American Express: Petplan USA -- A Lean, Green Pet Insurance Machine

When it comes to cash management, some small businesses that missed the dot.com boom-and-bust learned valuable lessons from the excesses of that era. These smart companies are long on employee perks, high on morale and -- unlike most of their dot.com counterparts -- short on wasteful spending.

Chris Ashton is president and CEO of Petplan USA, a Philadelphia-based pet insurance company. Founded in 2006, long after the Internet boom and its subsequent crash, the company is decidedly frugal. “We're always saving money,” says Ashton. “I think it's an important tenet of any young company to be aware of costs, to be frugal. Some of the greatest companies in America have an ethos of frugality. We instill it in everyone.” In a nutshell, he says, it's about not wasting resources.

American Express: Personal Guarantees Put It All on the Line – but Should You?

When applying for a bank loan, small-business owners are almost inevitably asked to sign a personal guarantee on the note. It's often a moment of truth both for bankers and borrowers. To bankers, a signature is a measure of extra assurance that the loan will be paid back. For business owners, it may be a psychological test -- are you willing to risk it all for the business?

The practice of requiring a personal guarantee is fairly standard among small-business lenders. To secure a loan guaranteed by the U.S. Small Business Administration, for instance, all partners with ownership of 20% or more are asked to provide one.

Even so, advisers to small businesses often counsel against giving a personal guarantee on a loan.Wharton management professor Keith Weigelt is among those who warn against them. "When you're personally guaranteeing it, that's a whole new ballgame," says Weigelt.

The Work-Life Dialogue: Maintain Good Employee Morale in a Bad Recession

In the current recession, everyone knows that employees are feeling the stress. Some live in daily fear of job loss. And because sales are lagging, many workers won’t be receiving significant cash rewards this year. So, how can you maintain good morale in a bad recession?

American Express: How to Tell if You’re Getting the Best Bang for Your Marketing Buck

Pretty much every small business needs to invest in marketing. But in this economy, when budgets are tight and spending is scrutinized, it’s often tempting to gut the marketing budget. After all, marketing spend is hard to track, and the return on investment vague and far off. Desperate times call for desperate measures, right?

Not so fast.

Before you take this potentially self-defeating step, you may want to perform a few experiments to see which marketing strategies work and which don’t. Why eliminate programs that make you money? And why keep the duds?

American Express: Credit Lines: A Great Financing Tool -- If You Can Get It

A bank line of credit can be hard to come by these days, especially for small companies. So what's it take to get one? Stellar credit and cash flow that can more than cover the fixed charges despite the downturn. That's a tall order for most small businesses in the current business environment. And nearly an impossible one for start-ups.

“Bankers want to take on virtually no risk whatsoever by making the loan,” says John Percival, Wharton adjunct professor of finance.

A line of credit can be a convenient and flexible tool for a growing business. Similar to a credit card, it can help cover the gaps when you're waiting for customers to pay, but need to buy goods and services to fund expenses to continue to serve more customers.

American Express: Cash Management: When to Hold, When to Be Bold (Part I)

When facing a cash crunch, a small business may be tempted to make across-the-board cuts. In the name of survival, some companies slash marketing and IT budgets, cut staff and discontinue expansion plans.

But such heavy-handed measures can backfire: Get rid of enough employees and you’ll find yourself short-staffed when the economy rebounds. Cut too deep today and you risk coming up short tomorrow.

That’s why smart companies like Saladworks take a more disciplined, selective approach to cash management. When sales began to slow, the Conshohocken, Pennsylvania-based restaurant chain took the opportunity to invest in software and revise policies that save money while positioning the company for success.

American Express: Cash Management: When To Hold, When To Be Bold Part II

 
Recently we described how Saladworks, the innovative Conshohocken, Pennsylvania-based restaurant chain, took the opportunity to invest in point-of-sale software and new cash-management practices while positioning the company for success in today’s challenging economy.

In addition to implementing on-demand solutions that streamline everything from inventory management to shift scheduling, Saladworks is cutting back on certain areas of spending and applying those savings to other, more promising areas.

American Express: Three Tips for Working with Asset-Based Lenders

With bank loans harder to come by, more small companies are turning to asset-based lending. When credit was flowing more freely, many small businesses gravitated away from collateralized loans. It's easy to see why. Few people want to pledge their assets. And the fees are pretty high. But times change.

Now that credit is tight again, it may be harder to develop a relationship with these lenders. Historically, asset-based lenders have existed to provide collateralized loans to people who can't meet the conditions for a cash-flow-based loan. Ideally, you would have cultivated these folks in good times when you didn't need their help so much.

The good news is that while many asset-based lenders are part of large financial institutions, many are mom-and-pop operations, some of whom have an affinity for small businesses because they are also small-business owners or were at one time.

American Express: How to Tell if Your Business is Borrowing Too Much Money

Practically every business must manage debt. For small- to mid-size companies, how much is too much? To find out, we tapped Eric Siegel, Wharton adjunct professor in management.

While there’s no hard and fast rule, there are certain common metrics lenders consider when deciding whether to make a loan, says Siegel, who is also president of Siegel Management, advisors to middle market growth companies. In other words, if you want to know if your company can handle its debt load, you may want to look at your operation the way a bank does.

How to Preserve Cash for Your Business

If you're running a small business today and aren't thinking about how to tighten your belt, you are surely in rarefied company. But if you're like the rest of us, you're scrambling to cover expenses, pay bills and make payroll. We asked Wharton lecturer and small business expert Robert Chalfin, about cost-saving strategies for small- to mid-size businesses. Chalfin is quick to point out that while there are no single solutions, there are numerous steps entrepreneurs can take to cut costs during the current recession.

http://blogs.openforum.com/2009/06/30/how-to-preserve-cash-for-your-business/