In unprecedented times such as the COVID-19 pandemic, sharp declines in consumer confidence and decreased sales can threaten all businesses, but small businesses are particularly vulnerable.
As a business owner myself, I know how difficult it is to protect cash flow and build your customer base. Having a plan and making preparations in advance can help your business not only survive but also thrive during an economic downturn.
Below I share my tips on how to best manage your small business in an economic downturn. It’s important to focus first on Stabilising your business before shifting your attention to Growing.
Become a leaner organisation
First, take steps into becoming a lean organisation by focusing on what your business can do better than competitors. Refocus your limited management bandwidth on your core products or services that generate more margin and make sure this part of your business gets all the resources it needs, even at the cost of the non-core parts of the business that are not of strategic importance.
Resources can also be freed up from your exiting cost base:
- Evaluate all costs and differentiate between ‘must-haves’ and ‘nice-to-haves’.
- For all non-essential costs, eliminate them if they generate little or no revenue.
- For ‘must-have’ costs, renegotiate all supplier contracts:
- Remember everything is negotiable - if you don’t ask, you won’t get.
- Always have a second supplier quote to bolster your negotiating power.
It's important to always look for ways to make your operations more efficient. Look closely at your business to devise a plan and you'll soon find other areas that need to be trimmed in order to run more efficiently.
Sometimes the most creative ideas or changes happen when faced with big challenges. For example, the pandemic has proven to us that an office is not necessarily essential to running a healthy business. A switch to VoIP absolves the need for a physical office or premise and can save on rent costs.
Protect your cash flow
Cash flow is incredibly important to your business during this pandemic it's understandable that consumer spending habits have changed.
There are 4 main ways of ensuring that money continues to flow through your business:
- Reduce and slow down cash outflows by changing your payment terms.
- Increase and speed up cash inflows by shifting more resources to collections.
- Position your business for a recessionary environment.
- Get your team to be more productive - do more with fewer people.
Call your vendors and ask to get better terms while the pandemic is ongoing. For example, you might be able to get longer payment terms rather than the odd 30-day terms. Many banks and lenders are now offering payment holidays for mortgages and the furlough scheme is readily available.
Go online and find the best deals on price comparison sites. There is a good chance you are overpaying for most of your utility costs if you have not switched in the last 18 months. Avoid buying anything from Field Sales agents as they typically are expensive, fraught with hidden costs and tie you up in long term contracts to maximise their sales commissions. Many companies selling door-to-door utilise aggressive and rogue tactics.
One of the biggest advantages of having a cloud phone system is the huge savings it can bring to your small business. Statistically, switching to VoIP systems can help save the average business up to 75%.
Focus on your current customers
The key here is excellent customer service. Ensure that your customers or clients love what you do or sell, and keep them happy. You want to retain their business at all costs. Try to sell them upgrades, add-on services to boost customer retention.
Bottom line is keeping current customers happy increases the chance of referrals and new customers, without any need for marketing spend. In fact, according to Esteban Kolsky, 72% of customers will share a positive experience with six or more people. Once customers do refer your products, reward them with a commission or discount for further services. With a great referral programme, you might even be able to grow with a zero marketing budget.
VoIP can aid businesses in building rapport, be easily accessible and create call journeys that better the customer experience.
Communicate frequently with your customers
Now more than ever, it’s important to be transparent with your customers about service levels and changes to the business. Inform how your company is keeping employees safe during the pandemic, how working from home might affect service levels or reduced opening times. This can effectively be done with email campaigns, updating relevant social media and your Google My Business page. Make information easily accessible without having to dig for it or force customers to get in touch.
Ensure you communicate effectively highlighting how customers can get help e.g: from government schemes or other institutions. How exactly your organisation is willing to help such as products to support remote working, discounts or payment holidays. 64% of customers choose to buy from socially responsible brands. Care for customers’ needs now and it’s likely to leave lasting rapport and create loyal lasting customer relationships.
Now that you’ve taken steps to stabilise your business, you must prepare for life after the pandemic to capitalise on the economy’s bounce-back while most of your competitors are retrenching. Too many companies miss this opportunity because they begin to cut costs too late and hence ill-prepared for recovery.
Evaluate if there are any benefits to remote working for your business. If it’s the first time your employees have worked from home and it’s gone well, maybe continue doing so to save on an office lease. This could be a significant saving once you add up all the savings - i.e. Business Rates, Electricity, Broadband, cleaning, security, etc. A robust business VoIP phone system can provide all the conveniences of working remotely.
Invest in upgrading your teams by finding great talent. There’s no better time to find great talent from companies that have retrenched. This is ideal in particular for strengthening your marketing and sales departments to give your company a much-needed bounce back and strengthen your funnel. This will be essential in pushing more sales and scaling the business.
Revamp your product line or marketing campaign.
Consumers spend differently in a recession, they want to get more out of their purchase. Invest in your core product or service to drive revenue and highlight these in new marketing campaigns. Take lessons from this downturn and make sure that consumers always find value in your products. This can also be extended to introducing new products down the line after building a steady stream of income once again.
Win the competition's customers
Finally, small businesses must continue to grow and expand their customer/client base. This stems from targeting and drawing customers away from your competition. Offer something more or different than what other providers or services are doing. Research competition and see what you can do to entice these customers. Deploy surveys and ask consumers what they like and don’t like about these companies. After, tweak your own business practices accordingly, this can be discounts, better products and solving customer pain-points.
Invest and grow with VoIP to increase sales and transform communications using call management features.
Ultimately, how your small business comes out of this pandemic is down to how quickly you are able to stabilise your business and start preparing for the post-pandemic recovery. Business leaders must be decisive, take quick action and be ready to invest in growth at a time when most companies are still pulling back.
We followed these actionable steps at bOnline and we achieved our best financial performance to date. We are now investing heavily in a new platform, new marketing channels and expanding our sales teams in preparation for the recovery.