Business Survival Part 3 "What should I do with my business in this economy?"

What should I do with my business in this economy?

Today evidence of small business failure is becoming as obvious as a neighborhood littered with foreclosures. Buildings, which once housed a thriving business full of life and activity, are now dark. Cash is getting tighter and business owners have to make critical decisions for significant expense and personnel reduction just to stay alive. Many businesses are budgeting negative growth and negative net income for 2009 and praying that the bank does not call the note.

As the CEO of a business coaching franchise, I often get asked the question from both financially stressed and financially sound businesses owners “What should I do with my business in this economy?” Other questions I get asked are: How long will this last? Are we at the bottom yet? When will we begin to see an up-turn?

The reality is, no one really knows. I have read about, listened to and have spoken personally with leading regional economists and no one can definitively answer. What these business owners should be asking is “What should I do in this rapidly shifting economy?”

The answer is; Three things.
· One, keep every customer you have. Ramp up your customer retention efforts and make every effort to keep your existing customers.
· Two, grab market share. Either through increased new sales, marketing and advertising efforts or through acquisition, now is the time to implement the guerilla marketing techniques and increase your market share.
· Three, manage by the bottom line. Break even is the new “BLACK” for many companies and to do so we must make the tough P&L decisions every day.

But how do I achieve this you say? Well, here are a couple of examples of strategies that have helped business owners during this challenging time.

1. With every cost reduction initiative, there must be an even greater NEW growth initiative.

I led a coaching session with a business owner who was reviewing his P&L strategies for labor and other expense reductions planned for the upcoming months. While reducing expenses may be necessary, I challenged the CEO to implement one key business growth initiative that was equal or greater to each expense reduction initiative planned. For example: If you lay off an employee (expense reduction), commit to launch an aggressive “marketing to customers” campaign. Have everyone in the company call three to five active and/or past customers every day in an effort to strengthen client relationships and to create opportunities for sales.

Other examples include:
· If you are going to cut your facilities maintenance expense in half (expense reduction), form two strategic alliance relationships with noncompeting businesses who are willing to launch a co-marketing campaign.
· If you are going to reduce your sales personnel (which may be a mistake), make a commitment to attend five networking events per month in order to generate new sales opportunities.
· If you are going to drastically reduce your direct mailing or advertising budgets, make a commitment to launch an aggressive e-marketing and web Search Engine Optimization campaign.

In short, “you cannot cut your way out of a problem.” With every cost reduction initiative, there must be an even greater NEW growth initiative.


2. Increase market share through acquisition

In coaching with another business owner, who happens to be in a very strong financial position today, we discussed creating an aggressive acquisition campaign. In every industry there are businesses owners who are on the brink of failure and would welcome an acquisition interest letter from a stable competitor. Just as the savvy liquid investor is grabbing real estate at drastically reduced prices, the savvy liquid entrepreneur is grabbing market share via acquisition at the same rate.

You can’t cut your way out of a problem. If you’re in a strong position, now is the time to act. Those companies who strategically and deliberately survive in today’s economy will thrive when the economy turns. Just don’t ask me when that day will come.