4 Interesting Ways To Improve Your Business In A Down Economy
Times have been really hard for both small and big businesses. Hard economic times affect customer demand, which affects sales. And the adverse foreign exchange situation has skyrocketed the cost of doing business.
But even in these hard times, it’s very easy for entrepreneurs to get caught up with blaming external factors for our business woes.
We say things like:
“The government is not creating an enabling environment for small businesses.”
“I don’t have access to credit.”,
“My business is not located in a prime spot.”
And if you’re in my home country – Tanzania — you might hear this “Vyuma vimekaza (not easy to get money)" ,too much taxes”.
Most entrepreneurs believe that their business fortunes will turn around if all these “external” factors could work in their favor.
The list of could haves, should haves and would haves are endless. And if you’re doing business in Africa, it’s very easy to come up with perfectly valid excuses to explain why your business is in a rut.
Here’s the thing though. There will always be external factors outside your control that will affect your business. But you know what, there are so many things within your control that can give your business a greater boost than you could imagine.
Areas such as process development, service delivery improvement, and cash-flow management are aspects of your business that, if given the appropriate focus, could propel your business to its next level, regardless of the state of your business environment or your country’s economy.
In this article, I’m going to touch on some areas within your business that, if given the appropriate attention, can unlock the latent potential of your business.
The points are outlined in no particular order.
The cheapest form of marketing any business can get is a solid referral from a loyal or satisfied customer.
So I ask you this question: How are you treating your existing customers?
What kind of products do you sell to them? Do you always leave them with products or services that make them feel like they got value for their money? Do you leave an indelible impression in their minds after they have patronized your business?
Do your staff understand how important your customers are to your business? Is there a minimum quality standard of service delivery that your employees are required to provide to your customers?
Have you clearly defined how you want your customers to feel after patronizing your business?
It’s very easy to forget that to achieve customer satisfaction, retention and loyalty, you have to provide exceptional service delivery.
And guess what? This one is all on you.
You can blame the economy all you want but it’s within “your” power to improve your value proposition to your customers.
It is within “your” control to determine if your customers are satisfied with your product or services. It is within “your” control to determine if your customer will pass up other similar businesses just to patronize your business.
You might ask how you can make them do that. The simple answer is how you treat them.
Your customers are people. And most people naturally gravitate towards people and organisations who make them feel special and valued. Customers are no different.
Most customers would pay a premium if only you treated them right, took care of them and provided quality products and services all the time.
I say “all the time” because the expectation has to be consistently met. You can’t treat them well today and treat them badly tomorrow. Consistency is key! You create an expectation in their minds about your service and you meet it or better still surpass it every time they patronize your business.
We can go on and on with this point but by now I’m sure you already get the gist.
Get creative with this process. There are a lot of things you can do to dramatically improve the customer experience in your business.
Look back and try to remember why you started the business in the first place. Think back on what you wanted to create when you started the business, and then translate that into the experience you want for your customers.
A little bit of standardization of your operations will be required to be able to achieve this (this is a whole topic of another article). Suffice to say that standardization increases efficiency, and efficiency improves quality, which is all that we’ve been talking about.
All ships rise in a high tide. But in a down economy, only those businesses with loyal customers have a good chance of staying afloat.
A thorough understanding of your customers could be the difference between night and day in your business. Why you might ask? Because it helps you channel your efforts appropriately and ensure that you are neither running in circles nor throwing empty punches into the air.
In order to understand your customers, you need to apply yourself a lot more than you might be used to. You might need to carry out surveys from your target audience to understand what makes them tick and obtain information to tailor your product/service offerings appropriately.
You may need to use short questionnaires to obtain information from customers that come to your business premises.
In order to get people to participate, you have to get creative about it. You might need to provide incentives to the people providing the information e.g providing discounts to customers that fill out the questionnaires provided.
The truth is, if done properly, the information obtained through this process can translate into increased profitability for you and your business.
Cash-flow is the life-blood of any business.Life is meaningless if you dont keep scores into records.
And during hard economic times when cash is tight, only those who know the pulse and blood level of their business can adapt and survive.
Without keeping proper financial records, how will you know if your business has enough blood to survive? And how will you recognize the point where you need to get more blood for your business, like raising external capital for example.
Business is mostly a numbers game and your financial records are the lenses through which you see if those numbers are adding up, or looking down. Your financial records help you understand your profitability, your investments and your financing requirements.
