Send Lynette a Confidential E-Mail
Small businesses endured financial declines during 2009 while stock market investors, who chose wisely earlier this year, profited handsomely. Don’t allow market happy-talkers to disillusion you into believing the economy has recovered and you’re behind the curve. Instead, celebrate that you’ve survived the last two years of severe economic downturns.
During the last quarter of this year, the home foreclosure plague moved from go-go real estate boom areas to these bastions of conservative economic values: McAllen, Texas; Burlington, Vermont; Lincoln, Nebraska; Gulfport-Biloxi, Mississippi; and Sioux Falls, South Dakota. Simultaneously, millions of square feet of empty office and retail space sit bleakly through the nation’s winter as unemployment continues to rise. Consumers spend less, business customers cutback orders, and major financial institutions hoard cash.
Remember: Your business is about your customers/clients, income, and profits.
Seems simple enough, doesn’t it? However, it’s amazing how frequently we entrepreneurs lose site of basics – momentarily or, regrettably, over time.
Someone told me about a philanthropic recycling effort that produced far greater than projected income until the founders decided they only wanted electric or natural gas powered trucks to haul their material to recycling facilities, in a geographic region where there’s a shortage of environmentally attuned anything. Heady with success, they decided their business was so valuable to the trucking company that they could coerce them into buying new vehicles. Instead, they lost the deeply discounted rates of the most reputable transport firm in the area. Now they’re scrambling to regain revenues they were producing for local nonprofits.
During most of my life I’ve described myself as an idealistic realist. Sometimes the idealist part runs amok over the realist. When this happens in business, the financial consequences can be devastating. You must seek balance, while remaining true to your ethics.
On the flip side, I know a self-taught computer service provider, who continually makes nasty remarks about his customers – people with lives not connected to technology – who call to ask for help because they don’t understand computers or related services. When he takes their calls, his disdain is evident in his voice. While his rates are competitive and his service is local in a community that prefers to buy local rather than national, his business has declined drastically during a period when it should have been flourishing because he’s failed to embrace his customers’ intrinsic value. Any question, when the asker doesn’t know the answer, is not “stupid” for the person seeking helpful information.
Who is your customer?
- Your definition of your customers can change after you form your company. You may believe your clientele will be consumers, when you start, and discover you can produce far greater revenues when you sell primarily to businesses.
- Does a significant portion of your income result from one market niche? Can you expand and specialize in that sector to drive higher income and profits?
- Evaluate who your customer is, and who your customer can be, as you plan your business for the year ahead.
How can you maximize profits?
- You’ve probably pared down inventory, moved ultra-slow sellers to special order status, and developed ways to communicate with your customers.
- If you’re a service provider, you’ve developed mailings, spoken at all the local service clubs to spread your reputation, and sought project partnerships.
- To reach new customers/clients in most markets, traditional advertising does not produce results it once delivered. If you’re not an Internet junkie, you’ve got to learn enough about social networking to rev-up your business. You must provide a dynamic website that truly reflects the strengths of your brand. Figure out how Twitter, a Facebook ‘fan’ page, a blog, and maybe even YouTube can work for your enterprise. You could decide to hire a part-time ultra savvy tech employee to carry out your daily desires online. Remember: Their work will be as effective as the direction you provide. This might be a perfect student job for the right candidate. Be sure to stay on top of what’s Tweeted and posted to be sure messages are consistent with your business’s image and goals.
What are your potential credit sources?
- Despite major financial institutions’ virtual moratorium on lending to small businesses, you need to establish access to credit before you require cash.
- Set up meetings with the small business manager for the local and regional banks and credit unions in your area. Find an institution you feel comfortable with, one that demonstrates real enthusiasm for your business, and can provide services you need.
- For additional information, see my column: Four Tips to Select Your Business Bank.
Applying caring customer relations and creative marketing approaches, along with wise cash management, businesses can thrive in spite of the recession. Plan for your prosperous year.