Economically speaking these are interesting times. One day the stock market hits an all-time high, the next week we hear rumors of recession. The United States is basking in 121 months of expansion, the longest in history. But remember the impact of the recession in 2008.
No one knows how long the boom will last, so let’s look at some precautions you should be taking to insulate your business from a downturn.
Keep marketing. Don’t be tempted to cut back in this area. If you can’t afford a full-blown campaign pursue low-cost options like social media marketing, news releases, e-mail blasts, blogging and on-line newsletters.
Cut expenses and track cash carefully. It’s extremely important for you to understand your monthly burn rate and cash position. Look for places to cut costs and know how much money is coming in and going out every week. Consider using the following formula, for every $2 you cut in business expenses, invest $1 into your marketing efforts.
Start collections at 30 days past due. The days of waiting 45 to 90 days for payments are over. You need your money now. Once a client gets 30 days past due, get on the phone and talk to the Accounts Payable Manager for an update. Be sure you are set up to take credit cards, you may get paid faster and more efficiently.
Get very close with customers. Have quarterly face-to-face meetings or lunches with your top customers. Understand their biggest challenges and look for ways you can help, even if it doesn’t involve more direct business for you.
Add value, not price. Continuously adding value to your services is the best way to get repeat business and referrals. Adding price without value is a lose/lose proposition. You may get the reorder, but your client may start looking for a replacement.
Under promise and over deliver. Excellent customer service is the number one way to beat a recession. If you do great work, are highly responsive, make follow-up calls and send thank you notes, your customers will know you care.
Call the bank before things get critical. Good relationships are made in good times. Regardless of your situation you need to communicate with your banker sooner rather than later. The bank does not benefit if you go out of business, so stop the denial and negotiate better terms with your banker.
These seven steps are always essential but even more so if the economy starts to slide. Regardless what direction the economy goes, if you start improving in these seven areas, your business will survive nearly any storm.
The road is easier together,