Apart from cashflow, profitability is another important metric you need to keep your eyes on. And the truth is, you really can’t tell if you’re making a profit or less unless you’ve been keeping records of your sales and expenses.
You need to have a system in place for capturing these records. It could be a record book, a Microsoft Excel sheet, or a piece of software. What you use to keep records really depends on the size and scale of your business.
You want to have records where transactions are kept when they immediately occur. In accounting these are called “books of original entry.”
It’s where you record your sales when they occur, your purchases when you stock up, and track of how inventory moves in and out of your business.
It’s where you record the amount of capital when you put in extra capital into your business, and a place where you monitor loans and overdrafts your business might have obtained.
Recording your financial information is only the first step. You need to analyse the information. That’s how you get insight. And insight is the thing that gives you the advantage to make effective decisions about your business.
What is your profit margin this year, compared to last year?
Which of your costs and expenses have risen the most over the last 12 months, or 3 years?
How long does your stock or inventory last before they need to be replaced? Is the time (cycle) getting longer or shorter? If the cycle is getting longer then you may be tying down too much cash in stock.
And in a down economy, cash in hand is key!
Do you now see the power of insight you can get from analyzing your financial records?
It isn’t every time that you need cash that you should borrow or raise capital. And that’s because one of the easiest ways of having more cash flow in your business is managing costs appropriately.
Another area proper accounting records helps is with your investment decisions. With the picture your numbers provide you are able to determine the best time to either purchase new equipment or expand your business.
Your numbers will help you determine if your profits can cover the repayment plan when you are funding through borrowings. If you are funding through your profits you will be able to determine whether you will be cash strapped once you start ploughing profits into your acquisition or expansion.
The third critical area you are going to need financial information to decide is in your financing decisions to raise capital for your business.
As I said, it isn’t every time you need capital that you necessarily need to go outside to get it. But if you need to get financing from investors, creditors or financial institutions, the insight from your financial records will show you how much capital you really need, the interest rate you can afford, and the terms your business can cope with.
All financial decisions should be taken based on numbers and not on intuition. A little bit of forecasting is welcome but it should be based on the trends that your financial information have shown you.
Tools like QuickBooks, Xero, Zoho Books, FreshBooks, and Wave Accounting are some good examples of affordable and easy-to-use accounting tools that can help reduce the stress of recording, tracking and analyzing financial information.
When people hear of a business, product or service these days, they first go online to Google it. And if you’re not online in any way – social media, webpage, forum discussions etc. – then you’ve ruined that first impression.
Social media accounts, handles and pages are free. It will take less than 2 minutes to get them.
I remember an incident when someone was raving about ice-cream he bought from one of the Nigerian store chains. That particular post generated more than a 100 retweets because the guy kept on raving about the taste of the ice-cream and its affordability when compared to the ones sold in other ice-cream parlors.
I’m sure that tweet gained that business some new customers.
But I don’t think you have earned that right unless you’ve done your homework in the 4 areas explored in this article. These are really important things you can do within your business to move the needle.
The economy will do whatever it wants to do.
The foreign exchange rate and interest rates will dance and twirl as much as they want to.
Consumers will cut down their spending and tighten their belts as much as they want to.
You can’t do anything about these things.
But what you can do is to focus on the things you can control and start making improvements.
Complaints and blame are for the average Joe.
Your job is to improvise and adapt to the times.
You’re an entrepreneur.
Do your job!
But even in these hard times, it’s very easy for entrepreneurs to get caught up with blaming external factors for our business woes.
We say things like:
“The government is not creating an enabling environment for small businesses.”
“I don’t have access to credit.”,
“My business is not located in a prime spot.”
And if you’re in my home country – Tanzania — you might hear this “Vyuma vimekaza (not easy to get money)" ,too much taxes”.
Most entrepreneurs believe that their business fortunes will turn around if all these “external” factors could work in their favor.
The list of could haves, should haves and would haves are endless. And if you’re doing business in Africa, it’s very easy to come up with perfectly valid excuses to explain why your business is in a rut.
Here’s the thing though. There will always be external factors outside your control that will affect your business. But you know what, there are so many things within your control that can give your business a greater boost than you could imagine.
Areas such as process development, service delivery improvement, and cash-flow management are aspects of your business that, if given the appropriate focus, could propel your business to its next level, regardless of the state of your business environment or your country’s economy.
In this article, I’m going to touch on some areas within your business that, if given the appropriate attention, can unlock the latent potential of your business.
The points are outlined in no particular order.
1) If you’re not nice, they’ll go somewhere else.
The cheapest form of marketing any business can get is a solid referral from a loyal or satisfied customer.
So I ask you this question: How are you treating your existing customers?
What kind of products do you sell to them? Do you always leave them with products or services that make them feel like they got value for their money? Do you leave an indelible impression in their minds after they have patronized your business?
Do your staff understand how important your customers are to your business? Is there a minimum quality standard of service delivery that your employees are required to provide to your customers?
Have you clearly defined how you want your customers to feel after patronizing your business?
It’s very easy to forget that to achieve customer satisfaction, retention and loyalty, you have to provide exceptional service delivery.
And guess what? This one is all on you.
You can blame the economy all you want but it’s within “your” power to improve your value proposition to your customers.
It is within “your” control to determine if your customers are satisfied with your product or services. It is within “your” control to determine if your customer will pass up other similar businesses just to patronize your business.
You might ask how you can make them do that. The simple answer is how you treat them.
Your customers are people. And most people naturally gravitate towards people and organisations who make them feel special and valued. Customers are no different.
Most customers would pay a premium if only you treated them right, took care of them and provided quality products and services all the time.
I say “all the time” because the expectation has to be consistently met. You can’t treat them well today and treat them badly tomorrow. Consistency is key! You create an expectation in their minds about your service and you meet it or better still surpass it every time they patronize your business.
We can go on and on with this point but by now I’m sure you already get the gist.
Get creative with this process. There are a lot of things you can do to dramatically improve the customer experience in your business.
Look back and try to remember why you started the business in the first place. Think back on what you wanted to create when you started the business, and then translate that into the experience you want for your customers.
A little bit of standardization of your operations will be required to be able to achieve this (this is a whole topic of another article). Suffice to say that standardization increases efficiency, and efficiency improves quality, which is all that we’ve been talking about.
All ships rise in a high tide. But in a down economy, only those businesses with loyal customers have a good chance of staying afloat.
2) Have you been flying blind?
How well do you really know your customers?
Some business owners still think that “everyone is my customer.”
No matter what you sell, everybody cannot be your customer. And the sooner you clearly define and discover your ideal and target customers, the better for your business.
So, who makes up 70-80 percent of your customers?
Are they people from a particular location, age group, gender, occupation, ethnicity, income level, education level, or what exactly?
Are the bulk of your customers salary earners, business people, house-wives, petty traders, school children, small businesses, or college students? Do they belong to the upper class, middle class or lower class?
Consumers behave differently during hard economic times, depending on their need or want for your product or service. And if you don’t know who the bulk of your customers are, it’s almost impossible to get understand how they would react during an economic recession.
If you know your customers, you will learn how they think and behave. And if you know how they think and behave, you can adapt your products, services, prices, and offers to suit their budget during hard economic times.
A thorough understanding of your customers could be the difference between night and day in your business. Why you might ask? Because it helps you channel your efforts appropriately and ensure that you are neither running in circles nor throwing empty punches into the air.
In order to understand your customers, you need to apply yourself a lot more than you might be used to. You might need to carry out surveys from your target audience to understand what makes them tick and obtain information to tailor your product/service offerings appropriately.
You may need to use short questionnaires to obtain information from customers that come to your business premises.
In order to get people to participate, you have to get creative about it. You might need to provide incentives to the people providing the information e.g providing discounts to customers that fill out the questionnaires provided.
The truth is, if done properly, the information obtained through this process can translate into increased profitability for you and your business.
3) Have you been keeping score?
Cash-flow is the life-blood of any business.Life is meaningless if you dont keep scores into records.
And during hard economic times when cash is tight, only those who know the pulse and blood level of their business can adapt and survive.
Without keeping proper financial records, how will you know if your business has enough blood to survive? And how will you recognize the point where you need to get more blood for your business, like raising external capital for example.
Business is mostly a numbers game and your financial records are the lenses through which you see if those numbers are adding up, or looking down. Your financial records help you understand your profitability, your investments and your financing requirements.
Apart from cashflow, profitability is another important metric you need to keep your eyes on. And the truth is, you really can’t tell if you’re making a profit or less unless you’ve been keeping records of your sales and expenses.
