Do You Have a Good Tip for Recession Proofing a Business?
Hi all,
I'm doing some background research for an article that will give business owners tips for recession-proofing their businesses. Have you got a good tip or idea that you'd like to share? If I use your tip, I'll list you as the source and include a link to your Website or blog. If I don't use your tip in the article, I might use it in my blog, and the same applies - I'll list you as the source.
Good Answers (18)
If you plan ahead you can survive the recession with a positive outlook and some specific actions.
1. Invest in education:
2. Network and make contacts online and offline:
3. Follow the market: Read the papers or watch the news, know what is happening and stay on top of it.
4. Pay off debt: If you can pay off any debt, now is the time to do it.
5. Cut back on extras: Seems simple, but do you need all the bells and whistles you have on your business or home phone or even your cell phone? Do you need to get Starbucks twice a day? Can you bring your lunch? Can you carpool to work?
6. Build your online presence: With a website, blog, newsletter or articles.
7. Have your clients sign a long term contract or review their existing contacts and renew them or extend them.
8. Specialize in something: Make yourself valuable, employers are more likely to keep an employee who can do more than one thing.
9. Turn your hobby into a part time business: for example selling items on ebay.
10. If you don’t have to sell your home or any property, don’t. You won’t get top dollar and will end up losing money.
11. Update your resume now, just in case.
12. Learn more about jobs that are recession proof, industries such as food, energy, vices (tobacco), entertainment, medical services, debt collection, security or alarm services.
13. Don’t cut prices, but reward your customers: During a recession business owners may think that cutting prices will help them and their customers. Don’t do it. Keep your prices as they are but offer your customers a coupon or a rewards program, to reward them for sticking with you during tough times.
14. Build value: Offer a buy one get one deal or buy one get something at 50% off. This increases your sales, where someone might have only purchased one item, with a deal like that it seems almost foolish to them not to take advantage of the deal and therefore purchase more from you
15. Get in contact with past customers who have not purchased from you in a while, this can activate a dormant account and possibly create more sales for you.
16. Follow up on any new leads and all old leads: Call them and see if they have a need for anything you offer.
17. Offer Outstanding customer service: To keep your customers you want to give them more than what they pay for.
18. Aggressively work on your marketing plan: send out press releases, keep yourself in the eyes of your target audience during the recession.
19. Tighten or update and keep on top of your credit policy: now is not the time to extend credit blindly, and it is the time to collect from any customers that owe you money.
Panos T
Strategy & Negotiations Consultant
Best Answers in: Internationalization and Localization (2), Government Policy (1), Business Development (1), Sales Techniques (1), Corporate Governance (1), Change Management (1), Organizational Development (1), Professional Networking (1), Starting Up (1), Enterprise Software (1)
Hello Cheryl,
I would say that you can do 2 things to secure your business:
1) Create a 12 or 18 month reserve to keep you in business during any crisis that might come up
2) Create multiple streams of income from different markets and customers. Independent of one's success, the business development process should be of equal importance to getting up in the morning and breathing.
In general terms, a recession is a threat to the unprepared and an opportunity to the well-prepared business person. It is a re-arrangement of the economy to cope with the currently evolving reality. Thus, it is really a time of opportunity, where any business person can claim a better position in the market.
So, get prepared and wait for the opportunity to act.
Good Luck
Richard J
Wealth Mangement and Philanthropic Advisor, Executive Producer, Connector, 7000+ Connections
Best Answers in: Personal Investing (7), Wealth Management (7), Personal Taxes (4), Personal Real Estate (4), Retirement and Estate Planning (3), Equity Markets (2), Professional Networking (2), Using LinkedIn (2), Property Law (1), Personal Debt Management (1), Incorporation (1), Starting Up (1)
Hi Cheryl,
When it comes to recession proofing, two schools of thought come to mind:
1) Cover your assets- I look at covering two areas here. First, making sure that you are running a tight ship. If there are areas that are just not profitable and you aren't fully committed, cut em. These are draining cash flow and profitability from your business. Not only are they a cash drag, they are draining valuable time from your operation. Clean up the messy areas and focus on cleaning up the bottom line profit as much as possible. Cash and earnings are king (focus on the EBITDA)
2) Manuver to win- Using downturns are a good time to pick up market share. While your competitors are cutting back on marketing and advertising, you can use this to either continue your marketing (where others don't) or to ramp up expenditures. When the cycle turns, YOU will be the one that people remember because you stayed top of mind when others cut and run.
