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Succeeding in a Struggling Economy

by David Williams - October 5, 2008


Tips for Small Business Owners on Surviving a Recession


To say we are experiencing tough economic times is a serious understatement. Businesses, both - brick and mortar and online merchants, are hemorrhaging and if we can't effectively triage and treat the country's bleeding economy ~ many worthwhile businesses will undoubtedly die needlessly.


I don't want to editorialize but: I, for one, have had it! One news reporter said, "When Wall Street coughs ~ the world catches cold." Really!? Allegory is not what we need!


Here are some tips to help you survive & possibly even thrive in tough economic times.


What are you going to do about your payroll?

As a division 6 retail manager we had very specific guidelines for our controllable expenses yet, due to unforeseen circumstances and an inventory prep, my staff I were both over-worked when I received a call from our regional manager J.B.

J.B. ~ What are you going to do about your payroll Dave?

Me ~ I can't do much of anything about it right now.

J.B. ~ Do you understand your responsibilities as a manager?

Me ~ Yes I do. And I am working over 100 hours per week trying to satisfy them.

J.B. ~ Glad to hear you understand the gravity Dave. Let me ask again, "What are you going to do about your payroll?"

Me ~ Nothing...

J.B. ~ I think you better explain.

Me ~ I'm not going to do anything about payroll J. I'm going to do something about our sales. If I increase sales, my payroll percent will come back in line.

J.B. ~ "Son," (I later learned that folks from the south called me 'son' when they were about to praise me) "that's the best answer I have heard yet."

After completing the inventory & some aggressive promotions; two weeks later my sales had shown significant increase. Sure enough, the payroll percent to sales was back in an acceptable range.


Not only had I survived the storm - we were thriving and enjoying increased revenues. Why? Because we didn't focus on circumstances we had no control over. We focused our energy and skills on the things we could have an impact on - our sales.


Son... That's the best answer I have heard yet.


Focus on the things you can change

Cut Payroll or Increase Sales

Nobody wants to lay off employees yet many small businesses are struggling. What's worse is that many business owners just can't seem to see the light at the end of the tunnel. Factor in financial bail-outs that include off-shore rum production and exclude the 'little guy' (small business has been the single biggest industry segment growth for some time) and the future can look very dim.


What do we do? Simple. We light a torch to guide us to the end of the tunnel. We do everything we can to increase our sales and retain our help.


The struggling economy and the possibility that we're going to be in a recession for some time are worrisome subjects for small-business owners.


How Can You Increase Sales When Customers are Spending Less?


Better Service Now is the time to take customer service to a higher level. Begin by focusing on your current customers. All too often we take them for granted; now is the time to step up your appreciation level.

Better Pricing Make sure your pricing is competitive in your market. Take some markdowns if necessary to increase your rate of turn.

Better Service Make sure your service is exceptional and everyone you encounter knows beyond a shadow of a doubt how much you value them.

Rekindle the Fire Review your accounts to find customers whose spending patterns have decreased and engage them to learn what you can do to help them. Sometimes it only takes a quick follow-up to rekindle the fire. Yet, other times it can take effort on your part. Either way, rekindling the fire is still easier and less expensive than finding new customers.

Take Care of your Team You are carrying a great burden trying to keep your business afloat. You have deep concerns that may make you feel you are all alone. You're not alone. Your employees are concerned as well. There are stories on the news every morning, noon and night about more cut-backs and layoffs. Even if you have never mentioned layoffs or restructuring - your employees know. And they may be in fear for their jobs. You need to be sensitive to their concerns as you map out the future of your business.

Now is the time to speak to them; be specific and engage them to take ownership of the business in every area of responsibility. Help them to understand that you are doing everything you can to protect their job security. Invite them to be a part of the solution. If you communicate these things effectively as a leader (not some faceless voice from an ivory tower) ~ they will follow you and work to defend what you have together as a team.


Got a sandwich board? Use it.

Got end-caps? Feature some seasonal items at a fair price.

Got Merchandise? Merchandise it! Think outside the box and cross merchandise.