You need to have a system in place for capturing these records. It could be a record book, a Microsoft Excel sheet, or a piece of software. What you use to keep records really depends on the size and scale of your business.
You want to have records where transactions are kept when they immediately occur. In accounting these are called “books of original entry.”
It’s where you record your sales when they occur, your purchases when you stock up, and track of how inventory moves in and out of your business.
It’s where you record the amount of capital when you put in extra capital into your business, and a place where you monitor loans and overdrafts your business might have obtained.
Recording your financial information is only the first step. You need to analyse the information. That’s how you get insight. And insight is the thing that gives you the advantage to make effective decisions about your business.
What is your profit margin this year, compared to last year?
Which of your costs and expenses have risen the most over the last 12 months, or 3 years?
How long does your stock or inventory last before they need to be replaced? Is the time (cycle) getting longer or shorter? If the cycle is getting longer then you may be tying down too much cash in stock.
And in a down economy, cash in hand is key!
Do you now see the power of insight you can get from analyzing your financial records?
It isn’t every time that you need cash that you should borrow or raise capital. And that’s because one of the easiest ways of having more cash flow in your business is managing costs appropriately.
Another area proper accounting records helps is with your investment decisions. With the picture your numbers provide you are able to determine the best time to either purchase new equipment or expand your business.
Your numbers will help you determine if your profits can cover the repayment plan when you are funding through borrowings. If you are funding through your profits you will be able to determine whether you will be cash strapped once you start ploughing profits into your acquisition or expansion.
The third critical area you are going to need financial information to decide is in your financing decisions to raise capital for your business.
As I said, it isn’t every time you need capital that you necessarily need to go outside to get it. But if you need to get financing from investors, creditors or financial institutions, the insight from your financial records will show you how much capital you really need, the interest rate you can afford, and the terms your business can cope with.
All financial decisions should be taken based on numbers and not on intuition. A little bit of forecasting is welcome but it should be based on the trends that your financial information have shown you.
Tools like QuickBooks, Xero, Zoho Books, FreshBooks, and Wave Accounting are some good examples of affordable and easy-to-use accounting tools that can help reduce the stress of recording, tracking and analyzing financial information.
4) How will they know if you don’t tell them
You just have to improve your marketing efforts.
But first, I highly recommend that you go ahead to perform the earlier mentioned steps before really going all out to increase your marketing efforts.
I say so because if you have performed all the earlier mentioned steps appropriately, you will be able to retain both the customers you already have and the new ones that are coming in.
One of the major problems a lot of businesses face is customer retention. That is, they spend time, energy and money on attracting customers only to lose them to the competition after the first or second transaction.
So, how do you retain your customers? Follow the first and second rules in this article.
One of the best ways to increase your marketing efforts is by starting from within. Before you start spending any money on glitzy marketing, start by using the bird you have in hand to get the ones in the bush. J
Find creative ways to reward your loyal customers. Find ways to reward those who have been with you the longest. Give them something to inspire them to rave about you to their friends, family, neighbours and colleagues.
Your existing customers are your best marketers. They’ve known you the longest and if you ask, most of them will gladly promote your business for free in person, or online.
Another option which is common however not every business owner really takes advantage of is creating an online presence for your business. No matter what you sell these days, it’s almost considered an “abomination” if your business cannot be found online.
When people hear of a business, product or service these days, they first go online to Google it. And if you’re not online in any way – social media, webpage, forum discussions etc. – then you’ve ruined that first impression.
Social media accounts, handles and pages are free. It will take less than 2 minutes to get them.
I remember an incident when someone was raving about ice-cream he bought from one of the Nigerian store chains. That particular post generated more than a 100 retweets because the guy kept on raving about the taste of the ice-cream and its affordability when compared to the ones sold in other ice-cream parlors.
I’m sure that tweet gained that business some new customers.
So, are you ready to thrive in a down economy?
It’s easy to whine, complain and blame the economy, the government and the hard times.But I don’t think you have earned that right unless you’ve done your homework in the 4 areas explored in this article. These are really important things you can do within your business to move the needle.
The economy will do whatever it wants to do.
The foreign exchange rate and interest rates will dance and twirl as much as they want to.
Consumers will cut down their spending and tighten their belts as much as they want to.
You can’t do anything about these things.
But what you can do is to focus on the things you can control and start making improvements.
Complaints and blame are for the average Joe.
Your job is to improvise and adapt to the times.
You’re an entrepreneur.
Do your job!
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