Today’s uncertain economy is enough to make a small business owner’s hair fall out, bowl over from a stomach ulcer or scratch up a rash that could cause customers to consider another place for service or product. The good news is that we know the economy will turn around, in time. Your job is to work smarter and keep your business moving forward until then. That means taking a hard look at the business of your business .
As small business owners we are good at what we do and make. Problems arise when we pay too much attention to our product or service and not enough to managing the business itself. Granted that is the part that usually evokes a dreaded “ugh,” but it is also the part that can mean the difference between success and failure. Focusing on your financials, the people who make your business possible, and your vision will help ensure your survival in today’s economy and beyond.
Re-Mind Your Business
Cash in or Cash Out I am sure you have heard this a thousand times, but it still needs saying. “Cash is king.” A business is more likely to survive in a good or bad economy with good cash flow than with profits. One does not necessarily mean the other. Small business owners usually have problems with cash flow no matter the economy. To improve cash flow do a cost analysis of your business . Look at areas where you can save money such as bank and credit card charges; negotiate with creditors for longer payment arrangements. Barter for services or products with suppliers. If you offer credit to your customers, cut it down or out and be more aggressive with collections. Consider outsourcing services instead of hiring another employee. There are many freelancers that are experts in specific areas such as accounting and bookkeeping, website design and operations and marketing and public relations that can cost less than an employee, benefits included. Be creative in reducing the cost of your day-to-day operations without sacrificing the quality of your product or service.
If you do large jobs, ask for a payment plan that includes a deposit. If you do large contracts such as janitorial services for major corporations, invoice early and ask for early payment or offer your customers a discount if they pay the invoice within a certain time frame. In a poor economy, large corporations are looking for ways to save money too.
If you need help with your cost analysis or cash flow projections, ask for it. Worcester has many free and low-cost resources to help you develop your survival tactics.
While cutting costs is most important, cutting back on marketing, advertising and public relations during a poor economy is a big mistake. Marketing and public relations are what gain you new business . When times are hardest is the time you want to shine even brighter than before. If you do not let your customers know you are still on board, they may forget about you when the good times resurface. And they will resurface.
Develop a no cost marketing plan that includes building media relationships so you can submit byline articles relevant to your industry. Appear on local access television as an expert in your field. Join in professional, community and industry networking events. Develop a customer management program that includes regular contact with customers about subject unrelated to your business as well.
Apply for small business awards and contests by corporations, professional associations, and government. This recognition will get you attention by your customers as well as potential customers that may not know you exist. Winning an award often gets you requests from other media who want to publish your story. It also builds your credibility.
Nurture Your People
Employees It may be that without your employees you would not have a business . During this economic slowdown, communicate with your employees. Now more than ever it is important to be transparent, ask for their ideas for improvement. Motivating employees is difficult when they are feeling shaky about whether they will keep their jobs. The best motivator is to provide them the opportunity to offer suggestion on how to serve the best interest of everyone in the company over the long-haul. They may be willing to take a pay cut or have ideas about cutting back on expenses you did not think about. Go the extra step and provide praise for good work or ideas that work. They are your most precious resource. It is usually less costly to keep current employees than searching for qualified employees that you have to train when the economy improves.
Customers Keeping your existing customers by providing excellent customer service is good practice anytime. During today’s economy it is critical. It is much easier to keep existing customers than to find new ones. Talk to your customers. Learn what they need, how they are doing financially, what their expectations are for the future, so you are on your game when the economy improves and your customers start spending more.
Suppliers Supplier loyalty can be valuable when you need extra time to catch up on your account payables. Depending on your business , you may land a new account and need supplies to launch the account until your first month of receivables is due which could be 60 to 90 days out. A good relationship with your supplier could mean your payables receive the same time consideration. Think creatively when making deals to grow your business with the help of your suppliers. The more growth your business experiences, the more business your supplier could expect.
Focus on the Future
Business Plan Review and revise your business plan. As your business grows and your industry changes it is necessary to keep your business plan relevant. A well-thought out business plan that includes your cost analysis, new marketing plan and employee and customer management programs is critical to a quick and successful recovery. It can ensure the future viability of your business .