Thoughts and ideas on growing a business

A year of challenge

This year will be a challenging one for many of us; in fact survival will be the objective of many small businesses. Here I have gathered ideas and approaches – which are being implemented by clients – to demonstrate that proactive actions can have positive returns. Many of the ideas are as much about changing attitudes and behaviours as about taking decisive action.

Why should anyone buy from us this year?

This was the question for a recent workshop I facilitated. Yes it is good to know your USP (unique selling proposition) as it is a reason why people buy from you. But for most businesses their selling proposition is not unique. Location, accessibility, quality, convenience, customer service, price, reputation all contribute to purchasing decisions by customers. Make sure you know which elements of this package influence your customers.

Increase customer focus

Customer focus is a clear requirement, and I think it is more spoken about then actually delivered. Aim to provide excellent customer service to all existing customers and maintain relations with ex-customers. In fact go out of your way to be in contact with ex-customers, they still have potential to be won back, so aim to stay on their supplier list.

Business connections

In my mind much networking has limited business value and is social in nature (and there is nothing wrong with that!) – I suggest you focus on connections where they are of value to your business (or to your customer’s business). It is not how many connections you have on Linkedin but what is their potential value to you and your network.

Staff communications

Communicate to your staff: through the hard times talk to your staff more, share your plans and targets, and engage with them how objectives are to be achieved. United teams where conversation is open and ideas shared will weather the stormy months ahead.

Be online

Work out what makes sense for your business (blogs, LinkedIn, facebook, web directories, google maps etc). If you are selling to the mass market, put your message everywhere, if you are selling to a niche market make sure your potential customers know of your products/services and why they should buy from you. Attractive and cheap websites are available to all using software such as Joomla templates.

Suppliers

Treat key suppliers as valued customers. Forming partnership type relationships with your suppliers is more important now, make sure you have agency and distributorship agreements signed up and confirmed. There is little point in building a market for an OEM and then losing the agency because of poor communications and key supplier management.

Cash flow management

Yes, cash is the lifeblood of a business. Prepare your budget and update your cash flow projections at least monthly. Regularly updated cash flow forecasts and management of working capital are key to business survival this year.

Cutting costs

Several clients of Celtar have made considerable savings by renegotiating their rent in the middle of lease periods. Rent for commercial property has fallen everywhere back to the levels of five or more years ago. You are now in the driving seat and can use professional negotiators such as (only the more commercially minded of) solicitors to negotiate on your behalf.  

Shop around for professional services

One client has reduced auditor fees by 30% by shopping around, and staying with his current auditor. Negotiate solicitor’s fees upfront so you know what you are getting. For value for money advice on employment law join the SFA (www.sfa.ie) or ISME (www.isme.ie) and avail of their well regarded services.

Staffing reviews

In previous recessions layoffs and redundancies were the usual reaction to a slowdown. Now business owners are looking to a more flexible series of options. Why? Because there is a strong belief that the economy will recover sooner so keeping the talent that has been recruited and developed makes sense.

Reductions in salary, of 10 to 30%, are commonplace amongst Irish SMEs. In technology companies salary cuts are made reflecting today’s market rate for a job and bring salaries back to what they were in 2004. Often the senior positions are taking the most severe cuts, directors and managers are bearing the greatest decreases and are sharing the pain of dropped income.

Working time flexibility

Salary reductions are also being made through the introduction of three day weeks and other flexible working arrangements.

Frequently staff are put on three day weeks to cut costs. This option of making staff work part time needs to be managed effectively so productivity is maintained or increased.

Offering unpaid leave to your staff is a way to temporarily reduce your wage bill. If you are overstaffed at the moment, but expect you need staff in a year’s time when the economy picks up some staff may find the option of unpaid leave attractive.

Introduce customer focused flex-time as a competitive response to the downturn: an organisation’s opening hours could be extended without increasing cost. Implementing flexi-time should have the effect of creating longer open hours. As a customer I would like to see this happening for banks, accountants and solicitors.

Remember you are not alone

There are many experienced business advisers out there who will listen, advise and stimulate your ideas and activities.

So ignore the radio and TV reporters who appear to luxuriate in the bad news announcements, and get on with doing the business.

This is part of a series of articles on managing a business through the recession by Billy Linehan of Celtar, business and management consultants.

Billy Linehan is a specialist SME adviser who has been working with small businesses in Ireland and the UK for nearly 20 years. A director of the Institute of Management Consultants and Advisers, as well as managing a private consulting practice Billy provides a mentoring service to clients of the IMI and the Dublin City Enterprise Board.

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1. Economic tumult:

Says Business Week, “Expect more budget cuts, layoffs, shutdowns, bankruptcies, and mergers.” Says the National Federation of Independent

Business: “Small business owners broadly and sharply [will] feel the impact of the recession. The National Federation of Independent Business Index of Small Business Optimism. .. was the fourth lowest reading in the 35-year history of the survey.” Says Strauss: At least for the first half of the year, companies will be downsizing, tightening budgets even more, and looking to do more with less. That trend will trump all others. The good news is that we have probably seen the worst of things and as the year progresses, money and ideas will begin to flow again. Deals may even get made!

