Don’t panic about the recession, but know that it is not business as usual.
You do not have to be in a panic about the recession. What is required is that you review your business operations and effect meaningful change in the way you do things. Remember in these times customers are concerned about their cash flow and whether they will be able to weather the storm of the recession. They may be contemplating reducing prices, cutting costs, postponing new investments, sale of assets, etc. as a means of staying in business. They are operating in an environment of fear and the supplier/consultant who is able to show them a road-map of how they can navigate these troubled waters may just get their business.
On the other hand, you may be one of the lucky ones who are experiencing profitability in the recession. Don’t become complaisant. This brings to my memory the much talked about American dream of a car, house, successful career and money, spoken of by Conrad Law in the video entitled no strings attached- success is achieving your dreams. In today’s environment you cannot settle for achieving the American dream as it can be taken away very quickly, not because you did not run your business successfully but because of technology and the recession. Don’t be caught unprepared. Notwithstanding where you are positioned, the following can help ensure you weather the storm of recession.
Tips for dealing with the recession
Schedule visits to key clients and discuss the possible impact on their business of the recession and assistance they will expect from their consultants/suppliers. It is quite possible they may be considering downsizing, but such a measure has to be made against a background of possible scenarios of each action and possible consequences. In this area, you can offer some initial free advice. As you contemplate their position, try to determine possible sources of assistance you can give to them with a view to maintaining your relationship with them. This is necessary as you may have been high priced and they may now be considering using cheaper consultants/suppliers at this time. Let them know that you are willing to reduce prices and to work with them so you can both weather the bad effects of the recession. What you are ultimately seeking to accomplish here is to build customer loyalty.
This is a time that you have to redefine your target market and provide answers to the following questions:
- Who is your target market and is such a market as defined still valid?
- What are their needs? Designs, colours, sizes, etc.?. Do not go on past information as these may have changed.
- Can they afford your product/service at the set price?
- What price(s) are they willing to pay?
- What terms will they now require e.g. price cuts, extended payment terms to creditors, etc?
- What are the demographics (age, race, sex, economic status, the level of education, level or employment, income, marital status, occupation, etc.) of the group and where are they located? Update your client information as much of this may have changed. Ensure that you are always able to contact your clients. Some may be considering relocation to cheaper locations. This is especially important for marketing purposes.
- Consider factors such as their personality, values, attitudes, activities, etc. Where can you easily meet them. In your discussion with them try to record these points.
3 Revisit your business model
Joan Magretta defined a business model as “the story that explains how an enterprise works,” Whereas Peter Drucker, described it as the answer to the questions: Who is your customer, what does the customer value, and how do you deliver value at an appropriate cost? You need to review all these key areas.
The fact is that you may have to change the way you do business. If you are unsure of this then you should read the article entitled 5 signs that you need a new business model. In today’s world, you need to change your business model to be in tune with changes in your environment. It is not necessary always to completely change your model but to tweak things that may no longer be working. You have to be innovative. The article entitled developing a great business model will provide useful information for this area.
To determine what changes you need to make you should examine the following:
- Determine the customers needs- what pain the customer has that you are seeking to reduce? What problems that he/she has that you are seeking to solve and how can you be creative in addressing them.
- The products/services you offer. Are they relevant today to your target market or is there need for adjustments to be made in the offerings. To determine this you need to look more closely at what is selling? What is the market demanding? What are your customers saying about changes they will make in their purchasing habits or changes they require in your products/services or delivery and other aspects of it. You need to determine how your products/services can improve? How can you introduce into your model creativity and innovation? The Huffington post article entitled Creativity and Innovation: Your Keys to a Successful Organization should give some insight into this area.
- You need to set up systems to monitor what is happening in the market. Even if you are a sole proprietor, you need to recognize that you have to fulfill all the aspects of the business and marketing and research are critical areas that help businesses to survive and to whether external shocks. Develop and implement feedback surveys, clinically look at your offerings against the value offered and prices paid for them and that of your competition. Make sure you closely monitor the activities – strategies etc of your competitor at this time and be quick to respond.
