Surviving in an Economic Downturn

The author of this article is unknown; it was sourced from an online repository called ‘Small Business Notes’. Given today’s economic climate, and the prevalence I have seen recently of small business owners tending to “bury their heads in the sand” and blame their woes on the economy, I thought this article was an excellent opportunity to provide an alternative thought process. In tough times the best thing a small business (or any business for that matter) can do is to go back to the basics. If you actively run your business every day, think thru the issues so you can make smart decisions, and utilize the ideas in the following article, you should be well on your way to insuring that your business survives today’s economic challenges and is set up to thrive when things turn back around.

 

The belief that small businesses fare poorly in economic slowdowns is a common misconception that is not generally true. Solidly run small businesses actually hold their own during downturns. While we all like to believe our businesses fit the definition of “solidly run”, let’s take a look at what are some commonly cited best practices for all businesses to be following during a time of economic downturn.

Revisit Your Business Plan
The number one recommendation, across the board, is to re-examine your business plan. Your business plan should be the working base for your company. Have you strayed from it in any way? Does it need revision in light of new information? Should you be considering whole new directions that are not included in it? Sit down and read it from the perspective of someone about to invest in your business – and make any revisions that seem appropriate. You may even identify additional information you need to know in order to make decisions about the future of the company.

Seek Supporters and Advisors
If ever there is a time to network, this is it. Many companies set up advisory boards that include a wide spectrum of professional expertise that they can draw on for advice. Such board members often are attorneys, certified public accountants, civic club leaders, owners or managers of businesses similar to yours or whom you do business with, and retired executives. The latest jargon for these types of boards is “Power Circles.” An apt name because the members should be power connections for you – knowledgeable about the environment in which you do business and able to connect you with the information you need to make good decisions. The purpose of the board is to offer you objectivity. They should be people you can be truthful with and who will keep your disclosures confidential. Most groups like this discuss specific business problems you have, using the meeting to brainstorm possible solutions.

If you don’t belong to civic and professional organizations, do it. Here are groups of people facing similar challenges to you. Their joint expertise and resources can be a powerful support mechanism when times are tough.

Make Customer Satisfaction Your Priority
Your customers are your lifeblood in any economic climate. In a downturn they are what keep you in business. Treat them very well. Spend time listening to your clients to hear what they like and do not like about the services you offer. Change those things that you can. Take time to be innovative in meeting your customer needs. Perhaps taking the time to computerize customer information would allow you to more easily access their particular preferences and respond quickly to their needs. Perhaps taking time to call special clients to discuss how you can serve them better would be productive. Maybe an extra telephone line would speed the service time. Do whatever you need to do to keep your current customers loyal and to position yourself to win new customers.

Expand Relationships with Existing Clients/ Sign More Long-term Deals
Given that your customers are satisfied, they should want to do more business with you. Find out if there are ways you can expand what you do for them, perhaps by offering more products or services or fulfilling other needs that they have. Long-term deals add to your security. So, if you have happy customers, offer a discount to those who are willing to sign a long-term contract or who are willing to pay cash up front for a contracted set of services. Cash up front is particularly attractive because it makes you look good on paper and can allow you to lock in favorable financing from financial institutions.

Advertise/Sell
In a downturn one of the first places many businesses cut expenses is in advertising – a real mistake. As part of the philosophy of expanding your base and recruiting more customers, you need to advertise and sell more than ever. People are looking for better ways to do business. If you have established strong customer satisfaction, this is the time to get the message out.

Seek New Business Opportunities (Diversify)
A downturn sounds like a terrible time to diversify, doesn’t it? But there are opportunities out there to be taken. And given that you have done your homework in establishing yourself on a solid financial base, this is an opportune time to broaden your base. Diversification gives you more stability because a down market in one product may be compensated for by another product. The tricky part is, of course, finding complementary products that face differing market challenges. You don’t want to stretch your expertise by producing totally different products, yet you do want to target different types of markets so that softness in one may not be mirrored in the other. A simple example of a way to seek new opportunities is to establish an internet business for a retail store. You have provided a new way to service your regular customers and expanded the audience you reach.

Form Alliances
Alliances with your vendors or with closely aligned types of products is always a good way to strengthen your customer base. With the right alliance you are reaching a broader spectrum of possible customers and you have more to offer each potential customer.

Diversify Your Customer Base
It may be possible that you have been selling to a limited sub-group within the community and you can expand the appeal of your product to a wider audience. For instance, you may be primarily selling to a specific age, ethnic, or gender group and with different advertising or a slight modification in the product; you can reach a broader spectrum of the population. Simple things like instructions in another language or wording advertising slightly differently can have a major impact in who your business attracts.

