Ask anyone from a bank economist to the owner of your local hair salon about the economy and you’ll probably get the same answer: The U.S. economy is going to continue to struggle next year. The question is will you see that as a problem or as an opportunity?
Surviving, and Thriving, in Slow Times
It’s likely that as in past recessions, many new small businesses will be created in the coming year as laid-off workers rethink their careers. How will these businesses survive, along with all the other small businesses already struggling out there? Only by being cunning and cost-smart say experts in business and entrepreneurship. The following include some of their tips for getting through the slow times:
Strike a deal: Right now, everything is negotiable,” says Rieva Lesonsky, CEO of the business consulting firm SMB Connects in Irvine, California. “If you go in and talk to people, employees are willing to cut deals. Ask for a break with everyone, even your landlord.”
Get creative about financing: Bank financing may be tough to come by next year unless you have a stellar credit rating. We’ll likely see a shift from more capital-intensive startups to those such as e-commerce firms, which are more easily self-funded or launched on friends-and-family money.
Business funding may also come from an unusual source next year: private foundations, says Tom Ruhe, director of entrepreneurship at the Marion Ewing Kauffman Foundation, a Kansas City, Missouri-based organization dedicated to advancing entrepreneurship.
For example, as other funding dries up, look for environmental foundations to fund renewable-energy startups. Private equity may remain a viable funding source next year, as poor stock returns leave some investors looking into other investments, says Lawrence Gelburd, a lecturer at the Wharton School’s Entrepreneurial Management Program at the University of Pennsylvania in Philadelphia. “When you’re wealthy and you want to get a 10 percent to 100 percent return on capital,” he says, “you [eventually] run out of places to go except funding startups.”
Review your business plan: When business is slow, spend time reexamining every aspect of your business plan. Take a hard look at your company’s overall direction and determine whether it’s the right one, Ruhe says. “You can’t change a tire while you’re going 100 miles an hour,” he notes. “So now’s the time to do it.”
Find a new audience: One way to juice up your business in a slowdown is to find new applications for your product or new markets for your service. Ruhe notes the example of Play-Doh, which was used to remove coal residue from walls originally but was reimagined as a children’s sculpting material when the original market died out.
Don’t get mired in the negativity circulating about the economy. Instead think about the entrepreneurs who bought assets cheap during the Depression and rose to become multimillionaires. This time around, that could be you, says Harry DeWolf, a Portland, Oregon–based district director for the Small Business Administration.
Start a business that buys cheap real estate assets, for instance. Or think about entering growing fields such as health care or business consulting, which is on the rise as large corporations outsource functions they previously did in-house.
Market your business aggressively to project a positive, successful image, DeWolf advises. For starters, upgrade your Web site. “Your site can project a solid, quality image for you 24/7,” DeWolf notes. “Also, use Internet networking and go to good old-fashioned chamber of commerce events and business events at convention centers. Get out there. Don’t curl up in a ball.”
Another strategy is to comarket with other local small businesses. Team up with companies offering complementary products or services to offer customers package deals, says SMB’s Lesonsky.
Some experts see a ray of hope coming in 2009 with President Barack Obama. Lesonsky is optimistic Obama will return the SBA to a more proactive approach to helping small businesses, as the agency exhibited under the Clinton administration.
SBA director DeWolf, meanwhile, says Obama’s arrival may have a positive impact on consumer confidence and in turn on consumer spending. “The prospect of a new administration is giving people some light at the end of the tunnel,” he says. “You’re going to see slow, incremental improvements in consumers’ perceptions.”
Check out my latest book The 2009 Economic Survival Guide available here.
Monday
America's Best Christmas Movie
A Christmas Story (1983) - The film relates the tale of Ralphie Parker, who wants a Red Ryder BB gun for Christmas and will go to any lengths to get it despite the numerous adult admonitions of "you'll shoot your eye out." Over the course of the film, Ralphie hides a Red Ryder advertisement in his mother's magazine, fibs about the spotting of a dangerous animal in the neighborhood, blurts his desire outright, writes an essay on the subject, and asks an impatient Santa just as the department store closes. Ultimately, Ralphie's "Old Man" gives Ralphie his BB gun for Christmas, stating that he had one himself at an earlier age.
