How small businesses can survive the coming economic downturn
By Gary Rohloff founder of Laybuy
OPINION: The move to alert level 1 will have seen retailers and small business owners across the country breathe a collective sigh of relief.
The further easing of restrictions, and loosening of social distance guidelines, means many will have been able to return to business as usual.
But while they might have survived the immediate challenge of lockdown, the reality is many will now be facing a long and difficult winter as a recession begins to bite.
And while every business will be facing its own unique challenges, and will need to take their own approach, there are six key steps I believe every customer-facing business owner should be taking right now to see them through the current economic storm.
Firstly, focus on what you can control. While it’s easy to get caught up in the noise, especially when you are under pressure, this only distracts you from what you need to be focussing on – your business!
Write a plan outlining the steps you are going to take and talk it through with your family and your team. It’s vital to get everyone onto the same page and heading in a consistent direction.
Accept that at times like this sleepless nights are inevitable and the pressure will be immense. This is the part of owning a business that others don’t see. But know that the rewards will make it worth the sacrifice.
Having a plan outlining how you will make through the coming months will help relieve some of the stress. Don’t be too rigid in your thinking, flexibility is key to help you respond to a changing environment.
Secondly, critically look at your business model. Ask yourself the tough questions – what do my customers want and am I providing it? Has the market fundamentally changed, and do I need to respond by changing also? How do I reshape my business so that it can survive and can then thrive?
Some of the answers to these questions might be confronting. This is OK. Some of the world’s most successful businesses have been on the brink of collapse and have had to make fundamental changes to their business model to survive. Never be afraid of change.
Thirdly, make sure your business is operating efficiently. Look at every opportunity to reduce costs and improve your cash flow. While you might have already done this during lockdown, repeat the exercise and then repeat it again.
It’s the simple things that can make the difference, but that are most often forgotten. Review your electricity, phone and internet plans. Talk to your insurance broker, look at your supplier contracts and have a conversation with your landlord. In times like this, it is in their interest to have a stable and reliable tenant.
While never easy, you should also review your staffing model. But in doing this, remember that your staff are not only one of your highest costs, but they are also among your most important assets, so tread carefully.
Fourthly, while the temptation is to cut your marketing budget when budgets are strained, remember in times like this marketing is never more important. Drastically reducing your marketing budget is almost always a mistake. But the time is right to review it.
Competition is strong and customers need to know what you are offering, so they can spend money with you. At times like this, you need to be looking at how you can grow your customer base, and marketing helps you do this.
If money is tight, think about new ways to reach your customers cost-effectively. Social media should be a key part of your marketing and engagement strategy and allows you to reach large numbers of potential customers at a low cost.
Fifthly, make it as easy as possible for customers to buy your product. Research and understand your customers. Look at your opening hours – are they aligned to when they are actually buying?
Remember, in tough economic times, many consumers are also struggling so consider alternative payment methods, such as low-risk credit options, that help them buy from you.
If you are not online, get online. There is simply no excuse in 2020 for you not to have some form of online offering.
Finally, remember customer service is everything! This needs to be ingrained into your company’s culture.
Consumers have a choice and you need to work hard to earn their repeat business. It’s the simple things that matter – service with a smile, going the extra mile and having every customer feel like they are the most important person on earth that will see them return time and again.