The following practical and timely tips for managing during challenging times can help keep a small business resilient and solvent:
1) Turn to technology to boost efficiency. Many business owners may not be using technology to its fullest potential. Explore ways to use your tech investment to help drive down other costs and accommodate more sales, without having to hire more staff. Look at free or nearly free technology from the web, such as Google Apps for business, Amazon Web Services, and other options.
2) Scrutinize your operational services. Sometimes a company uses business services for years without realizing there may be less expensive and better options on the market. Look at your telecommunications, computer network, and your printers and fax machines. You might want to evaluate services like Skype, VoIP or wireless phones with calling circles to save on telecommunications costs, for example.
3) Hang onto staff as long as possible and cut only as a last resort. Most small businesses don't have much staff to begin with, so cutting staff can mean cutting business off at the knees. Furthermore, every forced cut may have a demoralizing effect on the remaining staff. It is often better to ask people to take temporary, across the board pay cuts, or eliminate some benefits, than lay people off.
4) Don't cut marketing. When customer spending slows down, it's important to make your competitors' sales slow, not yours. Be more aggressive and creative at marketing than your peers. It's an opportunity to gain customers and help grow your business when the economy turns around.
5) Focus on getting more business from existing customers than cultivating new ones. It can be less costly and less resource intensive to sell additional products or upgrades to existing customers than to bring on new customers. If you have to make a choice, focus on cross selling and trading up existing customers, rather than on new customer acquisition.
6) Sell something as soon and often as you can. If your main products are big ticket items with long sales cycles, come up with some lower priced items to bring in cash while the bigger sales are slow in closing. Negative cash flow is the big "gotcha" for smaller firms. It can do you in.
7) Don't skimp on bookkeepers and accountants. Cash management and management of accounts receivables can make or break a business, especially during tough times. Now is the time to have a better grasp on your business numbers than you've ever had before. Weekly, even daily attention to your numbers will give you early warning of issues and buy you more time to adjust.
This story was edited from an article by Anita Campbell that appeared in the American Express Open Forum for Small Business. Campbell is CEO of Small Business Trends at smallbiztrends.com, an online community touching more than 250,000 small business owners each month.
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