Winston Churchill once said “the pessimist sees the difficulty in every opportunity. The optimist sees the opportunity in every difficulty.”
The events currently playing out across the globe are revealing who is who.
When it comes to your business, difficult times can make it very challenging to maintain, let alone grow, your business. On the other hand, for those prepared for such trials, it can be an opportunity to increase market shares and boost revenue. Perhaps best of all, successfully weathering a crisis can dramatically increase customer loyalty when they see that they can depend upon you.
Here are some practices for when the outside world presents your business with exceptional difficulties:
Cash Flow: The Lifeblood of Your Business
Just as the blood flowing through your veins is necessary for life to continue, cash flow is critical to the survival of your company. It’s a given that you will always have expenses causing a drain on your resources. If you are in business, you will see money flowing out for various reasons, but that is not a concern as long as money continues to flow in at a quicker rate.
And that is where the problem lies.
During times of crisis, it becomes increasingly difficult to maintain your cash flow, and you may find money going out faster than it comes in. Keep calm, and know that there are ways to keep that flow going until the crisis passes. Some of these methods include:
- Negotiating Extended Terms. This may not be an option, but it’s worth checking. If you are on good terms with a large vendor and have been a regular customer, you might be able to extend terms. So, for example, if you are normally making payments after 30 days, you may be able to arrange new terms giving you 60 or 90 days.
- Partial Payments. Like the above, you might be able to arrange to make partial payments to your vendors. Again, this might depend on your history with the vendor.
- Increasing Collections Efforts. On the opposite end of things, if you have customers who are delinquent in their payments, you can step up your efforts to collect, possibly even making it a special project for one of your employees. You should start seeking payments one day after the due date and ensure continued efforts to collect.
Maintain Your Marketing Efforts
It might be tempting to trim your marketing budget to save some money, but don’t do it. This is exactly when you need to focus on improving your marketing efforts. You need to be out in front of your audience so that they know to turn to you when it’s time to make a purchase. Customers can easily forget you if you do not appear before them regularly.
Know that if you are tempted to reduce your marketing, some of your competitors are likely feeling the same. If they choose to do so, you could find yourself with several new clients finding you with greater ease. Being visible in the marketplace during difficult times can give clients a greater sense of confidence in your business.
Tough times force customers to be choosier about their purchases. Continuing your marketing efforts lets customers know that you are still there for them and that they can rely on you. Make the effort to show them that you are a dependable brand.
Do not cut back on marketing. In fact, if you can do it, expand your efforts to reach an even wider audience.
Reducing Inventory Costs
It’s time to evaluate what you can do to reduce your inventory costs. If you are ordering too many of an item, it’s time to cut that order. Can you source items elsewhere at a reduced price without a loss of quality? Do so. Have you considered drop-shipping to reduce the costs of shipping and warehousing?
Being loyal to a long-time distributor is admirable, but not at the cost of your business, Times of crisis call for a new approach, but you may be able to find other ways to reduce costs if you look hard enough.
One simple, common approach is to address excess inventory. An overstocked warehouse costs you money, so you will need to find a way to reduce the overage. Some ways of accomplishing this include:
- Returns. You may be able to return some stock to the supplier, resulting in a refund or a credit to be applied to a future order. Shipping costs may be an issue, but in some cases, it is a wise investment.
- Liquidate it. Certainly not the ideal choice, but selling at a significantly reduced price can be more economical that the cost of carrying the inventory.
- Repurpose. Can the items in question be repurposed for different products or services?
Play Up Your Strengths
Businesses often try to find greater success through diversification. While this can certainly prove successful, some small business owners take diversity to mean wildly different, and this can cause issues.
Adding related products to what your company offers is one thing but adding seemingly random new products can not only fail to bring you additional revenue, it can cause harm to your business by distracting you from your core products. The result? Your business and reputation suffer.
Rather than trying to have your fingers in multiple pies, focus your attention on your greatest strengths. This can be one of the most important means of maintaining your profits during tough times.
Win Customers Away from Your Competitors
If you are going to survive through both good times and bad, you will need to grow your business, which means adding new customers. Where can you find new clients interested in your goods and services? Buying those same goods and services somewhere else.
Those customers will be happy to come to you if you can offer them something that your competition does not. You can accomplish this with a bit of research into your competitor’s offerings. See what you can offer that they cannot and use that to attract their customers over to your business. To get you started here’s one: outstanding customer service. This is something that you should already be focused on, but perhaps you can kick it up a notch. Some points to focus on:
- Speed of service. Who likes waiting? Not customers. Prompt service is one way of expressing to your customers that you value them. There’s also the fact that a delay could give the customer time to wander off to a competitor.
- Personalized service. Again, this shows attentiveness to your customer and their needs. Customer loyalty improves when they feel that they are building a relationship with a company.
Get a Boost from Current Customers
Getting new customers is vital, but so is maintaining your relationship with existing ones. In fact, your present customers are possibly more important than finding new ones because you don’t need to expend time, effort, and money to get them—they’re already yours.
A loyal customer can keep you afloat during tough times. They already buy from you, and by treating them right, you might encourage them to buy more. Of course, treating them right does not mean forcing something upon them. What you want to do is offer them something of value that will benefit them. This can be done through proper tracking.
If you know the regular purchasing pattern of your customers, you can make appropriate recommendations. Perhaps they have not made one of their regular purchases in some time, which could be something to highlight. You could, for example, contact the customer and offer to provide it for them in a quick and easy manner. Alternatively, you might be able to offer a new product to them related to their previous purchases.
Watch Your Personal Credit
At times like these, borrowing becomes more difficult, and small business loans seem to dry up, becoming dust in the wind. In these situations, having good personal credit gives you a better shot at borrowing the money you need to help your business. Always keep a close eye on both your personal credit rating and your business one, doing whatever is needed to keep them in good shape.
Though there is no perfect, foolproof method to surviving the extraordinary difficulties that might present themselves, keeping a cool head and following the above guidelines, you give your small business the opportunity to not only endure tough times but turn them to your advantage.
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