Having walked past a shop called Recession this morning, I was reminded yet again about the tough times that small firms continue to face. All the small-business owners I meet through my work as a coach are really busy. They tend to work much harder than their counterparts in the corporate world and are frequently more motivated, too. There's so much involved in running your own business – and not many people to help.
Here are my top six tips on how to give your small business the best chance of surviving when times are tough.
1. Spend 30 minutes each day thinking
It seemed to work for Bill Gates. He's reported to have spent one month every year thinking up ideas for his business. Yet in a survey of 4,000 UK businesses, 95% of small-business owners didn't even have a business plan. Owners spend all their time working in the business, leaving no time to work on the business. But failure to plan, as time-management guru Alan Lakein said, is indeed planning to fail. It's like setting off on a journey without knowing the eventual destination – fun, perhaps, but unlikely to be effective. Just half an hour a day spent thinking and making plans will enable you to focus on what's really crucial to the business. Urgent isn't necessarily the most important.
2. Actively manage your cashflow
Failure to manage cashflow kills more businesses than anything else. Cash is king when it comes to the financial management of a business. The lag between the time you have to pay your suppliers and employees and the time you collect from your customers is the problem – and the solution is effective cashflow management. This means delaying outflows of cash for as long as you can, while encouraging anyone who owes you money to pay it as soon as possible.
3. Know who your best customers are
A simple analysis of your customers can be enlightening. Who are most profitable/most rewarding to work with/have the most potential? It's said to be five-times more profitable to spend time and money on retaining existing customers than it is to acquire new ones. Michael LeBoeuf's book, How To Win Customers and Keep Them for Life, highlights the reasons why customers leave - 68% of them because of an attitude of indifference shown by the owner, manager or an employee. Given this, how valuable it is to fold your customers in a warm embrace and love them to death.
4. Use social media
Social media is no longer the preserve of teenagers. Indeed, it's hard to think of a business that cannot benefit from using social media. LinkedIn, Facebook and Twitter are now essential tools to connect with customers, prospects and suppliers. Your competitors are already using social media to boost awareness, enhance reputation and win business. If (like me) you didn't know where to start, make it your business to find out more about using social media for business. It could bring you many more sales.
5. Keep calm and carry on marketing
It's no coincidence that businesses that increase and hone their marketing spend in a recession are those that emerge strongest when recovery comes. Bill Gates (yep, him again) famously said that if he was down to his last dollar, he would spend it on marketing. Research has shown that companies that increase their marketing spend in a recession recover three-times faster when economic conditions normalise.
People don't stop buying in a downturn, they just focus on value and “out of sight, out of mind” still holds true. Customers will notice if your brand falls silent and will smell failure. So set objectives, be clear about what you want your marketing to achieve, and measure the results. The more you know about your customers, the better you will be able to target them successfully by understanding their problems and presenting appropriate solutions.
The internet – and Google in particular – represent cost-effective platforms. Used properly, marketing has the power to stop a business being caught like a rabbit in the headlights.
Many small-business owners try to do everything themselves, which is plainly daft. Even decathletes who train for years have events in which they perform better than others. No one can be a jack-of-all-trades.
How much better is it to defer to a bookkeeper or PR specialist than to attempt to muddle through yourself? It can be immensely liberating to free yourself up to do the parts of the job that are most rewarding or to which you are best suited. Leave the rest to people better qualified than you. Smart business-owners know when to outsource, delegate or automate. You will more than make up the money it costs you through focusing instead on getting more sales or developing product or service enhancements.
By Bristol-based business coach Chris Kenber.