Turning Around a Struggling Business
Consumer confidence is at an historic low and the financial news seems to get worse by the day. With a new Administration in Washington, there's a lot of uncertainty about exactly how and when promised changes will take place.
But even if your business is struggling, you can take steps to turn it around and be poised to grow this year, says Paul Rauseo, managing director at the George S. May International, a Chicago consulting firm. Practical tips from Rauseo and other small business experts follow.
1. Keep Selling. Purchasing agents are reporting sharp drops in weekly sales calls across many industries, Rauseo says. That means less competition for your products or services. "It's easier to get a commission-only sales force going today" with so many individuals looking for jobs, he says. "Give your salespeople the tools they need and have them redouble their efforts."
2. Evaluate Marketing Effectiveness. Don't cut your advertising and marketing budgets, but put tight controls in place that allow you to gauge the response and adjust your expenditures on a weekly basis, Rauseo recommends. If something's not working, make changes sooner rather than later.
3. Anticipate Opportunities. In whatever form it takes, there will likely be a large influx of government money this year as part of President Obama's economic stimulus plan. "With that much money flooding into the economy, of course there's going to be an effect," Rauseo says. "Prepare a strategy for tapping into it and you can take advantage of it."
4. Create a Rapid Response Team. Set up a recession-busting committee that can anticipate the effects of the downturn and react quickly. "If there's an item on your menu that no one's buying, get rid of it. If you've got trucks returning from runs empty, schedule a third stop where they can pick up goods and eliminate empty miles," Rauseo says.
5. Get Creative. Brainstorm innovative solutions to your business problems. "We had a client making hinges for the auto industry and they were going down the tubes. Now they're making hinges for caskets and they're recovering," Rauseo says. "Stop panicking and get on with business."
6. Minimize Layoffs. You may have no option but to cut some staff. However, do your best not to make sweeping cuts that will cause morale and productivity to drop among your remaining employees and drive other workers out the door, says Jason Zickerman, president and CEO of The Alternative Board, a Denver-based small business networking organization. Another negative—customers who hear that you've downsized may lose confidence in your company's ability to handle a new order.
7. Look for Alternatives. Explain to your employees that you are looking for ways to cut costs and avoid layoffs. Ask them to come up with suggestions and reward the idea that saves the most money, Zickerman advises. If your solution includes pay cuts, shorter workweeks, or giving employees extra responsibilities, they will react more favorably if they know you're doing everything you can to keep them on the job. Tell them that austerity measures will be lifted as soon as the company recovers sufficiently.
8. Touch Base with Customers. Provide clients with reports showing the work you've done for them and the results you've achieved, says Neile King, vice-president of Durham (N.C.)-based Smart Online[SOLN], which develops small business software. "If most of your dealings are done over the phone, make a point of holding face-to-face meetings periodically. Meeting in person says you are interested and gives you an opportunity to literally see things that you can help address," he notes.
9. Ask for Feedback. Don't assume your customers are satisfied. Ask how you're doing and take their suggestions seriously. Don't use jargon or acronyms when talking to your clients unless you know they're familiar with them. Customers feel more like you're a part of their team if you use terms they readily understand, King says.
10. Take Complaints Seriously. If clients ask for changes, investigate what it is they want and then accommodate them if at all possible. (If not, explain why not.) "As proud as you may be about your product or service, remember it's being made for the customer," King says. If it's not working for them, it's not working. Be flexible and work with your customers, and they'll want to work with you.
11. Resist Negativity. "All these crises are creating an opportunity we've never seen before in business," Rauseo says: "It forces small business management to be more professional and more mature than it's ever been. It's time to seize the moment."