Recession-Proofing Your Small Business
Written by Angie Mohr
For most small business owners, it is difficult to keep up with the broader economic news while still trying to run a company. But as the headlines start discussing the possibility of recession more and more, it's important for entrepreneurs to pay attention to the writing on the wall and start protecting profits.
So what can you do to make sure that your business is "economy-proof"? Here are ten practical ways to strengthen your business:
1. Make sure your historical record keeping is up to date.
Nothing can bog a business down like drowning in papers. Organize your company's records and make sure that you have recorded its historical performance so that you can forecast its future growth.
2. Have both a 12-month and a 5-year cash flow projection.
Don't leave your business's future to chance. Have a plan and a budget to back it up.
3. Ensure that all processes and procedures in your small business are documented.
Even if the business consists only of you right now, some day you will need to hire employees if you do not want to be forever tied down to your business. Having good documentation helps immensely in the hiring and training process.
4. Hire the best employees possible and invest in their training.
The quality of your staff is critical to your company's success. Make sure they are well qualified for the task and give them extensive training in customer service as well as the specific tasks they have been hired for.
5. Continually evaluate growth opportunities, whether they arise by purchasing an existing business or customer list, or come from developing a new product or service.
Growth opportunities will present themselves to you regularly. Train yourself in the art of recognizing them when they come along.
6. Formalize your business growth plan and make sure it encompasses all three ways to grow: attract more customers, sell to them more frequently, and sell them more every time they see you.
Leverage your sales efforts. It takes much less time and expense to market to existing customers than bring new ones in the door.
7. Hold monthly management meetings, even if the business consists only of yourself.
If you can explain out loud what happened in your business last month in a way that would make sense to others, you will have a much deeper understanding of your company.
8. Systematize your small business so that it will run effectively even when you're on vacation or sleeping.
Ultimately, your goal as an entrepreneur is to either have the business run without your daily presence or to sell it for a tidy profit. Both goals require providing a consistent buying experience to your customers through systemization.
9. Test the changes you make in your business to make sure they are effective.
An old business lament goes, "I know I'm wasting half of my advertising money. I just don't know which half." Make sure that you document the results of any changes you make in your business, such as advertising programs, product or service offerings, or other marketing strategies. Know where your money is going and what kind of a return you're getting on your investment.
10. Formalize the way in which you and your staff interact with customers to strengthen the relationship and increase sales.
Customers return to franchises like McDonald's because they know exactly what the business transaction will be. There will be no surprises. They are treated consistently. For your business to succeed, you will have to define how you and your staff will interact with your customers and ensure that they have a consistently wonderful buying experience every time they come to see you.
While you can't control what happens to the larger economy, you can take some proactive steps to make sure your small business can weather the storm.