Two of the focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. Many businesses face tough times at one point or another. If and when it happens, it’s important to understand how to adjust. The following contributed post is entitled, Dealing with Tough Times as a Small Business.
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Every business owner that has been around for a while knows: you have great years, and you have lean years. The success you might be experiencing right now is not a guarantee for the future. Having a buffer in the finances helps most medium to large companies deal with trialing times, while they either wait or get organized for better fortunes.
Photo by Tim van der Kuip on Unsplash
For smaller businesses, these types of financial buffers are usually non-existent. If the cash flow dries up, there are serious risks to not being able to pay suppliers on time or, even worse, the payroll. Companies do well to have a contingency plan ready to deal with meagre times and, as the saying goes: mend the roof when the sun is shining, perhaps already incorporate into your business to become more agile and responsive. Here are some areas to look into.
Switch Up Your Marketing
There will be no new business without significant marketing in place. That doesn’t mean climbing in the phone to the next media buying agency to get yourself a costly TV campaign. It means, especially in this digital times, to go smarter with the market budget and try to reach audiences you haven’t reached before. Think direct to consumer marketing campaigns, social media campaigns, or pay-per-lead type marketing activity. In the new age, going small for just a leads/new business campaign is possible, but do consider that eventually, you will need brand saliency for real growth. Going full digital marketing and lead/sale based only will work in the short term is no real replacement for the longer term. Also, don’t fall in the trap of only focusing on short term marketing, you will always need a vision in place how your proposition will evolve over time.
Investigate Your Cash Flow
Thinking about cash flow issues, especially in regards to being able to pay suppliers is another challenge business owners will have to get their head around. In some cases, the solution is as simple as coming to an agreement with your suppliers. One the one hand they have no interest in one of their customers going under, on the other hand, they will have to pay their own suppliers and employees as well.
In some cases, there is a good middle that can be reached to alleviate the pressures of paying a full invoice but also respects the relationship you have with your suppliers. Running payroll is more challenging as it will be a large chunk of the finances. Of course, you can try negotiating, but don’t be surprised if employees walk away quite quickly. Ask yourself “what is factoring” for a solution in this area.
Keep Improving
Ensuring a stream of jobs and managing your cash flow are the main life-line for companies in difficult times, but it doesn’t end there. What might seem to be a luxury, thinking about the future 3-5 years down the line, as you are fighting for survival, might seem daft, but it’s precisely what you will need to do. As a business owner, you need to be continuously navigating the challenging waters of threats and opportunities to come out of it stronger, more robust, and on a path of healthy growth.