Nearly every business has felt an impact from the recession. There has been no escaping. The root causes were universal and had a domino effect.
Some small-business owners believe they've seen the bottom and they are surviving -- they are OK and they expect to persevere with modest adjustments. These small-business owners are kidding themselves. The bottom has not been reached, and it will be a long slide until it does. We are in for a five- to 10-year disaster.
Defeat the Downturn
During such times, it's easy to panic. Panic, which is fear-driven and not based on fact but on emotion, has tremendous power, the power to change the direction of business. But do you want to give in to panic, throw your hands in the air and accept self-destruction, actually accelerating it, becoming a part of the panic, stimulating more?
There's an alternative to panicking. We are confronting change, and change is an opportunity for advances. Now you have the choice to take advantage of change it or allow yourself to be buried by it.
Make the right choices today and see the results tomorrow. It’s not just about adjusting prices -- you need to broadcast your differences, tell people why they should shop with you, provide them with added value, and not discounts, and watch your business grow in a down market.
Be a leader, and the people will follow. As a small-business owner, you can help lead the way out of the recession. Start with your employees, move to your vendors, and then support your customers and your market area. Announce the good news, and everyone will line up.
Here are 10 rules of engagement that will help you successfully recast your business and succeed in the new economy:
- Evaluate and eliminate excessive debt. If your revenues have dropped, you may not be able to service the debt you took on when your revenues were much higher. Any debt can be worked out -- secured debt, loans guaranteed by the Small Business Administration, mortgages, lines of credit, and even leases.
- Downsize. If you haven't already, reduce your headcount and overhead. You can deliver the same amount -- or more -- by increasing productivity.
- Track your finances daily -- and start today. Install a key indicator system to track your business and have daily, weekly and monthly financial reports issued. Follow profitability per job, per week, per client, per product. Use these indicators to focus on your most profitable products or services. Make nothing that does not bring in a profit.
- Reduce inventories and overhead at any cost. Look for items that does not move or turn frequently. That's where your cash is locked up -- in your cost of materials, labor, and so on, waiting to be turned into cash after it’s sold and the receivables collected. This can result in a huge cash drain.
- Train and cross-train your staff. If every job or task is learned by at least one additional person, when the primary person is out, the secondary person cross-trained to perform the task can leap in and save the day. And so work continues, and productivity remains high despite the absence of a key player. Smoother production, greater productivity and happier customers mean a better bottom line.
- Review your marketing and reduce spending on traditional media. Use the internet and focus on existing clients first; get more out of them. Internet marketing will save many companies.Consider what's called the long-tail theory, coined by Wired Magazine Editor-in-Chief Chris Anderson. In short, it means that there are folks on the internet making profitable hits of niche products, services and entertainment.
- Resist profit-eating sales and discounting. Don't give away your product; instead, compete with service, quality and uniqueness. Create a niche and have a competitive advantage. The big box stores cannot compete with you, especially on service. It's the small-business competitive advantage.
- Expand geographically if possible. Internet marketing can take you anywhere, especially if you can create an expertise or a niche item or service. Find what you do that is unique and do it as large as possible.
- Manage effectively. This means tracking and analyzing key indicators, financial reports and productivity. Get smaller first and more profitable; then grow slowly and carefully.
- Focus on quality. That’s what wins in the long run. Never forsake this principle.
The horse is out of the barn, but there is still time to close the door...quickly. Get better, get smaller or be forced out. It's your choice.
Life insurance as low as $14/mo for $250,000 or $21/mo for $500,000 of coverage. Contact MetLife®
Comments:
Donald, these 10 rules are excellent but more importantly they are acheivable. They lend themselves also for consideration by persons in the public sector which in my view has a poor record in the mangement of resources espcially in developing countries. Thanks again, I will use some of your tips in my discussions with small business owners in Barbados
I could not agree more, key indicators, the pulses of your business, we must monitor closely, as margins are being pressed down and expenses are up, revenues are down and the challenge is before us all to do better with what we have.
Thank You Michael, I agree, however the first step is recognizing the need, then implementing. Thank you for your suggestions, I hope some of our readers look for this help.
