Finance and Budgeting Tips to Plan for Retail Success

For many small business owners, maintaining a profitable business has become increasingly difficult in recent months. While merchandizing and customer satisfaction are always important to retail business owners, today's economy makes it crucial to have a solid understanding of financial planning and budgeting in order to achieve long-term success.

Raymond Joabar, senior vice president and general manager for American Express OPEN, offers five invaluable tips for small businesses on how to develop and improve budgeting and financing in the supermarket and retail industry to help weather the economic climate:

- Plan not to fail. Uncertain economic conditions and the rising costs of doing business are the biggest challenges small business owners face in growing their business, according to the most recent Small Business Monitor, a semi-annual survey of business owners conducted by American Express OPEN. The best defense during an uncertain economic environment is a solid plan. Write down ten challenges that face your business and ways that you can overcome them. This list will help address potential pitfalls, like rising gas and energy costs, long before they affect your business and your customers.

- Line up several sources of financing. When times are lean, you need tools to solve the problem fast. Get a jump on the problem by lining up several sources of financing. Be sure to match the sources and uses appropriately. Use short-term financing options such as lines of credit, short-term loans or credit cards for short-term cash needs, and long-term or secured loans only for the purchase of long-term investments.

- Budget pessimistically. Overly optimistic projections could cause trouble for business owners. Remember that nothing ever goes exactly as planned, so pad your budget with a little extra to accommodate the economy.

- Examine do-it-yourself financing. When surveyed, small business owners say they plan to use personal or private funds as the primary way they will address any cash flow challenges that arise, according to the Small Business Monitor. Investing your own money in your business can help get you through rough economic times but it is important to be sure to minimize personal risk and maximize cash-flow.

- Start building a reserve. Businesses should have up to six months of cash in reserve. If you don't have money tucked away, design a plan for your business to build savings over time. Turn to your accountant or other financial resource for help if this savings goal seems unattainable.

Raymond Joabar is senior vice president and general manager for American Express OPEN. His finance and budgeting tips are taken from OPEN BOOK, A Practical Guide for Business Growth.