- Remember not all customers go for value. In a recession, customers may accept lower value at a lower price e.g. doubles vs Kentucky fried chicken. You, therefore, have to look at needs to be satisfied a little closer – both these examples deal with hunger, both are related to available money. Can you, therefore, introduce products/services at a lower value but that will satisfy your clients’ needs. In this environment, a range of prices with associated products or services may be necessary. A business person told me of a thriving food business that was adversely affected because a Chinese food business came in the vicinity of her food place and was selling an eleven dollar lunch. There has to be a response to this other than close down. We cannot sell our traditional lunches for that price but we have to be creative. We may not go to eleven dollars but we can offer a cheaper alternative to our traditional meal that will allow us to keep some of our customers. As you seek to introduce new products/service do the necessary market testing to avoid spending money on products/services that will not return profits.
- Do not overlook the fact that in a recession there are persons with available money who will spend it on things of value to them. The value of introducing different products/services targeting different audiences cannot be overlooked.
- Networking should be stepped up as this can help you to get valuable information and establish useful contacts and aid your marketing. Increase your reading. Locate and monitor key websites that will provide you with valuable information on your industry. Join industry groups, increase your reading.
4 Work on the development of new strategies, tactics, and product/service offerings to meet the changing needs.
- This should flow out of:
- The assessment of your market and the changing needs of your customers
- Customer feedback re their needs
- New and emerging trends
- Joint discussion with customers of possible solutions to resolve issues affecting them. It is hereby reiterated that in these times you have to increase your customer contacts and your sales calls
- Analysis of what your competition is doing to stay in business
- Inputs from industry leaders about possible strategies for dealing with the recession. As have been stated, this is a time to continuously read and research and visit key sites. Find out and go to seminars that are being held that can guide you at this time. Network with the right persons.
- Do not spend time and energy and money on clients who are willing to talk but not close the deal. Many persons may seek to exploit, especially consultants and obtain advice without paying for it. You have to be wary of persons who are always calling you to meetings to discuss their business or to functions to advise persons on things they should do to resolve existing problems but who are not accepting or requesting a proposal from you.
- This should flow out of:
5 Increase advertising.
You cannot afford for your clients not to hear from your during a recession. Others will be bombarding them with their offerings. Recession marketing the rules change is a must read article.
- You need however to find different ways of marketing directly and cheaply to your target market.
- You should have established a database of client information – email addresses, contact numbers, social media links, etc.
- Try direct marketing ads and online ads using Medias like email and Facebook and other social networks you and your customers are on. In our environment, we have not effectively tested the use of coupons but online surveys can help you target where customers are coming from and their views of your products/services are important so you can directly connect with them and plan means to satisfy their needs.
- Establish a website. There are free videos on youtube that will direct you in this regard, include a blog and continuously update your website with current information.
6 Rethink and reinforce your business identity.
This is how you present yourself to or are viewed by your public such as customers and investors, employees, government and other agencies. Firms try to ensure that this identity allows for the achievement of business objectives. It includes aspects of branding, advertising, the use of trademarks, public relations, product design, etc. The article entitled branding 101 the small business guide to building a killer brand identity is useful to help you in this area.
Now is the time also that values, customer service, product/service quality, customer communications, employ relations and commitment and other issues come to the fore. What is the customer’s view of your business? You may need to re-brand your business to succeed especially if there are negatives in your history.
7 Review your fixed and operating expenses
You should examine different ways of carrying out your business activities. You also need to determine which expenditure has the least value, what is necessary and what should be removed. Increase your research efforts. Prepare and meet with your suppliers. Check for better purchase deals and credit terms. Revisit your credit terms and renegotiate where necessary. Strictly monitor new debtors and restrict as much as possible amounts allocated to new debtors. Put in place a better collection policy and where warranted invoke the penalties. Remember in many cases if you do not show interest in what is owing to you, you will not receive it. Ten ways to cut cost for your small business provide more insight into this area.
Do not ignore the value of spending more time with your customers discussing and advising them on ways to cope with the recession. This can resound to continuing business during the period of the recession.
Notwithstanding what’s is going on there is no need for despair, you can reposition yourself when your dreams turn to ashes.
Let us engage
What are your views? Does any of the above tips resonate with you? Are there tips not mentioned that are important for dealing with the recession. We would love to hear from you and to add your experiences to the post.
What are your views? I will love to hear from you.
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Business and Project Management Consultant