Real Estate NewsSurviving the Storms: "Weatherproofing" Your Business During Tough Economic Times
For hundreds of thousands of businesses across North America facing an economy near or in recession (depending on which economist you talk to), developing strategies to "survive the storm" is right up there with breathing in terms of importance.
What do you do when dark clouds of uncertainty move in? According to business experts, you stay lean, get focused and expand your marketing like never before.
According to billionaire Bill Bartmann, considered the 27th richest man in the United States, there are five fast facts you must understand about recessions:
they happen regularly – on average every 8 to 9 years
more than 500,000 businesses fail during a recession
they are ultimately healthy – they weed out the crowd and level the playing field
they reward the nimble and the flexible
all of them come to an end within 1 to 2 years
Now, with these facts in mind, let"s take a look at six ways smart survivors not only ride out the storm, but also find themselves in control of their market areas and their long-term success when the tide does change.
Get lean. According to Bartmann and top business professionals such as Bill Lenhart, national director of business restructuring at BDO Consulting in New York, paring down operating expenses is a must. Here are a few examples:
If three employees are doing the job of one, cuts may need to be considered.
If you have two product lines and one is failing, consider selling that division and concentrating on core markets.
Ratchet down inventory. The last thing you need is shelves full of inventory. Pare down and make sure that your sales and purchasing departments are in constant communication, only ordering what"s needed. Keep an eye on leading consumer indicators such as those offered by the National Retail Federation.
Cut down or eliminate travel expenses, meals and entertainment.
Renegotiate contracts for materials, equipment and services.
Expand financing. As the economy tightens, so does borrowing power. Line up the dollars and terms you"ll need long term now. You don"t have to use it or spend it now, but knowing it"s there when you DO need it will free you up to make smart decisions as you go and have peace of mind at the same time.
INCREASE marketing. That"s right. When you are cutting back on everything else, the one portion of your business that should get into and stay in expansion mode is marketing. Why? While your competitors are cutting back or ceasing their "presence" in the marketplace, you"ll be positioning yourself to capture lost market share not just in the "now," but for the foreseeable future.
Revise your promotions to make buying easy for your customers
Put the sales team and systems you need in place to fast track the process of getting in touch with every one of your past clients, and stay in touch with them every 21 to 30 days
Create referral reward programs
Implement direct mail incentives and drip marketing campaigns
Focus on high-end and economic buyers for highest response rates
Know your market segment, and match your message accordingly
Fine-tune and aggressively promote your Unique Selling Proposition – what makes your product or service different, better or more applicable than your competition; sell the difference
Maintain prices. As tempting as it may be to slash prices to increase cash flow, business analysts and recession survivors all tell us that"s a mistake. In fact, if anything, some products may need to increase in price. Deeply discounting products and services now weakens brand value, dramatically dilutes your profit margins and puts you in a position of having to justify your retail rate when the economy shifts and they still expect similar discounts. Instead, consider offering "extras" or "freebies" that incent loyal clients to purchase without damaging your brand or bottom line.
Adopt cutting-edge solutions. Technology can be your key to the kingdom when competition grows and the economy wanes. Customer relationship management software, email marketing systems, set-it-and-forget-it direct marketing campaign programs and administrative management software integration all allow savvy business owners to ensure their marketing and administrative duties are well taken care of while they keep their eye on the ball.
Tough times require smart strategic planning, open mindedness and, of course, as Mr. Bartmann points out, flexibility. Know that your business can survive this economic turn and come out the other side stronger and more profitable.