Recession proof your business: Feature Article
Times of recession can really break a lot of businesses down. Lower demand makes doing business hard and making money even harder. Some businesses do not have what it takes to weather the storm of uncertainty that a recession brings, while others are able to adapt and maintain their presence in the market. There are ways that even the smallest of businesses can become "recession proof." With planning, innovation and a strong foundation, the following suggestions can aid you as you recession proof your business.
Yes, it is true that during times of recession some companies go untouched by what is happening in the market, but you should not use this excuse as a reason for being caught off guard if in fact the economic slow down does in fact hit your company. It is always good advice to prepare for the worst and hope for the best. Gregg Landers, director of growth management consulting at CBIZ Accounting Tax & Advisory Services, San Diego says: "Prepare a worst-case, 12-month cash flow scenario. Assume a 10% to 20% drop in revenues and identify what changes you would make and when." Many times it is too late for recovery once a dramatic drop in financials is discovered. You should also be working on keeping an eye on what you should be doing to reach long tern goals and objectives. By staying focused on these long term goals during a recession, you will be less likely to be overwhelmed with all that is presently happening. Every decision, every cutback, every improvement you make now must be beneficial not only in the present, but most importantly, in the future. Man y companies regret hasty decisions after they react by cutting prices, firing employees, cutting overhead, etc.
The customer is always right
There is perhaps no better time than during a recession to acknowledge the importance of your customers. Without your customers you cannot make money and without money you have no business. Every interaction you have with a customer should be approached as if that one customer is the most important person to your company. Eventually you will gain customer loyalty and your next challenge will be to retain them in a situation (i.e. a recession) where they are very hesitant to let go of their money. Providing exceptional customer service is just one way of giving your customers more value for their dollar. Every effort should be spent on ensuring that the customer is delivered a product that is customer-focused and consistently effective. You can conduct customer satisfaction surveys to see if there are any customer needs that are not being met. You can also consider making your service more valuable to clients with faster delivery times, wider selections, or more flexible payment terms. During a recession the customer's buying habits will change. Therefore the business must keep up by making changes as well. You need to show your customer that you understand that economic times are hard and provide them with solutions that address their problems or concerns. The market will also become more competitive during a recession and you may quite literally need to fight for your customers. The successful business is the one that ends up with the bigger customer pool. So create the best experience possible for every customer that walks through your door, calls you on the phone or otherwise comes in contact with your business. Local businesses can benefit by increasing their level of community involvement by sponsoring a little league team, joining the Rotary Club or Chamber of Commerce, etc. Bonding with your community is a great way of becoming a recognized part of it.
Improve the value of the product
Another way to recession proof your business is to seek new ways to improve or add to the value of the product that you are offering to customers. In reality, it should not take a recession to trigger the evaluation of policies, prices and performance. However a recession does tend to initiate taking a more serious look at how you can operate as efficiently as possible. You may be surprised at what sorts of improvements, not directly related to the product, small changes can make. Do not limit your creative ideas to management. Encourage feedback from those who probably know your product best, those who are working on the assembly line. The trick is to see assets where others see liabilities and opportunities the challenges present rather than stumbling blocks.
Keeping up with current technologies is one of the best ways that you can improve the value of your product. You can put your business online, advertise with well-placed banner ads, send out information to potential clients via e-mail, outsource some of your administrative duties, manage your payroll, or establish an affiliate program all on the internet. Current technology can help your company run more efficiently and more cost effectively.
Be prompt in finding out what concerns your customers may have and address these concerns immediately. Ensure satisfaction and return business by following through on every sale and gathering what information you can that can help improve processes and products in the future.
With the market in a recession, one of the best things that you can do to ensure financial success is to become more diversified. You can do this by looking for ways that you can sell complimentary or supplementary products. If additional products are not a possibility, then invest your time in enhancing the usability of the main product by offering repair services, warranties, etc. You may even consider opening a completely new line of products or services that fulfill a specific need that may exist because of the recession.
Remember that the more services you can offer, the more clients you will be able to find. In addition to creating new products you can diversify even further by repackaging your product and selling it to a different clientele. Although you may be very comfortable in a certain market niche, a recession is no time to remain un-changed. You may have had the competitive advantage before, but unless you diversify along with your competitors, you will be left in their dust.
Naturally a great way to ensure that you are making money is to cut the costs that eat away at your profits. Lean or waste reduction methods should be your goal. You should be carefully measuring inventory targets and remaining in constant communication with your staff that is responsible for communicating sales and operational figures. Research and development, however useful, may not be the most important department to be pouring money into because you can definitely try your hand at innovating for yourself. You can also work towards reducing operating costs by making your production processes more efficient and effective. The goal of reducing costs is to increase service while increasing margins. Do this and you are sure to see a much more recession friendly operation.
In times of recession many companies make the decision that their dollar will make the most difference if it is invested in a more intense marketing strategy. Many business owners see advertising and marketing costs as non-vital components of a business in a struggling market. It is quite the opposite that is true. There is perhaps no better time to start a more comprehensive marketing campaign.
Offering and advertising discounts, freebies, or other extras as incentives is a simple and relatively inexpensive thing that you can do the yields excellent results. You may also want to set up a referral reward program for clients as part of your marketing efforts. Doing so costs you very little but puts you in direct contact with those who are likely to be very interested in the products or services that you have to offer. Do not waste valuable revenue sticking with marketing techniques that are not yielding results.
It takes a brave person to step outside of one's comfort zone. However, these people are usually rewarded by their bravery. By stepping outside of your comfort zone in the business world, you are positioning yourself as a leader rather than a follower. You can develop a unique selling position and strategy that can give you the edge that you need to gain customers from competing businesses and to maintain the loyalty of current customers. Develop a unique selling position that will give you no reason to worry about the economic slowdown or competition. Your unique selling position should be something that once your customers experience it, they have no need to look elsewhere to satisfy the need that your company has provided a solution for.
Of course the fundamentals of marketing and advertising remain in full force you will need to continue to get the word out about your business in whatever methods that you find work best. Do not let fear of the recession stunt the growth of your company. Continue bringing in new types of types of customers, developing stringer partnerships and taking advantage of developing new products and services.
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