Business Mistakes To Avoid In 2010 And Beyond
     The past couple of years have been an especially challenging time for most business owners as they've struggled to maintain sales and profitability in the face of one of the worst economic downturns in our nation's history. As a result, most business owners were only too glad to say "Goodbye!" to the first decade of the 21^st century.

     As you make plans for growing your business in the decade ahead, make sure you aren't carrying old baggage along with you.

     Today and tomorrow Promotional Consultant Today is looking at five common mistakes that were made by many small business owners during the economic downturn. If any look familiar to you, resolve to correct them now so you can begin this decade with a fresh start. Today we'll look at the first two.

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1. Have a sale on your highest-volume, lowest-margin products. After all, you know you will sell a lot of product this way, right? While this might be a great way to boost sales, it will also lower your gross profit as well as the value perception of your product. If you don't know your gross profit margins by product, you could be doing this without even knowing it.

This strategy is the exact opposite of what you should do, which is to focus your sales efforts on your high-margin products and offer something extra to customers that doesn't cost you a lot to provide, such as free shipping or express order processing. The key is to devise a discounting strategy that doesn't undermine your pricing structure and condition your customers to expect lower prices in the future.

2. Hesitate to borrow from your bank credit line to finance your cash flow needs. Sometimes, owners are afraid to tap their lines of credit for fear the bank will make demands they don't want to honor. However, financing cash flow is exactly what your credit line is there for, and this may be the perfect time to use it.

By borrowing wisely, you can help ensure your management team spends its time doing things that make your business better, rather than struggling with unnecessary cash flow issues. Just make sure your borrowing needs are temporary and your business will be able to pay the money back when things pick up again.

Note: Using a credit line to finance losses is a bad idea unless it buys you extra time to turn the losses around and you have an active program in place to do that. 

As an aside, there are banks out there that are willing to lend money today, despite what you might hear on the news or read in the paper. Many community banks, in particular, are looking for businesses with good management, solid business plans and strong financials that want to borrow money.

Source: Gene Siciliano, CMC, CPA, is an author, speaker and financial consultant who works with CEOs and managers to achieve greater financial success in a dramatically changing economy. As "Your CFO For Rent"^Ò and president of Western Management Associates, Gene has spent more than 23 years helping his clients build financial strength and shareholder value through applied knowledge and process improvement. His books, Finance for Non-Financial Managers and Financial Mastery for the Career Teacher are both available in bookstores and online.