Practical recession strategies for small business
(03/09)
As the financial storm continues to rage and the recession takes bite, many small businesses are left feeling afraid, vulnerable and uncertain of the future. Such feelings are understandable, but that feeling of ‘treading water’ can be eased if you take actions that better prepare your business.
It’s not all doom and gloom out there. Even though many businesses will be buffeted by market conditions, new opportunities are presented and old ones are still there to be seized upon.
Here are the bare basics of what you should be doing.
Sometimes it feels like I am singing the same old tune, but business success under any conditions comes down to good business practice, planning and strategy. Now that conditions have tightened, those that have been proactive in these areas will be under less pressure than those who have coasted along whilst conditions were good. The impact will be mostly relative to the fitness of the business.
If you already have proactive sales and marketing, review your strategy and have a good grip on your financials then you will already have initiatives in place. For the rest of you: get busy!
Planning
Even though you all know that you should be reviewing your plans and strategies, there are very few who actually do it. Don’t get bogged down in creating a perfect document, rather spend the time determining where you want your business to go, how to get there and implementing tasks and milestones to make sure it actually happens. If you are unsure how to go about it or need a reality check on what you have done, get help. A (good) small business consultant, mentor or board of experienced people can make a huge difference to the process.
Know your market
The effects of the current downturn are not uniform and it is important to know what is going on in your market. Some sectors and products are slowing (e.g. recruitment, retail, hospitality, tourism) whilst others are growing (e.g. career transition, ‘green’ products, condoms, alcohol, chocolate). You need to understand where your business fits before you review your strategy. Look at relevant media articles, industry publications or ask fellow business owners.
Innovate
In an ideal world you will be watching trends in your market and will have strategies in place to keep ahead of them. At the very least your business needs to move with your market. Take time to look around you. Research new or additional products that your clients or target market will buy. Investigate additional market sectors that you haven’t before. There may be new opportunities or niches that you could seize just by keeping your finger on the pulse.
Think of innovative ways to improve operations, sales and marketing. Now is the time for clever thinking and guerilla tactics that will grow, sustain and streamline your business.
Know your finances
It is always important to know the financial health of your business, however this is vital right now. If you don’t have good reporting systems in place then get onto it post-haste!
Key decisions that you will have to make are based on an accurate knowledge of your finances. Your strategy will have to include such issues as projected sales, profits, costs, staff and investments. You may need to adjust the way you package or price your goods or services.
Even if you decide to ‘batten down the hatches’ for a while, all is not lost. Many businesses still generate sufficient profit in this mode. In fact, sometimes the returns can be almost as good as with higher sales (and higher costs).
Don’t overlook your personal budget. Unrestrained personal spending puts immense pressure on business cash flow, so set budgets for yourself too.
Many business owners struggle with finances, so don’t be afraid to get help.
Sales and marketing
Even in the current environment there will be sales opportunities sitting in front of you. There are many new and inexpensive marketing ideas that you will not have implemented before that can build your client base. Most small businesses occupy such a small percentage of their market that there is always opportunity to take market share from someone else.
My adage for small business marketing is even more relevant now: ‘if you can’t afford to lose it, you can’t afford to spend it’.
Be proactive.
Your motivation and determination may be tested in difficult times, so you need to dig deep to energise yourself, your business and your team. Take time to look after your most valuable asset. If you get frustrated, focus on your long-term goals and, on a daily/weekly basis, implement the tasks that you have planned. To have a roadmap for your business can remove a lot of anxiety.
Whatever strategy you decide to adopt, make sure it is informed. And for those of you who are still in business once the sun comes out again, learn your lesson: you need to be constantly working at your business, plans and strategies. You can’t ever rest on your laurels.
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