Thinking about a downturn when times are good for your small business may seem pessimistic, but it’s just smart planning. Booms and busts are regular, cyclical occurrences in many industries, so busy times are often followed by slow periods. What’s more, the steps you take to thrive during a slowdown will help to make your small business stronger.
Read through the following tactics to see where you can make improvements.
Take a Look at Your Vendor Contracts
Most small businesses avoid negotiating vendor contracts aggressively because haggling takes precious time and energy. But it may surprise you to find just how much buying power you can have and how much you can save when you ask vendors to sharpen their pencils.
The simplest approach is to research pricing from other vendors and ask your current resource to match it. Other techniques include:
• Consolidating spending. Offer to bring your business to one or a few vendors in exchange for preferred pricing.
• Asking vendors for ideas. For example, buying items in bulk or scheduling deliveries when shipping costs are low can help you save.
• Extending contracts. Some vendors will give you better rates if you commit to working with them longer-term.
Keep Your Customer Pipeline Full
Prepare for reduced demand and increased competition by doubling down on strategic selling. This means zeroing in on who is most likely to buy from you and then pursuing more targets that match this profile. When fewer people are buying or your closing rate slows, a pipeline of high-potential customers will support your ability to sell.
Consolidate your efforts by:
• Analyzing sales data to understand the profiles of your most profitable customers, then expand your outreach to prospects with similar characteristics.
• Looking for opportunities to upsell or cross-sell to increase your value to current customers.
• Finding opportunities to boost customer commitment through subscriptions, automatic renewals or prescheduled refills.
A surprising number of cash crunches can be traced back to billing issues such as errors, delays and other process breakdowns. It is the rare small business that can’t stand to make a few improvements to its billing processes.
Review the following fixes to identify which will best help you keep cash flowing smoothly during slow times:
• Continually verify and update contact information to ensure payments aren’t being slowed by incorrect invoice details.
• Use invoice management technology to reduce slowdowns and errors caused by manual processes.
• Use automated systems to remind you of overdue payments so you can follow up immediately when issues occur.
Energize Your Offerings
The more on-target you are with what your customers want from your products and services, the better off you’ll be when spending slows. Customer needs are constantly changing, and getting ahead of them now by improving your offerings can make the difference between staying afloat or sinking during a downturn.
Follow these steps to get a clear picture of how you can improve your products and services and determine how to best direct your resources:
• Talk to current customers to update and solidify your understanding of what they value most about your company. Use this information to tweak, streamline or shore up what you offer.
• Be sure you understand how your market is evolving by attending conferences, networking with peers and talking to your team.
Economic slowdowns can be a challenging time for small companies, but they can be weathered successfully. The difference may lie in taking small steps now to make sure you stay in power later.