How Can Your Business Survive the Covid 19 Economic Crisis? We are at the beginning of the economic impacts of the Covid 19 pandemic. Business is going to get worse before it gets better but agile and innovative entrepreneurs can survive if they have a strategy to get through the crisis. Keeping your business open is crucial since 75% of businesses that close in an economic crisis never reopen.
In an economic crisis, entrepreneurs tend to bear the brunt of the negative impact but if they keep their eyes open and prepare to take advantage of opportunities that open up, they can not only survive but thrive. They can take market share from less agile competitors and become more profitable as they become leaner to fit the economic environment.
It’s difficult, but entrepreneurs must spot opportunities and be aggressive in capturing them. Look to the future and see how your business can take advantage of the new business landscape.
Here are 13 specific recommendations to get your business through the downturn.
- Keep a close eye on your cash flow. Conduct monthly forecasts and daily checks to make sure you have the operating cash to see you through. You should project where your business will be in 3 months as well as daily, weekly and monthly milestones. Negotiate with suppliers, landlords, and contractors to get a better price. They are feeling the pinch as well and might cut you a deal to keep cash flowing into their pockets. Look at bartering for goods and services you need. Take advantage of discounts for prompt payment and don’t pay other invoices until they are due. If cash flow is already a problem, talk to your creditors about payment extensions and don’t wait until the last minute.
- Get aggressive with collections (you don’t have to be mean to be aggressive). If a payment is due in 30 days, try and get it paid in 25 or 20. The cash is better in your pocket than theirs. Make sure your payment terms fit your business model and cash flow needs.
- Keep your inventory in check. A lot of cash can be tied up in unneeded inventory. Look at what inventory can be reduced, liquidated or sent back. It takes time and money to store products you don’t need right now. Keep enough on hand to keep orders fulfilled but try to switch to a just on time model for greater efficiency and less overhead.
- Build up your capital reserves. Become closer to your best customers and see how they are doing. This helps keep competitors at bay, keeps you informed if they can pay or not and puts you in a position to see opportunities. Set up calls and video conferences with as many customers as you can so you can win back customers who are unhappy and sell more to the ones who already love your services. Get as many long-term contracts as you are able and offer early payment discounts to get the money in the door sooner.
- Take a good long look at any capital spending. Delay long term projects and high-ticket items until the economic climate shifts. Tying up your resources now could spell our doom.
- Maintain a good relationship with your bank. Keep them informed of how you are doing. Banks like knowing where things stand so they can prepare. During economic times it isn’t advisable to get more credit. Increasing your debt load can put an undue burden on your business.
- Eliminate nonessential expenses as much as possible. Before spending any money ask if it is really needed. Do the same with your personal budget. Keep it simple and inexpensive.
- Try and reduce the cost of rented space. If you have too much room consider subletting the part that you don’t need at the moment. This reduces overhead and generates a little income as well as potentially helping another business out that needs space. Extra space that you rent takes away from your bottom line.
- Now is the time to reevaluate staffing, but don’t skimp. Service quality can suffer and your competition could earn business away from you. You may even consider hiring new sales staff during this time. If you are smart you can be aggressive in going after new business and expand while others contract. If you absolutely have to cut staffing do it early and cut deep. If you cut once then have to cut again (or suggest you may have to) then your staff will be worried about their job and not about doing their job. Put your company on stable footing so your employees aren’t worried and can concentrate on getting you more business.
- Concentrate on customer service to entice your current customers to spend more with you. As your customers buying power and interest in spending decrease, your customer service should increase to keep them coming back. Customer service is primarily viewed as a time issue by customers. Waiting time to get service, delivery time and how long it takes to help them all play a part in how they perceive they have been treated. People will abandon purchases if they believe the time it took to get help or get a delivery was unreasonably long. Look at your system and eliminate flaws that create time delays.
- A related issue is training. Sometimes the slow down is the perfect time to conduct training. Costs go down and there is more time between money-generating activities. Look at what skills will give you the advantage during the downturn and get the proper training for your staff.
- Make policy decisions alongside your employees. They are impacted by this downturn as well an being involved not only gives them ownership, it gives you a large pool of knowledge to draw from. “None of us is as smart as all of us” -Ken Blanchard. If workforce reductions are needed they can help figure out how to reduce hours and increase efficiency without having to go through the pain of layoffs. Meet with staff regularly to talk about how to reduce cost, increase production and get through this lean time. When times get tough, get the team together and put your collective minds to work.
- When a financial crisis hits most businesses decrease their advertising spend and that can be a mistake. Studies have shown that keeping the same advertising budget or even increasing your budget during a downturn will get your company in a position to outsell your competition. Good marketers can boost sales numbers and market share even when your industry is in decline. Usually, they concentrate on short term tactics like promotions and sales and using marketing targeted at the uneasy situation.
