As we head into this uncertain time in the American economy, anyone who runs a small business is thinking about how the downturn will affect their business. Some businesses have already been affected and many more are worried, very worried. So besides losing sleep, pulling your hair out, and biting your fingernails until they bleed what can you really do? Well, it’s a good thing you asked! There are quite a few things that you can do to keep your business on track, and to position your business to weather the downturn:
- Don’t assume the best and easiest way to cut expenses is to fire employees. You need to take a look at all of your expenses and figure out which ones should be cut, rather then just going to what seems like the easiest and quickest fix. What if you fire your customer service rep and realize that sales have gone down further because that rep was particularly good at selling upgraded services to your customers?
- Understand which expenses are really giving you the three magic letters ROI: RETURN ON INVESTMENT. The big question of course is how to figure that out. It takes a little time, and it takes looking at your profit and loss sheet in conjunction with your sales. You may think the easiest way to cut expenses is to stop spending that $3,000 a month with Google Pay Per Click, only to realize later that this $3,000 PPC spend was bringing in $4,500. You must break down and measure results based on every dollar you spent. For every dollar you spend in online advertising you NEED to understand what that earns you in sales. In order to really understand which marketing spends bring in real dollars, you will need to make sure that every marketing expense can be tracked. Use promo codes, technology (online it’s easy and free using Google Analytics), toll-free phone numbers, special prices, anything that can help you look back and attribute each sale to a specific initiative.
- Renegotiate with vendors. If you have had the same vendors for a while, it may be time to make sure you are getting the best deals. In a weak economy there will be plenty of other vendors willing to give you a better price to get your business. Go to your current vendors and negotiate. Tell them you need to have better rates, better terms, whatever it is that you feel you can negotiate on. No one wants to lose business right now.
I’ll keep today’s list to the top three things you should do for now. I will continue to post on how you can maximize the benefits of your expenses, to keep your business running and healthy despite the downturn. If you have any specific questions or comments, please let me know so that I can address them!
-Sabrina Parsons aka MommyCEO