The economy seems to be a topic that’s discussed over and over in our local and national media and at almost every business level in America today. Predictions abound that the remainder of 2008 and into the first half of 2009 will see a decline in the economy.
Here are our Top Ten recommendations of ways you can recession-proof your business:
1.) Know Your P & L – In addition to your income and expenses, measure and identify your accounts receivable (numbers & days to collect), customer retention rates, project estimates w/variances, sales cycles and closing ratios, and inventory control. Understand which numbers and percentages have to go up or down for you to succeed. Forecast a 10-15% decrease in revenue and create a plan.
2.) Intensify Marketing – This is an area that many business owners will cut first in a down economy. DO NOT CUT your marketing budget. Marketing is important in a good economy, but vital in a slow one. Stay networked and connected. Be creative and strive to obtain a bigger market share.
3.) Cater to Current Customers and Deliver Extraordinary Customer Service – Create new products and services. In a down economy, sometimes it is more cost effective to generate additional sales from existing customers than find new ones. Continue to build outstanding customer service solidifying repeat business and new customers through referrals. Make follow up calls and/or use direct mail to stay in contact with current customers.
4.) Be Lean & Fit – Cut costs where you can, but NO cost cuts in learning or marketing.
5.) Reduce Debt – Long-term debt can sometimes be renegotiated saving dollars on interest rates and increasing cash flow. Reduce inventory, if overstocked. Always efficiently manage the cash flow.
6.) Keep Good Employees – Look to hire even better employees in this age of corporate downsizing. All employees should add value and get results.
7.) Adopt Cutting Edge Technologies – Create efficiencies, reduce costs, improve service and increase employee satisfaction.
8.) Maintain Prices – While it is tempting to cut prices to free up cash flow, it is a mistake! You will definitely sell products, but you will cut your profit margins in the process. Discounts are also hard to take away when the economy improves.
9.) Good Credit Ratings – Good credit ratings are always important, even more so in lean times. You want to always make payments on time and maintain that credit rating. Your borrowing ability and loan costs depend on having good personal credit.
10.) Dismiss Your Fear and Consider Expansion – Any down-turn will create new opportunities. Seek out market opportunities that would enhance your current business. New changes and growth will always have a positive effect on attracting new customers, satisfying existing customers and growing your asset.