Find Ways to Save Time and Money
Collections are a great place to start in tightening your belt. Not only do you need to be providing incentives to your customers to pay on time or even early, but you need an efficient collection system that gives you advance warning of problems as they develop. Similarly, you need to be paying your bills on time and taking advantage of every possible discount that you can.

Look at fixed and variable costs. What among the variable costs can you cut back on or put off for later? What among the fixed costs can you find a better deal on or negotiate more favorable terms for? And, pay attention to your banking relationships.

Keep in touch with your banker, apprising them of any company developments. If you face a tight situation, having your banker knowledgeable about the positives of you and your business will make them much more amenable to helping you through difficult times.

Watch for Signs and Act on Them
Look for changes in psychology and behavior in your clientele. They may be spending less or putting projects on hold. They may not be paying their bills as quickly. If you are in touch with your customers, you will be aware of differences in buying habits. Contact them before they contact you about what the problems are. Can you help them in some way? You can gain a long-time relationship with a customer by approaching them pro-actively with the view of being there to help them through their own hard times.

Mobilize Your People to Save Jobs
Economic downturns are scary times for employees. Many firms cut personnel and add to the workload of the remaining employees. Involve them in cost cutting. Let them know they are important to you and that you are committed to keeping them. If they know that they are perceived as an active part of the solution, they can identify sources of savings that never occurred to you.

Find rewards that are not costly yet acknowledge their efforts. As hokey as it sounds, one successful businessman placed post-it notes on the restroom mirrors every evening noting positives that had been reported about various individuals during that day. It became a delightful, early morning ritual for the employees to discover each morning what the CEO had noted from the day before.

Whether or not the economy is in a recession, any of these methods can strengthen your organization – and your bottom line. This is what makes a “solidly run” business. It means returning to the roots of your business and making certain that everyone is healthy. All of these principles are worth revisiting at least annually, in good or bad times.

The New Basics of Marketing

What you need to know about: websites, email, mobile phones, social networks, viral video, blogging.

Inc. Online, February 2008

By: Leigh Buchanan, Max Chafkin, and Ryan McCarthy

The world of marketing is radically different than it was only a few short years ago. From viral video to text-message campaigns and avatar sales reps, marketing tools that only recently seemed rare and futuristic are quickly becoming commonplace.  They’re the New Basics.

Mainstream marketing was invented by big companies to convey simple messages to the masses. New marketing, in contrast, is about complexity and individuality. There are, for example, 100 million blogs worldwide. No matter how small the market for your products or services, one of those blogs probably serves it.

But though today’s marketers have more choices in terms of the tools they use to reach customers, their jobs aren’t getting any easier. With an explosion of new offerings, it’s hard to know when and how best to spend your marketing dollars. In compiling this report, Inc. looked for developments that are new and creative but also effective and affordable–and, of course, well suited to nimble, entrepreneurial companies. Use them creatively, and you just might transform your business.

Related Content

The Small Business State of Your State

For those of you interested in working with other small businesses in some capacity, or needing small business knowledge to help with the development of a business and/or marketing plan, some very useful information has recently been issued by the U.S. Small Business Administration. The data is provided in a national and state-by-state format. A brief overview of the report is shown below. Click on the “compiled data” link and it will take you to a PDF document which provides you with that state-by-state information. Additionally, the links at the bottom of the article will take you to additional small business resources that may be helpful to you.

 The Small Business Administration’s Office of Advocacy has compiled data for each U.S. state and territory, giving an excellent snapshot of each region’s small business activity (in 2006, the most recent year for which data is available).

For example, California had 718,220 small businesses in 2006 and created 87.6 percent of the state’s net new jobs from 2004 to 2005. (The SBA defines small businesses as employing fewer than 500 people.)


The health care and social assistance industry was Louisiana’s largest small business employer in 2006, while the construction industry was Virginia and Maryland’s biggest small business employer that year.
The report pulls together information on each region’s number of firms, demographics of business ownership, small business income, banking, business turnover, industry composition and employment gains and losses by business size.

It’s worth a visit to check out that status of small business in your state.

By Sharon McLoone, The Washington Post |  January 27, 2009; 8:00 AM ET   Data Points     Small Business Resources

Survey Indicates CMOs Not Tracking Social Media Well. How About Your Company?

As most of you are likely aware, the use of Social Media Marketing is on a tremendous upswing today, particularly among small businesses that typically have minimal marketing budgets – and even less staff. This being the case, it seems prudent to provide information that small businesses can use to understand the pros and cons of using social media, as well as how best to effectively measure ROI to insure that monies available are put to the best use.

