One of the most difficult challenges small business owners face is navigating the continuous cycle of ups and downs. When business is good, you have too much work and not enough resources. When there is an economic downturn, or you lose a big client, or the competition steals market share, you must manage the fallout while working to keep the business moving forward.
Staying positive during a slowdown and focused on growth during the upswings can be a daunting task. In honor of National Yo-Yo Day, we’re sharing a few tips and tactics to help you keep your business humming through the inevitable ups and downs.
Small business owners who are well prepared tend to come out ahead during downturns. These owners typically create a business plan that includes long-term goals and tangible milestones to aim for along the way. Reviewing your strategic roadmap regularly will help you manage short-term ups and downs by enabling you and your team to focus on the big picture.
It’s not uncommon for small business owners to ignore the signs of change. There may be clear indications that an important client is unhappy, a key vendor is going to increase prices, or that demand for your signature products or services is waning. Instead of taking control of the situation, you wait for the inevitable to happen.
Your company’s survival hinges on being proactive versus reactive, especially when times are tough. One surefire strategy is to look continuously for new ways to build your business. This can be challenging when you have to manage day-to-day operations and juggle multiple responsibilities. If you focus solely on doing the work, you may find that when you have finished filling the order or completing the assignment, there is no new business in the pipeline.
Dedicate time every day to keeping up contacts with potential clients, staying on top of industry developments, and generally promoting your business. If you’re successful, it’s likely that your business will remain steady and have fewer lows and highs.
Networking increases your visibility and offers opportunities to build your connections. There are numerous ways to cultivate an effective professional network, from joining online forums to attending industry-related events. Make use of your network as a tool for generating new business leads and as a forum for learning about issues your peers are facing as well as new technologies and trends in your industry. Your colleagues are a valuable resource that can help you see changes on the horizon and plan accordingly.
Manage Cash Flow
One of the keys to survival in a rollercoaster marketplace is effectively managing your cash flow. Many small business owners struggle to keep money in the bank. When times are good, you want to seize opportunities to grow your business. At the same time, it’s important not to get lulled into a false sense of security. You may end up spending money you don’t have, with no reserves left to weather a slowdown.
Managing cash flow starts with creating a monthly budget for your business and sticking to it. It’s also a good idea to establish a saving policy to ensure that you have some cash set aside to cover unexpected expenses. Strive to maintain a cash reserve of three to six months of expenses at all times.
Even the most experienced entrepreneur can experience a cash flow crunch. Small business owners often rely on working capital financing to help cover a shortfall. Whether you need to meet payroll, keep the utilities running, or pay your lease or mortgage, working capital financing will help reduce the pressure when your business hits a rough patch.
Summit Financial Resources offers working capital loans for small to medium-sized businesses that involve using your accounts receivable and other assets as collateral. We can mix and match from a variety of product options to suit your needs, including invoice factoring, asset-based lending, inventory lending, and equipment financing. Because working capital loans can be used for any business expense, they can mean the difference between keeping your business up and running or having to shut down.
Capitalize on Opportunities
Many small businesses circle their wagons or retreat from the front lines during difficult times. Savvy business owners capitalize on the resulting opportunities by expanding their efforts to gain market share.
Keep tabs on competitors whose market share is greater than yours and learn from their successes. Look for ways to enhance your business, such as revamping systems or investing in new product lines or technologies. Get closer to your customers to ensure that you’re offering products and services that meet their needs. Find creative ways to engage them, understand their issues, and help solve their problems.
Consider hiring experienced sales people to develop new business. This will allow you to concentrate on improving operations, curbing spending, and delivering quality products or services to keep clients satisfied. When the economic climate improves, you can invest in additional staff to accomplish the work at hand, freeing you to focus on continuously growing your business.
Companies large and small tend to cut their marketing budgets during a downturn. The wise small business owner continues to spread the word any way they can in order to generate a steady stream of business. Developing a plan for consistent and visible marketing should be a key component of your business plan.
If a slowdown makes it too costly to implement, investigate less expensive promotion channels. Develop online content or a social media ad campaign. Deliver a presentation or keynote at a chamber of commerce or professional association meeting. Man a booth at an industry trade show. Research ways to write articles for trade publications on and offline. Hire a public relations consultant to help position you as an expert in your field.
Successful businesses of all sizes experience peaks and valleys. Survival requires a positive outlook, a focus on moving forward, plenty of stamina, and the flexibility to expand or contract according to market demands.
Working Capital Financing is a few clicks away.
Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.