O.C. business owners squeezed in current crunch
October 10th, 2008, 2:22 pm · 2 Comments · posted by Jan Norman, small-business columnist
Small-business owners are cautiously eyeing their cash flow as Wall Street melts down and banks tighten credit, even after Congress approved a $700 billion bailout - or maybe because of it.
Business owners are used to the ups and downs of business. But now every slow paying client, every bank rebuff is magnified in this climate. That’s what some Orange County business owners are telling me.
Here’s a sample:
Amit Okhandiar, head of mLogica in Anaheim: A business credit line has become unnecessarily difficult
Amit Okhandiar, mLogica
to get even from the bank where we do extensive transactions.
Douglas Schmidt owner of Hard Soft Corp., a Brea computer consultant, says suppliers are doing the same thing: Our credit lines for all of our primary vendors have been cancelled, so now we have to fund acounts receivable out of company funds.”
Pat Dwight, general manager at Steams Dwight & Associates, a Laguna Hills marketing firm, is tightening the belt as a precaution. “No employee insurance plan in 2008; reduce work week for employees by two days; tap into the line of credit more than last year.”
So is Bob Richardson of RWR Marketing and Graphic Design in Huntington Beach: “Much due to media hype, I have cut back spending, think
Bob Richardson, RWR Marketing
twice before buying new equipment or personal luxury items. Taking a wait and see attitude. Again, because of the hype and the fear our government officials are putting on us, I think most of Main Street will pull in the reins – even if business is good — which of course will cause the exact thing the government wants to prevent.
“My credit is fine. I pay off my credit card balance every month (our state and federal government should try that). Maybe I’m not rich enough to feel the pain yet.”
Jack Bicer, CEO at Septium Corp., an Irvine custom software developer, says client problems could become his firm’s problems: “Some clients are experiencing cash flow problems, and some came close to closing their doors. They are maxing out on their home equity loans to keep doors open or ending projects prematurely to save cash.
“Their cash flow problems have now became our cash flow problems. It is now taking almost three times as long to collect on invoices and uncollected amounts are rising.
“Although we notice a fair amount of gloominess and uncertainty in the marketplace, clients are still continuing investing in new projects, albeit at a slower pace and with budgets lean enough to be in weight loss commercials.”
What about you? Is your banker being difficult? How about your suppliers? Are you cutting back and waiting to see what happens next on Wall Street and Main Street?
MORE ECONOMIC NEWS:
October 12th, 2008 at 5:00 am
[...] O.C. business owners feel economic squeeze [...]
October 13th, 2008 at 9:41 am
Right now, almost everyone is operating with some fear and uncertainty. A great way to alleviate some of that fear to take greater control of your cash. The quickest and cheapest way to produce cash lies within your accounts payable. The trick is to know who you must pay and who can wait. You must also know what and how to communicate with folks that you have to push off. There is a very specific formula for these procedures and when you know how to do it correctly, you can create a significant amount of cash (and sanity!) in short order.