As a business owner, how do I keep my company safe in a down economy?
This question comes from a recent Ask Andi forum, part of the Lunch and Learn series by the Westchester County Association. Panelists included Robert Sanders of Hospitality Resource Group, Tara Meenan Lansen of Compufit and Jeff Stillman of Stillman Property Management.
The panelists, all small-business owners, talked about navigating down cycles. They shared lessons from 2001-2002, comparing business ownership in that timeframe to the present. All agreed that so far, it was worse then than now. Following are specific suggestions that came out of the seminar.
Entrepreneurial times
As owners of privately held companies, we have control. We secure our futures through marketing and sales, client selection and management, reserve funds, financial discipline and keeping an eye to the future.
Growth in a down economy means lots of marketing and sales. Keeping good customers, and getting more, is essential. Change what the business does, look for new opportunities and quickly jump on customer and prospect requests. Expand sales efforts and learn how to eat more of a competitor”™s lunch. All agreed you cannot be passive about sales and marketing in tough times.
Make strong, personal connections with clients. Think long term. Know who you want to do business with. Make deliberate, customer-by-customer decisions. Don”™t be afraid to weed out poor quality and unprofitable customers. And be patient.
Go out of your way to be present with existing clients. One panel member relayed that after the event, he would be driving three hours round trip to spend five minutes speaking with the president of his top customer, as part of a cocktail party. He explained that showing an effort, being present at an event that was important to the client, will pay dividends down the road when he needs it.
Get everyone in the company involved in sales and customer service. Insure all employees understand their role. Keep clients satisfied.
Take into account
Watch for competitors who stumble. Bottom feeders, competitors who sell on low price, struggle most in a down economy. Know which competitors are vulnerable and which of their accounts you want to go after. Put together an explanation of what your company is doing to be fiscally healthy. Emphasize your company”™s commitment to servicing clients”™ needs.
Be on top of accounts receivable. Make weekly collections calls. Only extend credit to fiscally sound customers. Have regular contact with the person who cuts checks for each client. Keep a pulse on each customer”™s financial health.
Accounts payable demands are coming more frequently. Deal with it. Keep costs down. Cut spending on non-essentials.
Know your top vendors. They may offer programs to boost their sales. One panelist gets rebates for volume sales, for the first time ever. Some vendors are looking to partner to boost sales.
Everyone would like to have more reserves on hand. Plan tax and business strategies together. Tax planning means profits go home to shareholders. Be careful to put enough funds into reserve, earmarked for lending back to the company in case of need.
Get your fiscal house in order. Pick your bank based on its financial stability and ability to provide quality advice. Some banks are now focused internally, fixing their own balance sheets, and that can negatively impact client relations. Work with your bank to get credit lines in place at the start of a down cycle; don”™t wait for an emergency to crop up.
How do you keep a positive outlook when the world around you is in trouble? Stress impacts every business, and every business owner, one way or another.
Lead forward. You can”™t focus on what”™s wrong or you stall out. Get a business support structure in place to help you feel less alone. Speak honestly with employees, vendors and customers. Define where to take the company next. Get everyone focused on the future. It is up to the CEO to provide a realistic, but positive outlook so others can follow.
Looking for a good book? Try “101 Ways to Market Your Business: Building a Successful Business with Creative Marketing,” by Andrew Griffiths.
Information about Lunch and Learn is available on the Westchester County Association Web site: Westchester.org.
Andi Gray is president of Strategy Leaders Inc., a business consulting firm that specializes in helping entrepreneurial firms grow. Do you have a question for Andi? Please send it to her, via e-mail at AskAndi@StrategyLeaders.com.
