While there are encouraging signs of improvement in the economy, with some dealers reporting new sales, we are not out of the woods yet with the economy. We are getting warnings and reassurance about the economy, which for small businesses this means having a strategy that includes tactics for both an improving economy and a staggering one
Many of the tactics for shoring up your business as we entered the economic downturn still apply. These are about weathering out the storm and maintaining a presence for your customers. Tactics for a recovering economy are intended to make it easy for your customers to buy from you, and keep them as fans of your business. Seven things you should be doing include:
- Keep an eye on the cash flow … and work closely with your customers and your suppliers. Ask suppliers to allow you to extend your payments – smaller amounts over time when short of cash, but be sure you keep up with the new arrangement. Equally allow others who owe you to extend payments if you can. The customers and suppliers that you come-through with during difficult times will be the ones you can count on for a long time.
- Cut back on unnecessary expenses. Continue to go slow on unnecessary expenses to build your cash reserves. The recovery has been called a 2-step one: two steps forward and one back. You’ll want cash for the “one–back” as well as the “two-forward” steps as the economy improves. A silver lining to a recession is that it helps us get rid of dead wood that seemed to creep up when money was more abundant.
- 3. Pay as you go. Capital business expenses should be made on corresponding sales. Known as “bootstrapping,” strive to make sure that elective expenses relate to sales generated within that period of time. If sales are not forth coming, then you need to put in more effort with respect to marketing.
- Strengthen your community. A community’s collective and individual strengths grow from supporting one another. The downturn hit some sectors harder than others. Understand how your customer base was affected, and adjust your strategy accordingly. Partnerships built in hard times lead to strong business relationships that last for many years.
- Spend on marketing and advertising. This is a necessary expense during a recession. Be visible and let your customers know you are still there. Also, people see the product or service they want when they are ready to buy. Even if they were your customers before, when they are ready to buy they won’t unless they see you. Knock on doors now, and be ready for when they are ready to spend.
- Offer dramatic, attention getting and significant discounts to reward your existing customers and attract new ones that will stay with you. By managing and engineering your cost carefully, a discount will mean thinner profit margins, but will result in increased cash flow and market share. A restaurant, for example, that offered a significantly discounted Sunday dinner saw its weekend revenue more than double.
- Stick to your knitting. Build on your strengths; don’t diversify into areas that stretch your ability or are simply too risky. For most businesses, this is the time to reorganize and improve on what you do best. Seek growth a bit slower than you would have 4 years ago. It is not the time to absorb the financial repercussions of a bad decision.