The current economic landscape leaves much to question and can generate emotional responses in the marketplace. While long-term data shows an overall resilient economy, the immediate reality is what matters. When people’s basic needs and consumer confidence are shaken, budgets tighten, and purchase behavior changes. As a small business owner, it’s critical to manage uncertainty and reduce risk for your long-term outlook. Review these strategies and compare them against your day-to-day needs to uncover opportunities to protect your business.
1. Tighten Financial Controls
If you’ve been playing it loose with your financials, now is the time to regain control. Maintain accurate reporting and forecasting deadlines, even reviewing them weekly. Ensure your team is following processes and procedures for purchases. If not, provide remedial training and review policies to ensure team members comply.
Audit accounts to assess accounts receivable and use your accounting software to trigger alerts and reports for past-due invoices. If your contract terms include penalties for late payments, make sure those are applied.
2. Evaluate Cash Flow Processes
Many businesses have standard deadlines for invoices, but if they’re all the same, backlogs can occur. Review contract terms to determine if payment windows should be adjusted. Make changes to future contracts to more evenly distribute customer payments throughout the month. Consider if offering a discount for early payment makes sense for your industry. This may be especially helpful for companies with a significant activation cost.
For example, a catering company will need food, a landscaper will need to procure plants, and a manufacturer will need raw materials. If your customer’s payment can cover these costs, you can have more flexibility with your vendors. In some cases, you can obtain discounts for upfront purchases on the business-to-business side.
3. Strengthen Customer Relationships
Customer retention is essential to the stability of one’s business, especially during uncertain times. Take care of the customers you have and evaluate your retention process. If you typically increase prices annually, consider the economic tolerance of this practice. If an increase is unavoidable, carefully strategize your communication plan for your clients. Be empathetic and candid with the economic conditions and convey what you’re doing to maximize value for your clients.
Coach your sales and relationship management team to enhance their service level for your customers. Offer key insights to clients that help them appreciate the value of your partnership. Every industry can communicate the before and after results of their work.
A building management company can report tenant retention and satisfaction rates. A landscaping company can provide before and after images of completed projects and year-over-year improvement. Position these reports as helpful updates that assist your clients in their ability to do their work. This way, you become a partner in their success, earning the designation of an essential asset.
4. Diversify Revenue and Client Base
Analyze your revenue, streams, and client base to unearth new opportunities. Host small groups of employees made up of different teams to diversify insights. Facilitate a candid discussion about possible repositioning, and markets rife for disruption.
Uber began as a rideshare company but later added delivery to its offering. Consider your infrastructure, much like Uber did, to build upon your existing assets. If you’re focused on business clients, look at consumers for potential growth.
A commercial window-washing company may specialize in high rises, but individuals need help too. This type of company might expand to neighborhood associations, and offer a discount for residents utilizing their services. This strategy is smart as many associations require approvals and have standards for home appearances. By collaborating with the governing body, this company gains an advantage, offering less hassle for homeowners.
5. Trim Expenses Strategically
Resist the urge to start slashing expenses, which can cause issues and unnecessary panic. First, review your budget to determine which expenses are essential, which can be negotiated, and which are luxuries. Mark line items that you can go without and model the potential results of cuts.
If you reduce mailing expenses, you may also reduce your marketing reach. However, it’s wise to gauge the effectiveness of print distribution versus other options. Explore other strategies that help you reach potential customers through mail, like sponsoring content in a community newspaper. A one-time sponsorship can cost less than print mailings and have the advantage of third-party endorsement.
Work with each cost center to prioritize budget adjustments and understand the risks of doing so. Get buy-in from your team on which expenses to cut, when, and how much. This will help ease the internal concerns and will get your team invested in the process. When you come together to make budget adjustments, you gain essential support and buy-in for your efforts.
Engage Your Employees and Clients in the Process
Keep your people in the loop as early and often as you can. When your team is uncertain about the stability of their employment and their future, they react with what they know. Start by proactively stating what you do know and don’t know and commit to including them in the conversation.
Host a town hall to gauge their feelings and uncover potential opportunities. This provides a platform for open dialogue and insights you may not otherwise have access to. When you engage your people in the conversation, you earn their trust and get them invested in the plan. Together, you can implement these strategies to protect your business, preserve your financials, and weather economic uncertainty.
Disclaimer:
CBD:
Qrius does not provide medical advice.
The Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) outlaws the recreational use of cannabis products in India. CBD oil, manufactured under a license issued by the Drugs and Cosmetics Act, 1940, can be legally used in India for medicinal purposes only with a prescription, subject to specific conditions. Kindly refer to the legalities here.
The information on this website is for informational purposes only and is not a substitute for professional medical advice, diagnosis, or treatment. Always seek the advice of your physician or another qualified health provider with any questions regarding a medical condition or treatment. Never disregard professional medical advice or delay seeking it because of something you have read on this website.
Gambling:
As per the Public Gambling Act of 1867, all Indian states, except Goa, Daman, and Sikkim, prohibit gambling. Land-based casinos are legalized in Goa and Daman under the Goa, Daman and Diu Public Gambling Act 1976. In Sikkim, land-based casinos, online gambling, and e-gaming (games of chance) are legalized under the Sikkim Online Gaming (Regulation) Rules 2009. Only some Indian states have legalized online/regular lotteries, subject to state laws. Refer to the legalities here. Horse racing and betting on horse racing, including online betting, is permitted only in licensed premises in select states. Refer to the 1996 Supreme Court judgment for more information.
This article does not endorse or express the views of Qrius and/or its staff.
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