Many people get scared during downturns in the economy and don't do what they know they should; "Buy low, sell high". These two tips are time tested ways to improve the bottom line and knock your competitors clock off.
Regards,
Richard
Clarification added March 1, 2008:
(or was it clean their clock-knock their socks off...)
Mark N
Management Integrator
Best Answers in: Starting Up (4), Change Management (3), Small Business (2), Customer Service (1), Public Funding (1), Venture Capital and Private Equity (1), Personnel Policies (1), Offshoring and Outsourcing (1), Writing and Editing (1), Corporate Governance (1), Biotech (1)
In a nutshell, you have to get involved in someone else's business, and help keep the supply chain healthy in any way you can.
If you are in the middle or upper end of the supply chain, a recession first hits your business by lengthening your A/R cycle- your customers take longer to pay, going from net 30 to net 90+. This can cripple a business relying on monthly A/R for sustainability and growth. As a result your A/P extends and stress levels rise dramatically. This stress can cripple you business as well.
Obviously, the best way to guard against this is a 6-12 month cash reserve to ride out long A/R and A/P cycles. In lieu of this, work on establishing a healthy line of credit that can absorb some of these temporary losses. If you do not have either of these things, you will become part of the problem.
Work next on creating innovative (and somewhat radical) solutions to your A/R issues. Make them "temporary" problems. Tell your customers that you understand what they are going through, and you want to help them through this. Set up payments plans to accomodate what they CAN pay. Restructure past-due balances as long-term debt, payable on a different schedule. If your business has a cash reserve and you have a strong relationship with a well-positioned customer, this could even be a time to suggest an equity arrangement. They would have the option of buy-back when they recover. Get involved with their busineses, you may be able to help improve their revenue flow. Talk to sharp accountants and legal counsel about all these options. Structure it as investment, but not so agressive to put your customer out of business.
If you are stuck on the A/P side of the recession, reverse the suggestions above to your suppliers.
Successfully implementing innovative A/R and A/P solutions can build fierce loyalty partnerships that will thrive when the recession ends. Structured well, it can set up you, your customers, and suppliers for dynamic growth when the recession closes.
Preston T
Helping technical professionals earn what they're truly worth
Best Answers in: Small Business (3), Compensation and Benefits (1), Advertising (1), Business Development (1), Search Marketing (1), Starting Up (1), Using LinkedIn (1)
Cheryl, terrific question and one that many small business owners or prospective owners are asking these days. And, I love the responses that have been posted so far.
And here are some more thoughts for you:
1) As a business owner, create a weekly, 15 minute session with yourself in which you outline what your PURPOSE is as a business owner and what the PURPOSE is of your business. Ask questions such as, "What got me into this business in the first place?", "Is this still the idea that inspires me?", "Am I working with customers/clients who still inspire me?", and "What higher purpose/mission does my business fulfill?" This is the stuff that truly drives us.
2) If you believe your customers will just show up, then it makes sense you’re dealing with “recession-proofing”. If you don’t believe this, you're in a much better position to deal with variable market conditions. Any business, and especially small business, is all about MARKETING. If you are not comfortable with, struggle with or despise marketing yourself and your business, please seek support now. You will not be in business for long without embracing it. A colleague once shared with me, "I'm in the sales and marketing business. I just happen to offer commercial cleaning services." Notice that just shifting a perspective might benefit you.
3) Enroll others in supporting you. This is where most small business owners fall short. So many of us operate from the "myth of individualism" - a myth that has us convinced the only way to make it is on our own. Again, this thinking is a key ingredient of failure. Here are some suggestions:
a) Consider that "recession" is just an interpretation. And consider that "recession-proofing" your business puts you in a context of REACTING rather than CREATING. So rather than waiting for times to get tough and deal with them at that point, schedule regular time to plan out your day, your month and your year. Be willing to create a big goal (BIG being defined as NOT predictable) and take action to move toward it. Make your context (or lens through which you see the world) one of abundance rather than scarcity.
b) Enroll 5-7 business associates as your "advisory board". Big corporations have them, why can't you? Meet 4-6 times a year on a Saturday morning for breakfast, share what's working and not working in your business, and take action on the input from your board. You'll not only see things happen for you, but you'll others become a champion for you when you put their suggestions into action.
c) Join a mastermind or association group. Ask around your business community to see if there are groups of like-minded business owners or associations that serve your industry that come together to share ideas and support one another. I belong to a local chapter of the International Coach Federation (www.michigancoaches.org) and it's a huge support from marketing ideas to industry trends to managing my practice.
d) Hire a coach. A coach is an objective partner who supports you in navigating the tough times and champions your ability and your future. A coach does NOT have answers, a coach asks powerful questions that help you uncover your answers - the types of answers you're far more likely to take action on. Visit the International Coach Federation website to find coaches in your area (www.coachfederation.com) who can support you in many aspects of your business and life.
