Thursday, October 16, 2008

Recession Proof Your Small Business

I once worked in an office where words like "problem" "trouble", and "difficult" were not allowed. It seemed silly at first. If you let a word like that slip one time you were corrected like a child, "It's not a problem, it's a challenge." The next slip would just get you a sideways look. Everyone quickly learned to speak only of "challenges" and even though we all knew it was code for some nasty problem using the word "challenge" actually did make most of start to view problems as opportunities. Such are the times we are currently experiencing. SBOs who view this not as a bleak and uncertain time, but as one of challenge and opportunity will come out of this with stronger small businesses.

It's time for business as UNusual.
Review your market and offer something new. It might be repackaging of items or a shift in the way you manage clients. Start looking at your products and services in a new light. Break down your product into smaller more affordable bites. For example, if you are a personal trainer you might find clients reluctant to splurge on such a luxury--try offering group trainings that are more affordable yet allow you to reach more people in less time. Be sure that the changes you make offer a perceived value to your customers. So if you own a coffee shop, don't reduce the size of your cups, instead you could get creative with your menu or add community events to entice more traffic.

Take customer service to a new level.
The biggest advantage small businesses have over large is human connection. Get personal with your customers. Understand their particular challenges and help create solutions. People are always more willing to work with someone they know and trust. If you own a salon find those customers that haven't come in for awhile. Give them a call, make it personal, and invite them in for a special treat.

Review your accounts receivable.
Keep an eye on customers who might show signs of having trouble paying. No matter what your payment terms make them clear and don't let things slide. A customer with a cash flow problem could bring you down with them. This isn't the time to let friendship cloud your judgement.

Focus on the basics.
Keep a tight watch on your cash flow and keep funding your emergency fund. Review your balance sheet and bank accounts frequently.

Don't ignore credit.
Consider increasing your line of credit now in case of emergency. Secure the best rate that you can--it's easier while your business is still in good standing. If things should turn south it will be much harder to get the cash you need to turn things around.

Trim discretionary spending.
Even a tightly run small business can find a little fat to trim. Hold off on major purchases that aren't absolutely necessary. Find ways to reward employees without overspending. Reduce overtime and travel expenses. Use technology to your advantage to find more efficient and cost-effective ways to operate.

Don't fire marketing.
So many companies make the mistake of firing the marketing team/firm, and cutting the advertising during down times. But these are the things that bring and keep business. If necessary you can reduce your marketing and advertising budget, but keep it focused and creative. Look for new ways to reach customers. Find an funny, innovative or unique way to present your business.

So, as you look at your balance sheet, customer database, to do lists, and accounts receivable give a smile and see the opportunities that shine through, hem...challenges.

1 comment:

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