Top 10 Small Business Tips During a Recession
Whether you think we’re in a recession or not, the economy is on shaky ground right now. And if things continue to spiral downward, is your company ready to weather a recession?
Here are 10 tips for dealing with a recession for your business:
1) Cut costs cautiously. As soon as the economy begins to slow down, many business owners think they need to cut costs. But this is a short term solution. Only cut costs or lower your prices if it won’t hurt your business later. You can always lower your price, but you can’t always increase it.
2) Think of subcontractors – especially if healthcare costs are putting pressure on your budget. If you have employees, consider making them subcontractors. There are very affordable monthly web video conferencing services that allow you to be in close contact on a daily basis.
3) Advertise, advertise and advertise! During the last recession, McDonald’s nearly tripled its ad campaign at a time when its competitors, namely Burger King, were cutting back. So while this may seem counterintuitive, a recession may be the time to increase your marketing. Tough economic times wipe out your competition, leaving the field wide open for you.
4) Long-term plan: The Japanese are famous for planning their strategy 15 to 20 years in advance. They follow the path of the turtle to win the race. And works! Remember, marketing is a marathon, not a sprint. Keep marketing every month, month after month, without stopping and starting on a whim.
5) Choose your marketing techniques wisely. You need to keep track of the marketing venues that get you the most business. Reduce or eliminate marketing techniques that aren’t working for you, or fix them to increase leads and sales. And consider a form of direct marketing where you can specifically test target markets without spending your hard-earned budget.
6) Refresh your marketing tools. For those marketing techniques that work for you, this might be the time to revamp your marketing tools. Could your sales staff use more training to close the deal? Online training reduces costs and time.
7) Automate whenever you can. Find ways to automate any task to reduce the workload for you and your staff. What have you been doing manually that a computer system can do for you? Take a look at all your daily tasks and see if there is an IT solution for these time wasters.
8) Spend your time on what really matters. Have you ever heard of the 80/20 rule? It is a proven fact that 80% of your business comes from 20% of your customers. So treat your best customers like royalty. Spend 80% of your time focusing on the marketing and delivery of your product or service.
9) Make and repair. Because raw materials were in short supply during World War II, people were encouraged to “fix and repair” an item rather than simply replace it. Consider your own expenses: do you really need a new computer or could you upgrade the one you already have for less money? Do you need a new phone or can you get by with the old one for a little while longer?
10) Reduce inventories. If you sell a product and you think your sales are going to decrease, this might be a good idea to reduce inventories and not replenish them at the same level. This is a risky strategy (what if the recession only lasts 6 months?). So make sure you know exactly how long it will take to replenish inventories once the economy recovers.
Now is the time to have a plan to deal with a recession. It doesn’t matter if we are in recession now or not. These 10 tips will prepare your business for both the good times and the not so good.