Prepare your business to survive a bad economic condition | ||
If you are an accountant you might have probably figured that under these circumstances, unless you are selling magic items, you would see higher expenses than income. Business is not about how much money you make, but it is more about how much of the money you make actually stays in the business. A business that makes a million dollars a year and spends a million is the same as the business that does not do business at all, except in the earlier case, the owner is actually at a loss because they are putting in more effort than they are making. So how do you survive that? That was exactly the same question I asked myself a few years back. Here I have compiled some notes that some in the same situation might find helpful. 1 Constant Evaluation and process streamlining.Constant evaluation is the blood and soul of every business. As the saying goes “What got you to where you are may not get you where you want to be”. To be honest, I have never met any business person, whether it is in the formal or informal sector who wanted their business to stay the same for a long period of time, no matter how well they were doing. Being on top of your class does not stop your competitors from doing what it takes to beat you. We see a lot of big businesses laying people off, going through mergers and acquisition. This is process streamlining on a large scale. They evaluate their positions; get rid of inefficient processes, redundant positions and so on. Don’t feel guilty if you have to do it for your small business… If you find yourself with more employees than you need or using a process that is costing you more than it brings in, cut it off and replace it with something that works better. I will tell you a secret. A few years ago, I read an article about how one could make a lot of money on FOREX, if you do not know what it is, basically the business is about speculating on whether a certain currency’s value would get stronger or weaker and then you would either buy or sell a specific currency in exchange for another currency. I thought that was a pretty easy thing to do and got a lot of books telling me that it is a lucrative business. I am not disputing that, but there are also a lot of people that loose money this way. I also got a few articles somewhere that warned me about what happens on FOREX, but I got drawn to it, not by the money but by the fact that I could learn a lot about financial discipline. After two months, I had almost lost all that I had in my account, but I had also learned a lot of things. One of the important lessons is to cut your losses short and let your profits run. Get me right, this is not the same as giving up too soon. This is giving up soon after knowing that the business is heading no where. This may sound like a greedy game, but it works. To me money not spend is money saved, it is as simple as that. 2 Break away from conventional marketing practices.Many people out there think having a business is about having merchandise in store and putting ads everywhere to let people know where to find you; or even worse hoping that people will easily come by your store looking for what you got. Others spend most of their starting capital on radio and TV commercials, when they know they have no way of measuring where the traffic is coming from, so that they can cut out stuff that is not working. The sad thing is that many advertisers out there do not care whether you get your returns out of your advertising dollar and honestly, they shouldn’t, because they are in business to make money. Otherwise how would you feel if somebody told you that every time you sold a frying pan to a family, you would have to follow them around to make sure they are using it. It is not your business, your business is selling frying pans and you should stick to that. To make sure your business can survive, start talking to people you know and trust or people that trust you, about what you are offering. Do not try to push it on to them, just tell them know about it. Chances are, that next time they hear somebody looking for what you have, they would refer them to you. The idea is that the few that you know are going to tell a few others that they know and the game continues… viral marketing… if you get where I am heading. The best tool for viral marketing is word-of-mouth, you either learn to use it or loose business. Save your marketing dollar, by cutting out all the stuff that does not work, the world is bombarded with marketing messages every second and many people are beginning to ignore marketers who interrupt them with a sales proposition. Watch your competitors see what they are doing wrong and learn from it. We have learned the hard way from a deliberate experiment on interruptive marketing, we were distributing flyers about our business and most of the time he would get a mean look or be told that people did not have time for what he was trying to sell them. After going through the pile of flyers, we sat and talked about how people were responding, why they were responding that way? and what we needed to do to overcome that?. Just make sure you do this all the time, otherwise you are going to waste a lot of your resources and not understand what is going on when they do not show up at your store. If your business is too small, try online merchandising. You look for a cheaper way to sell your products on the internet. This will cut your expenses in terms of rent, expensive advertising and even the commuting time as this will enable to work from home. Besides, you will be able to market to a wider audience and do not have to be awake to take orders. This is not an easy cookie though, you will have to spend some time researching internet marketing and optimizing your website for best results. 3 Help your customers find the help you do not offer.Customers are very interesting people, one thing is that many of them do not want to be sold something. They want to buy it and hopefully from you. They tend to ask people they trust of their opinion on other businesses or even products. No matter how much you hate your competitor or how desperate you need their dollar, if you do not have what they are looking for, politely tell them that you can not provide it and they should check with your competitor or some of your non competing partners for that matter. Never delay their purchase out of greed until you have the product to sell to them, leave that to them to decide. Never bad-mouth a customer, even when you catch them buying the product you have from your competitor when you believe they should be buying from you. The funny thing about customers is that the more you help them, the more they get to trust you and they might even bring their friends to your business knowing that they will get help regardless of whether you have what they are looking for or not. Why is this important? People get to you first before they get to somebody else, thus you have a chance to sell them something first before your competitor. 4 Ask non-competing business owners for help and return the favor.If you are to survive in business, you have to acquire some friends hopefully people that are already in business but are not your direct competitors. You should do this for a few reasons, one is that since you are not competitors, you are more likely to need what they offer and so are they. These people might end up being your biggest customers or they may even refer their customers to your business. Two, Since they are already in business, it is very likely that you think the same way. This gives you an opportunity to pick their brains on something that you need help with. Remember for the most part, we are defined by who we associate with. If you hang around thieves, you will be considered a thieve; and if you hang around very successful people, you will be considered successful, as long as you work hard enough to think and behave like them, for them not to run away from you. Three, people around you are watching even when you think they are not. What you say to one about other people may come to haunt you. If you have hanged around somebody that gossips a lot, would it not bother you as to what they say behind your back? Or rather as to what would stop them from saying about you what they say to you about others? The same thing happens in business, when things are not going well, you reach out to others for help. This almost always works as long as you remain accommodating of others reaching out to you. Keep what they tell you in confidence, confidential. This will earn you a good reputation, trust and in many cases business or referrals. 5 Be Careful of hyped advertisers trying to take your last pennies.How often do you see something like this? “Get ranked high on major search engines in 24 hours for a small fee” or rather an interesting one “Make up to $400 a day working at home using our proven system” and at the end of the page, they ask you to pay $300 to get you started. These are all people wanting to get your money for their own benefit. First of all the web is full of people competing for the top ranking. Even if it was true that they would get you top ranking on Google or Yahoo, how long do you think you will stay there. Besides, these ads go to millions of people who maybe in the same business category that you are in, and just out of curiosity, how many millions of you would fit into Google or Yahoo’s top 10 ranking for the same or similar keywords?
