Tip: Thriving and Prospering in a Tough Economy

It’s been two years since the economy hit a rough patch, and – although we are in recovery mode now – progress is slow, and many small business owners are still feeling the pinch. The effects of the recession have reverberated through business and industry worldwide, leaving no sector untouched. It is apparent that many U.S. businesses continue to face a challenging marketplace.

Perhaps the slow pace of recovery has daunted some entrepreneurs, but many understand there are no simple or fast solutions to the complicated business issues that created the crisis in the first place. However, there are some fundamental strategies that will allow companies to not only survive tough times, but also to recast their business operations to succeed in the new economy.

Here are some back-to-basics strategies that work.

1. Be realistic about the amount of debt you can carry. If you have seen a decline in revenues, you might need to rework your relationships with banks and creditors. Most creditors are willing to work out solutions with business owners, but make sure you sit down with a plan that shows how you intend to cut overhead without sacrificing productivity.
2. Stay focused on day-to-day expenses and revenues. You can’t afford to wait until the month’s end to see which clients/projects/products were most profitable and where losses occurred. Weekly reports will show you emerging problems and areas of opportunity, thereby preventing you from throwing good money after bad. Pay close and frequent attention to key indicators and productivity data.
3. Learn about online marketing options. There are frequent classes and seminars in most cities and towns that explain how social media and Internet marketing can help. Your business might or might not be a good fit for online marketing strategies, but be open-minded and invest a little time to find out. If you can reduce your marketing budget by using nontraditional media, do it.
4. Promote productivity. Make sure your employees understand how important each person’s effort is to the company’s overall success. Cross-train your staff as much as possible so that sick days and vacations are covered by backup personnel on staff. You can make the idea more palatable by encouraging employees to select a business skill they would like to learn.
5. Avoid discounting and leverage your competitive advantage. Tempting though it might be in a tough market, avoid giving discounts on goods or services. It is hard to recover customers’ willingness to accept future pricing if you undermine the basic value of your products or expertise by giving big discounts to gain new business. It might also set up pricing issues with existing customers. If you are a small firm, you can offer a caliber of personal service and responsiveness that the bigger companies can’t deliver.  Determine what your specific competitive advantage is and make sure existing and prospective customers know what you offer.

Finally, remain true to your commitment to quality services and/or products. When cash is tight, customers and clients become more value-conscious, not less. Businesses that survive tough times do so by successfully adapting to new conditions – not by lowering their standards.

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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