I may have given you far more than you asked for Cheryl. :-) And, your question is so relevant to the current environment here in Southeast Michigan. Thanks so much for putting it out there. If you have any questions, please feel free to contact me – I’d be happy to clarify anything if needed.
-Preston True
www.breakyoursilence.com
Links:
Jerry E
Teacher Candidate: Mathematics 8-12
Best Answers in: Sales Techniques (6), Using LinkedIn (4), Business Development (3), Education and Schools (2), Public Relations (2), Wealth Management (2), Customer Service (1), Occupational Training (1), Compensation and Benefits (1), Staffing and Recruiting (1), Direct Marketing (1), Career Management (1), Ethics (1), Small Business (1)
Recession only means lack of growth, not lack of business. Business still happens everyday. Consider for a moment Maslow's Hierarchy of Needs. I believe the more things your business does that is in areas lower on the chart, the less impact a downturn has on your business. In slower times, focus more on providing products and services that help folks/businesses get done what has to get done to survive.
Brock B
The DigitalSalesDoctor: Bringing the science of selling to the wacky world of internet marketing & sales pipeline dev.
Best Answers in: Business Development (3), Sales Techniques (2), Internet Marketing (1), Lead Generation (1), Writing and Editing (1)
My thinking is in line with Richard. This down-turn is an opportunity to take market share. How? Optimize your marketing-to-sales process.
Measure and manage your client acquisition process. What steps are in your customer’s buying process? Is your selling process in alignment with your customers? How do you measure the conversion “gates” in your marketing-to-sales process? Where are the holes in your process? Hint: A small improvement in the lead-to-opportunity process can double the number of active sales opportunities.
Use the Web to a) identify and segment your ideal clients, b) Determine their needs and their value to your company, c) interact with them to learn about them, and d) deliver relevant value, or offers of value, to persuade your customer to begin a dialog with you company.
Shift to a relationship-based prospect development model. “Lead generation” and “lead qualifying” are wasteful concepts that are obsolete in all but the most impersonal marketplaces. Think in terms of “Ideal Customer Community” and “Prospect Development Funnel”. There is a 30% improvement in sales in companies that shift to a prospect nurturing approach to marketing. (Forrester 2006)
Automate. The marketing-to-sales process is one of last business areas to automate, and it has the highest return on investment. Since you increasing revenue by leveraging your lowest cost channel (web and email) your cost-of-sales actually decreases. And, you improve your responsiveness and service to your customer. This technology has just recently evolved to the point where it is practical and inexpensive. You have an opportunity to weather the down-turn by being smarter, more efficient, and more aggressive than your competitors.
Good luck and good hunting.
Brock Butler
CEO, MoreDemand
Links:
Mitch K
at Krayton Seminars
Best Answers in: Advertising (4), Business Development (4), Staffing and Recruiting (2), Sales Techniques (2), Business Analytics (2), Organizational Development (2), Career Management (2), Using LinkedIn (2), Education and Schools (1), Job Search (1), Accounting (1), Government Policy (1), Personnel Policies (1), Internationalization and Localization (1), Guerrilla Marketing (1), Internet Marketing (1), Graphic Design (1), Public Relations (1), Customer Relationship Management (1), Corporate Governance (1), Planning (1), Non-profit Management (1), Packaging and Labeling (1), Product Design (1), Communication and Public Speaking (1), E-Commerce (1), Computer Networking (1), Software Development (1), Wireless (1)
You can't control the value of commodities or stocks. The only thing you control value for is yourself.
Value is the perception, sometimes real, sometimes not, that you bring more to a relationship or a transaction then you take. The perception in not from your viewpoint, rather it is from the viewpoint of all the others you come into contact with.
When money loses its actual value, you must raise your perceived value.
