Economic Downturns Can Improve Your Business

If you are not preparing for an Economic Downturn, the time to start planning is NOW.  This is a great time to grow your business and take advantage of those other businesses that are not seeing the whole picture.  This has been a discussion at our monthly TAB Board meetings.  Following are some of the key points that have been brought up, and that we will be working together with the Boards.  If you are smart about your business, it can mean some short term pain, but some long term gain.

1. CASH FLOW IS KING – Cash flow is the key to survival during any recession.  It is the first place that should be attacked. Look closely at the 4 major cash flow influencers and what you can do to dramatically improve – Accounts Receivable, Inventories, Pricing (Gross Profit), and debt.  Always check to see if you can refinance on existing loans or get better terms with credit card processing companies.  1% change in pricing, or debt can mean a lot to your cash flow. 
2. PRICING STRATEGY – Along the same lines optimize your pricing strategy to move inventory and/or liquidate old inventory.  Considering bundling like products.  Encourage buyers to buy larger lot sizes.  Raise prices to companies where it is costing you money to sell too. 
3. MARKETING – Most businesses look to cut back their marketing budget during these times.  Think about what a great opportunity it is to market more, because your competition is doing less.  This is the time to really push and prospect for new customers.  Make sure you have the right metrics to determine, which marketing is most effective for your business, and explore the multitude of inexpensive marketing that can now be done through the internet.  For a more detailed discussion on the marketing side, please click here 5 Recession Proof Strategies
4. SELLING SYSTEMS, STRATEGIES, AND PROCESSES – Focus primarily on maintaining and increasing service or finding solutions to present customers needs.  It is time for the Executives to get out of the office and tell the customers how much they care.  It is dramatically easier to get new business from old customers then to get a new customer. 
5. REVIEW THE TOP CATEGORIES OF EXPENSES – In most companies, the controllable expenses are labor, travel, entertainment.  Solicit the help of your employees and offer special bonus when they can help reduce expenses or find ways for the company to be more efficient.  Make sure that all travel and entertainment is necessary and that those traveling give you a clear purpose and objective for the travel. 
6. COMPETITIVE ANALYSIS AND COMPETITIVE INTELLIGENCE – Develop a system for monitoring the competition and make it a requirement for your sales force to keep you updated.  Know your strength and weaknesses by charting the four P’s - Products, Pricing, Promotion, and Place and take Action to build up your strengths and weaknesses. 
7. PLANNING – Put down on paper exactly the steps that have to be taken, and share it with employees.  They will participate and help, as long as they have a clear understanding of the direction of the company.