Surviving the Credit Crunch
The current bear market is taking its toll on all businesses,customer money is short, supplier costs are rising which is in turn reducing profit and with this current economic downturn predicted to last a further 18 months at least, it’s a worrying time for many businesses. In order to stay profitable, and therefore have the best chance of weathering the storm, businesses need to boost sales and cut costs wherever possible.
Keep close to your clients
You need to look at possible avenues to explore for ‘quick wins’. It’s a time to go through your client list and look at upselling opportunities. Could you get any more value from the clients you currently have on your books? It’s a lot easier to market to clients already purchasing from you than it is to take the time and expense to try and win new accounts. Call these clients, check they are happy with their current service, find relevant products or services for them and discuss the potential benefits with them. In times of economic hardship you may find your competitors will be doing more to win over your clients so it’s important you stay in touch and ensure you’re doing all you can to keep them happy.
Pricing
It’s tempting in these markets to slash prices to try and bring more business in, but this may not be the best solution. Consider first if the product or service you are selling represents good value for money, look at your competitors, are they dropping prices? Will the reduced price bring in enough extra business to cover the lost revenue? For many businesses a few pounds off may not be enough to tempt them away to a new supplier, if they’re happy with the service they are currently receiving. It’s smarter to concentrate on your unique selling points (USPs), explain what makes you better than your competitors. Win and retain clients on this basis, rather than making panic cuts which will leave you in the difficult position of having to raise prices once the market picks up.
Resources
It’s important that your workforce is being employed efficiently to make the most of their time. Be sure that your employees are adding the most value they can, for example, why waste a sales person’s time on administrational tasks, or generating their own sales leads when they could be out there selling? Could you employ someone part time to take away this responsibility and free up the sales person to sell more? Would the sales person then bring in enough to cover that salary and more? You could look at buying in leads or outsourcing lead generation, this is usually the quickest way to get new sales in. There’s a high potential in this current market with the cost of living rising all the time that employees wage demands will increase, so it’s important you manage the balance of remuneration package. It needs to be high enough to acquire and retain the best staff for your organization, whilst keeping this cost as low as possible. Often employees place a high value on the quality of their working life, meaning retaining staff doesn’t always have to be about money, other incentives and benefits can be as,or even more effective.
Call your suppliers, find out if they can sharpen their prices at all, or offer you anything useful above the usual service. There can often be a large variation in prices between companies on products such as stationery and office equipment. However keep in mind the fact that there is no point negotiating a much cheaper price, or changing suppliers if this change will negatively affect the way your business runs in any way.
Marketing
Often the first budget to get cut when a company is looking to reduce costs is the Marketing budget, however this can often prove to be completely counterproductive. If the clients you already have on your books are tightening up on spending and you’re not managing to bring in any new business, profitability will drop and you will soon begin to struggle. Consider the fact that if your competitors are adopting a similar stance this could potentially leave you with a captive audience, if you continue to spend on Marketing as before, or even up your spend, yours could be the only message out there. This could potentially be the best time to present your offering to your prospects as you have the ability to highlight what you can bring to them, in terms of USPs and value added services, over your competitors and their current suppliers. It’s these times especially when you need to be looking for the best value for your money and the same is true of your clients and prospects.
Outsourcing
This is the ideal time to outsource activities such as Recruitment, Training and Marketing. These tasks can be better handled by professionals with expertise in their field, allowing you to concentrate on spending your time where it’s most productive on your core business. There are many benefits to outsourcing, it enables you to apply fixed costs to activities rather than having the costs potentially spiraling out of control due to poor management because of a lack of experience. Hiring and training people to perform new roles within your business can be very expensive, outsourcing these tasks takes the problem out of your hands and ensures you get the best possible return on investment. Outsourcing also means you have a service which is “turn off and on-able” this is most true of marketing activities. When you most need new business you can start a project immediately to get new clients in the door and then when you have enough work to be getting on with, you can simply put the marketing on hold for a while without having to release staff or find something else to occupy their time. Marketing companies also have the ability to make your company appear larger than it is. This has huge benefits in this time of economic uncertainty as it’s a fact that people feel more secure dealing with larger organisations.
If you follow these steps you could potentially not only survive the ‘Credit Crunch’, but grow through it, coming out the other side a stronger more profitable organisation.
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