Recession-proof Your Business with these Simple Tips
An economic downturn can spell disaster for a typical small business owner. Small businesses often run at a very tight margin, and may not have the capacity to cut prices or significantly lower costs. This presents their business leaders with some sizable challenges, and it’s not surprising that many small businesses fold during periods of financial hardship. The good news is that there are ways to survive a downturn without slashing your pricing. Learn how to make your small business recession-proof with these six tips.
1. Add Customer Value
When your customers have less disposable income, it’s harder to get them to buy your products or services. Maintain a healthy turnover by looking for ways to increase the value that you offer your customers. Develop web content that helps them get more from your products, using eBooks or instruction videos. Offer new services or products that mean your customers don’t need to shop around. Host open days and events, or offer training and learning workshops. If you can add value to your customer’s lives, without charging more money, you will increase loyalty and drive sales.
2. Develop Partnerships
You can rest assured that there are plenty of other businesses in the same situation as yours, so look for ways to find strength in numbers. Partner with other small businesses, so you can share customers and referral opportunities. Find partners that are a logical fit with your business. For example, a printing business would make a great partner for an art supplies store. Partnerships can also help you share mutual costs, further strengthening your margin.
3. Increase Efficiency
Look for ways to reduce your operating expenses. It’s often possible for a small firm to achieve lower overhead costs than a big company. After all, you probably don’t have a separate headquarters or a large administrative staff on your payroll. Many small and mid-sized companies often outsource marketing, bookkeeping, accounting, and legal roles. You may want to consider factoring your invoices for access to immediate capital as well as streamlining your accounts receivable functions. Lower overhead expenses can help you be more competitive with the rates you charge.
4. Promote Your Ethics
Small businesses can still compete with larger companies, even when the corporate organization is more expensive. Customers increasingly look for brands that consider the environment, and they may prefer your products and services because you can show strong ‘green’ credentials. Focus your advertising and marketing on your business ethics, and strengthen your role in the local community. This encourages customer loyalty, even when people are trying to cut down on what they spend.
5. Redefine Your Target Market
Your business relies on a particular group of customers, but you can protect your turnover by looking for other target markets. For example, a sandwich shop could reach out to local offices and businesses, and offer high-quality catering services. A fitness studio could rent out space during the evening for private events or classes. Think about the assets and skills your business has, and consider all the other groups of people who could use them.
6. Sharpen Your Competitive Edge
Your customers always have a choice, so it’s vital that they choose your products and services over the competition. During an economic downturn, it’s vital that you keep up your competitive edge. Keep an eye on similar businesses, and focus on what they DON’T do. Offer services to a different area, or offer free delivery when all the competitors charge. A competitive edge can make sure that your turnover stays healthy, even if other businesses around you start to run into problems.
The Bottom Line
In times of economic difficulty, many businesses react by reducing their prices or cutting costs. Small businesses can’t always afford to do this, and they must find other ways to make sure their income remains healthy.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.