Honorable Mention
Its A Wonderful Life(1946) - The film takes place in the fictional town of Bedford Falls shortly after World War II and stars James Stewart as George Bailey, a man whose attempted suicide on Christmas Eve gains the attention of his guardian angel, Clarence Odbody who is sent to help him in his hour of need. Most of the film is told through flashbacks spanning George's entire life and narrated by Franklin and Joseph, unseen Angels who are preparing Clarence for his mission to save George. Through these flashbacks we see all the people whose lives have been touched by George and the difference he has made to the community in which he lives.
Miracle on 34th Street(1947) - Kris Kringle is indignant to find that the person assigned to play Santa in the annual Macy's Thanksgiving Day Parade (Percy Helton) is intoxicated. When he complains to the event's director, Doris Walker (Maureen O'Hara), she persuades Kris to replace him. He does such a fine job that he is hired to be the Santa for Macy's flagship New York City store on 34th Street at Herald Square.
Christmas Vacation (1989) - This is the one Christmas movie that I don't anyone can ever get tired of. Chevy Chase returns in the third installment of the Vacation series as Clarke W. Griswold as he tries desperately to maintain his sanity during the holidays with all of his relatives coming to stay under his roof and enduring all the mishaps along the way.
The Santa Clause (1994) - It's an original '90s style Christmas story that tugs at your heart strings, and reminds you that we were all kids once. It reminds you of those days when you dreamt of Santa... when you stood in line waiting to sit on the jolly elf's lap... your knees shaking... as you tried to memorize what you were going to ask Santa. Anyone who isn't touched by this movie should look for the little boy or girl inside, and remember the Christmas Eves when you listened for the clatter of reindeer hooves on the roof.
Scrooged(1988) - Francis "Frank" Xavier Cross is a selfish, cynical television programming executive whose concentration on his lucrative, fast climbing career cost him his true love, Claire Phillips, alienated him from his family and obliterated any chance of having a happy and fulfilling life. Essentially, Frank has become nothing but an expensive black suit who barks orders and overworks his assistant Grace Cooley, forcing her to constantly break plans with her family.
What are yours????
Merry Christmas and a Prosperous New Year!
Tuesday
Hey Buddy, Gotta Match?
Everyone is searching for answers on how to have their business succeed in a down economy.
Many feel that business has changed, but in reality the economic challenge has forced business people to improve their skills and refine their approach.
When I talk with other business owner searching for the Holy Grail to sell in this economy, I start with a very basic question. "What is your job as a business owner?" Usually, that question is met with silence for a moment; and then I'm peppered by a plethora of descriptions.
I'm always amazed at the description variance for the same role. How can a business owner be successful if they can't clearly define their role?
This exercise is followed by another question.
"Would it be worth the price of admission if I could provide you with a one-word job description that provides you with a level of focus that you have never had before? You will wake up every morning and say, "I know exactly what my job is!"
As you can imagine, this offer is always met with a warm reception.
To help paint this picture, I ask the business owners to picture the two sides of Velcro, one side being the cotton side and the other being the hook side. Imagine each side represents a business entity. One your business and the other your customers.
Still with me? Good.
Think about it. There is no other part to the success equation. Thus, the fundamental job of the business owner is to put these two entities together. The one-word job description is to be the matchmaker.
The matchmaker business owner works with these two entities with the goal of bringing them together. To successfully do this, the matchmaker needs to master both sides of the equation.
Your business and your customer.
Many feel that business has changed, but in reality the economic challenge has forced business people to improve their skills and refine their approach.
When I talk with other business owner searching for the Holy Grail to sell in this economy, I start with a very basic question. "What is your job as a business owner?" Usually, that question is met with silence for a moment; and then I'm peppered by a plethora of descriptions.
I'm always amazed at the description variance for the same role. How can a business owner be successful if they can't clearly define their role?
This exercise is followed by another question.
"Would it be worth the price of admission if I could provide you with a one-word job description that provides you with a level of focus that you have never had before? You will wake up every morning and say, "I know exactly what my job is!"
As you can imagine, this offer is always met with a warm reception.
To help paint this picture, I ask the business owners to picture the two sides of Velcro, one side being the cotton side and the other being the hook side. Imagine each side represents a business entity. One your business and the other your customers.
