“John, I need some help and some different ideas...my business is slowing down. I’m concerned it’s going to get worse before it starts getting better and I want to make sure I’m still here when the economy gets good again.
The comments were from a client of mine. She runs a small business that, while still profitable, is very dependent upon the economy running smoothly. And, in her location, the economy is not great. It's tough right now and forecasts don’t call for much improvement in the near future.
These headwinds are impacting many countries with credit tight and many costs are going up. Revenues seem hard just to maintain with each passing month.
So, what’s a small business owner to do?
First, don’t over react. Local economies cycle up and down. This one may be more severe than you’ve seen before; but it, too, shall pass. And when it does, the market demand for services and goods will return.
In the meantime, here are 9 tactics and strategies I’ve seen used successfully over many years as a company leader and coach:
1. Have a plan. Great businesses – of any size – have a plan that looks ahead at least 18 months and includes all their critical needs such as revenues and expenses by line, cash flow forecasts, new options to grow the business, and ideas for surviving in a bad situation.
Any business person who says that (s)he’s just focused on making through each week or even month will have more difficulty recognizing opportunities as they arise. And opportunities always arise for those who are watchful.
2. Manage your plan. Your plan isn’t something to do annually and then file. It should be reviewed frequently and regularly to help you understand trends that you may otherwise may not want to face up to. At least as important, it may clue you in - a new business option which didn’t look great before, may now be much more viable.
3. Check your receivables. You may be surprised to see that your “best” clients are paying more slowly than others; or that your suppliers aren’t giving you the same discounts you’d been promised.
4. Cash is King. Credit, in most countries, is more prevalent nowadays; but small business owners are often surprised when they go to access their credit line only to be told that it’s being withheld. Keep enough cash on hand to survive at least 2 months in the worst case.
5. Reward your best clients. Show them you care, make sure they don’t ever want to go elsewhere. This doesn't have to cost a lot - just a phone call or visit to check in on them is often a delightful surprise as well as keeping them loyal.
When was the last time one of your suppliers dropped by to say how much they value your business? This is an easy and virtually no-cost way to break away from the crowd.
6. Cut expenses to the bone. It’s those “everyday” little things that need to be examined now and you may be surprised to find goods and services at lower prices as everyone adjusts their offers.
You may be able to supply your clients with a product or service that's "just like" a more expensive competitor has been providing.
7. Keep your perspective. As I said at the beginning, “this too shall pass”. A primary trait of entrepreneurs is being able to see opportunities that others miss entirely.
That skill may be what got you into your business in the first place. Yes it’s important to be realistic about the situation....but doom and gloom has no place in business success.
8. Look for small successes. Celebrate them. Watch for those little wins. And when you find them exploit them and be grateful.
If someone on your team accomplished something, make a big deal about it and encourage more of that behavior.
9. Look after yourself (and your loved ones). Everyone can behave well in good times but how we behave in difficult times is a true measure of who we are.
Here’s an old adage that bears repeating in today’s business climate, “The harder I work; the luckier I get.” Keep this nugget in mind as you make sure that your small business isn’t just surviving – it’s thriving!