Business & Finance Corporations

How to Thrive in the Current Economy

Small business owners often clamp up during economic crises.
It's understandable.
Even the most confident business is apprehensive with the recession and the weakening economy.
For small businesses, the stakes are high and the environment more difficult.
We're all worried, but there is still a lot of business out there.
You need to get started in taking steps to improve your business today.
Implementing these steps will help ensure your small business's survival and even allow it to thrive in the current economy.
So here's a guide for businesses to handle recessions and the inevitable boom that follows: Watch Your Cash To keep your small business healthy, you must understand the financial ebb and flow of your company.
Understanding the patterns of your cash flow in and out is a bigger part of success than many entrepreneurs realize.
You should always be tracing and managing this continually.
Here are some suggestions to keep on top of your businesses cash flow: -Focus on your balance sheet: This is a very important piece to managing your cash flow well.
It's something you should be doing all the time, but it's even more critical in a recessionary environment, because there's just that much less cash floating around.
If you are doing well, try to put cash aside to build a war chest.
-Check your receivables weekly: Call your customers, find out what is going on and if necessary, negotiate a payment plan.
Offer discounts for immediate payment.
Get money up front whenever possible.
When things are starting to turn down, you want to keep a sharp eye out for someone who is into you for quite a bit because if they go under and cash is tight, that could have a huge impact on your small business.
Review your accounts payable too - negotiate more flexible payment terms wherever possible.
-Cut expenses: Now no matter how tough times get, having cash flow out of your business will never be a problem.
As long as your business exists, you will have expenses.
Carefully looking at your expenses is something a wise businessperson should be doing all the time.
The trick is to not cut indiscriminately across the board.
Trim only the fat, and beware of cutting things that bring in revenue.
-Negotiate: In the next year or so, a whole lot is going to be negotiable.
Everyone's business is hurting and everyone is willing to deal.
You don't know if you don't ask.
Keep Your Employees If You Can Keeping your key employees is crucial during times of economic uncertainty.
Laying off people is the kind of thing that makes you wish you hadn't gone into business.
Examine closely the functions of each employee.
Know ahead who needs to improve their performance.
Help them increase their achievements if you can, cut them if you must.
In a recession, the survival of your business may be at risk.
Be ready, have the decisions made ahead of time and hope the day never happens.
Prepare yourself to carry it out if the time comes.
It is also a good idea to get your employees engaged in the performance of the business, like their job is on the line, because unfortunately, it may be.
Ask them to help you identify ways to cut out discretionary expenditures and save money.
They have a big stake in your business too and will want to be part of the solution.
A recession is also a great time to add to staff if you have the capacity to do so.
It is a good idea to look around for people who have been laid off from other companies and pick up some available talent.
You can find top performers who will help take your company to the next level.
Don't Cut Sales and Marketing In lean times, many small businesses make the mistake of cutting their marketing budget to the bone or even eliminating it entirely.
But lean times are exactly the times your small business most needs marketing.
Consumers are restless and looking to make changes in their buying decisions.
You need to help them find your products and services and choose them rather than your competition by getting your name out there.
This move will increase your market presence and pay off well, even after the recession ends.
So don't quit marketing.
Instead, your marketing needs to be more aggressive and more comprehensive than ever.
Here are some suggestions: -Re-evaluate: You need to re-evaluate your current marketing methods.
If you are not seeing some increase in sales from every dollar you spend on promotions, then you are wasting valuable revenue.
Whether you use billboard ads, direct mailings, or the yellow pages now is the time to make sure your current marketing is cost-effective and efficient...
and that is bringing in customers! -Ask for referrals: It may seem a tad aggressive but if you never ask you'll never know.
People place high value in their business relationships.
Try letting customers know that they are appreciated and then asking for information about two or three colleagues that could benefit from your services.
It could be the perfect opportunity to build on that relationship.
You may also want to set up a referral reward program for clients as part of your marketing efforts.
-Network: Get out there and meet your potential customers, both in person and online.
Use online social networking like LinkedIn, Facebook, Plaxo, etc.
