Victim or Victor: Is Your Small Business Prepared to Profit in a Recession?
Victim or Victor: Is Your Small Business Prepared to Profit in a Recession?
1. Get help from experts.
New risks are converging that many business owners have never experienced. All of these critical factors emphasize the importance of leveraging a range of experts from business coaches to accountants to help you anticipate, mitigate and profit from these risks. Experts can help you identify and capitalize on actionable market information, best practices and business accelerators to maximize revenue and tax-saving opportunities. For many small business owners, these things will mean the difference between severe losses and six- or seven-figure profits.
2. Avoid Big Cost-Cutting Mistakes.
Many business owners have the wrong mindset when facing a recession. They ask themselves, "How can I cut costs?" But the real question should be, "How can I increase and sustain profitability?" The answer to that question might not lead to cutting costs, but increasing them. It is important to remain focused on intelligently increasing profitability and value, not trying to cut costs and "wait out" out a recession. However, if you truly need to cut costs, you may explore restructuring or consolidating debt to lower interest rate terms. Additionally, you may try consolidating non-business critical functions and services with the same vendor or outsourcing.
3. Build Your Cash Reserve.
During an economic downturn, it is vital to have a sufficient cash reserve to handle emergencies and to take advantage of new investment opportunities. Your cash requirements will depend on your industry, access to capital, variable and upcoming non-recurring expenses, potential acquisitions and earnings predictability. Look at your financial statements over the last 2-5 years. Observe the historical business cash flow pattern and factor in any new potential risks. If you do not have a sufficient cash reserve, this is another area where experts can help you.
4. Increase the Predictability of Your Income.
Focus on increasing predictable income streams to stabilize your business, reduce risk, plan effectively and position your company for greater access to capital. Consider adopting various strategies such as a membership, subscription or licensing model that requires customers to pay regularly for your products and services. By integrating or bundling your offerings as part of a subscription service, you can create greater value for customers while increasing your revenue. Additionally, this strategy of bundling—or being a "one-stop shop"—can provide a competitive advantage if you are selling commodity products and providing services that are undifferentiated in the marketplace.
5. Create New Products and Services that Cater to Your Most Profitable Customers.
In difficult times, generating additional revenue from existing customers may be a lower-cost alternative to acquiring new ones. A simple way to identify new revenue opportunities is to survey your most profitable customers. Seek ideas to help you create new products and improve your company's service, marketing and conversion rates.
6. Form Strategic Partnerships.
Strengthen vulnerable parts of your business by leveraging strategic partnership strategies. Product and service exchanges, joint-ventures, affiliate programs and co-branded and private label offerings can be great ways to control costs while increasing your revenue. Have a backup for key vendors if they fail to perform or go bankrupt. The right relationships can lower your costs, shorten development time and strengthen your offerings.
7. Look for Opportunities to Expand Your Business.
Many suppliers, competitors and complementary businesses become vulnerable in a recession. Deep discounts on products and services may be available by buying in bulk or extending vendor contracts. Also, watch for opportunities to grow your business through a merger or acquisition.
Remember, down markets present unprecedented opportunities for small business owners. If you leverage experts and the right team, it will be easier to grow your business and accelerate profitability while minimizing risk. Start now by using a business coach to capitalize on these seven tips and help you implement a winning strategy.
Victim or Victor Is Your Small Business Prepared to Profit in a Recession - To learn more about this author, visit William R. Patterson's Website.
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To help you protect yourself and profit in today's difficult economy, here are seven powerful tips to recession-proof your small business.
1. Get help from experts.
New risks are converging that many business owners have never experienced. All of these critical factors emphasize the importance of leveraging a range of experts from business coaches to accountants to help you anticipate, mitigate and profit from these risks. Experts can help you identify and capitalize on actionable market information, best practices and business accelerators to maximize revenue and tax-saving opportunities. For many small business owners, these things will mean the difference between severe losses and six- or seven-figure profits.
2. Avoid Big Cost-Cutting Mistakes.
Many business owners have the wrong mindset when facing a recession. They ask themselves, "How can I cut costs?" But the real question should be, "How can I increase and sustain profitability?" The answer to that question might not lead to cutting costs, but increasing them. It is important to remain focused on intelligently increasing profitability and value, not trying to cut costs and "wait out" out a recession. However, if you truly need to cut costs, you may explore restructuring or consolidating debt to lower interest rate terms. Additionally, you may try consolidating non-business critical functions and services with the same vendor or outsourcing.
3. Build Your Cash Reserve.
During an economic downturn, it is vital to have a sufficient cash reserve to handle emergencies and to take advantage of new investment opportunities. Your cash requirements will depend on your industry, access to capital, variable and upcoming non-recurring expenses, potential acquisitions and earnings predictability. Look at your financial statements over the last 2-5 years. Observe the historical business cash flow pattern and factor in any new potential risks. If you do not have a sufficient cash reserve, this is another area where experts can help you.
4. Increase the Predictability of Your Income.
Focus on increasing predictable income streams to stabilize your business, reduce risk, plan effectively and position your company for greater access to capital. Consider adopting various strategies such as a membership, subscription or licensing model that requires customers to pay regularly for your products and services. By integrating or bundling your offerings as part of a subscription service, you can create greater value for customers while increasing your revenue. Additionally, this strategy of bundling—or being a "one-stop shop"—can provide a competitive advantage if you are selling commodity products and providing services that are undifferentiated in the marketplace.
5. Create New Products and Services that Cater to Your Most Profitable Customers.
In difficult times, generating additional revenue from existing customers may be a lower-cost alternative to acquiring new ones. A simple way to identify new revenue opportunities is to survey your most profitable customers. Seek ideas to help you create new products and improve your company's service, marketing and conversion rates.
6. Form Strategic Partnerships.
Strengthen vulnerable parts of your business by leveraging strategic partnership strategies. Product and service exchanges, joint-ventures, affiliate programs and co-branded and private label offerings can be great ways to control costs while increasing your revenue. Have a backup for key vendors if they fail to perform or go bankrupt. The right relationships can lower your costs, shorten development time and strengthen your offerings.
7. Look for Opportunities to Expand Your Business.
Many suppliers, competitors and complementary businesses become vulnerable in a recession. Deep discounts on products and services may be available by buying in bulk or extending vendor contracts. Also, watch for opportunities to grow your business through a merger or acquisition.
Remember, down markets present unprecedented opportunities for small business owners. If you leverage experts and the right team, it will be easier to grow your business and accelerate profitability while minimizing risk. Start now by using a business coach to capitalize on these seven tips and help you implement a winning strategy.
Victim or Victor Is Your Small Business Prepared to Profit in a Recession - To learn more about this author, visit William R. Patterson's Website.
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
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