Still with me? Good.
Think about it. There is no other part to the success equation. Thus, the fundamental job of the business owner is to put these two entities together. The one-word job description is to be the matchmaker.
The matchmaker business owner works with these two entities with the goal of bringing them together. To successfully do this, the matchmaker needs to master both sides of the equation.
Your business and your customer.
Sunday
High Impact - Low Budget Marketing
The secret to creating a high-impact marketing plan is to optimize your limited budget. A one-time radio ad blitz, glossy brochure, or flash-enabled website will quickly erode your budget and derail your marketing plans. Use low-budget marketing to get your message out to your customers on a regular basis, and watch sales revenue grow.
There are several reasons why a low-budget marketing plan is a must for small business in today's advertising bloated society:
Expensive ad exposure does not necessarily translate to increased sales. Just ask Super Bowl advertiser Pet.com, whose sock puppet commercial was a hit with consumers, but left the company bankrupt. Every marketing dollar spent should produce a good return in sales.
Your target customers need to hear your marketing messages at least 7 times to influence a buying decision. Using marketing & sales strategies outside your budget, does not allow you to repeat your message often enough to make an impact.
Marketing impact can be greatly improved by using multiple marketing channels. Prospects will likely become buyers if they: read about your company in the newspaper, attend a seminar, take home a brochure, and visit your small business website. The further you can "stretch your marketing dollars" to reach your target market in multiple channels, the higher the impact of your marketing message.
Low-Budget High-Impact Marketing Techniques
Get A Piggyback: Hitching a ride on the marketing of another company can save your small business time and capital. When computer reseller franchise, Computer Exchange, was looking for methods to reach price conscious consumers on a low budget, the company followed Wal-Mart openings. Wal-Mart`s big budget marketing department would carefully select the new store openings based on demographics and other costly analysis. Cyber Exchange opened stores in the vicinity of Wal-Mart saving real-estate selection costs and piggy backing on Wal-Mart`s marketing plan.
Find The Right Target: A critical part of your marketing plan is targeting the right customer. For a low-budget high-impact marketing plan to work, find customers who are easy to identify and affordable to reach.
Forget the mass market and go for small niche markets. For example, local, large breed dog enthusiasts can be reached by clubs, special shows, and targeted publications. Reaching all dog owners will be ineffective because of limited exposure combined with higher costs of marketing in mass publications.
Make Yourself News Worthy: A mention of your company in the right media can help deliver your marketing message in a low cost manner. My local plumber has mastered the art of self-promotion. When a child's red wagon was stolen, "Pete The Plumber" showed up in his Super-Hero painted van to bring a brand new wagon to the child. It was a good deed; resulting in plenty of media talk.
Form a Joint Venture: Joint ventures are too powerful for small business to ignore. Forging an alliance with a group of small companies or a large corporation can give your marketing plan the ultimate "bang for the buck." A joint venture will lower your costs, enabling you to enter into new markets and create new distribution opportunities.
Maximize Referrals: The most cost-effective method of reaching new customers is by referrals from satisfied customers. A satisfied customer telling others about your small business is more effective than any fancy ad campaign. Spend time to get customer referrals on a weekly basis.
These are just a few of many tactics and strategies used by small business to create a high-impact marketing plan on a low-budget. Marketing success comes from creativity; not from having the biggest budget.
There are several reasons why a low-budget marketing plan is a must for small business in today's advertising bloated society:
Expensive ad exposure does not necessarily translate to increased sales. Just ask Super Bowl advertiser Pet.com, whose sock puppet commercial was a hit with consumers, but left the company bankrupt. Every marketing dollar spent should produce a good return in sales.
Your target customers need to hear your marketing messages at least 7 times to influence a buying decision. Using marketing & sales strategies outside your budget, does not allow you to repeat your message often enough to make an impact.
Marketing impact can be greatly improved by using multiple marketing channels. Prospects will likely become buyers if they: read about your company in the newspaper, attend a seminar, take home a brochure, and visit your small business website. The further you can "stretch your marketing dollars" to reach your target market in multiple channels, the higher the impact of your marketing message.
