All business owners—dry cleaners, nail salons, tax preppers, you name it—have one thing in common: Planning ahead for potential revenue shortfalls can mean the difference between keeping the lights on and having to close if times get tough. That’s why it’s crucial to do everything possible to keep a consistently positive cash flow and set aside extra funds in case of emergency.
For tips on surviving a financial skid, we asked three Westchester-based experts for their best advice for your playbook.
1. Write a sound business plan and update it regularly, factoring in potential downturns. “The document should include a contingency plan outlining options to reduce spending and expenses, should anticipated sales not materialize,” suggests Yonkers bakery GM Kevin McGahren.
2. If you’re operating in an especially volatile market, find ways to diversify your products and services—just be careful that it doesn’t distract you from your main source of income. It’s important to always develop plans for many more revenue streams than you need because inevitably some that you are counting on will under-deliver, McGahren points out.
3. Whatever you do, don’t delay in pivoting if you notice sales trends that aren’t as promising as you’d hoped. This may mean you will have to make tough decisions. “When it comes to spending cuts and expense reduction, you’ll want to take immediate, decisive action,” McGahren says. “Your options only decrease the longer you wait.”
“When it comes to cutting spending and lowering fixed expenses, act quickly and decisively. Your options only decrease the longer you wait.”
—Kevin McGahren, Greyston Bakery
4. To stay as solvent as possible, lean into the math, advises Art Hunter, who works with clients eager to launch businesses. “For example, if you know that you need to do $600,000 in revenue annually, that equates to $50,000 a month,” he says. “You need to stay laser focused on that number. This could mean you need to cut 200 lawns a week, sell 500 loaves of bread or service 40 clients with their accounting. No matter what, this will give you a real perspective on what you need to do.”
5. Be mindful that it’s never a good idea to shy away from expenses that are vital to the overall success of your business, such as labor, rent, and advertising, notes Hunter. And stay focused on the product—knowing what you’re selling—and what markets you’re looking to expand into over time.
6. Prioritize having a trusted advisory group around you, whether formal or informal, urges Gordon. “We discuss this a lot with small business owners,” she says. “Your banker, accountant, attorney, or a business advisor can help you stay ahead of any financial blips that might happen.” And if your business is heading towards a potential shortfall, share this information with those advisors. “We find that if somebody is struggling financially and they’re transparent with their vendors and other stakeholders, it causes everybody to want to help more,” Gordon says. “There’s trust that’s established.”
