How to recession proof your business…
I know that recent news reports have said that we are heading out of recession but I thought that this post would prove useful with respect to the current climate, whether in recession or not, and growing your business.
Therefore, this post’s aim is about the simplest, fastest and easiest ways to:
This is quite a long post. So, for those of you with no stamina…here’s a summary of the ideas:
If you are not engaging in planning in your business then you are giving your competitors an unfair advantage. We find our clients benefit from putting in place long and short term plans (monthly and 90 day plans) to keep them on track and ahead of their competition. This allows them to employ targets for testing and evaluating performance, identify trends and allow room for rapid adjustment thus providing them tactical advantage over their competitors.
When asked what’s the difference between response and reaction? Most people and businesses struggle to answer. Let’s look at it in the context of our emergency services. When you call them the operator will always talk about a ‘response’ time. Why is that? The reason is that they always train to respond to different scenarios as they know that preparation reduces fear and panic and leads to intentional action and reduces any risks. In times like these, preparation and intentional action will lead to a stronger business. Are you training enough in your business to respond to a changing competitive landscape?
The fact is that people still spend money during a recession but customers are more careful and look for value. Therefore, choose your products and services carefully. Identify a niche and fill it.
When choosing a niche, look for positions that are essential and irreplaceable. For example, rather than trying to sell printers provide printer cartidges. That way your business will thrive with your customers longevity while other companies tread water and eventually succumb to red ink.
This tip splits into four key areas that good business know, understand and increase their focus on in an uncertain climate.
To manage a business effectively requires the following:
These are all systems. Intelligent managers know that strong businesses are built on systems.
Strategies for dealing with money will make or break profitability. A successful approach to managing money will involve several key components:
Fight your instincts! When things get tough, don’t cut your marketing budget, instead make sure you are getting a better return on your investment. Take care of existing customers and make sure that you are offering real value ….up-selling, cross-selling and down-selling where appropriate. Look after your customers and they’ll look after you. Also, remember, if you’re doing a good job, to ask for referrals.
We use merchandise hear because it starts with an ‘M’. What we mean by this term is stock, inventory management and portfolio focus.
In tough times, growing businesses will understand and focus on their most profitable product or service lines as it reduces their need to focus on quantity sales only. Focusing on quality delivers higher margins. Other things that clients have had success with include:
Do you know the difference between market share and wallet share? Market share is all about new customers. Chasing market share can be very expensive. Wallet share is all about building your relationship and value of your existing customer base. Having invested to acquire a customer, focus on increasing the return on that investment.
There are levers in every business when small improvements in each area are combined produce fantastic results.
Common ‘levers’ to focus your energy on include:
It’s an old saying but so true. In order to generate strong cash flow your business must be profitable. So, focus on profitability, stopping any leakage or loose spending, make sure that you are making a profit on all products and services and work on closing the ‘cash gap’ – the time gap between when you have to pay for goods/services and when you get paid for your goods/services.
Phew! That was a long post.
If you made it this far, here is a repeat of the summary ideas for recession proofing your business: