Yesterday, I was sitting at the kitchen table sharing a cup of Chai with my friend Terry who is a small business owner. Since I’m a small business start-up consultant, she came over to ask my advice about what her accountant had just said to her. Terry had been told to put into place a “survival plan” for her business.
Terry was upset. Besides cutting expenses, her accountant asked her to consider laying off one or two of the people who work for her, eliminating her employees’ sick and personal days, and a salary cut for everyone.
She knows that this is the advice many small business owners are getting right now. But, she wanted to know, is it the right advice? Is there better advice to consider?
Times are tough right now. Recessions are always tough. However, being in a recession doesn’t give you liberty to take drastic action or make irrational decisions when it comes to your business. No. This is the time to carefully consider what you need to do to stabilize your business without hobbling it in the process.
Before you make any “survival plan” decisions, you owe it to your business to take these ten ideas into consideration.
10 Ways to Stabilize Your Business During a Recession
1. Don’t lower your prices.
The worst thing you can do as a small business owner is to reduce your rates when the economy slows. Many small business owners panic and lower their prices. The problem with this is that once you lower your prices, it’s more difficult to raise them later. Economies ebb and flow. Keep your rates constant.
2. Avoid giving deep discounts.
If you naturally give a 10% discount to repeat customers and then suddenly give a 20% discount, your customers now know that you can and will go lower and think that they can now negotiate prices. You can never go back. You don’t want this to happen. Stay the course. Keep the established discount.
3. Think small, sell big.
Instead of lowering prices, creative small business owners are packaging their products and services differently in order to provide a lower price point for their customers. This is a smart move. Instead of lowering your price, make your products and services more affordable by packaging them in smaller, more attractive packages.
4. Offer alternative payment options.
Although this idea is not for everyone, some small business owners will benefit from promoting their products and services with an extended payment plan. Again, don’t lower your price. Instead, offer different payment options.
5. Build your reputation.
There’s no better time than the present to build your reputation. If you aren’t already recognized as an expert in your field, now is the time to become one by writing a book, doing a weekly radio show, or speaking at industry events. Experts get more attention. They get the lion’s share of the market. They get noticed by the media. Being an expert means your cash flow will increase, you can command more for what you do, and more people will be willing to buy from you.
6. Get control of your thinking.
Especially when times are tough, you have to get control of your thinking. The first step is to realize what you do have control over and what you don’t. While you may not have control over what’s happening with the U.S. economy, you do have control over your business’s level of risk and exposure to the economy.
Choose what strategies you’re going to implement in your business based on what you can control.
7. Practice a rational mindset.
This is an uncertain and fearful time for many people. However, this doesn’t mean you should start making emotional and irrational decisions. If you’ve been a small business owner for any length of time, you know that it wasn’t an emotional and irrational mindset that got you where you are today. And it’s not going to get you where you want to go tomorrow.
Practice a rational mindset. Before making any big business decision ask, “Am I making a rational decision or an emotional one?” Decide what cuts you are going to make based on what makes sense to the future of your business. Ignore what everyone else is doing.
8. Cultivate an eye for opportunity.
The key to surviving this recession and any other economic tough time is to cultivate an eye for opportunity. Instead of hunkering down, start looking for opportunities. There are still plenty out there. After all, the millionaires of 2012 will be the people who saw opportunities now and took action.
9. Adopt a different way of thinking.
The media wants you to think that the recession is threatening everyone and everything. This is simply not true. You’ve got to see beyond the present circumstance to grow beyond it. Instead of looking at the 6% of the population who are out of a job, look at the 94% who are working. Just because there’s a recession going on in the U.S. doesn’t mean there’s a recession going on in your mind. Change your thought. Change your creation.
10. Focus on what you want to expand.
What you focus on expands. You have the same 24 hours in your day as everyone else. What can you focus on in those hours that will expand your business? What can you focus on that will multiply, increase, or grow? What can you align yourself with now that will expand your business in the future?
To lay off or not to lay off. That isn’t the question. Neither is the solution to cut back on staff hours, eliminate employees’ sick days, or slash your budget just because other small business owners are doing so. We’re in a recession. We’ll come out of the recession. Before you make any “survival plans”, consider these ten ideas to stabilize your business that will enhance, not hobble, your future success.
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About the Author: Dr. Susan L. Reid is a business coach and consultant for entrepreneurial women starting up businesses. She is the author of “Discovering Your Inner Samurai: The Entrepreneurial Woman’s Journey to Business Success.” To download a free PDF chapter of her book, go to Alkamae. If you’re interested in finding out more about what steps you can take to ensure your lasting business success, get your free PDF: “Doing What You Love: Multiple Streams of Passion” at Your Inner Samurai.