To learn more about your value, ask the people whose perception of you matters most to tell you the benefits of knowing you. Benefits are not attributes. Benefits are postive results or outcomes. And I encourage you to do that assessment on yourself, too.
If your list is small, make this assessment on a person you value greatly.
The more benefit statements, the greater your perceived value.
Links:
Clarification added March 1, 2008:
Of course, when I use the term 'person', it is implied that you can freely substitute 'business' and look at both your individual and business value scores.
Bob M
Managing Director USA, Four Groups
Best Answers in: Branding (3), Advertising (2), Internet Marketing (2), Business Development (2), Career Management (2), Customer Service (1), Occupational Training (1), Government Policy (1), Contracts (1), Corporate Law (1), Direct Marketing (1), Sales Techniques (1), Writing and Editing (1), Currency Markets (1), Starting Up (1), E-Commerce (1), Enterprise Software (1), Computers and Software (1)
Cheryl:
If there is going to be a recession, we are already in it. Its too late to prepare.
So, how to react to a recession?
1) Make sure no single customer is too much of your business. Companies go out of business, and if one lost customer can drive you out of business, you will be at great risk. You might be too late for this.
2) Get rid of debt. You can keep less, but better inventory. take a partner, invest your own money (only if your business is not in danger), sell assets you don't need, get rid of non-performing lines.
3) Go see all your existing customers. Do extra for them.
4) Get out of the office and visit prospects. Don't talk about price, just talk about what you can do for them (and for the love of God, have something to tell them that you can be proud of).
5) Listen to fired employees from other companies.
6) Be as loyal as you can afford to your employees and suppliers. If you survive and your competitors don't the loyalty you earned will be valuable. If you lay people off, don't spend any visible money. Postpone your daughters wedding, forget the cruise. The employees you keep will never forgive you if they think you are being extravagant at their risk.
7) Survive. Don't try to get rich. If you don't make a profit during the recession but are stronger after it, you are OK.
Write me if you want help. I'm cheap until the program is successful, then I charge a success fee, so your risk is minimal.
Links:
Alan P
Founder / CEO at The Business Technology Consumer Network. Founder, The Institute for Technology Asset Management
My best tip: Identify and deliver a product or service that people need to help them survive the recession. If you provide a product or service that can help them save money or operate more effectively on the same old budget you have recession-proofed them while recession-proofing yourself. I've done it. It works.
Suresh Kumar N
Director - Outsourced Product Development at Sierra Atlantic Software Services Ltd.
Best Answers in: Staffing and Recruiting (1), Professional Organizations (1), Small Business (1)
Find new markets where the customers will be willing to use your products. In my opinion, there will always be markets that are not in recession.
Cheryl,
Here are 8 Tips To Recession-Proof Your Business:
1. OUTSOURCE: KEEPING AMERICA FIRST
Outsourcing is a hot-button issue among solution providers. Many of their offerings take on responsibilities of their clients, allowing those companies to focus on their core competencies as they have to more closely monitor their pocketbooks. Providing such services in the United States offers cost savings, though generally not as large as offshoring those same services, due to wage differentials. The advantage here is to focus on its core competencies while having its partner close at hand -- and it's a source of U.S. pride as well.
2. OUTSOURCE: PROVIDE OFFSHORE SERVICES
By now, many companies have implemented a cost reduction programs.One way to do that is to look offshore for staffing and production. For less complex projects, this is a less expensive option than outsourcing in the United States. Firms that offshore work to India, Latin America or Eastern Europe have seen substantial cost reductions. Often, companies ship those less detail-intensive projects to be completed in other countries so they can devote money and headcount to larger, more complex projects.
3. OPEN SOURCE: FASTER TIME TO MARKET
Open source isn't free, but it is much less costly, assuming your business can support it, and that it knows where to turn when there is a problem.
You can't deny the revenue that is attached to open source services. The time to market is much faster and that has direct implication to market share!
4. KEEP YOUR OPTIONS OPEN
In addition to considering open source, think about adding new vendors to the mix.
5. MANAGED SERVICES: A CONSISTENT REVENUE STREAM
By providing exceptional delivery and services to customers is one way you can ensure repeat income. For example: Managed Service Providers, who offers a flat-fee for the proactive support of their customers' networks are less likely to be affected during an ecomonic downturn.
