Recently I was going through some archived articles about small business and found this series of questions on starting and marketing a small business in a slow economy. Here are the Questions and My Answers:
Q. What is the biggest challenge for businesses (particularly those who sell something) in a slow economy?
A. Cash flow… or lack of… when we have little income coming in we panic and try to think of quick fixes and ways to get “easy money” such as offering discounts on our products. Which may be okay short term but could backfire on us down the road. Because when you discount people start expecting it and then demanding it. Call it the flea market mentality. Nothing wrong with it as long as you recognize it for what it is and that you also know it WILL change the perception of your company.
Q. What are some tips you have for staying a float in a slow economy?
A. Focus on the long term…. Things that are important today….may not be a year or six months from now. Look at the news as an example. See what interests you today and if you can look into your crystal ball see what will even have an affect on you in six months. The same is true for business. While we need to market quickly in a down economy we need to think strategically about how our marketing today will affect our business in the future. Discounting is a perfect example. I suggest that instead of discounting your services you offer a “gift certificate” to your to clients as a thank you for their business and or a thank you for referring others to you. Or send them your product as a thank you. When they get a “gift” they will feel a stronger need to repay the favor. Its quid pro quo – something for something.
In business today it’s all about relationships. I recently reconnected with a customer who made a nice sized purchase and when I was finished taking her order said “Please tell your friends about Eden Florist.” 15 minutes later the phone rang and a friend of hers called to place a floral order too….
Ask for the Business – I was invited by a Local Newspaper to an event they were hosting and called and asked for the event planner. I offered her my services. She said “send me a bid” and I did. We ended up doing the décor for that event and two more events they hosted over the next 6 weeks.
Don’t be afraid to tell your friends business could be better. A dear friend of mine, Linda Stein had a radio opportunity and if I had not told her that my business could use a boost she might not have thought of me when the opportunity arose. That bit of media generated untold business over the next few years. People think that business is good unless we tell them otherwise. Set your pride aside and let those key people in your life know that you could use a referral now and then.
Q. What advice would you give to someone wanting to start a business in this economy?
A. Some people would say DON’T – I say that as long as you have enough capital to get you through the slow times, why not! Most businesses fail because they are underfunded
David Bach, author of several books including Smart Women Finish Rich said that when he decided to quite his six figure job to be a full time writer, he had enough cash reserves to make it at least six months. Today I’d suggest you have a year in reserves. Either that or work your business part time until you can replace your income to go full-time.
Another reason businesses fail is because they have a product no one really wants or needs so make sure you have a market for your product before starting a business. I drive up and down the streets of my community and see dozens of empty storefronts from small package stores, to postal stores to boutiques and everything in between. Selling ice cream in Alaska in the winter time is probably not a good idea.
How does a business compare in a slow economy vs. a thriving economy?
Earlier I mentioned we get into a discount mentality and that can really hurt you in the long run. Also in a down economy we work harder longer hours to make up for the loss of business or we just give up. Don’t – Give up that is. Unless you know its not going to work or you just don’t have the passion for the business any more.
Whether you are starting a small business or marketing an existing small business, you need to know what works and what doesn’t. What doesn’t is accepting the status quo. It is better to go out and make your own history than repeat history and hope it has a different outcome the next time. Growing a small business takes passion, marketing savvy and yes, money or resources. Find the resources your company needs to grow and prosper! Then you can market your small business in any economy, offline or online!