Dealing With Tough Economic Times

Part 2: So, as small business owners, what are we to do?

Well, we all need to make the most of every resource at our disposal - technology, people, knowledge, experience, attitude, dollars. Understanding what those resources can do to help your business survive and even thrive during tough times is essential.

Here are some things our clients have learned during the recessions over the 18-plus years we've been in business:

Attitude matters

• Stay calm above all. The sky is NOT falling. Sure, times are tough, but you're tougher, and you've gotten through tough times before. Things WILL get better again. It may not be this month or even this year, but things WILL get better. When that time comes, will you be lagging or leading your competitors compared to today?
• Have courage. Look back at prior tough times. Who came out of them the fastest and the best? Those that had the intestinal fortitude to persist, change and strive for success

Deal fairly with your customers and vendors

• Service, service, service. Your customers are tough too, even if they're not feeling it right now. If you stay loyal to them, they'll stick with you
• Manage your receivables carefully but fairly. No-one wants to be too far out on a limb. Talk to your customers to get a clear understanding of their credit needs and their ability to honour the credit you extend them, but don't go overboard - it's not helpful for you OR them if you extend more credit than they can afford right now. And if they get behind, work with them to help them get back on track. They will appreciate your fairness later, even if they don't like talking about it now. They'll remember, when things get back on track, which vendors helped them and which ones cut them off unfairly
• Same goes for dealing with vendors. Manage your relationships with the companies that help you to ensure that they continue to do so today and do so even more in the coming easier times. Pay your bills on time. If you're having trouble doing that, be up front with them and work out a realistic plan for paying them. This will give them the confidence to keep working with you. Work with them on what products and customers to focus on. Respect the fact that for them to be there for you later, they too need to survive

Deal honestly and fairly with your staff

• Your staff is one of the keys to your success so far, and they have knowledge and experience. If you want to be able to leverage that going forward, it's more important than ever to keep them on board. Part of this is to keep them informed on where things stand in your business
• Recognize that your staff will be impacted in a variety of ways. They've got rent to pay as well, and will be unsettled about whether they'll have a job in the coming months. Make sure you can honestly reassure them that they will. Also, you'll need to make special effort sometimes to keep them focused on what they need to do, and why it's so important
• Figure out ways to get the most of your staff for their benefit and yours, for example by cross-training people in different roles and by rewarding them for positive efforts. Make sure everyone understands that this is a time for everyone to pull together and contribute - "united we stand" and all that goes with that
• Try to keep your employees focused on moving forward. One unfortunate side effect of recent times we've seen is a dramatic increase in spyware infections, which might be at least partially attributable to employees spending too much time surfing at work

Maintain your own business

It's critical at this moment NOT to stop doing the things that drive business.

• Figure out what things are purely "expense" that can and should be trimmed, and what things are actually "investment" in your future success. Trimming hydro or office expense costs probably won't hurt your business, but trimming other areas may indeed hurt your ability to sell or deliver your products or services
• The biggest example of this: Maintain your sales and marketing efforts. It's hugely tempting to scale these back, but don't skimp here, because perhaps more than ever, you'll have to work harder and spend more to get sales. If you short-change your sales crew, they won't deliver the sales you're hoping for. Some of our clients have actually increased sales and marketing efforts at times like this, and it can work because your competitors are probably cutting back. All the same, you'll need to figure out whether what you're doing is the most effective way to reach and convince your customers. You may well need to stretch a little - or a lot - and get creative in how you approach sales and marketing at times like this
• Challenge your assumptions. If you've always relied on a certain type of customer, perhaps now is the time to start diversifying into other markets. Perhaps it's time to expand your product offerings into lines that run against the current economic cycle or lines that complement what you sell now, so you can sell more to your existing customers. Perhaps it's time to re-think the ways you sell, service or deliver your products or services to your customers. Perhaps it's time to partner with other companies that offer complementary products or services. Perhaps it's time to enter one or more completely different markets
• Perhaps consider bringing in some outside help to work on strategy - perhaps a small business coach or business consultant who can add some unbiased perspective which is so hard to find when times are tough. Perhaps an informal Board of Advisers made up of people that are familiar with your business but detached enough to be objective