Low-Budget High-Impact Marketing Techniques
Get A Piggyback: Hitching a ride on the marketing of another company can save your small business time and capital. When computer reseller franchise, Computer Exchange, was looking for methods to reach price conscious consumers on a low budget, the company followed Wal-Mart openings. Wal-Mart`s big budget marketing department would carefully select the new store openings based on demographics and other costly analysis. Cyber Exchange opened stores in the vicinity of Wal-Mart saving real-estate selection costs and piggy backing on Wal-Mart`s marketing plan.
Find The Right Target: A critical part of your marketing plan is targeting the right customer. For a low-budget high-impact marketing plan to work, find customers who are easy to identify and affordable to reach.
Forget the mass market and go for small niche markets. For example, local, large breed dog enthusiasts can be reached by clubs, special shows, and targeted publications. Reaching all dog owners will be ineffective because of limited exposure combined with higher costs of marketing in mass publications.
Make Yourself News Worthy: A mention of your company in the right media can help deliver your marketing message in a low cost manner. My local plumber has mastered the art of self-promotion. When a child's red wagon was stolen, "Pete The Plumber" showed up in his Super-Hero painted van to bring a brand new wagon to the child. It was a good deed; resulting in plenty of media talk.
Form a Joint Venture: Joint ventures are too powerful for small business to ignore. Forging an alliance with a group of small companies or a large corporation can give your marketing plan the ultimate "bang for the buck." A joint venture will lower your costs, enabling you to enter into new markets and create new distribution opportunities.
Maximize Referrals: The most cost-effective method of reaching new customers is by referrals from satisfied customers. A satisfied customer telling others about your small business is more effective than any fancy ad campaign. Spend time to get customer referrals on a weekly basis.
These are just a few of many tactics and strategies used by small business to create a high-impact marketing plan on a low-budget. Marketing success comes from creativity; not from having the biggest budget.
Friday
You Have Two Choices Now
During challenging times you have two choices; whine, complain and sit and wait for things to get better or you can start to see your challenges in new creative ways learning how to use these difficult periods as opportunities to get better, smarter and more effective.
Generally speaking poor business owners, during periods of difficulty, choose the first option.
Why?
For starters they feel like victims of circumstances that they couldn’t control. Well, let me tell you, the business owners who choose the second option have no more control over many of the challenges they face than the poor business owners.
But, what they do, is bring a different mindset to the problems. They look for the lessons or learning. They find ways to better manage their time and resources. They don’t waste a single minute feeling out of control. They get busy. They market smarter. They look for opportunities where they had previously ignored or took for granted.
In general they take a pro-active approach to these times where the whiners tend to sit around feeling sorry for themselves.
I don’t like difficult times any better than the rest of you but guess what? They are a part of the ebb and flow of life so get used to them. Why not use these times to hone your business skills so that the next time we have a similar problem you will be better prepared?
And we will have another economic decline. We’ve had them every 10-15 years for the past 100 years.
There’s a whole lot more. So you have a choice; get busy getting better or wait till this blows over. But let me warn you, if you wait and your competitor is getting better, you’ll have a lot more to complain about when business picks up.
Generally speaking poor business owners, during periods of difficulty, choose the first option.
Why?
For starters they feel like victims of circumstances that they couldn’t control. Well, let me tell you, the business owners who choose the second option have no more control over many of the challenges they face than the poor business owners.
But, what they do, is bring a different mindset to the problems. They look for the lessons or learning. They find ways to better manage their time and resources. They don’t waste a single minute feeling out of control. They get busy. They market smarter. They look for opportunities where they had previously ignored or took for granted.
In general they take a pro-active approach to these times where the whiners tend to sit around feeling sorry for themselves.
I don’t like difficult times any better than the rest of you but guess what? They are a part of the ebb and flow of life so get used to them. Why not use these times to hone your business skills so that the next time we have a similar problem you will be better prepared?
And we will have another economic decline. We’ve had them every 10-15 years for the past 100 years.
Consider
- New markets for your products or services.
- New marketing approaches that might be a little edgy.
- Spending more time in self-improvement; books, CD’s, Seminars.
- New approaches to previous customers or clients.
- Reduce operating cost through more effective purchasing.
- A rigorous self-evaluation of every aspect of your business.
- Better record keeping and activity evaluation.
