When you are a small business owner, major crises can make or break your business. Some operations work on a razor-thin margin, so lost sales can be a danger. If you are facing tough times, you should stop panicking and start thinking. A proper response to a downturn or emergency can help your company get through it. Here are some things you should do to help ensure that your business endures.
The moment you know that you are facing a downturn, then it is time to step back and evaluate your resources and your operations. That will give you an idea of what is working in your processes and what you need to change. For example, your business model depends on constant customer flow. If the current conditions allow for that to happen, then you are in trouble. Evaluating the various elements of your business to see whether they will work in the new situation is essential.
Besides your procedures, you should also look at your people. Small businesses tend to spend a lot on their staff. Sometimes, it can be worth it. But there are occasions when you are better off without some of them. Additionally, if you can get more work out of the same amount of pay, then that is the best option available.
Ensure You Have Access to Money
Money is what fuels your business operations. If you run out of money, then you have no funds to pay your employees and pay all the other expenses you need to make money. Do some calculations and see how much money you might need. Fortunately, there are several funding sources you can try. The simplest is to get some small business loans from the local lenders. You can handle short-term cash flow problems with the minor infusion of money that they can give. Your business will then try to pay off these loans in better times.
Loans are not your only solution, though. You can try to tap into your savings for some help or even sell off some assets. If you were smart, you likely had some money stored away for business emergencies. Look around for creative ways to generate cash so that you can operate for another day.
Be Smart About Your Cash Flow
With a source of money available in case of emergencies, you still shouldn’t be careless. Cash flow issues can still pop up, and they are even worse for your business now. You need to be sure about your expenses. It is always a good idea to monitor your costs, but it is more critical now. A few dollars here and there can add up, so you need to be strict. Ensure that all the money you spend goes to legitimate expense, while you ensure that you get paid for every product or service that you sell.
There are some changes that you can make that will help with this. For one, you can reduce extra spending. While you can’t cut into your main expenses, you may notice extras that drain money from you. For example, you should not be encouraging your people to do overtime unless it is necessary. You may even have to reduce operating hours, as long as your business stays in operation. Another expense you might consider cutting is your storage costs. If you sell off your inventory at sale prices, you can earn money on them while removing the costs of storing them.
Get Customers to Spend Money
The critical issue during a downturn is that many people don’t want to spend money. Without spending, your company won’t get any income. You need to convince your current customers that giving your money is in their best interest or is a good deal. To do that, you need to provide them with extra value.
That helps a lot with regular customers to your business. For example, if you run a hair salon, adding something extra to the standard haircut like a free pedicure or manicure can be enough to convince regulars to stay with you through the downturn.
Besides keeping old customers, you should try your best to attract new customers. A great way to do this is to change your prices. Find a balance between profit and attracting new customers. That can potentially help you enough through the hard times.
Running a business can be very stressful during a major crisis. But it is possible to do it with some care and effort. Focus on your company’s survival and try your best to keep it afloat.