Difficult trading conditions call for difficult decisions. When markets are contracting, it’s no time to put your head in the sand. But what do small firms need to do in order to survive?
We asked some small business owners, including our followers on Twitter and Facebook, what they do to get going when the going gets tough.
“Don’t delay making difficult decisions. If something is not working respond quickly and do something about it,” says Neil Westwood founder of Magic Whiteboard. “Only spend money if it’s going to add value to the business. Keep a close eye on your margins and remember to make a profit.”
“Don’t compete on price — you can’t, and you will just devalue your brand,” advises Hayley Chalmers founder of clothing retailer Short Couture. “If your product or service is worth what you are charging for it, then your challenge is to target the right customers who are willing to pay that price, and do a good job of selling to them. If you keep reducing the price you are eating into your profit and not necessarily increasing sales – just changing who your customer is.
“I try never to lose sight of the back office costs,” adds Hayley. “I keep re-evaluating processes and sometimes I can make something more efficient — sometimes it’s by using a different product/supplier or by doing it differently.”
Being adaptable is important says Denbigh Army Surplus. “We have several selling channels so if one of them is quiet the other usually takes up the slack. Ultimately, it's a giant game of chess and you have to use your instincts, drawing on the knowledge and experience you have in your industry.”
Many long-standing businesses have been through hard times before. Rich Brady reveals how his family business got through a previous downturn. “Some lean periods are difficult to plan for. Twenty years ago we purchased the unit we're in now and after moving in we had the worst January, February was no better, sales continued to drop in March and April and we were really beginning to panic.”
Spending was cut drastically, as Rich reveals. “There were several months when we didn't pay ourselves anything.” Cutting back can help he adds — “You don't buy any new stock, marketing budget is massively reduced or scrapped. Often your competition, though, will be suffering the same fate and that creates opportunities. Perhaps a collaboration or investing more in marketing while the rest of your sector is holding back may help you to stand out. But first and foremost you should position yourself so that you can cope with a lean spell.”
But starting up during a downturn can be a good thing, says Julia Lowe of Farm Toys Online. “I was told that it is always a good idea to start a business in a recession. That way you have to concentrate on every aspect of the business from the word go and if you can make a success of a start-up in a recession — things can only get better!”
Make sure your business is visible on social media sites, recommends Sharon Bassett, co-founder of coaching firm A-Star Sports. “Don’t underestimate the value of social media, even if it looks daunting. If what you deliver is up there with the best, don’t be afraid to let people see that and they will start talking about it. Embracing social media over the last few months has been crucial for us to develop our customer base, find suppliers and open up PR opportunities.”
There’s no end of advice and support from fellow entrepreneurs out there thanks to Twitter. Here are some of the tweets that we’ve received about business survival:
- “Take a step back and look at why things are tough. Then tackle it head on.” @EmmaWalker01
- “Look harder at your ideal customer — can you do better business with them? You may have to adapt, refine, grow, niche.” @BronwynDurand
- “I remind myself that if I don't get going, the going will get tougher and tougher. Then I try something new.” @shortcouture
- “Good effective targets and clear objectives should enable anyone to ‘get going’ — when they become unrealistic or unclear it gets hard.” @Craig_McKenna
- “Look for potential partners to collaborate with to strengthen offering, marketing power and skills mix #collaboratetoaccumulate.” @beindemand
- “In a B2Bbusiness, be careful who you give credit to — customers not paying invoices is a big problem. And cut costs not corners!” @hcnewhouse
- “Enjoy being the best you can, growing, learning and giving the best to amazing customers.” @BWebZoe
- “Get inspired, think big, stay in your flow, don't lose track of why you do what you do and what makes you great.” @fionahumberston
Sandy Banfield agrees. “I think it is all about the mindset that is needed and having clear goals as to why you are doing it and what you are working towards,” says Sandy. “There will always be ups and downs with finance and cash-flow. But what keeps you going and moving forward is down to your why, your motivation to keep going when those tough times hit.”
There's more great advice available on the Donut business survival guide.