Small Business Articles
Tips For Recession-Proofing Your Small Business Franchise
October 28, 2008
Recession can be a frightening time for consumers and businesspeople alike, because it puts everyone’s financial stability in jeopardy. As a small business owner, these periods can produce a very acute sense of hopelessness, as it seems like the economic influences tossing your franchise business around are entirely out of your control. Therefore, determining what exactly should be done in the midst of a recession can often be a very difficult, and sometimes fruitless process. If the recession is weighing you down and figuring out what to do to keep your franchise afloat is bearing no recognizable success, here are some fresh ideas to act on, both to give yourself a concrete course of action to take and to see a quicker recovery for your business.
Cut Costs
Certainly not coming as any kind of shock, this is a valuable move when the economy hits a speed bump. Even if you work from home, cutting expenditures is something that any wise businessman does continually in the course of his business’ lifespan, but particularly when times are tight for everyone, it’s a good time to regroup and apply a revitalized focus to restricting business expenses to only the essentials.
Pursue Dormant Clients and Old Leads
Recession is the time to pull out all the stops and get any business you can, so start by tracking down clients that haven’t used your services in awhile. Give them a call just to see how they’re doing personally and professionally under the weight of the shifting economy. Be sure they know that you aren’t simply contacting them to try to stir up business, but don’t be afraid to mention at the end of the call that if they ever need anything, they should call you. Similarly, go through your files and dig up those old business leads that never amounted to anything. Call them as well, to see how business is running and ask if there’s anything you can do for them.
Make Cheaper, yet Reasonable, Bids
It’s tricky to write up the right kind of bid in a recession: you don’t want to overcharge and scare business away, but you also don’t want to undercharge and miss out on the little revenue you may see in this slow season. Professionals recommend a middle ground somewhere in the range of a 15-20% decrease from regular bid prices. Don’t go straight to rock bottom for any client, but also don’t leave your pricing where it was when the economy was stable and clients had cash to burn. A creative way to make more money without turning clients away is to offer cheap add-ons to your bids. By offering clients small additional services that they can choose to accept or not, you retain the possibility of making a higher profit without making your clientele feel as though they’ve been taken advantage of.
Negotiate More Aggressively with Your Suppliers
As a part of cutting costs, don’t be afraid to wheel and deal with your suppliers and other businesses from whom you receive services. In much the same way that you are reducing prices to keep your clients happy in the midst of a hard time for everyone, your suppliers should be doing the same for you, and you needn’t be afraid to tell them that.
Re-assess Your Loans and Lenders
The fact that the economy is in a downturn does not mean there aren’t business opportunities yet to be had. In fact, if you have loans, it may be a good time to browse around for a lower interest rate or a more stable lender. When the economy takes a dive, lenders often have to lower interest rates to incite more people to take advantage of their lending, so a good businessman would be wise to ask his lender about the possibility of switching to a longer term or a new fixed rate. And depending on the financial state of your particular institution, it may simply be time to jump ship and find a new lender altogether.
Pump up Your Marketing
Though recession is the time for franchises to cut back on costs, marketing should never be reduced; in fact, it may be a good idea to increase your investment of time and money in this area of your business, particularly a home based business. What every business needs in the midst of recession is an increase in client traffic, and that will never be achieved if potential new clients do not know that your business exists. Without a good, revitalized advertising scheme, making it through a recession is not as likely.
Keep Close Record of Everything
Because you likely have more time on your hands during a recession, take some of that time to keep a closer watch on everything about your business from expenditures to client purchases. Take note of it all, step back, and assess the situation. This will help you determine where you can cut costs, how much money you can funnel into marketing, and the like. As well, having a detailed record will help you establish a plan of action for any future downturns as well.
Keep a Close Eye on Client Payment
In any recession, cash is far more valuable than credit, so ensure you have tangible cash in your accounts by reminding clients about invoices when they go even a day overdue. Though you don’t want to be a hound, you want to be certain that clients who are notorious for late payment get their funds to you on time.
Recession isn’t easy for anyone, but there are ways to make it easier on yourself and your business by staying on top of things. By adapting a few aspects of your business to the changing trends and adjusting your focus slightly, your ability to weather the storm could be strengthened greatly. Take these ideas to heart and use them as your business needs.
Recession can be a frightening time for consumers and businesspeople alike, because it puts everyone’s financial stability in jeopardy. As a small business owner, these periods can produce a very acute sense of hopelessness, as it seems like the economic influences tossing your franchise business around are entirely out of your control. Therefore, determining what exactly should be done in the midst of a recession can often be a very difficult, and sometimes fruitless process. If the recession is weighing you down and figuring out what to do to keep your franchise afloat is bearing no recognizable success, here are some fresh ideas to act on, both to give yourself a concrete course of action to take and to see a quicker recovery for your business.
Cut Costs
Certainly not coming as any kind of shock, this is a valuable move when the economy hits a speed bump. Even if you work from home, cutting expenditures is something that any wise businessman does continually in the course of his business’ lifespan, but particularly when times are tight for everyone, it’s a good time to regroup and apply a revitalized focus to restricting business expenses to only the essentials.
Pursue Dormant Clients and Old Leads
Recession is the time to pull out all the stops and get any business you can, so start by tracking down clients that haven’t used your services in awhile. Give them a call just to see how they’re doing personally and professionally under the weight of the shifting economy. Be sure they know that you aren’t simply contacting them to try to stir up business, but don’t be afraid to mention at the end of the call that if they ever need anything, they should call you. Similarly, go through your files and dig up those old business leads that never amounted to anything. Call them as well, to see how business is running and ask if there’s anything you can do for them.
Make Cheaper, yet Reasonable, Bids
It’s tricky to write up the right kind of bid in a recession: you don’t want to overcharge and scare business away, but you also don’t want to undercharge and miss out on the little revenue you may see in this slow season. Professionals recommend a middle ground somewhere in the range of a 15-20% decrease from regular bid prices. Don’t go straight to rock bottom for any client, but also don’t leave your pricing where it was when the economy was stable and clients had cash to burn. A creative way to make more money without turning clients away is to offer cheap add-ons to your bids. By offering clients small additional services that they can choose to accept or not, you retain the possibility of making a higher profit without making your clientele feel as though they’ve been taken advantage of.
Negotiate More Aggressively with Your Suppliers
As a part of cutting costs, don’t be afraid to wheel and deal with your suppliers and other businesses from whom you receive services. In much the same way that you are reducing prices to keep your clients happy in the midst of a hard time for everyone, your suppliers should be doing the same for you, and you needn’t be afraid to tell them that.
Re-assess Your Loans and Lenders
The fact that the economy is in a downturn does not mean there aren’t business opportunities yet to be had. In fact, if you have loans, it may be a good time to browse around for a lower interest rate or a more stable lender. When the economy takes a dive, lenders often have to lower interest rates to incite more people to take advantage of their lending, so a good businessman would be wise to ask his lender about the possibility of switching to a longer term or a new fixed rate. And depending on the financial state of your particular institution, it may simply be time to jump ship and find a new lender altogether.
Pump up Your Marketing
Though recession is the time for franchises to cut back on costs, marketing should never be reduced; in fact, it may be a good idea to increase your investment of time and money in this area of your business, particularly a home based business. What every business needs in the midst of recession is an increase in client traffic, and that will never be achieved if potential new clients do not know that your business exists. Without a good, revitalized advertising scheme, making it through a recession is not as likely.
Keep Close Record of Everything
Because you likely have more time on your hands during a recession, take some of that time to keep a closer watch on everything about your business from expenditures to client purchases. Take note of it all, step back, and assess the situation. This will help you determine where you can cut costs, how much money you can funnel into marketing, and the like. As well, having a detailed record will help you establish a plan of action for any future downturns as well.
Keep a Close Eye on Client Payment
In any recession, cash is far more valuable than credit, so ensure you have tangible cash in your accounts by reminding clients about invoices when they go even a day overdue. Though you don’t want to be a hound, you want to be certain that clients who are notorious for late payment get their funds to you on time.
Recession isn’t easy for anyone, but there are ways to make it easier on yourself and your business by staying on top of things. By adapting a few aspects of your business to the changing trends and adjusting your focus slightly, your ability to weather the storm could be strengthened greatly. Take these ideas to heart and use them as your business needs.