Here are some key guidelines to marketing during a downturn:
- Keep track of your competitor’s advertising. When they cut back may be the time to increase and get a bigger market share.
- Don’t use gimmicky advertising. Use your benefits and advantages to drive your advertising. Clear solid statements rather than appealing to emotions.
- Direct-response advertising is important. Simple and clear language with impactful copy and a crystal-clear call to action. The other advantage of direct-response is you will see the results (or not see them) quickly.
- Try to avoid regular looking ads. Position your ads as important messages offering them great value.
- Present value and dependability. In a downturn, people want the most bang for their buck. Avoid clichés by showing the value rather than telling about the value.
- Perception is key in a downturn. If people think things are bad financially, they will act like things are bad. Present your product or service as a smart investment.
Be ready to pivot and take advantage of the economic opportunities presented to you and your business will survive the economic crisis just fine. Keep your eye on the bottom line but not to the detriment of growth activities. Take advantage of your competition’s missteps and bring your whole team along with you. Together you can succeed, if you do it alone you won’t. Today’s difficulty is tomorrow’s triumph.
If you need help or guidance putting together your survival strategy I am just a phone call or message away. (435)554-8209 Jason@Jasonmporter.com
I have heard it said many ways, that you cannot grow unless you leave your Comfort Zone. I call BS once and for all. I know for a fact you can grow and develop while staying quite snug and safe in your Comfort Zone. I think it can be damaging to some people to be forced out of their comfort zone for the sake of growth and short-sighted to believe those who stay in their comfort zone can’t grow. So let’s explore this a little deeper.
What is a “Comfort Zone”?
It’s a place, situation or state of being where you feel safe, at ease and not stressed. This is typified by the image of sitting at home, in your favorite chair snuggled in a warm soft blanket. Everyone is different and people can feel safe in many types of situations. Some love to be surrounded by people, others prefer to be alone. It really depends on your own life experiences as to where you feel the safest. In the business world the comfort zone generally is described as the work and tasks you feel most comfortable with and you have the most skill at. Whenever you are at ease while working is your comfort zone.
So why does everyone say no growth occurs inside your comfort zone?
Doing new things can be scary and usually it is a learning experience. When we are in the comfort zone we are rarely trying new things and therefore it is assumed we aren’t learning. The thinking goes that change and growth must accompany risk and risk is being outside our comfort zone.
It’s a Myth!
I say it’s a myth, that we can grow inside our comfort zone. Are you comfortable reading? Reading creates growth and even reading new things is rarely outside our comfort zone. If we are going to try new things, read about them first, that reduces the stress and anxiety new things can cause. If it’s still scary, read more. Keep exploring the subject until you are an expert before you even try it for the first time. You have permission to be comfortable trying new things. This may not work for everything but it can work for most of the things we do in the business world. It’s slower, maybe even less efficient but it keeps us in our comfort zone as we explore new things. We can also make changes incrementally, changes so small that they don’t cause us stress. If we keep making those changes we will eventually get to where we want to be. Manufacturers use this all the time. They can’t afford a big change so they make hundreds of small changes over time until the same result is achieved.
Why is growth within our comfort zone important?
For some of us, running around outside our comfort zone is fine. We exist on the edge and love taking chances. Others hate going outside the comfort zone and just the thought of it paralyzes them. So that’s the main reason. Small changes within the comfort zone are better than no changes because of fear. Even those who love being outside the comfort zone need a break but they refuse to quit improving. Growing inside the comfort zone is a great option for them as well. Moving forward and giving yourself a break at the same time.
So there you have it. Don’t let the myth of the comfort zone hold you back. Grow, change and improve inside or outside your comfort zone, what ever way suits you best.
Sometimes you see opportunities to go into business for yourself. Sometimes those opportunities come out of the woodworks and you are overwhelmed. Maybe you have 100 ideas about a new business to start and don’t know which one to pursue. When that starts to happen I recommend you conduct a personal SWOT analysis. SWOT is an analytic tool to determine strengths and weaknesses, usually, your business versus your competitors. In this case, it’s just you so the SWOT stands for Strengths, Weaknesses, Opportunities, and Talents (as opposed to threats in the original SWOT). We will go step by step through a personal SWOT analysis and get you on the road to figuring out what business you should be going after. Remember, this isn’t the only step, if you decide on a business you still need to do a Market Analysis to determine if it’s a viable business.
You are going to examine what advantages you have that others may not. What education have you received, what certifications? Are there skills you have that you do better than other people? What have you accomplished that sets you apart? What kind of a network have you built?
