Like most business operators, you’ve probably been doing a lot recent pondering over where to cut spending. Whether you’re just being cautious, or outside forces have inflicted a need to slash budgets, consider a redirection or re-think of spending habits first – it can really help support your bottom line while the economy recovers.
Switch your pitch for a recession-time loan
After years of flowing loan funds and easy credit, your routine plans for business borrowing might face new obstacles today. Economic pressures have shifted lending attitudes. If your business was banking on a loan, there’s better chance of success if the recession scenario is set into your pitch. Present a realistic business plan to lenders that confronts the hard times relevant to your company, and show what you will be doing to meet the challenges ahead. Demonstrate an understanding of the economic environment, rather than a “business as usual” approach.
It’s tempting to keep everything in-house when your finances are falling, but the strategy could produce expensive traps. Not only do you displace team time that may be better spent on other strengths, but the risk of errors and a less than professional image could prove costly later on. Examine where you can spend money to save money. Outsource tasks like bookkeeping, IT support, direct marketing, public relations, writing or web design. Even loyal customers will scrutinise your professional image closely now. One advantage of a downturn is that there are many more specialist freelance skills on the market offering competitive rates.
Cut business cycles
In tightening economies, it’s wise to review business activity more frequently than usual so that you can take swift action on cash flow if required. Quarterly financial revision could revert to fortnightly or monthly; monthly to weekly if you’re already in that cycle. Your customers will be spending less, but that won’t last forever. With shortened business cycle planning, you’ll see the upward trends sooner too, and can respond accordingly.
Plan for even worse conditions
Keep in mind that serious unexpected changes could upend even the best-designed business plans for a downturn. Include an analysis or two for serious scenarios that could test your revenue, expenses and cash flows. For example, extreme inflation or deflation, a change of government policy or oil price hike; a supplier’s demise, move offshore or takeover.
Check for technology lag
It’s tough to even consider borrowing or leasing new equipment when cash flow is tight, but there might be situations where your technology is being outpaced. Should you invest in the latest gear to stay in the game? Beware that if your competitors have upgraded their machinery or equipment, they will be achieving better time - and cost-savings, passing the benefits on to their customers and worse – pitching to yours.
Bring your website out of hiding
Your website may already be doing a lot of sales legwork for you, but could it do better? More people will find you online if you invest in search engine optimisation (SEO). By moving higher up the search results page, potential customers see your site sooner when shopping around.
Searches can be promoted by key word, by your location or even by an image, using html programming. “Vertical searches” are emerging as an even better way for niche professionals to find refined information and reach highly specialised audiences. Diverting marketing funds to SEO is a good alternative – or addition – to traditional promotions, with the important bonus that you can see precisely how many people searched, looked and booked.
Use a business mentor
An empathetic, experienced business mentor is useful in times of boom and bust. As a general sounding board during expansion in tough times they help keep you focused on your greatest business challenges. Committing time and money to a mentor will energise your business.
The benefits include finding opportunities or threats you have missed; an experienced and professional sounding board; clearer guidance during growth (or decline); improved networking and; a sense of accountability through refined milestones that are more formal than if left to yourself.
Keep up the marketing
Ongoing marketing lets your customers, and prospective customers, know that you’re still around and operating as usual, in any economy. Promotions are easy to cut when income slows down, but consider the risk of ‘disappearing’ from the industry or public radar when the media and others are constantly talking about business foreclosures. You might be able to negotiate better advertising or printing deals now, so don’t be afraid to ask.