Maintaining profit margins is also key to business survival. Ensure that you are maintaining your profit margins even if you are reducing prices by also reducing the cost of what you are making or providing. Also, don’t be afraid to make hard-headed financial decisions, says Bolger.
“For example, don’t hang on to things you don’t need - it costs you to house, insure and maintain them. Consider selling surplus machinery or unsold stock - even if you don’t make a profit, it will release some working capital.”
Cooperation is Key
CYBER SAVVY Businesses can also prove their value through the exploitation of new social networking media. Cooperation is key for small businesses in the current downturn; sharing ideas and interacting with the wider market is now more important than ever. Networks such as BNI, Venture, B2B, Open Networks, County and City Enterprise Boards, Small Firms Association networking events, Women’s Executive Network, Kerry Women’s Executive Network and many more have thrived as more and more people band together to ask for help and give help in these times.
This phenomenon is reflected in the cyber world where businesspeople have finally copped on to the power of social media. Kids have been doing it for years with Bebo, Facebook, MySpace and a myriad of other places where they connect based on special interests. Facebook is now an accepted place for businesspeople to connect. LinkedIn has become a worldwide business network. Boards.ie has a thriving forum where business ideas can be discussed. The internet and social networking sites have opened up such networking opportunities and changed the languageof business.
Small Businesses Can...and Will
Since the launch of the Smallbusinesscan website, a free open-source resource for entrepreneurs by entrepreneurs, thousands of business people have visited the site and, judging by the huge variety of topics being discussed, they are sharing insights and experiences and providing valuable guidance to each other, notes Bolger.
“This site has hit a pulse amongst small businesses and is proving to be an effective tool enabling entrepreneurs to link up with peers from a cross-section of business sectors and provide solutions and ideas to cope with current challenges.” The support infrastructure offered by the cyber world in the areas of cloud computing, software-as-a-service and indeed hardware-as-a-service, freeware and opensource resources is also a great opportunity to take advantage of costeffective tools to support the business. In such circumstances, any advantage that is available must be taken to ensure competitiveness and survival. Information technology is one of the best investments for smaller businesses to achieve such advantages.
Reposition for Opportunity
In certain key areas, the application of information and communications technologies can not only reduce costs, but can actually free up people time to focus on what people do best, such as customer services and winning new business. “The SMEs that make the necessary cuts but that also reposition for opportunity are the ones that will survive and prosper.
The leaders in these businesses understand the new paradigm and can communicate those tentative steps on the path forward and rally employees, customers, partners and indeed other businesses to work together in making the tough decisions and taking the steps needed,” says Bolger. “Success will depend on leaders who are able to stabilise, restructure and reposition the company as they identify and exploit opportunities, find new market niches and create innovative new offerings. The business community and wider economy is depending on them.”
Grow and Prosper
1. Get the basic plan right
Have a clear business plan in place that is able toanticipate & withstand current market deviations and capacity to service debt. Having this plan in place early and an accurate set of financial forecasts will allow small businesses toprepare in advance for the effects the downturn is having on business.
2. Cut costs
Scrutinise expenditure to identify non-essential costs. Streamline costs and look for easy ways to cutback on non essentials. Giving up office space altogether is also something to consider to reduce monthly overheads especially with developments in mobile technology and home offices enabling more flexible working.
3. Careful cash flow management
Ensuring that the business has enough cash to take it forward is a crucial factor for survival. Whilst a business can be fundamentally good, it doesn't mean it won't run out of cash especially if all incoming and outgoing costs have not been accurately recorded.
4. Spend on marketing
Despite recommendations for cost-cutting across most areas of the business, there remains a strong need to be competitive and visibility is therefore important. Marketing is one area crucial to generating business during a period of downturn.
A determination to do whatever it takes to succeed and stay in business is fundamental. However there is not only a need to work harder, but also smarter.
6. Hold onto existing customers
As spending power diminishes existing customers are the most common source of revenue growth. Rather than putting all efforts behind winning new business, identify new business opportunities among existing customers.
7. Diversify your product and customer base
Look at ways to adapt or broaden the appeal of a product. This may be through opportunities arising as a direct result of the economic climate or it could be re-looking at your business and adapting it for a different market.
8. Delivering excellent customer service
Delivering excellent customer service is essential. Being flexible and reliable to meet requirements and surrounding customers with service are fundamental to help keep current customers loyal as they tighten belts.
9. Credit check customers
As the recession bites and customers go under, ensuring they don't owe large sums of money is key to the financial health and longevity of a business. Keep a close eye on overdue payments and ask for payment within shorter payment terms or even in advance.