2. Innovation rears its head:

It is historically true that business innovation expands as the economy contracts. There are many reasons for this. Necessity being the mother of invention is the main one; that is, with fewer customers and a need to keep the business alive, hearty entrepreneurs often get creative as a way to lure people in. The Xerox machine was first conceived of, and then worked on, during the Great Depression. Ditto Tupperware.

This will be even truer in 2009, for a variety of reasons: The need and push for clean energy, a massive government spending programme in the US and abroad, technology moving at the speed of light, scared customers, and an era of new visions and possibilities, to name a few. Taking advantage: Try doing something new. Labour can be cheap right now, and so too can be materials.

3. Social networking works.

Maybe it is just me, but doesn’t it seem like people have just become obsessed with Facebook? And it is not just Facebook. It’s Twitter, and LinkedIn, and MySpace, and Digg, StumbleUpon, Del.icio.us, Technocrati, and something like, oh, a zillion more. Taking advantage: Join some of these sites, or, if you are already on a few, put some time and effort into them. It does pay off.

4. Shoestring marketing makes a comeback:

In this time of tight budgets, where both entrepreneurs and their customers are increasingly reluctant to part with a penny, it is actually more important than ever that the small businessperson step up their marketing. As Richard Branson advises, recessions are time to expand, not contract.

Most entrepreneurs instinctively know this and that is why the trend now is towards increased marketing that costs little but delivers big, such

as:

.Online video: Tapping into trend # 5, online video is a way to better interact and connect with your customers. Teach them something new about you or your products.

.Blogs: Anecdotal evidence: At a conference I attended earlier this year, fully half of the small businesses surveyed said they are increasing their blogging and as such are successfully using blogs to grow their business. Blogs make you more accessible. Blogs increase your search engine optimisation. Blogs can build your business. Even if you only get, say, 50 people consistently reading your blog, that’s 50 more potential customers than before. .Old school marketing: Coupons, word of mouth, direct mail, customer service. Taking advantage: Get crackin’, amigo!

5. Web 2.0 tips:

Web 2.0 has reached the Tipping Point. Web 2.0 is shorthand for this era of interactive Internet where content is often participant created. YouTube is the most obvious example – the audience creates the Internet experience. Flickr, Slideshare, and even the comments section on USATODAY.com articles do much the same thing. More significantly, this interactivity has spread to mobile computing, and this presents increased opportunity for small business. Notebooks, smart phones, BlackBerrys, GPS devises, netbooks (small notebooks for mobile Internet), etc. enable you to reach customers as never before. Experts say that the biggest opportunities lie with restaurants, financial and news services, and retail. Taking advantage: Create a viral video. Create a web app, or a mobile web app. Solve a problem.

6. Opportunity abounds!

As Warren Buffet says, “You should get greedy when others are fearful and fearful when others are greedy.” Many things are on sale right now, especially stocks and real estate. Taking advantage: If you buy at these historically low prices today, it is doubtful that you will regret it tomorrow.

7. The solo-preneur takes flight:

According to the Bureau of Labor Statistics, in November 2008 “employers took 2,328 mass layoff actions involving a total of 224,079 workers.” In addition, “the unemployment rate rose from 6.5 to 6.7%. Job losses were large and widespread across the major industry sectors.” And the unemployment rate is only going to climb higher, and higher. According to Thomas Frey, the Senior Futurist at the DaVinci Institute, “As a general rule, 7% of the recently jobless will attempt to start their own businesses.” Frey says that “the most popular form of start-up will the Empire of One, one-person businesses. .. .” Taking advantage: “Look for rapid growth of support structures eg. business advice, management systems, and outsourcing options.”

8. Green goes mainstream:

Yes, people are looking for a bargain, but an increasing number also want their product and service providers to be environmentally conscious. And green consumers in particular will almost always be willing to pay a premium for organic, sustainable, green products.

Taking advantage: At a minimum, make sure your website indicates your green commitment.

9. The O-conomy:

The election of Barack Obama signifies many things, but for our purposes here, a main one is that government spending and budgets will be headed in a new direction, and it would behove the smart entrepreneur to get ready to take advantage of these new priorities. The stimulus package that Congress will pass in early ’09 will budget plenty of money for all sorts of infrastructure projects – everything from the traditional – roads and bridges – to the new – green businesses and high tech. Taking advantage: Google ‘bidding on government contracts’ and learn how.

Government largesse – it’s not just for Halliburton (who did well out of US government contrcts in Iraq and elsewhere) anymore.

10. Money doesn’t grow on sprees:

In this era of belt-tightening, reduced budgets, unemployment, and fear, it is easy to see why one of the most obvious trends out there affecting small business is the desire of consumers and customers to save a buck, spend less, and get a bargain.

Even high-end brands are feeling the effect of this trend; the lavish Bellagio Hotel in Las Vegas for instance, a resort that usually commands at least $300 a night, has lately been offering rooms for about half that amount. Taking advantage: If people are looking for a bargain, give them one. Discount popular products. Bundle services for less. Negotiate.

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