Are you fed up with all the doom and gloom surrounding the state of the economy? You could be forgiven for thinking that no business is going to survive what we have in store for us over the coming year.
Job cuts, falling house prices, home repossessions, the worst recession of our life time, are just some of the economic woes we are bombarded with every time we look at a newspaper or watch the news.
In fact you can't turn on the news without hearing the story of some poor business owner that is walking the tightrope between bankruptcy and only just breaking even.
The media highlights the negative. Bad news is good news for a newspaper, the worse a story the more publicity it seems to get.
But in reality every business isn't suffering, many businesses are doing the best business they have ever done, others are continuing to trade as normal.
This point isn't making light of the economic problems, the issues are real. Some businesses are suffering but others are prospering and many more will continue to trade as they always have done.
The best strategy is to respond to the situation. Being pro-active and positive is going to help your business a lot more than doing nothing and waiting for the worst to happen. If you are a small business you are at an advantage because you can respond quicker to market changes than a bigger business, you might be able to capitalise on new opportunities first.
The question is how can you as a small business owner protect yourself from a recession, how can you ensure your business not only survives the storm but prospers.
Here's how:
Advertising Spend
Don't stop advertising, but at the same time don't spend unnecessarily unless you are sure you are getting results. For example, instead of having a large advert in the Yellow Pages because you always have and your competitors do why not try something different by using Google Adwords and advertising on Google, if you don't already. By doing this you can track your spending and the return on your investment.
Can you advertise more locally? Try targeting specific areas or specific customers rather than larger less targeted campaigns. Sometimes local newsletter or magazines are a cost effective way of reaching a new audience.
Keep a database of your existing customers or those who have shown an interest in your products or services and send them newsletters letting them know about new offers you have.
Recommendations
Offer incentives for existing customers to refer people they know, recommendations are a brilliant and cost effective way to grow a business. Make sure you do the best job you possibly can and recommendations will come naturally.
If you can do a better job than your competitors and go the extra mile, this should earn your business a reputation that money can't buy.
When a customer first contacts you, make a point to ask them where they heard about your business. This can be some of the most valuable information you can collect because obviously the more customers you have coming from a specific type of advertising the more successful it is. You can then focus on advertising methods that are working and stop anything that isn't.
Think Local and Network
Don't overlook the area your business is located in. To some this may seem common sense but many businesses focus on a larger area that requires more spending on advertising when there are customers that are cheaper to target on their doorstep.
Local business meetings and local events are often great places to get the word out there about your business and meet potential new customers. It's often not only about making a sale but getting people talking about your business who wouldn't have otherwise. Word of mouth can sometimes be the best form of advertising.
Invest in your Business
If you have any profits try to invest them back into your business and consolidate what you have. An economic down turn might not be the right time to expect to grow your business significantly but you might be able to keep the business trading steadily in anticipation of a larger period of growth in the future.
Don't miss out on opportunities however, if you spot a chance to grow then make the most of it. Just because most things you read are telling you the economy is doomed it doesn't mean your business has to live up to that expectation.
Cash Flow
Try to keep your businesses cash flow positive. This is of course easier said than done when the economy isn't in great shape but it is important to keep control of.
If you issue invoices to your customers and you find they are excessively exceeding the payment due date you will need to take greater control of your debt management. In difficult economic conditions the last thing many other businesses will do is pay their invoices quickly so to boost your cash flow you need to keep strict accounting procedures.
Think about trying Factoring or Invoice Discounting which secures you a loan against your invoices and helps bridge the gap between your invoices being issued and your customer paying them.
Before you take on a new customer do a thorough credit check on them, past history can be a tell tale sign that they will be a bad payer in the future.
Can you make Price a Benefit?
If value for money is one of the benefits you offer to your customers you could push this fact in your marketing and make it a bigger selling point than it was before. In an economic downturn many people are looking for the best value they can get and so if you are in a position to offer the best value then push this fact.
Be Adaptable
When financial conditions are difficult small businesses can use their size to their advantage and adapt to their surroundings, quickly responding to changes in demand from customers. This is where a small business has a competitive advantage over a larger business, a larger business may take longer to adapt. Seize new opportunities when you can.
If business is starting to get tough or you think it might in the coming months don't do as you always would have, try to find new ideas and opportunities, try to do things differently.
Make the most of your Competitors mistakes
Your competitors might not have read this guide! They might be making simple mistakes and panicking because of what they are constantly hearing in the media. Take advantage of this, it could be your chance to take some market share from them. They might have cut down on marketing and advertising so why not step yours up using some of the cost effective methods outlined above.
Hard economic times don't have to be a disaster for small businesses, for all the stories you hear about businesses failing there will always be others that prosper in difficult economic times.