This is examining your weak points. Failure to understand where we need help can sink us fast, so be honest with yourself. What don’t you like doing or aren’t very good at doing so you avoid it? What skills do you still need to work on? Where are your education gaps? What are your negative work habits? Are there personality traits that limit you?
Looking at the business and personal opening that might be available to you. In what industries are you connected? How extensive is your network? How is your network constructed, as in what types of people? What equipment do you own or have easy access to? What are your capital resources?
These are your inherent abilities rather than trained or learned skills. What are you naturally good at? What do you do that feels good? What kind of tasks give you a sense of accomplishment? What do you get compliments on that isn’t something you learned?
Once you have all of these written down a better picture of what business you should be involved in will come to light. The more strengths, talents, and opportunities that align the better your chances of sticking to it and making something a viable business. Get a couple of ideas together then start your market analysis to see where your efforts should go. Keep in mind you don’t have to start at the top, get a minimally viable product and start from there.
Starting your own business and going the path of an entrepreneur can be daunting. The security of a 9 to 5 job is appealing as well as the allure of a steady paycheck. It’s a wonder anyone even makes an attempt with so much uncertainty.
One way to get through the initial doubt is to firmly fix in your mind the reasons you decided to strike out on your own. Rember your why. It’s important to write these reasons down and keep them in a place you see often as they will help when times are difficult (and they will be). Your reasons why you are going on this journey can shift so keep the list updated.
Keep revisiting this list to keep you motivated and on track for growing your business.
I didn’t see many stores this year for Black Friday because I was in the trenches with a client as usual. My wife, however, was out and about enjoying the sales and battling the crowds looking for some fun gifts. One problem? Several stores she went to were closed. During normal business hours. On Black Friday! She said she saw several other cars pull in, check the door and leave as well. Of course, she reluctantly went to their competitors and spent her money with them as I’m sure the other people did as well. Money just walked out the door and no one was even around to know. If you are in retail, you are open Black Friday, it’s just the nature of the beast. I cannot imagine why a retail store would be closed during normal hours on Black Friday. Meanwhile here are some tips for the rest of you who were open to increase your sales over this holiday season.
The short answer is yes. In my opinion, every business needs a business plan. It doesn’t have to be long and complicated, but it needs to exist in a written form. It’s not good enough to have a half-formed idea, you need to get it written down. Clemson University entrepreneurship professor William B. Gartner points out, that with a business plan “You’re two and a half times more likely to get into business, that’s powerful.” Why else would you want a business plan? Let’s take a look.
A business plan is a roadmap for your success. It shows strengths, weaknesses and the potential for your business to do well. This is especially important if there are multiple people involved in the business. How do you know your partner’s idea of success is the same as yours? How can you tell if you all are moving in the same direction? The business plan gives you focus and clarity. It shows you where you want to go and gives a path to get there. Just remember, with business, detours are the rule rather than the exception so be ready for them.
If you are looking for any kind of funding you must have a business plan. I recommend being conservative with your numbers if funding is a goal of your plan. The people loaning out money have been around the block a few times and will know if your calculations are realistic or not. I have helped many businesses that thought they had billion dollar ideas, but the entire market they were entering was barely a tenth of that. Keep the end reader in mind. Would you loan money based off unrealistic numbers?
Understanding Your Market
You really can’t go into business if you don’t know the market. Who is going to buy? Why are they buying from you? How do you stack up against your competitors? These questions are essential and a business plan helps bring them out and sets you up for success.
Over the next few days, I am going to guide you through a business plan. The traditional plan, which is what I will teach, is good for most businesses and is what you want when you plan to get financing. If you need something quick and dirty, use the traditional plan as a basic sketch. Remeber, the more time you spend on your plan the less time you are putting your business on the market. A plan is important but don’t let it be the excuse for not starting.
I have never liked New Years Resolutions, mostly because of the negative baggage attached to them. I was told as I grew up the only purpose of a New Years Resolution was to see how long it took to break it so from an early age I made goals. Sometimes I achieved my goal, sometimes I didn’t but since I could keep going towards my stated goal I hadn’t broken a promise, it just took longer than a year to accomplish it. The last couple of Years I had heard Dr. Larry Hass talking about what he does for the new year and it seemed very affirmational and useful so I have adopted it to my practice of goal reviewing each year. Mind you I set goals all the time but the first of the years seems as good a place as any for a goal review. Here are the 3 questions Dr. Hass writes down.
- What are my Achievements from last year?
- What Commitments Should I make for this Year?
- What are my Goals for this year?
Make sure to write down your answers because an unwritten goal is just a wish. Make sure to use the S.M.A.R.T. method when writing your goals to make sure they are good ones. That is to make sure your goal is specific, measurable, achievable, relevant, and timely. Make sure to send me a note or give me a call if you need help with your business goals this year.