A Survival Guide for Small Businesses Facing an Economic Downturn
The word ‘recession’ is on everybody’s lips right now. Find out how to make sure that your small company keeps thriving, even when faced with a dip in the economy.
Media commentators have been predicting a global economic downturn for the past few years. Now, as areas such as retail, real estate and manufacturing slow down, it is no wonder that many business owners across the world are thinking about what kind of impact a dip in the economy will have on their companies and are considering all of their options.
1. Take it Online
Unlike a brick and mortar shop or office, an online store doesn’t have to pay the utility bills every month. There still are costs, such as hosting fees, web designer and maintenance fees and domain name fees, but they are far less than the cost of a physical building.
2. Cut Utilities
When families want to save money during less affluent times, they often are very careful about turning off lights that aren’t in use. Small business owners should consider similar measures. Dimming the lights and closing heat or air vents in areas not accessible to the public that do not need a regulated temperature can really make a major difference in utility bills, especially in a big building that wasn’t built with passive solar design in mind.
3. Do it Yourself
Hiring people to do things he or she doesn’t like is a great feeling for a small business owner. However, during a recession, likes and dislikes become a bit less important. Cleaning the store instead of using a cleaning crew, stocking shelves and doing typing or filing are all things a small business owner may do before the business grows. While handing them off to other people frees the owner up to do more profitable things during a good economy, it actually may be more cost effective to take those tasks back on during a recession or a time of slow growth.
4. Reconnecting with the Customer
When things are tight, companies should be reappraising their markets and really looking at who they are selling to. Businesses owners should be reconnecting with their consumers and figuring out how to add value to the customer experience.
Small businesses cannot compete with large and overseas companies on price so they need to think of ways that they can add value in other ways. This could include diversifying their product range or streamlining the way that they deliver their goods. Customer loyalty schemes are also an effective way of adding value without cutting prices.
5. Implement smart marketing strategies
It’s easy and more cost effective to reconnect with current customers than to uncover new ones. A substantial amount of effort should be expended on trying to get additional business from happy customers and pursuing the referrals that you receive from satisfied customers. Also, opt for e-mail marketing campaigns over traditional mailings and eliminate any spending that’s doesn’t get results.
6. Getting to Grips with Cash Flow
Cash flow is something that many small business owners have problems with, even when the economy is booming. However, when the economy is struggling, it is even more vital that business owners get to grips with this aspect of business management.
Business owners can regain control of their cash flow by ensuring that their invoicing process is quick and efficient and by requesting deposits for bigger jobs. There are also a lot of extremely cost effective services available, which can assist businesses with tasks such as managing their debtors’ ledgers.
7. Looking after Employees
It is not only the financial side of things that can cause headaches when markets are cooling. Deterioration in employee motivation, largely due to job uncertainty, can also have serious repercussions for a company’s productivity.
Firstly, employers should think long and hard before slashing personnel numbers. Companies may find it much harder to hire quality staff after the economic slump is over if they become known for having a high turnover. Layoffs will also affect the motivation and morale of the remaining employees.
Keeping the lines of communication open with employees is also recommended. Being as honest and transparent as possible will reassure staff members, who may be feeling insecure, and will put a stop to any rumors flying around the workplace.
In addition to this, business owners should make sure that they give employees positive feedback. Verbal acknowledgment for a job well done, along with non-cash incentives for more senior staff members can make a huge difference to employee motivation. Alternatively, if employees are not performing to their full potential, a good and simple performance appraisal, encouraging input from both employer and staff member, can be useful.
The Key to Surviving an Economic Downturn
Periods of economic decline can be stressful and challenging for small business owners. However, there are many things that can be done to ensure that companies remain intact and profitable during these times. If business owners stick their heads in the sand and consider themselves too busy to make improvements, it is unlikely that they will survive a significant slump in the economy. However, if the head of a company takes the time to review and improve every aspect of their business, from the operations to the advertising, they will give themselves a fighting chance and may even come out of the downturn a better and stronger company than they were before.