Does the recession have you and your small business on its heels? Wondering where you should cut and where you should invest? Not only can you survive during this recession, you can eclipse your competitors and come out even stronger.
Have you read the papers lately? There's a recession! Shocking! Of course, most small businesses wouldn't have known that without our brilliant media telling us as much - ha! In fact, they were able to even tell us when it started - December 2007. Well, now that we finally know what most of us have felt for the past year or so, what do we do about it? We hunker down and position ourselves stronger than ever.
There are a couple of areas that you need to be very smart about when you consider what to cut. Be very careful about your marketing budget and your customer service.
Marketing is a critical lifeblood to your business but it seems that every time the economy goes south, small business owners start looking at advertising and marketing as a variable expense that should be slashed. Think very carefully about that. It might sound simple but if you zig while your competitors zag, you will be in better position not only during the recession (higher visibility) but after the recession (customer loyalty).
That brings us to the other very important area of consideration for your small business during a recession - customer service. Layoffs might be the first instinct for many small businesses but be very careful not to impact your most valuable asset - your loyal customers, who may be adversely affected by layoffs that impact customer service. See above - if we're eating in to our competitors market share during a recession, we need to have exceptional customer service so those new customers stay with us.
Of course, a recession may be the best time to re-evaluate your Web efforts and strategies. Are there opportunities for you to expand your business through the Web? Can you create a customer loyalty program online and leverage that email file that you haven't done anything with yet? Get creative. When times are great, we tend to get complacent. When things get tough, we need to get creative.
So, you might be asking "where do I cut?". The difficult reality is that you may need to accept lower profit margins during a recession while your top line suffers. Be patient. Weather the storm. Harken back to the early days of 'beans and rice' when you first started your business. Hopefully, you won't have to get that dire but accept the fact that you, as the owner, may make a little less this year. Consider it a reinvestment in your business. Don't be stubborn and think that you 'deserve' to make as much as you did last year and therefore you must cut expenses in order to maintain your profit or draw. That is irresponsible and short-sighted.
What if you have shareholders to answer to? Be upfront and vigorously defend your decision to defend marketing, advertising, and customer service budgets. They may suffer as well with smaller profits this year as well - you'll have to sell them on reinvestment now in the form of lesser profits rather than risk the long-term health of the business by being greedy today. You have to reassure them that things will improve. After all, a recession is cyclical so they will soon get a return on their investment.
If you do have to cut staff, take a close look at activities that you may be able to outsource - or maybe insource to your family. Administrative and bookkeeping tasks might be easier to outsource or have a family member chip in on in the short-term while you tighten the belt. Not ideal, but it's also not a bad idea to periodically bring family members closer to the business to learn the ropes a bit in case you suffer a short-term disability where they may be called into duty.
Tough times can be lonely for small business owners. This may be your first experience in the weak portion of the business cycle. As a business owner, no one is going to tell you what to do and you are expected to be the one to set the direction. If you have doubts as to what you can do to survive a recession, don't be afraid to ask other owners what steps they have taken. Sharing this information is beneficial to everyone because no one wants to throw in the towel. Think opportunity instead of challenge.
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