Article #77, January, 2009
Staying Alive and Thriving - Guidance for Small Business Owners
Survival for very small businesses can be very challenging in a recession. We don't have the resources to ride out the storm if we experience a dramatic downturn.
What we do have is the ability to make changes quickly, which bigger businesses cannot do. We are not burdened with a huge payroll and big vendor contracts - we can add new services as easily as setting up a new page on our websites and announcing it at our networking meetings.
The recession will end as they always do - history tells us that. And believe it or not, but in part, the entire world depends on small businesses staying viable in the U.S. We have a responsibility to stay in business! Collectively, we make a huge financial contribution in many ways. We also set an excellent example for the next generation.
However, staying alive is easier said than done, right?
If you have a business that caters to the middle class that is not an essential every-day product, you need to constantly evaluate what you offer and your price point. Because consumer confidence is low right now, people are afraid to spend their money. If your sales are already trending down, you need to be very strategic and agile to stay alive.
We are experiencing a necessary correction. Some segments of the marketplace went a little crazy spending money they had not yet earned, and were given credit they should not have been given. Too many of these people have become unable to pay their bills, which has caused our current situation.
Small businesses will be affected by this in both positive and negative ways. I predict that there will be permanent, positive changes that will come out of this, but like all growth, there will be growing pains. If we pay attention, we can individually minimize these and come out ahead.
Here's what I mean. If you sell new cars, you should have realized many months ago that you were going to experience dramatic, maybe even traumatic, losses. At that time, you should have started studying other ways to apply your expertise. For example, if people in your community are not buying new cars, how are they getting to work every day? Most of them are probably driving their old cars.
Many of these old cars either need extensions on their warranties, or they need maintenance and repairs, or the owners want to jazz up their rides. By creating and executing a marketing plan to offer these products and services, you can stay alive until the economy recovers. Then you can sell your new cars again and continue making more income from the products, warranties and service. In addition, realistically, some of your competition will not make it, putting you in position to really increase your revenues.
Let's look at a more difficult scenario. If you offer a service like massage, fitness coaching or hair/skincare, you might see a reduction in sales as your prospective clients hold onto their paychecks. What can you do?
Evaluate all of your skills, your past and current clients, your competition and trends. What is the complete current story? Keep asking that question and looking at the information. What else can you offer? If you have any other skills you can use, put them to work. Is there a way to add a product or service that is more essential to your target market?
Offer promotions packaging your offerings in unique ways at great prices to differentiate your business from your competitors. Market yourself in unique ways.
If you are at risk of losing your business or having to give up and get a j-o-b, your short-term goal is to stay alive until the recession turns around. Cash flow is your top priority. How can you get people in the door?
A "loss leader" is a product or service you offer to get people in the door, even though you may lose money on that specific product. For example, if your grocery store offers a dozen eggs for 75 cents, they may lose money on that specific item, but anyone who comes in the store to get that fabulous deal will probably also purchase milk, bread and apples while they are there, and the store makes a profit.
What can you offer at an unbelievable deal to get old and/or new customers in the door? NOTE: Put an expiration date on all offers to create a sense of urgency. This way you can offer a different promotion every week or month.
Remember, if you can stay alive and thrive in tough times, you will be poised for greatness when the economy comes back! Keep reminding yourself that cash flow is your first priority, work hard and use your imagination.