While the impact of the Eurozone crisis on the Australian economy is still unknown, in the event another economic downturn or GFC befalls, micro businesses need to be prepared.
When the GFC of 2008 hit, micro business owners sung out for ways to weather an economic downturn. Now the threat is very real once again, that call for safety and security measures has resumed. The good news is there’s nothing really technical or drastic you need do. Actually, it’s about taking a back-to-basics approach. Here’s how:
Deliver a quality product or service
No, make that an exceptional product or service. Whether this is your personal labour or your business’s output, the message is the same – average just won’t cut it any more.
Deliver it from the point of view of the customer/purchaser
What do they want? What do they need? What are they willing to pay for? The super-sweet spot for any business is the confluence of:
- What you do exceptionally well; plus
- What you love; plus
- What the world needs (and wants); plus
- What the world will pay for.
Control your finances, especially your cash flow
For your personal life, keep a strict budget and don’t spend beyond your means. For business, reduce your fixed costs to as low as possible and make as many costs as possible variable. This effectively changes the breakeven point for the business, in turn making it more resilient to ripples and even waves in the economy. And another thing: I know you’ve heard it before, but collect your debtors quickly.
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Get really clear on what you do, for whom you do it, how you do it and what are your points of uniqueness. Then follow through. This is different from point number two above; it’s about gaining absolute clarity on your specific market niche and your unique offering.
Remember that you are in the business of marketing your product or service, not your product or service business.
Please read that again.
What you do is satisfy certain needs for a certain group of people – but that is the end result only. First, they must know about you and want your product or service. Your principle task in business is to educate the world – or at least your target niche – as to who you are and what you do. Nothing happens if you don’t do this – even more so when times are a bit tougher.
Hire great people to make, sell and deliver
Pay more if you have to – they will pay you back immeasurably. Even for a small business the ROI is worth it. And this is just as relevant for soloists who outsource activities as well.
You shouldn’t be afraid of trading money for time because there are times when it makes more sense to spend money than to do it yourself.
Here are three situations when this applies:
a) When you can use your time more profitably: It doesn’t make sense to turn down work paying $100 an hour so you can do something you could hire someone to do for $20 an hour.
b) Your cost in actual dollars may be less when you outsource: You could buy printing equipment and print your own materials; or you could get it done by a print shop that already has the equipment (and more likely better equipment). It costs less to have them do it than to do it yourself. This is the “pay as you use” or variable cost principle in action.
c) When hiring someone will get better results than if you do it yourself: For example, if you are really uncomfortable making cold calls to set up appointments, it’s likely you won’t do a very good job of it. Hiring someone else to take that first step could result in many more appointments – and more sales!
Ensuring your business is strong and stable from its foundations up will help it survive any future economic trouble.
What are your tips for fortifying your business against an economic downturn?