There’s a whole lot more. So you have a choice; get busy getting better or wait till this blows over. But let me warn you, if you wait and your competitor is getting better, you’ll have a lot more to complain about when business picks up.
Thursday
What Is Your Defense?
Whenever we're threatened by someone, we instinctively look for ways to protect ourselves.
It's just a natural knee-jerk reaction that everyone has. And in business where money, security, and even our family's future rides on our every move, anyone or anything we view as a "threat" usually causes us to crawl into our shell and go into protection mode. Once we're inside of our shell, we close off to all possibilities except avoiding or defeating the threat.
But on the flip side - Anyone or anything we see as being able to help us build our business, expand our reach or improve profitability, makes us instinctively think of ways to use that to our advantage.
The same thing can be said about a slow and uncertain economy.
You see the word "competitor" is nothing more than a label other businesses place on you because they see you as wanting to get the same thing they want (from a limited supply).
In other words, if 100 customers exist and your competitor knows you're both pretty much selling the same stuff. The race is on to see who can get the biggest share of those 100 customers!
So what sets your business apart from your competitors? What edge does your company have? What makes you different?
The answer is how you market yourself and your company.
Why do people know what product "plop plop fizz fizz" represents? Why do people know who, what and where they get when you dial 588-2300. Can you dial that number without the jingle going on in your head? Who is "the king of beers"?
Do you get the point?
What do consumers think of when they think of your company?
It's just a natural knee-jerk reaction that everyone has. And in business where money, security, and even our family's future rides on our every move, anyone or anything we view as a "threat" usually causes us to crawl into our shell and go into protection mode. Once we're inside of our shell, we close off to all possibilities except avoiding or defeating the threat.
But on the flip side - Anyone or anything we see as being able to help us build our business, expand our reach or improve profitability, makes us instinctively think of ways to use that to our advantage.
The same thing can be said about a slow and uncertain economy.
You see the word "competitor" is nothing more than a label other businesses place on you because they see you as wanting to get the same thing they want (from a limited supply).
In other words, if 100 customers exist and your competitor knows you're both pretty much selling the same stuff. The race is on to see who can get the biggest share of those 100 customers!
So what sets your business apart from your competitors? What edge does your company have? What makes you different?
The answer is how you market yourself and your company.
Why do people know what product "plop plop fizz fizz" represents? Why do people know who, what and where they get when you dial 588-2300. Can you dial that number without the jingle going on in your head? Who is "the king of beers"?
Do you get the point?
What do consumers think of when they think of your company?
Wednesday
Find Your Niche
Over the past few months, I've seen quite a few fearful sounding articles where some people seem incredibly worried about the bad economy and it's impact on being able to make a money with their small business.
Well, it's still possible to find profitable niches.
Sure, there are clearly niche markets that are going to fall off the map in rough financial times. But at the same time, there's plenty that are going to remain very stable or even do much better during a bad economy.
So how do you go about niche marketing when the economy sucks?
It just takes a shift in thinking. Consider these 5 key factors:
People will be spending money on things regardless of the economy. It is what they will be spending their money on and with who that you need to determine and court these folks like a teen courts their first love.
Well, it's still possible to find profitable niches.
Sure, there are clearly niche markets that are going to fall off the map in rough financial times. But at the same time, there's plenty that are going to remain very stable or even do much better during a bad economy.
So how do you go about niche marketing when the economy sucks?
It just takes a shift in thinking. Consider these 5 key factors:
1. Niches where people NEED to spend money. In other words...staple products
people have to buy regardless of what's going on. (Example: Students have to buy
books for college classes...or people who have health problems they need to
spend money on regardless of the economy)2. Niches where I can help people save
money. (Example: VOIP or calling cards to save money on phone bills)3. Niches where an essential problem needs to be solved or fixed. (Example: People have computer software/hardware problems that need correcting to keep their PC from going kaput)
4. Niches that don't require people to actually spend money.
(Example: Getting an auto quote or signing up for a free credit report
service)5. Niches where people are dealing with any kind of highly emotional or
motivational issue that simply overrides anything going on with the economy.
