Strategies to stay afloat during times of a slowdown in trade
Q. Like most businesses these days, my company is feeling the effects of a slow-down in trade and reduced income. I’m looking for advice on strategies I can implement to get me through these difficult times. Can you help?
A. Running a small business isn’t easy at the best of times, but is even more challenging at present. Rising costs, reduced customer numbers and difficulties obtaining credit can all combine to create difficult trading conditions. However, there are certain steps you can take to get you through the tough times and secure your business against the effects of the recession.
Firstly, you need to establish your current position. Perform a SWOT analysis of your business and examine the strengths, weaknesses, opportunities and threats that you face. Look at the strategic vision for your enterprise. Where would you like the business to go? What are the key opportunities for you at the moment? Bear in mind that these may have changed significantly over the last couple of years.
Now is the time to examine the fundamentals of your business. Have you a solid record-keeping system in place? Do you prepare management accounts and cash flow forecasts on a regular basis? You should be able to make a good estimate of the financial position of your business at any given time. That way you can adjust your business plan to meet changing market conditions.
Make sure you’re on good terms with your creditors and do your utmost not to fall behind with payments. If you do run into problems, but have a good track record of reliability, your suppliers will be much more likely to renegotiate credit agreements if necessary. At the same time, you need to watch spending in the business. Instead of reducing costs across the board, spend only on those items that will add most value to your business. You also need to keep a close eye on your debtors. Keep on top of any outstanding amounts and don’t wait to follow up on late payments. Be firm, but consider the possibility of negotiating if you think it will be beneficial.
It’s tempting to cut your costs by reducing your marketing and advertising budget, but you should look for costeffective ways to keep your business in the minds of poten- tial customers. Do you always carry business cards with you and hand them out when you can? Have you considered becoming a member of a local networking group or cross-promotions with other businesses providing complementary services?
As a small business you have an advantage in that you’re closer to your customers. Make sure you really listen to their opinions and what they want from your products. Social media networks like Facebook, Pinterest and Twitter are excellent low-cost channels for marketing and obtaining customer feedback. Ensure you’re looking after your existing customers as well. Concentrating on excellent customer service and always going the extra mile will keep you ahead of your competitors.
An economic downturn doesn’t have to mean disaster for your business. Look at it as an opportunity to really get to know your business and develop good financial practices that will help you through these testing times and provide a strong foundation for a prosperous future.