6. FOCUS ON CUSTOMERS' ROI
Customers always want to be shown an attractive return on investment, but when funds are tight, only those projects with high ROI will be approved. Other, more general projects will be pushed out further. Discretionary spending is not as likely.
7. 'GREEN' TECHNOLOGIES VIABLE OPTIONS
The upfront costs of some of 'green' technologies can be more than of traditional equipment; however, when long-term costs (electricity, disposal, e.g.) are factored into the equation, going green can be an attractive fiscal decision.
8. CONSIDER ACQUISITIONS AND MERGERS
If your books are in order, it may be a good idea to look at snapping up smaller companies that could add luster to your own offerings or possibly merging with another company that will expand your offerings.
I hope this will be of help in writing your article. My website is:
www.jcpworldwideconsulting.com
Please remember me for best answer before closing out this question. I would also appreciate your recommendation on this network.
Regards,
John Pilaccio
Wayne T
Senior Advisor - Strategist - Problem Solver - Executive Growth Coach for CEOs, business owners, women leaders, HR
Best Answers in: Organizational Development (2), Personnel Policies (1)
Move from a commodity to a value-added partner in the mind of your clients. In tough times they will depend on your more
Marvin "Coach" P
Innovative Small Business Coach and Advocate "Achieving breakthrough results in just 90days"
Best Answers in: Ethics (1), Small Business (1), Web Development (1)
The exact methods used vary by each business situation; however, the following are example measures to protect a business during a recession:
Cut costs
Ratchet down inventory
Maintain prices
Reserve discounts
Focus on service
Invest in employees
Free up cash flow
Renegotiate contracts
Look to expand your business
Recession management discussions:
http://www.smsmallbiz.com/capital/How_to_Recession-Proof_Your_Business.html
Links:
You can start an online business with no upfront investment. Just check the source links below for some ideas:
Links:
Use a service like CardStore.com to send all your best customers and clients a personalized postcard or greeting card. Put a photo of you on the front (or you with your family) to add that personal touch. Deepening relationships with your best customers and clients will go a long way toward "recession-proofing" your business.
Devesh D
Experienced Management Consultant
Best Answers in: Using LinkedIn (40), Starting Up (17), Small Business (7), Web Development (5), Career Management (4), Business Plans (4), Education and Schools (3), Certification and Licenses (3), Staffing and Recruiting (3), E-Commerce (3), Customer Service (2), Job Search (2), Government Policy (2), Business Development (2), Change Management (2), Professional Organizations (2), Professional Networking (2), Franchising (2), Occupational Training (1), Event Marketing and Promotions (1), Accounting (1), Economics (1), Risk Management (1), Compensation and Benefits (1), Personnel Policies (1), Offshoring and Outsourcing (1), Property Law (1), Internet Marketing (1), Public Relations (1), Search Marketing (1), Currency Markets (1), Futures Markets (1), Inventory Management (1), Manufacturing (1), Packaging and Labeling (1), Market Research and Definition (1), Incorporation (1), Computers and Software (1), Computer Networking (1), Software Development (1)
Well, not to write a long story and keep it in the state of tips ;-) I'd suggest:
1. Work on cost and operations efficiencies: Measures to cut spendings and hence giving the customer relatively lower prices.
2. Payment plans/ options: Setting up payment plans are very successful with the customers who want the product/service but can't pay at once and are ready to set up some sort of arrangement to pay in installments etc.
3. Diversification: Look into adding more services/ products in your portfolio of offerings, may be in the same line or related ones. For example: if you're into writing and editing of articles, may be looking into web copy write ups or Resume writing etc. will diversify and add more services.
4. Networking: Nothing is more profitable than repeat and referral business. More trust, more business...
Good luck with the article :)
Devesh
Links:
Warren W
Book Marketing Strategist, Publisher, Blogger, Author
Best Answers in: Guerrilla Marketing (1), Internet Marketing (1), Public Relations (1), Lead Generation (1)
I heard there was going to be a recession, but I decided not to participate
If the economy, social trends, or anything macro affects your clients ability to buy, there isn't much you can do to stop it.
On the other hand, some sectors do well in those same situations. So it depends on the business.
Personally, I make sure that there is a steady stream of people wanting to do business.. that is, more leads than I need. Most businesses are searching for customers, I prefer to attract people who are looking for me and want what I have.
In any economy, there are people who want stuff. If the "stuff" isn't what you have, switch to what they do want and it will always be good times.
