During the past few months, we have been seeing unthinkable things happening in our economy. Major banks have collapsed. Major brokerage firms have either been acquired by banks or gone out of business. The "Detroit Three" auto manufacturers are on the ropes. The real estate market has collapsed with billions of dollars of wealth disappearing.
As a businessperson, one has to remember that the same Chinese character is used for "disaster" and "opportunity."
What did Vince Lombardi do to build his invincible football team, the Green Bay Packers? He focused on the basics – blocking, tackling, passing, catching, kicking.
In an economic downturn, you have to do the same in your business. Focus on the fundamentals. Clean up sloppy areas that you let go in the easy times. Lay off "deadwood" employees that aren’t contributing their share or are spreading negative attitude poison in the organization.
Give special attention to managing cash flow. With the tightening credit situation, cash is especially precious. It is also a leveraging point to take advantage of opportunities, including buying desirable assets at bargain prices.
Carefully manage your inventory levels. You need to have enough to provide good service to your customers, but avoid excess levels. Inventory is tied up cash. Also, excess inventory has to be stored somewhere, which adds to overhead.
The worst thing you can do is stop selling and marketing efforts. Now is the time to focus on being more persuasive – to give your customers reasons why what you offer is desirable. Now may be a good time to invest in sales and marketing training. Work on creating or improving sales scripts and marketing pieces. But be smart in your marketing. Be sure it pays for itself. For small businesses, this is not the time for "image" marketing but for smart direct response marketing and publicity.
Add back-end products and services that will appeal to your existing customers.
Seek joint-venture partners for mutual benefit, including joint marketing campaigns.
With some luck, your competitors are now having a "pity party," "waiting the recession out" and not aggressively pursuing business. If you double your efforts, you may capture market share and not only grow now, but position yourself for long-term dominance.
Go get’em Tiger!
If you would like to discuss this further, call Michael Gray at 408-918-3161.
For new articles about how to improve your business, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight!