Thursday, 20 November 2008

Top 5 Tips for Surviving in an Economic Downturn

As a small business, you may feel especially vulnerable to less than favorable economic conditions.  Certainly, the global outlook for 2009 raises many concerns given the number of countries facing an economic recession.  So, what should you do about it?

The following five tips may offer tactics that you can use to insulate your small business from the impact of global conditions on the Cayman Islands:

1) Revisit your business plan
It's important to examine how your plans for your business will be affected given the anticipated changes in economic conditions.  Consider new directions for your business, perhaps reinventing it to be more appealing to customers.  Evaluate how your current business model is working and any adjustments that need to be made in order to bring your business back to a path that will enable you to achieve your long-term vision.

2) Improve efficiency
It's time to tighten your belt and cut back on non-essential expenditure.  Explore ways to refine your operation to improve efficiency, cutting costs without sacrificing quality in your product.  A good idea is to motivate your employees to be a part of the solution.  After all, they have a stake in the survival of your business and hence their jobs.

3) Improve your cash flow
Cash is essential to your business and you want to make sure that it's coming in faster than it's going out.  Talk to your suppliers to see if you can negotiate better terms on deliveries.  Be more aggressive in collecting accounts receivable.  If you foresee problems, remember to talk with your loans officer so that your bank is aware of any potential delays in your loan repayments.  

4) Focus on your core market
Most businesses depend on a group of key customers.  Be sure to strengthen your relationship with this group, watching for changes in their behavior and adjusting as necessary to ensure continuity in the relationship.  Through providing a high level of customer service to this group, you may also develop a better understanding of your core market and gain insights that will help you attract other customers that share similar characteristics.

5) Focus on effective marketing
If there ever was a time to focus on effective marketing, it's now.  Remind your customers that you are still there and of value to them.  Generate new leads and cultivate new relationships that will bolster revenues.  Remember that advertising takes time to be effective, and be sure to evaluate its success.

One other important tip is to network.  At the Small Business Network meeting on Nov. 20th, several entrepreneurs raised examples of the importance of networking to their businesses.  Whether you network with supporters or advisors who can help to guide you through tough times, alliance partners who will allow you to add value to customers or share costs, or strengthen your existing relationships to improve loyalty, networking is an essential function of an entrepreneur no matter what economic conditions are expected.

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