Surviving and Thriving in an Economic Slow-Down
The economic slow-down might not be an official recession yet, but small businesses are already feeling the pain all over the US and abroad. Technically a recession is two quarters of negative economic growth and, of course, small businesses will know long before the economists that revenue is down, supplies are more expensive, and uncertainty is high. What are some time-tested strategies for making sure your small business stays healthy throughout the slow-down?
Surviving and thriving means focusing on business basics:
Marketing, marketing, marketing. You will probably lose customers during a downturn, but don’t add to the problem by cutting back on marketing. Consistency in messaging and frequent check-ins with existing customers will help you retain your most loyal customers and position yourself for expansion when things turn around. MOBI has resources that can help get feedback, identify your target customers, and promote your business.
Right stuff, right place, right time. Customer check-ins are great opportunities to collect information about your products and services. Are you delivering the right thing at the right time in the right place? You can use customer feedback to retire your less profitable and unpopular offerings, and design products and services that your customers love. MOBI’s session on customer feedback can help you gather the information that you need.
Keep the cash flowing. Lack of cash kills more companies than any other problem. The math is easy: you need more coming in than going out. So make customer payments easy and attractive, and prioritize your purchases (do you really need that new office chair?). On the inflow side, you will have to balance convenience with the processing fees of payment apps and credit cards (from 2 to 4%). On the outflow side, you have to identify expenses that are directly related to delivering customer satisfaction and raising productivity. Learn more about controlling costs here.
Stay positive. Downturns and recessions are an inevitable part of business. While they are challenging and worrisome, don’t forget why you started a business. Were you looking for more independence, more time with family, greater financial success, or an opportunity to help the community? The path may be rougher right now, but the destination is the same. Use your positive energy to inspire your partners, employees, customers, and vendors. Don’t underestimate the power of positivity in your business relationships.
Evaluate and renew. Economic slow-downs can be an opportunity to take a step back and evaluate and renew your business. Information gathered from customer feedback, cash flow analysis, and reviewing your goals may uncover new opportunities for you and for your business. Update your business plan with the new information. Take inventory of your processes and procedures, assess your equipment and supplies, and prepare for the future. Business conditions are always changing, and by evaluating your business in light of the new conditions you can make better decisions about the future.
No one knows how long the slow-down will last or how mild or severe it will be. The rules for surviving and thriving remain the same regardless of what the future holds. MOBI is here with information and resources that can help you weather the challenges of 2022 and beyond.
Drew Starbird, PhD, is the Executive Director for the My Own Business Institute at Santa Clara University as well as professor within the Information Systems and Analytics department at the University's Leavey School of Business. Visit MOBI's website to read a full profile.