(Example: Love, Divorce, Legal Help, etc.)Bear in mind though, people will also still spend money on non-essential things in a bad economy. You see, the reality is most people are hardly rational about how they spend money, especially when it comes to things they're highly passionate about.
People will be spending money on things regardless of the economy. It is what they will be spending their money on and with who that you need to determine and court these folks like a teen courts their first love.
Tuesday
7 Strategies For Small Business Success
The events in the banking and financial markets have resulted in business confidence hitting the lowest level in the past 20 years.
With all this talk of doom and gloom, it would be surprising if you weren’t just a bit worried about how the economic trends over the next year or so will affect your business. There is no doubt that the past few years have been good for business. But now it appears that the party is over and we need to prepare for an economic clean up.
Rather than just worry about how you may be affected, there are a number of proactive measures you can take to ensure the downturn does not lead to your downfall.
1. Make a Plan
It’s time to look forward now to what may happen in your market and in your industry and plan ahead. Don’t wait until the downturn has started to take its toll, when you can only be reactive to the pressures that hit you. Analyse your current situation and take stock of where your strengths and weakness are. Then make a plan to make the most of your situation, by focusing on your strengths and shoring up your weaknesses. Don’t be over cautious, but be aware of what may happen and make allowances and contingencies in your plan. If you focus on your strengths, you may find you can grow in a shrinking market by outdistancing your competitors and taking market share by being better than they are.
2. DO NOT Cut Back on Marketing
Often when times are hard, we think about how we can cut back on expenditures. This is a good policy, but don’t make the mistake of cutting back on your marketing. Now is the time to be even more visible to your market. The key is to make sure you are not wasting your marketing dollars. Make sure every dollar you spend on advertising and promotion is accountable. Keep track of where your sales or your enquiries are coming from and measure the return on investment you are getting from each of your advertising methods. Cut back on the areas where results are poor and redirect that expenditure into the better performing areas. Don’t spend any money in any advertising vehicle when you cannot justify it with a clear and positive return on investment measure. Do this and don’t be surprised if you actually increase your sales while your competitors are complaining about how tough it is.
3. DO Cut Back on Waste
Analyse your operations and identify where you have become complacent and excessive during the good times. See where you can cut out expense without affecting efficiency and effectiveness. Review your expenses from your financial statements two years ago and see what has changed. See if you can cut back to the level of two years ago. Look at your stock levels and see if you can quit slow moving stock or reduce your purchasing levels to reduce your inventory investment over the next few months. Check your overtime levels and see if it would be better to employ an extra person rather than pay at time and a half rates. Review your phone plans and see if you can get onto a better rate. These are just some of the areas where you can find savings. Don’t be fat and slow when the tough times come. Get in shape now and be mean and lean and ready to fight the battle.
4. Focus on Quality
Develop your processes and systems to ensure your products or service improve in quality. In most markets, it is the lower end products that get cut back the most in tough times. In an economic downturn, usually the lower and middle income earners are affected the most. The more affluent are usually shielded from the effects of the economy and continue their spending on quality high end products and services unabated. Position yourself as a quality provider and go after the top end of the market where profit margins are greater. At this end of the market, price competition is less important and you can make more profit with fewer sales. Don’t worry so much about selling volume. Make sure you maximise your profits with each sale you make.
5. Treat Your Customers Like Royalty
Even if you take care of your customers now, make sure you do an even better job when the economy makes life harder. Remember that it is your customers who pay your salary and your bills. You can’t afford to lose any loyal customer due to competitive pressures. When times are tough, your competitors will fight even harder to get at your customers. Don’t let them get a foothold by being complacent. Make sure you get to your customers first and give them even more reasons to stay with you. Treat every new lead like gold. Improve your response rates and improve your sales methods. Don’t let new customers slip through your fingers because a competitor gave them a better deal. Focus on value and make sure you can communicate the value to your customers. When your competitors fall, be there to make sure you pick up their customers and convert them into your loyal customers.
6. Become the Preferred Place to Work
In an economic downturn, good people lose their jobs. If your business is strong, there are many opportunities to pick up good people to join your team. Make sure your current employees enjoy working for you so that they tell their friends how good it is. Then when good people become available, you will be sought after as a place of employment. How good would it be to have your pick of the best talent, rather than fighting to get anyone to come to work for you.
