Editors Note: Here at Baggetta & Co, helping our clients and their business is our Number 1 focus. We hope you find this article informative and helpful. Should you require further assistance with maintaining and growing your business during this economic downturn, please call Paul Baggetta on 9317 7300.
The belief that businesses fare poorly in economic slowdowns is a common misconception that is not generally true. Solidly run small businesses actually hold their own during downturns. While we all like to believe our businesses fit the definition of "solidly run", let’s take a look at what are some commonly cited best practices for all businesses to be following during a time of economic downturn.
Revisit Your Business Plan
The number one recommendation, across the board, is to re-examine your business plan. Your business plan should be the working base for your business. Have you strayed from it in any way? Does it need revision in light of new information? Should you be considering whole new directions that are not included in it?
Seek Supporters and Advisors
If ever there is a time to seek advice, this is it. Many large corporations set up advisory boards that include a wide spectrum of professional experts that they can draw on for advice. Small business owners, can’t afford such an expensive service. In your business, the most cost effective “Power House” is your Accountant. A good business accountant is knowledgeable about the environment in which you do business, and is able to connect you with the information you need to make good decisions. The purpose of using your Accountant as your Advisor is to offer you objectivity. Your Accountant is a person you can be truthful with and who will keep your disclosures confidential. Most businesses who use their Accountant like this meet with them on a monthly or quarterly basis and discuss specific business problems they have, and use the meeting to brainstorm possible solutions and review the facts.
Make Customer Satisfaction Your Priority
Your customers are your lifeblood in any economic climate. In a downturn they are what keeps you in business. Treat them very well. Take time to call special clients to discuss how you could serve them better. Do whatever you need to do to keep your current customers loyal and to win new customers.
Expand Relationships with Existing Clients/ Sign More Long-term Deals
Find out if there are ways you can expand what you do for them, perhaps by offering more or fulfilling other needs that they have. Long-term deals add to your security. So, if you have happy customers, offer a discount to those who are willing to sign a long-term contract or who are willing to pay cash up front for a contracted set of services.
In a downturn one of the first places many businesses cut expenses is in advertising – a real mistake. To expand your base and recruit more customers, you need to advertise and sell more than ever.
Alliances with your vendors or with closely aligned types of products is always a good way to strengthen your customer base. With the right alliance you are reaching a broader spectrum of possible customers and you have more to offer each potential customer.
Keep a close eye of Debtors
Prompt and timely payments of your accounts are crucial in an economic downturn. Not only do you need to be providing incentives to your customers to pay on time or even early, but you need an efficient collection system that gives you advance warning of problems as they develop. Similarly, you need to be paying your bills on time and taking advantage of every possible discount that you can.
Mobilize Your People to Save Jobs
Economic downturns are scary times for employees. Many firms cut personnel and add to the workload of the remaining employees. Involve them in cost cutting. Let them know they are important to you and that you are committed to keeping them. If they know that they are perceived as an active part of the solution, they can identify sources of savings that never occurred to you.
Whether or not the economy is in an economic downturn, any of these methods can strengthen your business – and your bottom line. This is what makes a "solidly run" business. It means returning to the roots of your business and making certain that every sector is healthy. All of these principles are worth revisiting at least annually, in good or bad times.
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