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21 ways to protect your business in a downturn
Global volatility has always led to a local bloodbath in the share market.
Business is harder pressed than ever to develop new, creative ways to not just survive but also thrive, especially in hard times.
Any one can grow a business during the easy times, the real test of business leadership and creativity comes during times of financial downturn.
My own industry has been hit really hard. I know of several very respected and talented colleagues who have lost their houses and are now on the dole.
As a way of helping fellow consultants and small business owners, here's a 21-point plan to help businesses stay alive while others quite possibly fall by the wayside.
1. Think 'healthily global'
Operate your business globally and focus your energies on those economies which are still buoyant.
2. Slash and grow
Focus on how you can reduce operating costs while still growing your marketing output (but not necessarily marketing costs) to ferret out potential new markets.
3. In with the new - part 1
Develop additional follow-on products and services to sell to your existing customer base - it takes significantly more money to get a new customer than it does to entice a repeat purchase from an existing customer.
4. In with the new - part 2
Develop new products and services you can market and sell online - where there are no sales staff or support literature costs.
5. Change your thinking from 'profit creation' to 'sustainability'
This means thinking about how new technology, the latest research, new trends and cultural changes all present tremendous opportunities to consolidate, grow or reposition your company and/or your brand.
6. Go virtual
Outsource your non-core activities to 'virtual' contractors, who offer the ability to 'magnify' or 'compress' time. While you sleep your contractors can be doing your accounts, writing your sales letters, follow-up emailing your customers, emailing replies to your enquirers.
7. Start thinking and stop lunching
Put your head down and your bum up!
8. Stay positive and forward-thinking
Refuse to accept the negativity of the press and actively go searching for new opportunities - remember that in the Great Depression there were more millionaires created than during most other economic periods with the exception of the short-lived dotcom boom.
9. Cashflow is King
Don't mistake 'turnover' for business health - there are far too many stories of businesses who are selling like crazy but still go under, because they didn't manage their cashflow. Remember, money in must always be greater than money out.
10. Keep your friends close
Don't forget who your friends are in the good times - service your customers and clients well during the good times, because during a tough market their loyalty is fundamental to your survival.
11. Steer clear of price wars
In a product-based business, find a product that is not commoditised - in other words, make sure your product is not price-sensitive.
12. Protect your brand
To follow on from the previous point, remember that 'branding' is huge in the eyes of the consumer - 'Coke' will sell in all seasons and economic climates, not because we need sugared water, but because the branding is so strong. One of the fastest growing Real Estate sales groups in Australia has the worst reputation amongst its industry peers and apparently a less-than-glowing reputation amongst its customers. But it is growing rapidly precisely because it is great at marketing its brand.
13. Be the pilot, not the steward
With all service-based markets becoming increasingly more sophisticated and discerning, when the service market toughens customers very often turn to the guy who can land the plane in a storm, not the steward who can serve an extra Gin & Tonic while the plane crashes. Therefore build your skill base; good service is expected anyway. Remember, you can fake skill in a good market, but in a tough market there is no way you can!
14. Quality, quality, quality
In a knowledgeable, sophisticated market you must deliver the best quality product.
15. Trim the sails
Cut costs, keep a close eye on your business, play on your customer's loyalty and hone your skills and those of your staff.
16. "Fixed is bad, variable is good"
Make your fixed costs as low as possible and increase your variable costs.
17. Find the number of your nearest administrator
Run your business as though it was going bankrupt tomorrow. For example, do you really need plush offices in the CBD? How much extra income can the image generate? Would automating various customer service and marketing aspects of your business save you money?
18. Slash your advertising
Only advertise when you are growing, not when things are tight. Forget about spending your way out of a downturn - that's only for companies with huge pockets. There is no point advertising when there are no buyers.
19. Consider low and no-cost publicity strategies as a way of keeping presence of mind in your target market
The newspapers and magazines are very happy to take your advertising dollar when times are good; let them unknowingly repay that by giving you free publicity when things are tight. And never forget that they are happy to give you publicity if it's a 'slow news day' and you might just turn into a big advertiser further down the track.
20. Consider sex
That's right, sex. There are very few products that cannot be enhanced somehow through the use of sexual imagery and association.
We may be put off by blatant gratuitous use of sex as a selling tool, but psychological research shows that all of us, men and women alike, no matter what our sexual or religious preference, react more positively to a picture of an attractive woman than we do a fat and balding man.
For example, did you look at the girl before you read this section?
How can you add a hint of sex appeal to your products or services?
Read books by and about successful businesspeople. Read books on your industry. Read books on marketing. Read books on customer service. Read books on subjects that have nothing whatsoever to do with your business. Somewhere in all of this reading will come the ideas that will push your business through the tough times and into a brighter horizon.
Want to discuss this? Contact me now
Reports I have written:
Measuring the impact and ROI of social media - for Ark Group
Making Social Media work for your business - for Ark Group
Social Media: The New Business Communication Landscape - for Ark Group
How to get started with podcasting in your organisation - for Melcrum Publishing
Contributing author to How to use social media to solve critical internal communication issues - for Melcrum Publishing
Contributing author to How to communicate with hard-to-reach employees - for Melcrum Publishing
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