6 Combine forces and let your marketing dollar take you a little farther.My seventh grade teacher once demonstrated to me how powerful you can be by combining forces with other people for greater results. This may have nothing to do with business, but just hear me out. This guy had noticed that kids in his class were not getting along, so he decides he is going to make the class sing, but everyone singing a different song, then asked three students to stand outside the class, so that after the song, they would come back and report on what they got from the song. After the first song, the three students came back into the class and reported different things about “the same song”, all of which were not accurate. Then he decided to get the class to sing one song, with everyone singing to the same song at the same time. While the students were singing, he asked the three students to go a little farther from the classroom. After the second song, he invited the three students back into the class and asked them to report on the song they had just listened to. All three reported accurately. So, what is the deal here? There are many people out there who think, they can do it on their own, ignoring the fact that their potential customers are getting bombarded with marketing messages from all over the place. The sad thing is that they end up spending a lot of money trying to get the word out, but because they are not in tune with others; their messages do not get to the intended recipient. They finally grow tired and quit, even when there is a huge potential for success. The best survival skill is to learn to play along with others while at the same time acknowledging that there are things that affects us differently from the way they affect others, even those closest to us. Anybody who had done stock trading would tell you “Never fight the trend, if you plan on winning”. Take some time, listen to what people are saying about certain products, research a little to see if there is real demand for the product or service, determine whether people who are talking about it are real buyers and not just people who would want something of great value for almost nothing. 7 Deliver what is promised on time.Sometime ago, a friend of mine came to me and said “I hear you do computer stuff, My computer is not starting and I would like you to take a look”. I asked him a few questioned and had determined that his problem is likely to be a hardware issue. I told him I would take a look, and that I was a software guy and I knew of another guy that did hardware stuff. As soon as I mentioned his name, the guy goes “Nope, I am not going back there, because he takes a long time to get things done”. This had been the second person to say the same about this guy. Although I was not a customer, It made me hesitant to recommend him to anyone. If they did not get the service they deserved with this guy, it would put my credibility on the line. Now every time somebody asks me where to get their computers fixed, I would say I was not sure or would at least warn them before referring them to him. Who knows how much business he is loosing as a result of this? His former customers might be telling their friends to not go there. Speedy and high quality service has proven to be the key to small business success. Follow up to make sure they are satisfied. This way you show that you are not only interested in getting rid of your product but also care about how they feel about the product. Just do not go overboard and get into how and whether they use the product, that is their business. Keep focused on delivering the best quality products and/or service, seek feedback on whether they are satisfied and make sure they can come back or bring their friends for more. That is your part, the rest is up to them. |
RELATED ARTICLES:
How to measure your business financial position and performance
As mentioned in the previous postings, accounting comes in two forms: Financial accounting - which is concerned with providing the overall financial picture of the business' financial position and performance. and Management Accounting - which is conc
The difference between Accounting and Business finance
So far you might have seen a lot of overlap between our Accounting and Business sections. After all, they both talk about financial statements and reporting. So where exactly is the difference between the two? Well, Accounting - deals with collecting, analyzing and communicati
Business finance - Basics
Anyone who runs a business will tell you that you can not start a business with nothing. Every business is started with money or something with a monetary equivalent. Suppose you decide to start a business to produce and sell fresh vegetables. To do this, you either hire people to hel
Business Insurance coverage
Protecting business assets should be a primary concern of every business owner. As a matter of fact, before you even open your doors to customers you should speak to an insurance agent about ways to protect your business from unforeseen business risks. These risks range from workers compensation ins
Business Operations and the Environment
Running a business effectively require managers to fully understand what they are trying achieve. In other words managers or business owners have to develop a clear vision of how the business operations should help the business attain its long-term goals. This also means identifying the role
Doing Business on the Internet
How online business has evolved In the last decade, the Internet has transformed from merely a research tool for academics to a flourishing business platform. A platform where the difference between big corporation a
Legal Business Forms
Now you are ready to start a business, you have fully or partially secured your starting capital. You have also done your market research and concluded that your business idea is viable. Now what? Now you have to register your business. There are several advantages to registering your business as le
New Business Planning
Many people starting out in business write business plans with the sole purpose of convincing financier or investor that their idea is worth investing in. Sometimes they outsource such work to outsiders with little or no input of their own. This however should never be the case. Many businesses that
Things to know before you start a Business
Before you throw your retirement, inherited money, your savings or whatever you have into the idea of starting a business; make sure that you cover the following basics: Have a purpose Define a purpose for your business. Many people have sole purpose of making
Small Business Planner