Nearly every business has felt an impact from the recession. There has been no escaping. The root causes were universal and had a domino effect.
Some small-business owners believe they’ve seen the bottom and they are surviving they are OK and they expect to persevere with modest adjustments. These small-business owners are kidding themselves. The bottom has not been reached, and it will be a long slide until it does. We are in for a five- to 10-year disaster.
During such times, it’s easy to panic. Panic, which is fear-driven and not based on fact but on emotion, has tremendous power, the power to change the direction of business. But do you want to give in to panic, throw your hands in the air and accept self-destruction, actually accelerating it, becoming a part of the panic, stimulating more?
There’s an alternative to panicking. We are confronting change, and change is an opportunity for advances. Now you have the choice to take advantage of change it or allow yourself to be buried by it.
Make the right choices today and see the results tomorrow. It’s not just about adjusting prices — you need to broadcast your differences, tell people why they should shop with you, provide them with added value, and not discounts, and watch your business grow in a down market.
Here are a few rules of engagement that will help you successfully recast your business and succeed in the new economy:
Evaluate and eliminate excessive debt
If your revenues have dropped, you may not be able to service the debt you took on when your revenues were much higher. Any debt can be worked out — secured debt, loans guaranteed by the Small Business Administration, mortgages, lines of credit, and even leases.
If you haven’t already, reduce your headcount and overhead. You can deliver the same amount — or more — by increasing productivity.
Track your finances daily — and start today. Install a key indicator system to track your business and have daily, weekly and monthly financial reports issued. Follow profitability per job, per week, per client, per product. Use these indicators to focus on your most profitable products or services. Make nothing that does not bring in a profit.
Reduce inventories and overhead at any cost
Look for items that does not move or turn frequently. That’s where your cash is locked up — in your cost of materials, labor, and so on, waiting to be turned into cash after it’s sold and the receivables collected. This can result in a huge cash drain.
Train and cross-train your staff. If every job or task is learned by at least one additional person, when the primary person is out, the secondary person cross-trained to perform the task can leap in and save the day. And so work continues, and productivity remains high despite the absence of a key player. Smoother production, greater productivity and happier customers mean a better bottom line.
This means tracking and analyzing key indicators, financial reports and productivity. Get smaller first and more profitable; then grow slowly and carefully.
Focus on quality
That’s what wins in the long run. Never forsake this principle.
The horse is out of the barn, but there is still time to close the door…quickly. Get better, get smaller or be forced out. It’s your choice.
Culled from entrepreneur.com