital gains exclusions from 50% to 75% when stocks are sold after 5 years of ownership as a strategy for encouraging more small business investments.
- Respond Lastly, be sure to RESPOND versus REACT to any current business pressure. To do this, tap into your local public business assistance network where you can find free and low-cost help with most any aspect of your business. For example,
- Free sources of Business Counseling
- Free sources of Business Marketing Help
- Free Business Start-up Help
- Free help Expanding Sales Internationally
- Network with Trade Associations
- Free Financial Counseling
In summary, it will pay to remember that planning without action is a waste of time. Therefore, be sure to act on any idea, resource or strategy introduced in this article. Often the only difference between success and failure is to “just do it.”
Sincerely,
Captain BUZ
Filed under: Uncategorized | Tagged: economy, finance, funding
