How To Make This Recession Work For Your Small Home Business.

On my blog I often talk about not spending money, bootstrapping and cash-flow planning. However a recession can be a excellent time to spend money too, providing you have the cash to spend – here are some tips on how to spend & save at the same time:

• Always ask for a better price, no matter what, always ask. If the supplier knows you are ready to buy for the right price they will cut you a deal.
• When buying from big corporations always pay late, their money collection procedures are very transparent. Use this to pay late, complain about anything and everything, so you can justify delaying payment. They’d do exactly the same to you if they could – so no false sentiments here. Just make sure you have the money when it is time to finally pay.
• Get better payment terms by negotiation. Promise to buy from one supplier for better payment terms, like 60 or 90 days.
• Get better payment terms by non-payment. Some utilities companies get panicked if you don’t pay and they will offer you a monthly payment plan, take it.

You can easily find out how far you can take these games, by finding out how companies collect their money. Just one thing don’t do it to fellow small business owners, they need their money just as much as you do. Given the fact that small business can’t get credit, while the big boys can, let them play bank for you for a while.

This is no time for modesty, it is time for survival and we all know cash is king – so keep it as long as you can. – ST.

19 Responses to “ How To Make This Recession Work For Your Small Home Business. ”

1. Deborah Bradley
   
   Said on November 17th, 2009 at 10:04 pm

   You have some really weird tips here but it surely looks interesting, coming from maybe its worth trying to follow this advice.

2. Stefan Töpfer
   
   Said on November 17th, 2009 at 10:41 pm

   Hi Deborah,

   you know what is even more weird, small business failing because of what the governments and banks did to them.

   Big business are paying later and later and they are getting away with it, why should small business not retaliate?

   Small business has no voice, yet they produce over 50% of GDP and supply the most secure and social work environment.

   We need far more small businesses and less big corporations, i will do and say anything that is legal to help my clients to survive this recession with their future intact.

   You think this is weird, I’ll have some more in store in the next week or so.

   Thank you very much for your comment – if you try any of my tips and learn something new come back and tell us about it!

   VB, Stefan

3. Matt Hymes
   
   Said on November 19th, 2009 at 10:22 pm

   How far would you recommend taking this advice though? Lets says business was bad three months running, do your tips apply to non business related credit etc. that might be limiting advertising capital? Obviously not paying a bank would be a bad move but a less used credit card…maybe?

4. Stefan Töpfer
   
   Said on November 19th, 2009 at 10:43 pm

   Matt,

   I’m not recommending running up debt if you do not have the money to cover your obligations. I’m talking about hanging on to your money for as long as you can – in a functioning business that will create a cash-flow surplus.

   As far as advertising capital is concerned, you could do a lot online marketing yourself, many free options exist.

   Depending what your circumstances are, not paying a bank can be a way to create cash-flow, but you need to know what you are doing and what you risk is – you need to get good advice on a move like this.

   If you read my blog in the past you will know I a fan of ‘business bootstrapping’ – in my mind the only way to run a business if you have no money.

   VB, Stefan

5. Ed Martin
   
   Said on November 22nd, 2009 at 2:39 am

   I think these recommendations can start some people down a slippery slope because they won’t know how far they can push things. It sounds like advocating surival by any means necessary. You say to just push against large corporations and utilities, but small businesses do a lot of business with each other. What then? Why not try the same tactics against them?
   Looking forward to the next set of tips.

6. Jason Holden
   
   Said on November 23rd, 2009 at 4:58 pm

   Nothing weird about the advice here, it is pretty standard, pay big suppliers as late as you can, if they want paying quicker negotiate an early payment discount, let them make it attractive to you to pay quick, ask for 5%, if they refuse well then ……..

   If a big supplier gets ‘shirty’ when you pay them late (remember a lot of the ‘big boys’ have the small business on 30 days this is compared to many larger businesses paying their suppliers in 90 or even 120 days), simply find another, there are enough out there who want your business, remember a lot of bigger businesses will factor your debt.

   This advice is certainly not that of not paying suppliers, but as things keep getting tougher then the small businesses out there that are still doing well should use the strong business position to make the big boys ‘squeal’.

7. Joshua Black
   
   Said on November 23rd, 2009 at 8:04 pm

   Good basic info for beginners. Getting a better price is especially easy to do right now, since suppliers are tripping over themselves to get business.

