If the two-speed economy is challenging your business, Greg Roworth of Business Success Systems has seven tips to help you thrive despite the shaky economy.
Recent surveys reveal that the confidence of Australian business leaders in the economic outlook is on a downer again. With all this talk of doom and gloom, many business owners worry about their survival and how a down economy will affect them. However, rather than just worry about how you may be affected, there are a number of proactive measures you can take to ensure the downturn does not lead to your downfall.
1. Make a Plan
It's time to look forward now to what may happen in your market and in your industry and plan ahead. Don't wait until the downturn has started to take its toll, when you can only be reactive to the pressures that hit you. Analyse your current situation and take stock of where your strengths and weakness are. Then make a plan to make the most of your situation, by focusing on your strengths and shoring up your weaknesses. Don't be over cautious, but be aware of what may happen and make allowances and contingencies in your plan. If you focus on your strengths, you may find you can grow in a shrinking market by outdistancing your competitors and taking market share by being better than they are.
2. Don't Cut Back on Marketing
Often when times are hard, we think about how we can cut back on expenditures. This is a good policy, but don't make the mistake of cutting back on your marketing. Now is the time to be even more visible to your market. The key is to make sure you are not wasting your marketing dollars. Make sure every dollar you spend on advertising and promotion is accountable. Keep track of where your sales or your enquiries are coming from and measure the return on investment you are getting from each of your advertising methods. Cut back on the areas where results are poor and redirect that expenditure into the better performing areas. Don't spend any money in any advertising vehicle when you cannot justify it with a clear and positive return on investment measure. Do this and don't be surprised if you actually increase your sales while your competitors are complaining about how tough it is.
3. Cut Back on Waste
Analyse your operations and identify where there is room for improvement. See where you can cut out expense without affecting efficiency and effectiveness. Review your expenses from you financial statements two years ago and see what has changed. See if you can cut back to the level of two years ago. Look at your stock levels and see if you can quit slow moving stock or reduce your purchasing levels to reduce your inventory investment over the next few months. Check your overtime levels and see if it would be better to employ an extra person rather than pay at time and a half rates. Review your phone and internet plans and see if you can get onto a better rate. These are just some of the areas where you can find savings. Don't be fat and slow when the tough times come. Get in shape now and be mean and lean and ready to fight the battle.
4. Focus on Quality
Develop your processes and systems to ensure your products or service improve in quality. In most markets, it is the lower end products that get cut back the most in tough times. In an economic downturn, usually the lower and middle income earners are affected the most. The more affluent are usually shielded from the effects of the economy and continue their spending on quality high end products and services unabated. Position yourself as a quality provider and go after the top end of the market where profit margins are greater. At this end of the market, price competition is less important and you can make more profit with fewer sales. Don't worry so much about selling volume. Make sure you maximise your profits with each sale you make.
5. Treat Your Customers Like Royalty
Even if you take care of your customers now, make sure you do an even better job when the economy makes life harder. Remember that it is your customers who pay your salary and your bills. You can't afford to lose any loyal customer due to competitive pressures. When times are tough, your competitors will fight even harder to get at your customers. Don't let them get a foothold by being complacent. Make sure you get to your customers first and give them even more reasons to stay with you. Treat every new lead like gold. Improve your response rates and improve your sales methods. Don't let new customers slip through your fingers because a competitor gave them a better deal. Focus on value and make sure you can communicate the value to your customers. When your competitors fall, be there to make sure you pick up their customers and convert them into your loyal customers.
6. Become the Preferred Place to Work
In an economic downturn, good people lose their jobs. If your business is strong, there are many opportunities to pick up good people to join your team. Make sure your current employees enjoy working for you so that they tell their friends how good it is. Then when good people become available, you will be sought after as a place of employment. How good would it be to have your pick of the best talent, rather than fighting to get anyone to come to work for you.
7. Stay Confident and Refuse to Join the Downturn
Business confidence is usually based on external factors, such as interest rates, market demand, exchange rates, employment rates, price levels of inputs and any number of other things. When these start to negatively impact the market, confidence levels fall because these factors do make life more difficult. But this confidence is wrongly based and you can use it to your advantage. Let others lose confidence because of the shaky economy. But make sure you place your confidence in your ability to play a better game. Think like a competitive athlete or sportsperson. We expect them to be better prepared, stronger and even more skilled when it comes to playing the better competition. It's just the same in business. If you rely on an easy economy for you to succeed, your confidence is misplaced. Put your confidence in your own ability to be the best at planning, selling, producing and competing in your market and get to work on being prepared for the tougher times.
It doesn't matter if confidence in the economy is shaky again. What matters is how confident you are that you can do what it takes to be ready and be at your best to compete. You can be sure that many others will not be prepared, but don't let that be an excuse for you. If you get to work now to improve how you do business, you can be confident that no matter how bad the economy gets, you will succeed and take advantages of the many opportunities that a downturn will bring.
© Greg Roworth
Greg Roworth is a business consultant and author of "Put Your Business on Autopilot." With over 30 years practical experience in business ownership and management, Greg has, over the last 16 years, worked with hundreds of small and medium size enterprises, assisting the owners to grow their business profitably and at the same time reduce their work hours and stress levels. His company, Business Success Systems operates in Melbourne, working with business owners to develop a business that works so well that the owner doesn't have to.