In tough economic times, a decrease in sales is to be expected. While this affects both large and small businesses, smaller businesses and startups can be especially vulnerable.
These often lack the cash reserves and mechanisms to cushion themselves. As an entrepreneur, how you adjust to the new normal and your speed of adoption will determine how much longer your business will remain in operation.
Here are some things businesses can do when the going gets tough.
1. Learn to Work With Little Cash Flow
When a business has been in operation for a while, it has enough metrics to be able to make certain determinations. These include cash flow.
Under normal circumstances, you can project how much cash will be coming into the business. These projections help you plan expenditure. You also have a clear idea of how long you can stretch what you have.
When the economy is hit hard, this becomes almost impossible to do. With cash flowing in steadily receding, it becomes more important to control and minimize business spending.
This can only be a temporary measure as you figure out how to increase revenue.
2. Anticipate and Plan For It
Most people go into business with a lot of optimism. As that is totally okay.
Nonetheless, business is hardly ever smooth sailing. Customers change, your competition pushes too hard, and market forces can create a hostile environment.
Trying to create a plan when in the eye of the storm is the wrong way to approach business. As you create a business plan and policies on how to run your enterprise, put some thought into how to handle complex business conditions because tough times will come. Only those who are prepared will sail through.
3. Get The Right Skills
Before you even think about opening your doors, you must ensure that you have the right skills to run a business. Sorry if this bursts your bubble, but just because you are an excellent attorney doesn’t guarantee that you’ll be successful if you go into private practice. The same applies to engineers, doctors, psychiatrists, and so on.
Operating a successful business requires a unique skill set that most people don’t have-no wonder few businesses make it past their fifth birthday. Luckily, taking a business course such as a Master of Management degree can get you closer home.
4. Rework Marketing Strategies
Most small businesses will slash marketing initiatives or stop them altogether. This does not help matters much. In fact, you need to scale your marketing efforts and let your customers know that you are still open for business. Note that scaling does not have to mean spending more.
Keep in mind that customer’s behaviors change during a downturn. Your marketing initiatives should align with this.
Here are some things you should consider:
- Instituting social media campaigns. People are on social media 24 hours a week.
- Producing SEO content and optimize your website
- Integrating low cost, effective strategies like email marketing
You might also want to consider programs geared towards customer loyalty like referral bonuses, sales offers, and discount coupons. Not only can these haul you over a difficult period, but also, they will help you build traction for when things go back to normal.
5. Keep an Eye On The Competition
It’s difficult to always know if you are doing things right or missing the mark.
A good benchmark for this is your top competitor. For them to have the market share they have, they must be doing something or a few things right.
This would be a good time to look at how they position their products and services and their marketing strategies. Figure out what they are doing that seems to be delivering steady results.
Finally, sift out those that will work well for your business and adopt them. Your competition is unlikely to take your revived efforts lying down, so think a few steps ahead on how to keep the momentum.
Final Thoughts
The long and short of it is that in business, you have to keep your eye on the ball at all times. In a tough economy, even more so. While you can afford to go slow and ride the waves of existing success in other times, you wouldn’t go far.
In a recession, protect your cash, keep an eye on the competition and strengthen your marketing to stay afloat.
