The peaks and troughs in the economy are a test of any business, but small businesses often struggle the most. Here are five tips for protecting your small business from faltering during a downturn.
Track Expenditures Now
Do not wait until an economic crisis arises to take stock of your expenses. Knowing what your business spends money on can allow you to set priorities. Forethought will make decisions easier if tough economic times come about and cost cuts need to take place.
In an economic downturn, the first place that business people look to cut expenditures is in salaries. When it comes to small businesses, this is often not the most economical decision. After all, in a small business, the boss (you) often needs to take over the workload of an employee that gets let go. You may find yourself doing a lot more work and still making less money. There are better places to cut your losses. Only lay off employees who do not pull their weight.
Cut Loose Dead Weight Clients
Time is money regardless of what type of business you run. Sometimes you need to cut loose a client, even though that seems counter-productive in an economic crisis. The fact is, however, that you could spend hours upon hours trying to appease an unreasonable client when that time would be better spent finding new clients. If you ever feel that you are hanging onto a client simply because you “can’t afford to lose them” it is time to raise your rates for that client or to let them go.
When money gets tight, businesses often cut back on advertising. This is the wrong time to make that decision. You need to work harder to get people to spend their money when they have less of it.
Keep Your Chin Up
The good news about economic downturns is that they end. Stay positive, keep working hard, and things will turn around eventually. It can be tough to “grin and bear it” when you are worried about your next utility bill, but moping about won’t get you any more work or inspire your employees to give their best.
Remember that the community plays a role in whether or not small businesses survive a downturn. District32 has made it our goal to provide such support within our communities, in good times and in bad.