While growing a business in an uncertain economic climate can present extra challenges, I believe that small and medium-sized businesses can thrive regardless of economic conditions.
1. Diversify your customer base
If you are too dependent on one or two customers for the bulk of your sales, you are putting your business at risk if they run into financial difficulties. “This is a lesson that too many entrepreneurs learned the hard way during the recent economic downturn”.
2. Don’t neglect your best customers
While it’s important to ensure you have the right mix of customers, it’s also wise to treat your best customers with extra attention. By nurturing relationships with key customers and building their loyalty, entrepreneurs can grow along with them. “It’s easy to make the mistake of being distracted by the most persistent or annoying customers. Your biggest customers are unlikely to be the ‘squeakiest wheel.’”
3. Take a proactive approach to marketing
No product or service sells itself, especially not in a slow economy. “Word-of-mouth marketing is not sufficient to grow a business,”. “You need to define and promote your unique selling points.” a well-defined marketing strategy that includes response marketing via the Internet – to pull in customers – combined with awareness creation techniques such as direct marketing – to push your business to potential customers.
4. Step back from the day-to-day to focus on strategic goals
While it can be easy to get lost in daily details and neglect your strategic plan, the consequences can lead to failure. “It’s essential to keep your mission and values in mind as day-to-day operating decisions are made. Know what your strengths are, what you want to achieve and how you plan to get there. Keep your business plan documented, updated and shared.”
5. Foster a positive attitude in your staff
“Everyone within the organization needs to be trained and coached to understand the company’s strategy and to proactively promote the business at every opportunity,”. When hiring, look for people with the right qualifications, but also the right attitude. “If you can’t change people’s attitudes, you may have to change the people.”
6. Consistently monitor assets as well as profits
Most entrepreneurs are very focused on managing the bottom line by monitoring sales, gross margin and expenses. But they often ignore asset management, especially cash flow. For a better bottom line, keep an eye on asset and cash flow management to build net worth. Balance short-term and long-term needs with short and long-term sources of funds. “If you foresee problems on the horizon, now is the time to talk to your bankers. Never surprise them with bad news.”
7. Balance the entrepreneurial approach with sound analysis
Maintain the enthusiasm and spontaneity to react quickly, but do your homework and base decisions on facts, not just feelings. “Entrepreneurs can make the mistake of neglecting or ignoring market feedback and analysis of the facts. Don’t stick with what works until it stops working. Be aware of the warning signs. Evolve and grow by optimizing systems and installing best practices and latest technologies.”