How to Keep Your Business Outlook Sunny
when the Weatherman Calls for Rain

It’s not only would-be home owners and banks who are feeling the pinch of the recent credit crunch.  Small businesses in a variety of industries are feeling the squeeze of a tighter lending environment.  Combined with the economic volatility of the past several years, you might start wondering if we’ll ever see the light at the end of the tunnel.

But it doesn’t all have to be doom and gloom.  Successful businesses—and the smart people who run them—learn how to be flexible and survive in difficult economic times.  Here are three tips to help keep your business outlook sunny, even when economic forecasts call for rain.

Know the difference between good and bad debt.
Not all debt is bad;  in fact, certain types of debt may be able to help you gain some traction and propel your business forward.  Good debt should be seen as debt your business acquires as an investment.  For example, upgrading your studio space or your equipment can be seen as good debt, as long as it helps you achieve your business goals.  Don’t just go out and by a brand new $5,000 kiln just because you want to buy a new toy.  Make sure you have the sales to back up that purchase. 

Purchases that do not appreciate in value or add value to your business are considered bad debt.  For example, using your company’s credit line to go on vacation would be bad debt.  Sure it’s nice to get away and free your mind of its daily burdens, but you would be out of your studio and not the producing work that could be sold to pay for that vacation. 

Use debt wisely.
In volatile economic times, it might be tempting to consolidate debt by taking out one larger loan. When interest rates were low, many people took home equity loans to buy things like a new car, home electronics, and other fun stuff (remember that vacation?).  Many of those loans had adjustable interest rates, and now that rates are going up, so are their monthly payments. 

The same story rings true for your business.  You might be up to your waist in debt, but taking another loan out could put you in debt up to your neck!

Reduce the cost of doing business.
Reducing direct costs to your business is possibly one of the most powerful and efficient ways to survive economic instability.  Cutting your business expenses down is like finding loose change in the couch.  You might a few cents each time, but pretty soon it adds up to big savings. 

There are a number of ways to go about reducing costs.  As an artist, the best place to start looking to save is in your process.  Finding ways to produce more work in less amount of time can help you save both time and money, making room for more orders.  You should also look at how you use—or waste—materials necessary to create your work.  This ties directly into your creation process.  Does making a particular piece create a lot of wasted raw materials?  If so, can you reduce the amount of materials you buy through wasting less materials.  Or better yet, find a way to re-use the waste!

You can also look at overhead.  Are you spending too much time on balancing your books?  Or making the basis for a piece that will be embellished later?  This is where entry-level labor comes in.  Hiring someone to come in once a week to balance your books or hiring an intern to help you in your studio might cost more money up front, but will pay dividends once you are freed up to create—and sell—more work.

The bottom line is that there are many ways in which you can reduce your costs, making a rainy economic forecast into a sunny business outlook!  Don’t be afraid to be creative!

Have you found a way to reduce your costs and be more productive?  Let us know at the Wholesale Matters blog.

ABI is coming to you!
You may have missed the Visiting Artist Program at the last Buyers Market, but there’s plenty of time to check out other Arts Business Institute workshops. 

Visit www.ArtsBusinessInstitute.org to see the latest schedule of workshops going on around the country! 

Wholesale Matters Blog-Watch
Wholesale Matters, the official Buyers Market blog, is updated almost every day. Find out what’s new in wholesale, get wholesale tips and tricks, find cool online business tools, and more at http://buyersmarketblog.typepad.com.  Here are a few recent headlines:

• Reducing costs to beat the credit crunch
• A sign o' the times
• The Price-Value Equation
• Entrepreneurs who plan poorly can find themselves scrambling

OPPORTUNITIES KNOCKING
Call for Entry: SNAG 2008 Savannah Conference
Juried Exhibition: “Overflow"
Deadline: Postmarked by November 1st, 2007. “Overflow” is a juried exhibition that presents contemporary metalsmithing solutions that address the transformational possibilities between the interior and exterior space of vessels and containers. The interpretation of the relationship between a vessel and its contents may be real or implied. The exhibition will coincide with the 2008 SNAG conference in Savannah, GA, March 5-8th.

“Overflow” is open to all artists living in North America. Works produced solely in metal or in conjunction with other materials are eligible. All metalsmithing techniques are accepted. The work must have been completed in the last two years. Cannot exceed 50 x 50 x 50 inches and are limited to 50 pounds. Entry fee: $25 Juror: Leonard Urso endowed chair of the Ann Mowris Mulligan Distinguished Professor in the School for American Crafts at Rochester Institute of Technology. Postmark deadline: November 1, 2007. For a prospectus: http://www.snagmetalsmith.org/.docs/pg/10078 or contact Bonnie Kubasta at bkubasta@scad.edu or 912-525-8455.

Quote of the Month:
Innovation is the specific instrument of entrepreneurship…. the act that endows resources with a new capacity to create wealth.

Market Insider Archive - MI newsletters from previous months.