A recent article in Advertising Age reviews a study conducted by the CMO Council which indicates that companies overall are not yet doing an effective job of tracking the results and impact of social media. The article further discusses who in the corporate environment should be charged with this responsibility, as well as providing examples of how some of today’s largest companies are beginning to implement social media tracking strategies. This article is shown in-full below.

Since the majority of people who will be reading this blog will likely be somewhat social-media-aware, I thought this would be a good audience to ask to review the article and then provide commentary on what your company is doing to insure the effective tracking of your social media strategies and the monies being spent on that endeavor – from a small business perspective. I would ask readers to provide Comments in this blog on the following questions in order to assist other small businesses who will read it and who have not yet addressed this issue:

  • Do you currently have in place a social media tracking mechanism for your company? If so, please provide a brief description of your tracking methodology.
  • Who in your organization (by title) is responsible for implementing/monitoring your tracking mechanisms?
  • Are you measuring ROI as part of your tracking? If so, what is an appropriate social media ROI per your company?
  • Please provide any additional input you believe to be relevant to the discussion

After reading the article below about social media tracking, you might have interest in going to the following link http://www.strategicgrowthconcepts.com/marketing/Marketing-Information-Resources_I12.html to learn the basics about An Introduction to Social Media Marketing and how to put it into effect.

 

Few CMOs Think They’re Effectively Tracking Social Media, Word-of-Mouth

Survey: Marketing Execs, Not Other Departments, Should Be in Charge of Monitoring Customers’ Conversations

by Jack Neff

Published:
January 26, 2009

BATAVIA, Ohio (AdAge.com) — Who in corporate America owns the consumer relationship, the customer experience, word-of-mouth or social media? The answer appears to be nobody.

For all the talk about listening to consumers, few marketers think their companies are doing so effectively and even fewer are monitoring what people say about their brands in social media, according to a new survey by the CMO Council.

The survey of 400 executives found that 56% said their companies have no programs to track or propagate positive word-of-mouth; 59% don’t compensate any employees based on improvements in customer loyalty or satisfaction; and only 30% rated their companies highly in their ability to handle or resolve customer complaints.

Few have a system in place
Despite all the hype about social media, only 16% of respondents said their companies have any routine system in place for monitoring what people are saying about them or their brands online.

The survey comes, however, as big marketers are paying growing attention to monitoring and leveraging social media. Procter & Gamble Co. has a Social Media Lab that’s about 18 months old, and Unilever last month hosted a word-of-mouth summit at its U.S. headquarters dedicated largely to understanding how social media affect its brands.

Another big marketer, Johnson & Johnson, became acutely aware of the trouble social media can cause when complaints on the micro blogging site Twitter led it to pull the plug on an ad campaign for Motrin in November.

One problem for marketing executives is that they’re not clearly in charge now of managing the customer experience, customer loyalty or social media today, given that public-relations, sales, consumer-affairs and research-and-development departments all have a stake in those areas now.

Donovan Neale-May, executive director of the CMO Council, said marketing should take the lead in overseeing the customer experience and satisfaction. And he said addressing deficiencies in tracking and analyzing consumer feedback and buzz may be the key way CMOs can stake a claim to leadership.

Buck stops with CMO
“From our standpoint, if there’s anybody who needs to be accountable for the customer experience, it’s the CMO,” Mr. Neale-May said. “Clearly what marketing needs to do to cover a lot of ground we’ve lost in the organization is more analytics, predictive modeling, and data integration and aggregation.”

How three big package-goods marketers are addressing social media, however, shows just how varied functional ownership even of that aspect of the customer experience can be.

P&G’s Social Media Lab has been led largely by corporate digital-marketing specialists. Unilever’s word-of-mouth summit last month appeared to be spearheaded by market research. And J&J last fall appointed corporate-public-relations executive and part-time corporate blogger Marc Monseau to focus full time on social media, both monitoring how J&J is faring and reaching out to help exert corporate influence.

Regardless of who’s in charge, the CMO Council survey suggests “companies generally still aren’t very sophisticated at capturing or managing either positive or negative word-of-mouth,” said Laura Brooks, VP-research for Satmetrix, the company behind the “Net Promoter Score” and a sponsor of the study. Aside from the leadership vacuum, she said corporate silos mean that disparate data streams are never brought together in a way that could help identify and solve problems.

But Pete Blackshaw, exec-VP of digital strategic services for Nielsen Online, isn’t sure separation of duties is such a bad thing.

“You could argue that tension is positive,” he said. “It’s probably a good thing that the consumer-affairs department is freaked out that the digital-marketing team is doing listening. It’s probably a good thing that the research team is kept on its toes by the social-media team.”