7. Stay Confident and Refuse to Join the Downturn
Business confidence is usually based on external factors, such as interest rates, market demand, exchange rates, employment rates, price levels of inputs and any number of other things. When these start to negatively impact the market, confidence levels fall because these factors do make life more difficult. But this confidence is wrongly based and you can use it to your advantage. If you rely on an easy economy for you to succeed, your confidence is misplaced. Put your confidence in your own ability to be the best at planning, selling, producing and competing in your market and get to work on being prepared for the tougher times.
Conclusion
It doesn’t matter if confidence in the economy is the worst it has been for 20 years. What matters is how confident you are that you can do what it takes to be ready and be at your best to compete. You can be sure that many others will not be prepared, but don’t let that be an excuse for you. If you get to work now to improve how you do business, you can be confident that no matter how bad the economy gets, you will succeed and take advantages of the many opportunities that a downturn will bring.
With all this talk of doom and gloom, it would be surprising if you weren’t just a bit worried about how the economic trends over the next year or so will affect your business. There is no doubt that the past few years have been good for business. But now it appears that the party is over and we need to prepare for an economic clean up.
Rather than just worry about how you may be affected, there are a number of proactive measures you can take to ensure the downturn does not lead to your downfall.
1. Make a Plan
It’s time to look forward now to what may happen in your market and in your industry and plan ahead. Don’t wait until the downturn has started to take its toll, when you can only be reactive to the pressures that hit you. Analyse your current situation and take stock of where your strengths and weakness are. Then make a plan to make the most of your situation, by focusing on your strengths and shoring up your weaknesses. Don’t be over cautious, but be aware of what may happen and make allowances and contingencies in your plan. If you focus on your strengths, you may find you can grow in a shrinking market by outdistancing your competitors and taking market share by being better than they are.
2. DO NOT Cut Back on Marketing
Often when times are hard, we think about how we can cut back on expenditures. This is a good policy, but don’t make the mistake of cutting back on your marketing. Now is the time to be even more visible to your market. The key is to make sure you are not wasting your marketing dollars. Make sure every dollar you spend on advertising and promotion is accountable. Keep track of where your sales or your enquiries are coming from and measure the return on investment you are getting from each of your advertising methods. Cut back on the areas where results are poor and redirect that expenditure into the better performing areas. Don’t spend any money in any advertising vehicle when you cannot justify it with a clear and positive return on investment measure. Do this and don’t be surprised if you actually increase your sales while your competitors are complaining about how tough it is.
3. DO Cut Back on Waste
Analyse your operations and identify where you have become complacent and excessive during the good times. See where you can cut out expense without affecting efficiency and effectiveness. Review your expenses from your financial statements two years ago and see what has changed. See if you can cut back to the level of two years ago. Look at your stock levels and see if you can quit slow moving stock or reduce your purchasing levels to reduce your inventory investment over the next few months. Check your overtime levels and see if it would be better to employ an extra person rather than pay at time and a half rates. Review your phone plans and see if you can get onto a better rate. These are just some of the areas where you can find savings. Don’t be fat and slow when the tough times come. Get in shape now and be mean and lean and ready to fight the battle.
4. Focus on Quality
Develop your processes and systems to ensure your products or service improve in quality. In most markets, it is the lower end products that get cut back the most in tough times. In an economic downturn, usually the lower and middle income earners are affected the most. The more affluent are usually shielded from the effects of the economy and continue their spending on quality high end products and services unabated. Position yourself as a quality provider and go after the top end of the market where profit margins are greater. At this end of the market, price competition is less important and you can make more profit with fewer sales. Don’t worry so much about selling volume. Make sure you maximise your profits with each sale you make.
5. Treat Your Customers Like Royalty
Even if you take care of your customers now, make sure you do an even better job when the economy makes life harder. Remember that it is your customers who pay your salary and your bills. You can’t afford to lose any loyal customer due to competitive pressures. When times are tough, your competitors will fight even harder to get at your customers. Don’t let them get a foothold by being complacent. Make sure you get to your customers first and give them even more reasons to stay with you. Treat every new lead like gold. Improve your response rates and improve your sales methods. Don’t let new customers slip through your fingers because a competitor gave them a better deal. Focus on value and make sure you can communicate the value to your customers. When your competitors fall, be there to make sure you pick up their customers and convert them into your loyal customers.