Yes jason it is cost efficient, and extremely effective, and thats the point, it levels the playing field and allows any small business to compete around the globe or in their home town....it is the way to go in todays market
Better Internet Marketing is a great way to survive the recession. Why spend thousands on yellow pages ads, when SEO can be free and obviously very cost effective. I teach SEO online and my students are always benefitting from free techniques and tips, such as my free top ten Webinar (http://www.jm-seo.org/).
This is terrific advice on "what" to do. But in terms of "how," items 2,3, 4, and 9 - increase productivity, track your cash position, reduce inventory, and manage effectively - will all be difficult to do efficiently without effective business management software. I have witnessed many business owners try to do some of these things with spreadsheets, which can require significant amounts of time from key personnel and result in little more than frustration. If you like this advice (and you should) but do not know how you would accomplish these things, look into your software. There are many great tools available if you're willing to invest the time to look. Lots of them are free, too.
Awesome list! It is so important for business owners to have their hand on the pulse of the business. They need information daily so they can steer the ship. Cathy Iconis http://www.IconisGroup.com
I have to agree with you about the discount thing; sad that we're becoming a 'freebie' economy where everyone is always looking for cheaper, faster and better. If they can get it for free, that's a bonus I'd say..
Every single one of the items you mention is critical for small businesses to embrace as they continue to survive (and hopefully even thrive!) in today's economy. I believe that those who do survive and take these principles to heart and stick to these principles even when the tide does turn will be even more successful in the long run. Lisa www.StartYourOwnSmallBiz.com
I believe the need is to specialize, have the most of something, the best of something, the most service, stand out for some reason, become a go to source, that works. Stay away from trying to discount your way to success, It is the wrong path in todays world unless you are going to be the biggest and best and cheapest. Hard to compete at that level as there is always someone who can sell for cheaper. perceived value is the answer. Be the best and win. Service is also king of the hill, give the best service and charge more, you will win.
I guess that in today's tough economy where everyone is smarter - businesses need to sell the right product to the right customers at the right time. Awesome tips you've got here!
Why not, a little divine inspiration or support can't hurt, besides prayer is a sort of visualization and that works also.
Agreed whole heartedly, but once agin, the rules have hanged and new business skills are required to support success. The new science of running a business in todays market is a critical skill to acquire to assure sucess..
that may be a good starting point but this will not take yo over the finish line, and this is one of the issues, one must be in tuned with what works and what doesn't work and have the skill to deliver the plan or success will be an illusion, quickly passing through your fingers, like sand.
I agree with Trump but say again, just opening up a business is not good enough, the skill of running a business is what will determine its success. One must master that first and then success is possible, without business skills there is no chance.
This is a new economy. In order to make the income you use to make, you now have to really think out of the box. I believe what Donald Trump said about how you become rich in this economy......Become your own boss. The sky is the limit.
Believe and KNOW that you can do anything you set your mind to doing. Then set your mind to doing what makes you happy. Do what makes you happy and you will be successful.
prayer is always good, plus a little luck, but hard work and the right path the right systems the right strategy goes a long long way.
I completely agree . The long tail plus customer service to the max..a winning formula
Never too late, thats the message, anyone can win, just follow the path. yes structured and repeatable concepts but unique implementation for every business. It's the science of doing business that counts now more then ever.
Bit Late…plus Innovate, create the structured repeatable process for long term growth and success
Great thoughts. I've been preaching about value, value, value. Make your business the ONLY place people want to come back to for your type of product or services. It starts with employees and their outlook on your business, and then a social strategy to build serious relationships with your clients. When dealing locally, the long tail theory really applies! @mediakrush:twitter
Thank you, Jeff, the whole point is we can succeed in this difficult economy, we simply must make changes. This will not pass, what we have is what we will have for a long while, we must adapt, survive and succeed, read the book, it works. Don dtod@secondwindconsultants.com
What a great strategy of writing to pull down the emotions of the readers on the Intro and slowly giving them a spark of success with the tips given. It is the a very clever style of writing that made me require myself to finish such feature... And you also got a point on "start with your employees and next to your visitors", I really liked it Donald.
And also pray? www.awkwardengineer.com