Database problems
He also said marketers, even those with extensive customer-relationship-marketing programs, are hamstrung by databases that don’t take into account the word-of-mouth potential of consumers by asking whether they blog, participate in social networks or post to message boards. One exception, he said, is beauty marketer Coty, which does ask consumers about some of those things.

On the social-media front, while Ted McConnell, P&G general manager for interactive marketing and innovation, generated controversy late last year with his dismissal of Facebook and other so-called consumer-generated media as places for P&G ads, the company remains intently focused on tracking and working with social media.

P&G’s Social Media Lab has worked with 15 P&G brands and 70 external partners in an effort to better understand and leverage social media. Among the more interesting projects has been working with Ripple6, acquired last year by Gannett, to develop tools for monitoring social-media buzz and building online communities. Among other things, Ripple6 is helping P&G Productions’ soap opera “The Guiding Light” develop a new online community.

To be sure, wherever there’s consumer data, P&G will try to mine it.

“Aside from technology, it’s almost been a natural thing for P&G to [listen to consumers],” said Stan Joosten, innovation manager-holistic consumer communication. “What technology does for us is truly extend what we can do. For the first time ever with this technology, conversations are visible to us. … You cannot start in social media without knowing how to listen.”

Mobile Marketers Target Receptive Hispanic Audience

In keeping with our recent review of mobile advertising, and our goal to keep you apprised of marketing information that will provide value to your business, we thought that a recent article from Advertising Age Magazine would have particular value to those of you who are marketing to consumers rather than businesses. In this article we are advised that Hispanics are the country’s largest and fastest-growing ethnic minority, and as a result, major brands such as “Continental Airlines, General Mills, Sears, Kmart and Tag Heuer will be working in the first quarter to launch Latino-centric mobile campaigns”.

Making the case to utilize mobile advertising to reach this hot demographic is research that suggests “U.S. Hispanics are more engaged with their mobile phones than Americans overall. Some 71% of Hispanics consume content on their cellphones, compared with the market average of 48%, according to ComScore M:Metrics. Why? Many don’t have subscriptions to internet or landline service, so wireless phones are their sole communications tool. Additionally, the median age among Hispanics is 27.6, compared with 36.6 in the population as a whole, so that may also help explain their propensity toward mobile”.

Read the article at the following link to help you determine if mobile advertising can help your company grow by reaching this hot demographic target group. http://www.strategicgrowthconcepts.com/marketing/Marketing-Information-Resources_I12.html

New Resources for Small Businesses

As part of Strategic’s committment to providing a wide variety of resources and tools for small businesses, we have recently added the following:

We will continue to add resources as we become aware of them, and urge you to bookmark this blog so you can check back frequently to see what’s new.  Those with blogs of your own, we encourage you to link to this site so more people can become aware of the tools and resources available.

If you know of resources for small businesses that you believe would be helpful to others, please feel free to provide us with this information at strategicgrowthconcepts@earthlink.net.  We’ll review the resource and if it meets our criteria we’ll make it available via this blog or our website.

2009 Events for Small Business

 

Strategic Growth Concepts BlogTalkRadio Broadcasts

Franchising – What is it, and is it right for you?

March 10, 2009 at 2:30 p.m. EST

Featuring experts:       Paul Segreto, CEO of franchisEssentials and 21st Century Franchise Coach

                                    Jackie Adams, President of JA Adams  & Associates, dba FranChoice

Dave Keegan, Franchise Operations Specialist Associate, Strategic Growth Concepts

 

The Basics of Social Media – How to Use it to Grow Your Business

March 17, 2009 at 2:30 p.m. EST

Featuring experts:  TBD

 

The Legal Aspects of Starting a Business – How to Save Pain & Expense in the Future

March 24, 2009 at 2:30 p.m. EST

Featuring experts:          James Voigt, Attorney at Lavelle Law

                                       Irv Williamson, CEO at Growth Guidance, Inc.

                                       Rebecca Turner, Attorney at Maddin Hauser

 

 

A list of 2009 Regional and National events for small business owners and prospective small business owners has been placed on our website at http://www.strategicgrowthconcepts.com/events/home.html .

Additionally, a listing of calendars of events for several organizations has been placed on our website at http://www.strategicgrowthconcepts.com/events/On-going-Events-Calendars-and-Listings_I29.html .

For those who work with other small businesses, please link these pages to your blogs so that many more people can be informed of these events.

The rest of my readers should bookmark the pages and make sure to check the website often for updates to this Events listing.

Lastly, if you are aware of any events that you believe should be included in either of these lists, please submit the following information to me at strategicgrowthconcepts@earthlink.net :

  • Name of the event
  • Date / time of the event
  • Sponsors of the event if you know them
  • Location of the event
  • Link to a website where event registration information will be located