6. Become the Preferred Place to Work
In an economic downturn, good people lose their jobs. If your business is strong, there are many opportunities to pick up good people to join your team. Make sure your current employees enjoy working for you so that they tell their friends how good it is. Then when good people become available, you will be sought after as a place of employment. How good would it be to have your pick of the best talent, rather than fighting to get anyone to come to work for you.
7. Stay Confident and Refuse to Join the Downturn
Business confidence is usually based on external factors, such as interest rates, market demand, exchange rates, employment rates, price levels of inputs and any number of other things. When these start to negatively impact the market, confidence levels fall because these factors do make life more difficult. But this confidence is wrongly based and you can use it to your advantage. If you rely on an easy economy for you to succeed, your confidence is misplaced. Put your confidence in your own ability to be the best at planning, selling, producing and competing in your market and get to work on being prepared for the tougher times.
Conclusion
It doesn’t matter if confidence in the economy is the worst it has been for 20 years. What matters is how confident you are that you can do what it takes to be ready and be at your best to compete. You can be sure that many others will not be prepared, but don’t let that be an excuse for you. If you get to work now to improve how you do business, you can be confident that no matter how bad the economy gets, you will succeed and take advantages of the many opportunities that a downturn will bring.
Monday
Operating Your Business During Tough Times
Many companies face pressures from operating in a tough economy.
However, if your small business can pull through the tough times, your performance will be rewarded when things pick back up. The economy right now is headed downhill. During tough times, businesses often get discouraged that they cannot compete. Sometimes small businesses think that their larger competitors are better suited to deal with the changing times and have better capital reserves to weather hardship.
That is not always true.
Small businesses have the great advantage of being just that, small! Entrepreneurs, by nature, are able to extend and change their business with ease simply because of their skill set and nature. Flexibility is imperative when dealing with changing times. There are several things that you, as a small business owner, can do to change the face of your business and be better positioned to operate during an economic downturn.
An entrepreneur once said that if he had only one more dollar to spend on his business, he would spend it on marketing. This holds true for times of hardship, perhaps moreso than ever. Marketing is arguably even more important during these times. Marketing can help combat the effects of an uncertain economy by reminding consumers of their favorite products and why they prefer them in the first place.
Remember, although it may seem like a lost cost, marketing your business during tough times is essential to the survival and success of your company. But if you stop marketing, the effects may hit harder some time down the road.
It might be nice to have front row tickets to every Cubs, Sox, Bears and Bulls game, but it may not be crucial to your corporate directive. Cutting the excess fat out of a company is imperative to operating in a tough economy. As a business owner, you must focus like a laser on streamlining operations and becoming more efficient.
Remember, there is always a light at the end of the tunnel. Find the positives for your business.
However, if your small business can pull through the tough times, your performance will be rewarded when things pick back up. The economy right now is headed downhill. During tough times, businesses often get discouraged that they cannot compete. Sometimes small businesses think that their larger competitors are better suited to deal with the changing times and have better capital reserves to weather hardship.
That is not always true.
Small businesses have the great advantage of being just that, small! Entrepreneurs, by nature, are able to extend and change their business with ease simply because of their skill set and nature. Flexibility is imperative when dealing with changing times. There are several things that you, as a small business owner, can do to change the face of your business and be better positioned to operate during an economic downturn.
An entrepreneur once said that if he had only one more dollar to spend on his business, he would spend it on marketing. This holds true for times of hardship, perhaps moreso than ever. Marketing is arguably even more important during these times. Marketing can help combat the effects of an uncertain economy by reminding consumers of their favorite products and why they prefer them in the first place.
Remember, although it may seem like a lost cost, marketing your business during tough times is essential to the survival and success of your company. But if you stop marketing, the effects may hit harder some time down the road.
It might be nice to have front row tickets to every Cubs, Sox, Bears and Bulls game, but it may not be crucial to your corporate directive. Cutting the excess fat out of a company is imperative to operating in a tough economy. As a business owner, you must focus like a laser on streamlining operations and becoming more efficient.
Remember, there is always a light at the end of the tunnel. Find the positives for your business.
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