As economy moves forward, savvy small businesses can continue to strengthen
Innovative thinking and continual belt tightening are keys to success.
Five years on from the official end of the Great Recession, a slow-growing U.S. economy has emerged. While many businesses have righted the ship from the toughest days, many small businesses are merely plodding along, but small business experts are optimistic and suggest that entrepreneurs who showcase innovative thinking and continual belt tightening will make their businesses even stronger.
When the economy was in its worst rut the thought that business owners needed to do everything they could to survive was common. Now this all-hands-on-deck mindset has faded somewhat and business strategists suggest this is a mistake.
Joseph R. Cardamone, attorney, small business owner and former president of the United States Federation of Small Businesses, an organization that advocates for the rights and interests of small businesses and the self-employed, stresses that for small businesses still mired in stagnant cash flow and slimmer profit margins a strategy that can impact the bottom line is a must.
Cardamone outlines a number of tactics that can help small businesses improve the bottom line and keep open.
Firstly, he says small businesses must take a hardline stance on accounts payable. An important aspect of getting paid on time is clearly articulating expectations with your customers. Small businesses must emphasize what work was done, how much should be paid and when the money is due. Another option is to offer a pre-payment discount or incentive.
He also stresses that small businesses must use technology efficiently because technology and frugality can go hand in hand. Companies should consider Web-based accounting software and video conferencing. While embracing the Web can save money it can also simultaneously provide education on important tech advances in the business world.
Boosting sales is a necessity to improve the bottom line, but Cardamone suggests several key strategies in this area: Charge for products or services currently given away for free or consider raising prices; and focus on selling more to existing customers instead of prospecting for new ones.
He also suggests additional tactics such as having a sale to move slow or obsolete inventory or increasing worker productivity by streamlining common business errands, such as buying office supplies online and using online shipping services.
David F. Giannetto, CEO of a management consulting firm the Telos Group and co-author of “The Performance Power Grid, The Proven Method to Create and Sustain Superior Organizational Performance,” emphasizes that in any down time business owners need to shun constant worrying about going out of business and use their time to improve their business and seize every possible opportunity.
No matter what the economy is doing or what that status of a particular industry, Giannetto points out that in business only the strong survive and that a successful business strategy is always the same: build the strongest business you possibly can. This means having a strong value proposition, managing in a fiscally responsible manner, and providing great service to get and keep important customers. He cautions against any thinking that distracts business owners from these basic business tenets.
According to Giannetto, a company’s struggles can be used as a great motivational tool for employees. He calls this a “momentary unifying factor,” that allows each employee to set aside their individual concerns and rally around a greater common cause, namely the survival of the company. He advises business owners to use economic struggles to drive home the fact that providing quality service to customers and creating greater effectiveness and efficiency are the absolute best ways for employees to help the business through the recession.
He also suggests several other useful tactics, including:
• Expand, don’t contract. Giannetto says if a company’s struggles are tied into a particular industry struggles, then competitors are also going to be struggling and, as a result, the weakest of these organizations will be going out of business, which opens up holes in the market that a clear-thinking organization can fill. Customers will become available so companies should be prepared to increase sales, marketing, and advertising efforts to make sure that newly “available” customers reach out to them first.
• Increase focus on top customers. Businesses should go the extra mile — even if that means spending extra money — to reach out to their biggest and best customers, Giannetto stresses. They should make sure they are meeting their expectations and keeping the lines of communication open, which can help to fix severed relations and help anticipate any problems that could lose business.
• Stay current and creative. Giannetto suggests a better tomorrow will come, and businesses must be ready for it. Too often during struggles companies cut back on the new products or services that represent the future of their business. Once things turn around they find that they cannot catch up to market demands and expectations. Too many businesses fail while the market is actually turning around rather than during the dip because they are left with only outdated products and services. Businesses should always keep the creative juices flowing and be thinking about new ways to satisfy their customers and which new products will enable them to meet their needs efficiently.
In today’s online-driven, social media, marketing frenzy Caroline Melberg, president and chief executive officer of Small Business Mavericks, a division of Melberg Marketing, says it is also extremely important that companies do not cut their Web presence.
She offers some cost effective ways to keep a small businesses Web presence:
• Article marketing
• A blog that the company posts every day
• Social networking and social bookmarking on a regular basis
• Forum posting and blog comments on blogs related to the business
• Online press releases
• Building in-bound links to a company’s Web site from quality, highly respected, industry specific Web sites
A consistent, positive Web presence reflects a healthy, active and growing business, Melberg adds.