   I would also add that a business owner needs to bootstrap as much as possible right now, and to avoid any large purchases that are not bringing money in the door. This is definitely not the time to buy a new desk. The longer you can avoid having the bank tell you how to run your business, the longer you can be nimble during tough times.

8. Stefan Töpfer
   
   Said on November 24th, 2009 at 9:47 am

   Hi Joshua,

   Thanks for the comment – good advice.

   VB, Stefan

9. Sarah
   
   Said on November 25th, 2009 at 10:03 am

   In regards to asking for a deal which I think every small business owner should do as a matter of habit, I think the timing of when you ask is important as well. Try and buy products or services towards the end of the month when sales people are trying to reach their quota and are more willing to cut you a deal. It has always worked for me in the past.

10. Stefan Töpfer
    
    Said on November 25th, 2009 at 10:08 am

    Hi Sarah,

    very good point – thanks for the comment.

    VB, Stefan

11. Ron Bolzern
    
    Said on November 25th, 2009 at 10:09 am

    Stefan, I can agree with your sentiment about small businesses often getting a raw deal and certainly concur with always asking for a lower price — but the deliberate delaying of debt is a dangerous ploy. To orchestrate this approach, you have to have a carefully monitored calendar to get your timings right. One false move can completely destroy your business — imagine if you get sued, or you lose a crucial supplier. You can also get on the wrong side of suppliers, meaning higher rates and less helpful service. All that takes a lot of time, and it’s important to consider the hourly rate you’re actually getting in return for all that time. It’s far better to be sure you’re growing your business within your means — and you’ll sleep better at night, meaning you’ll be more effective the next day.

12. Stefan Töpfer
    
    Said on November 25th, 2009 at 10:46 am

    Hi Ron,

    Thanks for your comment.

    I agree you can get on the wrong side of suppliers – so what? I’m not suggesting you should do this to all the suppliers, only the big boys. Why? Because they are doing it to all their small suppliers, i.e. my customers. They view them as easy credit and do not care if the small business goes to the wall – in fact they would probably prefer that – as it may get them into a situation in which they may not have to pay at all .

    I speak with some authority when I say that there are many businesses who are owed more money from their suppliers than the amount of money they owe on overdrafts to the bank. So these business are being squeezed from two sides.

    Since when is any small business a bank?

    In your business this all may not be a problem, but in any small manufacturing business this is not ‘a ploy’ – this is survival!

    A good supplier will make sure they can offer better credit terms to their customers so that everybody gets paid inside the credit terms. If you have a supplier like this then you should keep this relationship on good terms.

    VB, Stefan

13. Graeme Olsen
    
    Said on November 27th, 2009 at 6:11 am

    As a small business owner, I HATE it when people employ tactics #2 and #4 against me. It wastes my admin time and just ticks me off. So I could never consider doing that to someone else. It’s obviously fine to try and negotiate payment terms, but I think that deliberately paying your bills late is just bad business.

14. Stefan Töpfer
    
    Said on November 28th, 2009 at 2:13 pm

    Hi Graeme,

    As you will have noticed I was speaking about big businesses and said not to use this for small businesses, for the above mentioned reasons.

    You are absolutely right that paying late is bad business, but this has to be an equal playing ground, and i this game the big boys have an advantage, that needs to stop.

    VB, Stefan

15. Sunil Tosawar
    
    Said on November 28th, 2009 at 5:04 pm

    Really this is great

16. Trevor
    
    Said on December 4th, 2009 at 8:21 am

    What I think there is a business for every market. The key to survival is you bring in more than you spend. Next is to focus on sales. You need to have a product or service that people want to buy. Sounds oversimplified, but it is that simple.
    The rule and the strategy will remain the same: baffle your competitors and stay ahead in the competition either by offering quality service at a reasonable rate or by spearheading a marketing blitzkrieg.

17. Brendan
    
    Said on December 7th, 2009 at 1:43 pm

    I guess there are winners and losers in a recession and it’s all about how you view things. I think it’s a great idea to try and get the best deal that you possibly can – it’s very wise and will help keep many people in business.

18. Denzil
    
    Said on December 9th, 2009 at 5:58 pm

    Good basic info for beginners. Getting a better price is especially easy to do right now, since suppliers are tripping over themselves to get business.

19. alric
    
    Said on December 15th, 2009 at 11:39 am

    My view in the issue is lessen the cost of labor, I suggest small business outsourcing. A lot of services now can be provided by outsourcing companies nowadays.

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