With the credit crunch rarely out of the news, there are now indications that it is starting to affect entrepreneurs and smaller business bosses.
This is due to the banks introducing more stringent lending conditions and the increased cost of credit. In addition to mortgages, the sub-prime crisis has resulted in rising defaults for revolving credit.
Would-be entrepreneurs also seem to have less appetite for risk, as they may not reap the financial benefits for some time. Start-ups often take months to break even and people do not want to risk being at a loss.
For entrepreneurs in business, stricter lending conditions and increased cost of credit will hit them hard. The lack of new finance availability, and the withdrawal of previous credit lines as banks raise the risk threshold, will cut off the lifeblood of cash to fund the growth of the business.
Introduced in early April, the new CGT regime is likely to have an adverse impact on enterprise, discouraging entrepreneurs from investing in ideas, taking risks and driving the economy forward.
But it is not all doom and gloom. If we believe everything we read in the papers then failure could become a self-fulfilling prophecy, particularly for small business owners and potential entrepreneurs.
Monitoring costs very closely and differentiating between want and need, luxury and essential, is essential in times of economic slowdown.
Business owners must also ensure that their employees have the right tools and equipment in order to grab opportunities before their competitors. A true entrepreneur will be able to micro-manage the sales and prospects pipeline to make sure that no targets are being missed.
In times when money is not stretching very far, business leaders need to understand how their clients’ particular sectors are being affected and what can be done to help. Going the extra mile for customers will be greatly appreciated and, in the long term, rewarded.
The top organisations will weather the storms of bad times, reinventing themselves and finding new routes to generate revenue.