Post to discussion boards and blogs where your target market hangs out online.
And, don't forget in person networking like chamber events, merchant association and industry association meetings or community groups.
-Find cheap alternatives: If you can't afford a full-blown marketing program, choose cheaper alternatives such as e-mail marketing, blogs, public relations, online newsletters, attending networking functions, sprucing up your Web site, sending out post cards, or putting out a new sign in front of your office or store.
-Don't drop your pricing: Pricing is the worst way to compete.
Before you do anything with pricing look at your margins on a product by product basis.
Concentrate on high margin products and services and look to reduce/eliminate unprofitable ones.
It is important that your focus on the value that your customer receives from using your product/service.
Continuously adding value to your products and services makes you attractive to your customers and prospects.
Make a valid case that your product or service will benefit the buyer, even if the economic times are uncertain.
Look to Your Current Customers We've all heard the old adage that a bird in the hand is worth two in the bush.
The bird in the hand is your customer or client and he or she is an opportunity to make more sales without incurring the costs of finding a new customer.
Many small-business owners can find that their best prospects for new revenue are their existing customers and clients -- established relationships mean an owner doesn't have to spend time, energy and money trying to make a good impression and knowledge of customers' needs makes it easier to come up with new products or services they'll want to buy.
If you want to recession-proof your business, you can't afford to ignore the potential profits of shifting your sales focus to include established customers.
Here are some ways you can maximize your relations with your current customers: -Customer service: Now is also the time to take customer service to a new level.
You must provide not only a high quality product, but also exceptional customer service.
When money is tight, clients expect more for their dollar.
If you want to keep their business, you must keep them happy.
Refine your customer service strategy to insure that every step from taking the order to delivering the product is client-focused and effective.
-Customer appreciation: Your clients need to be pampered more during a recession, since your competitors will be desperately trying to attract them by offering lower prices.
It's an unfortunate fact that customers are usually the first to go during tough economic times.
Now is the time for you to take care of your loyal clients, since they could also bring new clients to your business.
Praise your loyal clients by telling them that you appreciate their business during these tough times.
If you can, reward their loyalty through discounts, loyalty cards and gift certificates.
-Talk with your customers constantly: It is important to show that you care.
Understand how their business is being affected and look for ways you can help.
Lasting relationships are built in hard times.
Also, look for new market opportunities, recognizing that when the business climate changes, customer needs will change as well.
That may mean new markets will open up for you.
-Revisit dormant customers: See what you can do to bring them back into the fold.
Sometimes it takes as little as just asking to restart a relationship.
Other times it can take some imagination and insight, but resurrecting a past customer can still be easier and less expensive than finding and breaking in a new one.
Focus Economic downturns can have a benefit for business.
You should be constantly re-evaluating not just your marketing plan, but all of your business strategies.
In order to stay successful, you must always keep an eye on your long term goals and objectives.
You will hit rough spots but do not get bogged down in the present.
Instead keep your eyes on your target.
Stay focused.
A recession gives you the opportunity to step back, rethink and review all sectors of your operation.
Consider launching a new product or service not currently offered in your market.
Use the time to diversify your products, services or industries so you don't have too many eggs in one basket.
Now is the time to revisit (or create) your Strategic Plan.
Businesses with formal strategic planning are more likely to be the ones around when the recession ends and the growth begins anew.
There you have it, folks - a basic, commonsense guide to thriving in the current economy.
As you read this tens of thousands of businesses across the country are headed for extinction.
Use the above strategies immediately and you are guaranteed to see assets where others see liabilities, opportunity where others see failure, and extra profits where others see financial losses.
Don't stand idly by with a wait-and-see mindset.
Many businesses stop doing things that will help them grow in fear of the recession, and then do just that-stop growing.
Don't let this be you! I want you to thrive, not just survive.
For more on this topic visit Dyer Consulting Group.

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