The last economic downturn was a tough one for so many small businesses, especially those who weren't prepared. Any business especially a small business should be prepared for a turn in our economy. But with businesses focusing on extreme growth, or just getting off the ground how do you prepare for such a thing when you're in a different mode of thinking?
You should always have a backup plan for if things take a wrong turn. Here are a few ideas to implement now before (hopefully WAY before) it happens.
Look at Your Budget Now
Seems obvious right? But most small business owners might not know line-by-line what's being spent in their company. They may rely on their bookkeepers or accountants which is great, but you need to be on top of it. Ask for a detailed report and then start asking the questions to the line item "owners"; do you really need to spend on that? For instance:
- You're probably paying subscriptions for things either don't use anymore because that employee who used that particular company resigned. Software subscriptions, magazines, etc.
- You probably don't need 20% of the things you're paying for now.
- You can re-negotiate anything that comes up for renewal so get all of your renewal dates down.
Focus on profitability can positive cash flow if you can in a downturn and not so much on growth. You need to stay afloat for when we're out of the bad times.
Take Money Even If You Don't Need It
A very smart man named Vijay once told me "Janine, take money when you can get it, because when you need it, it's either not going to be there or it's going to be really expensive." What great advice. At my new data dashboard company Dasheroo, we're doing just that and it's working. We have great investors who want to see us grow and they were happy to give us money, more than I've ever taken in my life.
Loans and lines of credit to get cash and "put it in the bank for a rainy day" are also a great thing to do, especially if you can show growth and the timing is right. Then sit on it until you really need it.
Focus on Your Customers Like Never Before
NOW is the time you should be focusing on your customers they're the lifeblood of your business. They need to be thought about WAY before the proverbial poop hits the fan. During the last economic downturn at my previous company VerticalResponse, we lost customers because they went out of business, not because they wanted to go elsewhere.
We provided a great service that made them money so they didn't want to rock the boat, we answered their questions FAST, we helped them through their own tough times and we were rewarded by them sticking around.
Diversify Your Customer Base
Diversify your customer base so if a customer leaves you for whatever reason, it doesn't hurt your overall business. Get into a new market or go upmarket or down. Vertical-ize your offering so that it fits different types of customers. If you service big companies can you cut your features in half and attract smaller ones or vice versa, can you attract bigger customers with advanced features? This could help open the floodgates for a whole different type of customer base.
At VerticalResponse we offered our product FREE to non-profit customers. Did it hurt us by not charging? No way. It actually helped get the word out about us being socially responsible. Those people who were with non-profits as a volunteer in their off-hours brought us into their businesses where we charged money and they were happy to pay because of the value their non-profit received.
Diversify Your Offering
Can you charge for something of value you give away for free now? How about premium support? What about a premium fee to get in the front of any line? How about bottling that delicious BBQ sauce you put on your pulled pork at your restaurant? Does your team produce web videos for you in-house? What about an agency offshoot where you offer this service?
Perhaps your customer list wouldn't mind getting offers from neighboring or complementary businesses from time to time. This is something you can charge those businesses for. These are all ideas for re-packaging and diversifying.
Take Customers from the Competition
Your competitor's customers have already identified themselves as someone who will pay for the same product or service you sell. Why not run a sale to get their customers patroning your business, give them a discount and a reason to switch and ultimately stay.
Don't Hire Full Time Employees
Virtual Assistants can work out great, and if you don't need them you can be flexible. Full time employees cost real money, especially if you're paying taxes and benefits. Today's virtual assistants can perform a multitude of tasks at a fraction of the price.
There are so many tools out today that can automate what people are doing day to day. You may have to cut out some of the things that get done daily but with regards to things like social media, email marketing, payroll, and aspects of HR, you could be covered.
You always need to be prepared for something to affect your business, that just goes along with being the big boss!