With the weight of the housing, credit and financial woes that are threatening to push the country into a deep recession on his back, Federal Reserve Chairman Ben Bernanke climbed Capital Hill on Wednesday with some bad news. He told the Joint Economic Committee of Congress that "It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly." By one definition of the word, six consecutive months of decline in the GDP (the value of all goods and services produced in the United States) constitutes a recession.
The news, however, was not all bad. Bernanke also voiced his optimism for the second half of 2008 and the beginning of 2009. "Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year," Bernanke said. He was referring, in part, to the recently passed $168 billion stimulus package of tax rebates for people and tax breaks for businesses as well as the Fed's aggressive interest rate reductions.
So what does all that mean to you, the small business owner? It means that you should come up with a plan today, just in case the floor drops out beneath you tomorrow. Remember, there is a certain agility that comes with being a small business. You can, with a little drive and discipline, refocus your efforts far more quickly and easily than a large corporation can. That is important. What should you focus on? Opportunities.
The Joys of Diversification
Even in the worst economic times, there are opportunities. It is up to you to grab onto those opportunities and run with them. By expanding your offering of goods and services, you will expand your client base. Repackaging your services and directing your efforts at a different audience is another way to diversify. For example, if you are a web designer with a web design business, you might consider becoming a consultant or offering seminars on Web design, search engine optimization or some other, related topic, anything that would allow you to make money and market your core Web design business at the same time. The key is to break out of your niche ahead of your competition.
Use Customer Service to Stand Out
Business is not only about finding customers, it is about retaining the ones you already have. The key to doing that is solid customer service and the basis of solid customer service is star treatment. The fact is that, all things being equal, the experience that a customer has in your establishment is the deciding factor in whether or not they will return to continue doing business with you. Some of the things you can do are broadening your product and service offerings, providing faster delivery and offering more flexible payment alternatives. Overall, however, make sure everything you do is customer-focused. Communicate with your customers; find out what they need and want and how close you are to filling those things. Then, adjust your efforts to build up your strengths and eliminate your weaknesses.
Market, Market, Market
You might have guessed from the title of this section that when the economy slows down, you need to up your marketing. It is a common mistake—and one that can severely damage your business—to cut back on marketing when the economy goes South. Take a lesson from the natural world. When food is scarce, the lion is neither gentle nor patient. In fact, they are more aggressive about taking down an animal and defending their kill from the surrounding hyenas then they are under normal circumstances (not that the difference really matters much to the recently-grazing zebra they are about to munch on). In lean times, you have to get out there, your marketing needs to be more aggressive, more complete and more meaningful than ever:
- Touch base with past clients.
- Use incentives like feebies, discounts and the like.
- Create a referral rewards program to generate a little word of mouth action.
- Increase your public relations efforts by getting more involved with your community and setting yourself up as an expert and a market leader. That involves some risk but once you accomplish it, recession worries will be a thing of the past. From this position, you will easily defeat your competitors even in very slow times because customers will have a real, tangible reason to see you.
- Review your marketing program to date and see if it is as cost-effective and efficient as it could be.
- Network like crazy.
Ride the Cutting Edge
Are you up-to-date with technology and best practices? Can you describe the trends, problems and opportunities currently facing your industry? If you cannot answer either of these questions in the affirmative, it is time you went back to school. Being up-to-date can help you run your business more cost-effectively and reach new customers in other places, even other countries. Selling online, for example, could take your local business and, depending on what you sell, make you a global player almost overnight.
Sharp Focus: It is all about your goals
Success depends on keeping your eye on your long-term goals while executing your tactics and strategies. Your strategies are the shorter-term objectives that will drive you toward your goals. Tactics are those things you do to achieve your strategies. Everything you do has to be done with your goals in mind as part of an overall strategy. This means, that if you are considering your overhead to stimulate short term profits, think about the effect that this will have down the line. If it does not support your goals, don’t do it. There is always another way.
Improve to Excel: Both sides of the battlefield
It has not been explicitly stated up to now, but everything you have read so far is really about improvement. I have suggested that you take a close look at what you are doing and try to figure out if you can do it better. By itself, that is half the battle. I have never been one to give much credence half the battle. I am more of a whole battle kind of guy so here is the other half: Your Competition. What are they doing? More to the point, what are they doing right (that you can steal) and what are they doing wrong (that you can exploit)? Perhaps it sounds a tad “cloak and dagger” but they don’t call it corporate espionage for nothing. I am not suggesting that you go to Machiavellian extremes here, but I am suggesting that intelligence on your competition is good and being able to exploit that intelligence is better.
You improve on your products and services, policies and practices; and you improve you competitors as well. If you do these things and you will be able to ride out most economic hard times with little damage. Come to think of it, why wait for the storm clouds to gather and Bernancke to intone that most-feared word: Recession? Why not begin your program of improvement today? In the immortal words of P.T. Barnum: "Those who really desire to attain an independence, have only set their minds upon it, and adopt the proper means, as they do in regard to any other object which they wish to accomplish, and the thing is easily done."
Now get out there and accomplish something!