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Productivity / Professional development

7 practical steps to help your business survive an economic downturn

As the seemingly volatile economy is demanding you take notice, here are seven practical steps you can implement to help your small business weather this uncertain economic storm.

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Obviously, your customers should always be considered your most prized possession. However, during times of economic unrest, it’s especially important to hone in on your customer service strategy and find ways to go above and beyond to give your patrons what they want, when they want it. By providing quality customer service, you are more likely to retain your existing customers as well as increase your client base.

1. The customer comes first

Here are some additional ways to engage with your patrons: 

  • Offer loyalty or customer incentive programs.
  • Adapt your products and services to meet your customers’ vital needs.
  • Nurture your relationships with customers by providing exceptional after-sales service. 

Again, your customers are one of the driving forces behind the growth and success of your business. They are most likely experiencing effects from the downturn as well, so be sensitive to that fact and look for unique ways to cultivate a trusting and long-lasting relationship. 

2. Don’t skimp on marketing

The needs and expectations of your customers change significantly during a downturn. It’s more about necessities versus wants as people look for ways to save more and spend less. To help ensure you retain your customer base, it’s important to review your marketing strategies and come up with new ideas to increase sales and optimise the use of your marketing dollars. 

Since marketing is often one of the more expensive areas of business, take some time to explore the free marketing tools available to you, including social media and word-of-mouth advertising. 

Some other marketing tips to help boost and strengthen your business:

  • Focus on conveying your competitive advantage within your sector.
  • Kick off a podcast or blog that focuses on your unique attributes as a company as well as the superior products and services you have to offer your patrons. 
  • Utilise all the social media marketing techniques available to you. These are often substantially more cost effective than your traditional forms of advertising. 
  • Implement some form of corporate social responsibility—a “must-have” feature for many businesses. If you have the resources, consider supporting a local cause. This is a great way to generate goodwill as you give back to your community during a time that is difficult for everyone.  

Obviously, your customers should always be considered your most prized possession. However, during times of economic unrest, it’s especially important to hone in on your customer service strategy and find ways to go above and beyond to give your patrons what they want, when they want it. By providing quality customer service, you are more likely to retain your existing customers as well as increase your client base.

Here are some additional ways to engage with your patrons:

Offer loyalty or customer incentive programs.
Adapt your products and services to meet your customers’ vital needs.
Nurture your relationships with customers by providing exceptional after-sales service.

Again, your customers are one of the driving forces behind the growth and success of your business. They are most likely experiencing effects from the downturn as well, so be sensitive to that fact and look for unique ways to cultivate a trusting and long-lasting relationship.

 

 

3. Nurture your staff—the core of your business

An economic downturn can cause panic among employees as they start questioning their job stability. It’s important to build morale and motivation by clearly communicating with your staff about what is happening within your business and the sector as a whole. This is a great opportunity to involve them in some of the decision-making processes and to work together to find innovative solutions to strengthen the business. 

No matter how prepared you are, however, you may need to adjust your staffing arrangements. For example, if hours need to be reduced, try finding flexible solutions such as asking some of your full-time staff to work a four-day week or implementing job-sharing arrangements. 

It is important to allow workers to show their creativity and innovation. Don’t just demand greater productivity as staff will likely become overworked or demoralised. By retaining staff, businesses can more easily hold on to essential knowledge and skills. 

4. Network and develop creative strategies

An economic downturn is a great time to network with other businesses in the area. This can be very helpful in understanding how other businesses are coping and finding solutions to combat lower profit margins. This is a great opportunity to join forces with other companies, offering complimentary services, discounts, and special perks for customers. 

In addition to networking, take a look at developing some new practices. Thinking outside the box with regard to what’s currently being done can help you adapt to changing market conditions, enabling you to stay ahead of your competitors. While you’re at it, review ways you can use technology to increase overall efficiency, reduce costs, and be more competitive in your sector. For example, offer a mobile app, install a customer management system, and ensure your website is fully optimised for mobile and online sales. 

5. Take stock of your inventory

Don’t fall short financially when it comes to efficiently managing your inventory. Be sure to implement a high-quality system to help you tighten your control on stock and reduce the amount of working capital invested in your inventory. 

This is also a great time to reevaluate your suppliers and compare them to other available ones. You may find you can order the same products at more affordable prices elsewhere or find a supplier with lower shipping and warehousing costs. Just because you’ve always used a particular supplier or ordered a certain number of items, that doesn’t mean it’s the most efficient or cost-effective way of doing things. Not only will you save money, but you may be able to transfer those savings on to your customers! 

6. Dip into emergency savings for a rainy day

This may seem too obvious to even mention, but having some cash set aside is one of the simplest yet most effective ways of protecting yourself and your business from the tumultuous waters of a downturn. An emergency savings fund will provide you with independent access to cash and prevent you from having to resort to borrowing and taking on unnecessary debt. However, if you do find yourself in need of financial assistance, there are several options available to small business owners! 

As a general rule, the best business practices dictate that you should have at least enough saved to cover expenses and employee wages for three to six months. This should be viewed as a non-negotiable expense in your yearly budget, regardless of economic stability.

7. Eliminate unnecessary spending

As your customers tighten their purse strings, you will have to look for areas within your business where you can do the same. As soon as the first signs of economic stress hit, be sure to have a thorough grasp on your cash position. Then, if you’re not already doing so, take time to regularly monitor your monthly expenditures so you know exactly where your business funds are going. 

Having a detailed understanding of your expenses will help you pinpoint where you can cut back and also prevent smaller expenses—which can add up quickly—from falling through the cracks! In addition, if your business spends money on added “fluff” such as parties, bonuses, vacations, incentives, or any other thing that has no direct impact on your company’s growth, then it’s time to cut back.

As a business owner and entrepreneur, you know how important it is to guard what you’ve worked so hard to build. When you take the necessary precautions to protect your business against the unpredictable winds of economic distress, you are helping to ensure a bright and promising future. 

Faye Ferris

Faye Ferris is the APAC Sales and Marketing Director for BusinessesForSale.com, one of the world’s largest online global market places for buying and selling small-to-medium sized businesses. Faye is passionate about helping Australian small business succeed and regularly writes about entrepreneurship and business management.

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