Recession-Proof Your Business
May 8th, 2008 by Maribeth Neelis
Gas prices are up, rice prices are up. And there is talk of a downturn, a recession or worse.
So if the current economic climate lasts throughout 2008, how will you protect your business? Here are some bits of advice from several successful business people.
Eliminate unprofitable customers. Evaluate the profitability of each customer. If you have a customer who demands a lot of attention and time, but you see little in return, it may be time to let them go.
Severing unprofitable or exhausting relationships can, after the initial fallout, boost your company’s revenues by allowing you to focus more time on gaining new business. Read more about Customer Evaluation Scoring.
Keep in close contact with your customers. Show them that you care. They are also experiencing the downturn. Understand how their business is being affected and look for ways you can help.
According to Gregg Landers, director of growth management consulting at CBIZ Accounting Tax & Advisory Services, “Lasting relationships are built in hard times. And look for new market opportunities, recognizing that when the business climate changes, customer needs will change as well. That may mean new markets will open up for you,” he says.
Amp up sales to land more customers. Jay Siff, CEO and founder of direct marketing firm Moving Targets and Loyal Rewards, has told his clients to literally steal customers from their competitors, if they want to see their companies grow.
“The pie is shrinking and the successful small business is going to have to win a bigger share of that shrinking pie,” he says. One way to do this is to give your customers a better consumer experience. He also advises his clients to reach out to the new community members. “You should have an active campaign to greet and bond with them,” he explains.
Spend on hiring. Tom Gimbel, CEO of Chicago staffing and executive search firm The LaSalle Network, says business owners should continue hiring during a recession.
He explains “It’s easier to invest training time for new hires during slower growth periods. Employees that are fired during a recession will have to be re-hired–which costs companies a lot more money in the long run,” he says.
He also suggests actively recruiting people who have been laid off by your competitors and score some talent. “This is a great time to find top performers who will help bring your company to the next level,” he says.
Keep marketing. During a recession, the first things to go in many companies are marketing and advertising. It’s difficult to track these efforts and prove their worth, but that doesn’t mean they don’t have value. Dan Feder co-CEO of Five Point Capital, an equipment leasing firm whose clients include many small businesses, says “The first instinct of many businesses is to kill the marketing expense. What they don’t realize is that could make things worse.”
He adds, “If you can’t afford a full-blown marketing program; choose cheaper alternatives such as e-mail marketing, blogs, public relations, and online newsletters.”
And finally, stay positive. Feder encourages his clients to recall the power of positive thinking and don’t give up. “Think of ways to bring in new types of customers, maybe partnership opportunities, or new products and services. Many businesses stop doing things that will help them grow in fear of the recession, and then do just that–stop growing,” he adds.
Hat tip: Business Week
