Recession? Downturn? Slowdown?
Whatever you call it, the rate of income growth across US businesses has slowed to a crawl, and that is scaring the pants off of a lot of people. Your own business may not be affected in any way, but the fact is many people are worried about their future. Very worried.
Bad news? In some ways, yes - obviously. Worried folks spend less money. They no longer buy on impulse, making each transaction, each sale, a little bit harder.
But for those of us with the right approach, there's hope. Hope and opportunity.
Why? Because when everyone else is selling with less vigor and determination, you can do the exact opposite. While timid business owners are pulling in their horns and "conserving cash" you can outmarket them. As the unemployment rate creeps up, you can acquire their staff more easily. And good businesses are for sale and can be bought on the cheap.
Here are a few business coaching tips and tactics that will definitely help when things get rough. These tips apply whenever your company needs a boost. You can think of them as turnaround tactics.
1. Sell Harder
When money is flowing and customers are buying everything in sight on a whim, you don't have to sell very hard. Hey - either they buy or they don't. And if they don't, there are plenty of other buyers, so who cares. But when customers are feeling the pinch they become circumspect about how they spend their money, and it takes more persuasion to get them to buy. Research shows that it takes as many as seven - even ten - "touches" to get someone to take action. And sales data shows that most people stop closing after the first try, and even professional sales folks usually quit after the third time. Sell harder. Ask more often. Use stronger arguments. Go back to your people repeatedly.
2. Narrow Your Focus and Broaden Your Lines
This may seem like a paradox - narrow and broaden at the same time. It isn't. You've got to free yourself from all distractions. Prune outlying ventures and offshoots that aren't really part of your core business. Narrow your focus and spend all your energy on strengthening the core products and services that contribute most to margin and volume. Next, make it easier for your good customers to spend more money with you. Figure out what related products or services they want and sell them those.
3. Spend More Money On Marketing
Most business owners "budget" for marketing, which only makes sense if you think of it as a cost. Instead, if you see marketing as a revenue generator you should be willing to be spend some defined fraction of that revenue to acquire yet more revenue. That fraction should be a function of your average customers lifetime value. If you follow tip 2 above, you will quickly increase your average lifetime value, and therefore be willing and able to spend more. Test first. Make sure your programs work before you roll out big. One more thing; in tough times, you may also want to think about increasing that fraction itself. If you normally consider spending 10% of lifetime value to acquire a customer, you may want to increase it to 12% or 15%. The exact percentage for your business is governed by things like gross margin, average transaction size, and time - all of which may change when the economy gets cloudy.
4. Make It Easier For People To Do Business With You
Recently I saw an article advocating business owners toughen their credit policies. I was shocked. After all, if you thought someone was creditworthy before, why would you suddenly change your mind? And why on earth would you go out of your way to make it harder for people to do business with you? You should be doing just the opposite: make it easier. Remember the old saying: when everyone else zigs, zag. If your competitors are running scared, welcome their customers with open arms. Offer terms. Give people credit. Ship for free. Stay open longer. Extend warranties. Provide better service.
5. Clarify Your Value Proposition and ROI
Remember: even if there really is a ‘recession,' people are always going to spend money. Perhaps not as easily or as much, but we all still have needs and wants, and we are going to try to satisfy those. That means that while people aren't rushing to pull out their wallets for every offer that comes along, they will still spend on things perceived as valuable. What does that mean? Before you may have gotten away with a lot of fast talk. Now you have to prove it to them. Spell it out; show them exactly how they will benefit - in financial terms and otherwise. Use case studies, testimonials, examples, demonstrations.
6. Reactivate Your Old Customers
Call it the bright shiny penny syndrome. During a boom it is common to keep selling new customers and ignore those you've just sold. In a slower environment, it helps to do the opposite. Get back in touch. Call, mail, email... If you're products and services were any good, and prior buyers had a positive feeling, you have a good chance of bringing them back in to the fold. It'll be easier to sell to them because you don't have to prove your stuff is good. They already know that. Just make a strong offer. Making it time-sensitive helps.
7. Cut Unnecessary Spending
We say it all the time: no one ever cost-cut their way to greatness. Better to focus on revenue building than cost reduction. But now is a good time to review your expense journal and cut some of the fat. The fat, not the meat. Don't cut effective marketing programs - expand them. Don't slash your sales force, only the non-performers. Even the best run businesses accumulate lots of extra overhead when the money tap is on full force. Take a close look. Get rid of things that do not make business sense. Ask, "what is the return on this expenditure?" If you can't say clearly, get rid of it.
8. Acquire Your Competition
Overlooked by many entrepreneurs and business owners, acquiring competitors and cooperators is a fast path to building a bigger business. While always a good strategy to consider, struggling businesses with excellent potential can be bought cheaply during a slowdown. Acquisitions can add to your customer base, boost revenues, increase your access to credit, provide strong (and trained) staff members, and help build your business in all sorts of ways. Of course there are risks, but no more so that at any other time.
9. Improve Your Internal Systems
Companies like FedEx and Dell are famous for their systems. Their DNA is woven around logistics and process control in a way that makes them almost unbeatable. If you plan to dominate your niche, strong systems are critical, but when sales are in hyperdrive, none of us pay them any attention. Optimistic thinkers see an economic slowdown as the calm before the storm. Use that calm to batten down the hatches. Strengthening your systems so that they are efficient, consistent, and scalable, prepares your company for the next big surge in business.
10. Topgrade Your Staff
A time for housecleaning, that's what this is. There are members of your staff who simply aren't cutting it. The truth is they haven't cut it for a long time, but you've been too busy to do anything about it. And since there weren't that many people on the market you kept them on. Use this economic "pause" to review your team. Clear out employees who don't make the top grade, and replace them with strong performers who don't see opportunity where they are now. Write compelling want ads and screen applicants for clear values and top results. And only settle for the best.
Business acceleration expert and growth strategist Paul Lemberg is the CEO of Axcelus: Advanced Business Acceleration for Entrepreneurs. Axcelus helps fast-growing entrepreneurial companies scientifically engineer the greatest business value possible, in the shortest amount of time.
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