Got Excess Inventory? Take some markdowns and increase your rate of turn.

Got more than one employee? Involve your associates and motivate them.

Got a website? Tune it to get traffic and keep it up to date.


Remember ~ New business doesn't have to come from New customers. Take care of your customer base and they will take care of you.


Continue to Market Yourself

Continue your marketing efforts We cannot afford to stop marketing even if it seems like a good way to cut controllable expenses. Would you call the phone company and ask them to remove your business listing? Of course not. Would you instruct an employee to remove all of your signage? No!

Then why would you cut your marketing budget? If you follow the steps above; you will earn referrals and good viral marketing (word of mouth advertising) - for FREE!

The next level regardless of economic conditions, continue to market yourself to recapture the attention of former customers and introduce yourself to new customers.

Re-examine your USP (Unique Selling Proposition) Determine what sets your business apart from the competition and capitalize on your competitive advantages by marketing them with determination. Update your website and your core message, product and service offerings, send out post cards, put out a new sign in front of your store. Light your torch!

Offer How To DIY Clinics Pay attention to what products your customers (and competitor's customers) are buying. Think 'special events' and develop a plan to show customers how to better use those products and cross-related products.

For Example:

Do you sell paint? Do you see a peak for interior painting around early spring and late fall? Create a special event. Normally, Mr. Smith asks an associate to mix 2 gallons of paint, walks to the checkout and pays for the paint and leaves your business. If Mr. Smith isn't a professional painter you just lost a significant amount of revenue. Thinks about the steps involved to paint just one room. I would bet that over 50% of the time and materials involved would be used to prep the room for the two gallons of paint you just sold him.



Move & Cover Furniture


Drop covers for floor


Removing old nails and picture hangers


Cleaning the walls


Patching damaged areas


Sanding the patches


Cleaning the dust


Taping or masking


Removing old switch covers, outlet covers & any fixtures





All of these steps are required before Mr. Smith even opens the two gallons of paint you sold him.

Then he needs to cut in the room.

Did he need brushes, rollers, pads, paint pans?

Did you help Mr. Smith? I'm thinking the two gallon paint sale may have left Mr. Smith ill prepared for the tasks ahead.


Go one step further Create a special event - an interior painting clinic to show people some basic steps for interior painting using the products you sell that will make their job easier.

Focus on the things you can control

We know that payroll is our largest controllable expense. I hope we have already successfully addressed that topic.

Other Variables to Consider

Cash Flow Manage your cash flow and limit unnecessary spending. Remaining liquid in tough economic times can make or break a small business.

Debt Some would say now is the time to increase your spending. I would have to disagree with that line of logic ~ no more than ever, we should do what we can to reduce our debt. First, it is always a wise course of action. Second, No one knows for sure how long these hard times will last... in the event you need to borrow or increase credit lines to survive the downturn - it will be much easier to negotiate from a position showing good stewardship than a history of over extending yourself.

Vendors Do your very best to remain current with all of your suppliers. They are likely struggling too and they are probably receiving countless requests for extensions and better terms. Again, in the event you need to ask for either; it will be much easier to state your case from a position of strength.

Receivables Look through your accounts receivable files and make courteous yet firm follow ups. Yes, we need to be sensitive to others who are likely in the same boat of 'tough times' but we need to keep our eye on fellow passengers so we can avoid sinking alongside a drowning victim.

Petty Cash Now is a good time to delve into the books and watch where the money is going ~ dozens of small payments add up very rapidly and those discretionary spending items can consume working capital faster than hungry teenagers can consume leftovers. Look for trends in 'small payouts' so you can recognize where your money is going and address it before your money is gone. Look at everything with a keen eye and do some simple math ~ even $100.00 a week for mileage reimbursements extrapolated out one year means $5,200.00 of working capital is gone.

No Hype, No Ads, No Sales Pitch ~ just No Nonsense Advice. Here's wishing you the very best in 2009!

Dave Williams


Be sure to check out previous issues of SmallBizNews for other Internet Marketing ideas as well. We invite your ideas, comments and suggestions.




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