4 ways to build your business during a Recession
by Virginia Ginsburg
It seems as if every day there is another depressing article in the news about the economy, and small business owners are more exposed than ever when their customers’ purse strings are pinched. Although there are predictions that things will get better in the Fall or in the New Year, your business might be struggling right now, and you might even be worried about how you will make it through.
1. Cut the fat; build the muscle Are your products and services working as hard as you are? Do you have any duds that you are holding onto out of sentimental reasons but that aren’t actually doing anything for your business? Look at everything that you sell and determine whether it is profitable or not. If there are unprofitable products or services, then either cut them or at least stop spending your time and money promoting them. Instead, focus on the profitable portions of your business and add features and benefits so that they become more attractive to your customers.
2. Involve employees Your employees are just as aware of the economic conditions as you are, so don’t try to leave them out. If your employees are wondering about whether they will be laid off, it could negatively impact their work because either they become so stressed out about the possibility that they can’t focus, or they start looking for another job. To avoid either situation, be open and honest with your employees about the situation, but not without having a clear plan in place to tell them how they can help improve the situation. For example, write down exactly what you mean when you ask your employees to work 20% harder. You may be surprised by how well everyone will come together in tough times - all it takes is actively and specifically involving them. The only mistake that you can make here is to complain to them or share your fear with them. Instead, come up with a plan, and share the burden of success with them.
3. Trim expenses Analyze every marketing activity that you spend money on. Write everything down in a list that includes where you are spending (e.g. Google Adwords, magazine advertisements, newspaper ads, etc.) and how much you are spending. Now, in a third column, rank your activities in terms of return on investment (how many sales you estimate from each) and consider what would happen if you cut out the bottom 50%. This will allow you to cut back your marketing spend without cutting down on the activities that are bringing you customers. Now figure out how to apply 25% of the budget you just cut while doubling your return on investment … read on for how to do that!
4. Increase your marketing smarts It is natural to hunker down and reduce your marketing during tough times, but that is actually the worst thing you can do. Rather, cut your marketing spend while increasing your marketing smarts. Find ways how to better use the money that you cut out in the previous step and get a better bang for your buck in the process. For example, if you cut out a $500 per month advertisement, consider replacing it with paying someone $250 per month to make sales calls for you. Many of the most effective marketing activities take nothing more than time, including: sales calls, press releases, e-mail newsletters, networking, asking clients for referrals, and reconnecting with past customers.
Whatever you do, don’t panic! Recessions come and go, and the businesses that make it through to the other side are often well-situated to out-perform their previous expectations simply because they were forced to take a different look at their activities. To quote a completely over-used but appropriate saying: When the going gets tough, the tough get going.
Get going on your business, and you will reap the rewards today and tomorrow!
Copyright (c) 2008 Virginia Ginsburg
Virginia Ginsburg, MBA, is a Senior Account Manager at Accordion Marketing (http://www.accordionmarketing.com), a full-service marketing firm that specializes in affordable solutions for small business owners and entrepreneurs. She runs a number of small businesses, including both online and offline retail operations.
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