How survive the tough trek ahead

Bailout and other politics aside, we're almost certainly in for an extended period of difficult slogging. With that thought in mind, here are some hopefully helpful comments from people I know - bankers, an accountant and a sales adviser - who know small businesses.

Their thoughts go like this:

*Support, don't fire, your good sales people.

* Take advantage of the increase in deposit insurance.

* Talk to your bankers.

It's tempting to cut the sales staff when customers aren't buying and you need to reduce costs. But that's not necessarily the way to go, according to Christopher Bennett, owner of Winfree Business Growth Advisors, Warrenville.

"If there's a history of not producing, that's one thing," Bennett says. "But the thing people forget is that it's not about the seller, it's about the buyer. This is when you need to take more time to listen and understand the buyer's needs.

"Get back in touch with people you've sold before," Bennett suggests. "Look for add-on business, maybe a new way to use your product."

The increase in federal deposit insurance coverage, to $250,000, "really works" for small businesses, says David Bandel, a partner at Porte Brown, LLC, an Elk Grove Village CPA firm that specializes in closely held businesses. "Small businesses need that cash for payroll and receivables."

Be aware that the bailout legislation extended the higher coverage only through December 31, 2009 - but in today's economy that's light years away.

Banking lore is that local banks - those that don't play on Wall Street - often have more flexibility in tough times than bigger banks. David Schroeder agrees.

"I think I can safely say," the president of Buffalo Grove-headquartered American Enterprise Bank says, "that most community banks are not suffering the liquidity issues (big banks face)." Even so, money isn't easy: Schroeder notes that "Banks we would go to for participations are holding their cash."

Consequently, Schroeder and his loan officers look harder at traditional bank lending criteria: Cash flow, an indication of your business' ability to repay the loan; the amount of your own resources you're putting into the deal; how liquid your collateral would be if the bank must step in; your character, very much including your personal credit history; and economic conditions which these days "are very difficult."

Yet, Schroeder says, American Enterprise is making business loans.

So is STC Capital Bank, St. Charles, where President Christopher Woelffer says you really should talk to your banker.

"Open the lines of communication," Woelffer says, "so the bank can understand your loans, needs and issues. We want to understand your issues so we can talk about (which accounts may be right for your needs)."

Woelffer also suggests sticking to "what you know how to do." If, for example, your business makes widgets, "make widgets."

Questions, comments to Jim Kendall, JKendall@121MarketingResources.com.

© 2008 121 Marketing Resources, Inc.