As the old saying goes, when the going gets tough, the tough get going. To help your business survive an economic downturn, you’ve got to prioritise your spending and strategise how to generate the maximum profits from the resources at hand. Here are a few tips for steering your business through rough seas until it can reach the dry land of economic upturn.
Keep a Positive Cash Flow
The most important rule to surviving in a tough economy is to always have enough money to hand to cover essential payments that can’t be deferred. This may include salaries, rent, loan repayments and bills such as utilities charges. Even if your business is strong on paper, it can quickly fail if you run short of cash when it’s most needed. If you currently have regular cash flow shortages, you need to have a backup plan to ensure your company can survive a cash emergency.
Don’t Lose Your Most Valuable Asset – Your Employees
When times are tough, you may consider laying off employees to reduce outgoings. However, you can’t do it all yourself so by getting rid of valuable personnel, you risk making your business position weaker, not stronger. You should also consider the additional costs in time and money you have spent training your current employees, as well as the cost of recruiting and training replacements when business picks up – this may well outweigh the short-term savings to be made from trimming staff numbers.
Examine Your Marketing Budget
Most companies spend huge sums on marketing and advertising costs but often fail to conduct proper research into whether this represents the best ROI. While it’s good to balance traditional media with newer online sources if budget allows, you should use your marketing budget wisely to ensure maximum reach. For example, building an online campaign using social media can be extremely effective and cost-effective, especially if you can encourage your loyal customers to upload content and help spread the word.
Focus on the Customer
Keeping your customers happy is the key to retaining them in the future and building brand loyalty. In addition, it costs far more to attract a new customer through marketing than it does to retain an existing one. Avoid sales pitches and other hard-sell tactics when it comes to customer relations. Instead, focus on the customer experience and consider ways you can improve it – for example, by increasing your customer service budget or outsourcing to a professional contact centre. This doesn’t even have to cost you extra as many customers are willing to pay a premium for improved customer services.
Consider Your Existing Business Model
While declining sales may be expected at times of economic hardship, that’s not to say you should only blame external factors without re-examining your own business model. Take a long, hard look at the areas of your business you’re getting right as well as those that need improving. While diversifying your services or products – or rebranding altogether – may be an option, it’s better to build on past successes rather than start afresh altogether. Identifying what your core business idea is and how it appeals to your customers will help you to build more successfully on your brand without losing your existing base.
Nobody said that running your own business was going to be easy but, whatever you do, don’t give up. In the words of the poet Robert Frost, “the only way around is through.” If you persevere, hone your skills and learn from your mistakes, you can overcome obstacles and grow your business for long term success.