People are cutting back on expenses, doing more things themselves that they used to “outsource” to small businesses and slowing down their payments for your products and services. Credit card bills are getting put off.
In an economy like this one, survival is all about cash flow. Keep a positive cash flow at all times, and you will make it through the tough years to come. While cutting costs will help you maintain a positive cash flow, at least for a while, sooner or later you run out of things to cut. The tougher, but longer term, way to maintain your cash flow is to do everything you can (short of selling below cost) to keep business flowing in the door.
I recently conducted a very informal (and very unscientific) poll of some local small businesses to find out what they were doing to cope with the current economy. Here are some of the survival strategies they’ve come up with — not only do they seem to be working, but also some of these businesses are actually growing!
Strategy No. 1: Don’t Be Too Picky About the Work You Take On.
A couple of weeks ago, I had a plumber over to my house to fix a leaking faucet in one of our bathtubs, and I asked him how his business was doing. “Well, it’s tough, but we’re managing,” he said. “There’s no construction work being done right now, so we’re not doing any big jobs. But there is lots of little, ’emergency type’ jobs out there, and we’re doing OK with those — you are my fifth call today.” You can make money doing a few big jobs. You can also make money-doing lots of little ones. Since the little jobs require less money, people are more likely to pay to have them done, especially if they’re “emergencies.”
Strategy No. 2: Find the “Dirty Jobs” People Are Still Willing to Pay For.
I’ve always said that succeeding in a service business is a two-step process: (1) find a dirty job that no one likes to do but has to get done; and (2) charge lots of money for doing it. The same process applies in difficult times, except that if the job isn’t really all that dirty (mowing the lawn, for example), people will start doing it themselves. You’ve got to find the really filthy jobs people will still pay others to do for them.
Here are some local businesses that are not only surviving but also growing right now, to give you some ideas:
— “pooper scooper” services that come to your home and clean up after your large, vicious dog;
— “water damage” services that clean up your basement after you’ve had a flood;
— Tax return preparation services;
— Home health care aides for elderly people; and
— Automobile service stations that specialize in one or two popular make or models (so as to compete more effectively with the auto dealerships’ service departments).
Strategy No. 3: Convert Your “Luxury” Products Into Affordable “Splurges.”
A gourmet restaurant saw a sudden downturn in business earlier this year. Rather than shut down, they downscaled their entire menu, losing their $50 entrees and offering “bistro fare” at $15 to $20, along with an expanded wine-by-the-glass selection and “appetizer size” portions of their traditional gourmet fare. Most of the lost business came back, and they are picking up new customers who wouldn’t have considered eating there under their old business model.
One of the greatest ways to keep your customers in tough times is to convince them they do not have to give up entirely the luxuries they love as long as they “control their portions,” and that your business will help them do just that.
By: Mark Borkowski is president of Toronto based Mercantile Mergers & Acquisitions Corp; Mercantile specializes in the sale of privately owned companies. He can be contacted at (416) 368-8466 ext, 232 or email@example.com or www.mercantilemergersacquisitions.com