Tips for Small Business Owners

“For many Americans this feels like the worst economic crisis in their lifetimes, and some leading investors are starting to say they may be right. …… Most comparisons turn to the low growth, high inflation, weak dollar and soaring energy prices of the 1970s, but this time with a housing crisis and spiking commodities prices thrown in, all threatening a prolonged recession.”

As reported by Reuters, The Orange County Register, Tuesday, July 15, 2008

Our current economic situation will impact your business!

Whether it is decreased revenue due to lower consumer spending or increased expenses driven by rising energy costs, you will have to carefully manage your business over the next year, at the least. Here are a few tips that may help to stabilize or even save your business:

  • Value your current customers

    • Past and present customers are your best opportunity for additional business and/or high quality referrals. Consider offering an “extra”, unexpected service to those preferred customers, contact them about it, and don’t forget to ask them for that quality referral.

  • Spend your marketing dollars wisely

    • Besides knowing the amount of money you are spending on marketing your business, know where, when, and how you are spending valuable marketing dollars. Put it all on one sheet of paper to quickly show the “bright spots” or the “glaring errors”. Once you have it down, you can prioritize your spending, schedule your programs, efficiently plan use of your resources, and even tie it all back to your profit & loss statement.

  • Manage your time

    • When times become difficult, there is a natural tendency to panic and focus upon the day-to-day tasks that must be done. Actually, this is the most important time to step back and look at the big picture, considering what is best in the short and long run for your business, answering questions such as the following:

    1. Is your business running efficiently?
    2. What resources do you need?
    3. What are the priorities?

    This is the time to work “ON your business” rather than “IN your business”. Track your time for a few days and see what percentage you worked “ON” versus “IN” your business, which priority you addressed, and which valued customer you visited.

  • Know where you are spending your money

    • Uncontrolled expenses (labor, material, services, etc.) will kill your profit, if not your business. Especially in difficult times, it is vital to understand how your expenses impact your business. Even though you may have accountants or software that handle your expenses, personally write them down, categorize them, and track them for a week or so. Once you have them down on one sheet of paper, consider the following:

    1. How do these expenses add in to pricing for your products and/or services? Ask yourself if these expenses make sense and are they necessary. If they are necessary, consider whether or not you should decrease or increase your pricing. Finally, ask yourself how that change will impact your revenue.
    2. How do these expenses add in to your Profit & Loss Statement? Ask yourself again if these expenses make sense and are they necessary.

In any economy, but especially in this difficult economy, every small business should remember…

  • Take care of your customers & you’ll take care of your revenue.
  • Control your costs & you’ll control your profit.
  • If you can measure it, you can manage it.