This last recession made an impact on all business across the nation over the last few years. Ripple effects can still be felt especially for small businesses, who, according to the US Small Business Administration account for an impressive 99% of all employer firms across the United States. A staggering percentage. I found an interesting article from www.entrepreneur.com by Donald Todrin titled 10 Rules for Surviving the Recession that outlines some tips on how to help overcome economic decline, below are a few ideas from the article. Creating my own firm from scratch has taught me that the sky is the limit. Now when the sky seems to be crashing down around us, the limit is set only by those who are most invested. With the right advice and motivation to change for the better, here are some effective tips to help lead businesses out of the recession.
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.
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.
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.
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 article is an excerpt from Successfully Navigating the Downturn by Donald Todrin, published by Entrepreneur Press. Todrin is president of Second Wind Consultants Inc., a business-debt solutions firm in Hadley, Mass.