Managing a small business can often be like a wild roller-coaster ride.
One day you’re riding high, and the next you’re speeding downhill towards a very tough time. Whether it’s caused by an economic downturn, an unexpected recession, or some new competition making waves, enduring hard times requires more than a winner’s attitude of never-say-die and steely determination. So how can you ensure your business survives when all seems lost? Below are six business strategies to focus on when times get tough.
A downward spiral in business may start out small, but it often doesn’t take long for things to get increasingly worse until it’s impossible to stop. If you can see problems ahead, don’t throw your hands up in despair and do nothing. Many problems can be almost completely avoided if they’re detected early and appropriate action is taken. The most important thing to do if you want your business to survive is to be proactive in response to whatever challenges lay ahead.
Because cash flow is the lifeblood of any business, you should always ensure you have easy access to capital or alternately have creative methods of obtaining funds during difficult times. Visiting your bank in advance to open a line of credit is a good first step, just in case you ever need to fund short-term issues with cash-flow. Small business owners should always know’ all potential sources of capital, or at the very least understand what is required to obtain a loan. There are a variety of loans for your business like cash flow loans, merchant cash advances, and SBA loans that can be helpful as you go through these tough times.
One of the best ways to survive the tough times is to invest in your business so it is ready for when things start to improve again. Get those jobs done that you’ve been putting off because you’ve been too busy, like training your employees, upgrading your shopfront, redesigning your website, and investing in the latest tech. You can also use this time to save money on promotion costs by switching to low-budget marketing tactics like public speaking, online marketing, and other inventive methods of networking.
One of the most effective ways businesses can survive tough times is to ensure you retain your loyal and returning clients. These customers should always be priority number one, but even more so when profits are down because now more than ever is when they will be targeted by your competition. In order to truly understand why your existing customers initially chose your business, and what has kept them coming back, you should engage and communicate with them and ensure you are still fulfilling their needs and future expectations.
While keeping costs low is obviously crucial whenever the going does get tough, remember not to reduce the value for money when making changes. The key is to always ensure no compromises are made regarding the quality of your products when reducing their overall cost. It is important to remember many customers would often rather pay more for higher quality products that will last longer than cheap items that will need replacing sooner.
It may be a cliché, but you should always take a step back and learn what you can from these experiences. Ask yourself if there were any early warning signs you missed, and if there is anything you could have handled differently for a better outcome. You should also use this as an opportunity to look at all aspects of your business and reflect on what works and what doesn’t. Make the hard decisions now about changing and restructuring your business while everything is fresh in your memory, so you will be in a better position should anything like this ever happen again.
While no small business is ever completely recession-proof, there is plenty you can do to increase the chances of surviving. Just remember that no matter how bad things seem, tough times don’t last forever.
Luke Fitzpatrick has been published in Forbes, Yahoo! News and Influencive. He is also a guest lecturer at the University of Sydney, lecturing in Cross-Cultural Management and the Pre-MBA Program. You can connect with him on LinkedIn.