10 Small Business Tips for Economic Uncertainty
Business uncertainty is at a 42-year high. According to the National Federation for Independent Business’s December 2016 survey, the political climate got us there.
Political and economic uncertainty is scary for small business owners who don’t have the protection of deep pockets. You don’t have to respond by cutting corners on quality and growth.
Economic uncertainty provides small opportunities for growth you can take advantage of. What can you do to strengthen your business in an uncertain economy?
Let’s find out with these 10 tips.
1. Improve Customer Service
It’s six to seven times more expensive to get new customers than to keep current ones, according to customer strategy specialists. When profits are uncertain, it’s vital for cash flow to keep the customers you have.
Customer service is an easy department for businesses to cut down during economic uncertainty. Set your business above the rest by improving your customer service.
Ensure your customer service representatives have the tools to provide outstanding service.
Those specialists also found that 66% of people leave because of a bad customer service experience. If your customer service is superb, you’ll retain two-thirds of the customers you would otherwise lose.
65% of companies can upsell their current customers. Retaining your customers is a much-needed opportunity for increased revenue in an uncertain market.
Getting New Customers
Great customer service also pulls in new customers. 72% of people share a good customer service experience with at least six other people.
Consumers are willing to pay more if they know they’ll get good customer service. A good service reputation translates into a new stream of customers.
2. Social Media Outreach
Your target audience is using social media right now, and it’s an easy way to reach out to them. Online marketing tools, in general, are the cheapest resource for entrepreneurs.
Establish a Presence
Get your business on the major social media outlets. Post regular content to Facebook, Twitter, Instagram, and/or Snapchat, but don’t make it all ads.
Switch up ads with useful content, like tutorials on how to use your product. Starting a company blog is a valuable way to generate content to share on these outlets.
Our Online Presence Analysis helps you see where you stand online, and what you can do to improve.
Join the Conversation
Your customers are voicing their opinions online. Listen to them and engage.
Their comments on your social accounts are valuable. They point to things you’re doing well and areas that you could improve.
If a customer likes your product, reach out and show you appreciate it. For frustrated customers, use your great customer service.
Their online voice is also an invaluable resource for choosing what direction to grow in. They will always state what they want.
During economic uncertainty, customers are less likely to spend money. Building a relationship over social media makes them more likely to spend their money with you.
3. Evaluate Payment Terms
Take a step back to evaluate your current payment terms. Are you spending your money in the most valuable areas right now?
You shouldn’t take on much debt in uncertain climates, but some debt is good.
Are you paying your suppliers up front for your supplies? Negotiating trade credit helps free your capital for more pressing needs.
Trade credit is when a supplier exchanges goods for the promise of payment later. Usually, the payment terms are within a few months.
During economic uncertainty, trade credit frees up the cash you need now.
You use a credit card to free up cash at home. Why not do the same for your business?
What to Watch out For
Pay attention to the terms you’re negotiating. If the payment period is too long, the cost of the credit goes up.
Get a clear picture of the annual percentage rate to know how much you’re paying.
Don’t take on more debt than your current cash flow can handle. In fact, don’t even get close.
Don’t give someone equity in exchange for capital unless you’re prepared to let them have authority over your operations.
4. Separate Personal and Business Credit
Speaking of credit, sharing personal and business credit is dangerous. Establish your business as a separate legal entity and apply for credit cards in its name.
If someone sues your business, your personal assets are at risk when you share credit. Should someone sue you or your business, one side is safe from the other.
Your personal credit score stays safe in your business’s early days with separate credit.
You can keep your personal and business relationships clear. Your new business will take less of a hit on your personal life.
Businesses can access 100 times more credit than personal borrowers. The average business owner needs 10 times more credit than personal borrowers.
You should be careful with the amount of credit you take during economic uncertainty, but you might need it to be available.
Separate credit also makes your taxes way easier. It’s easier to identify which expenses go with your business and your personal life.
5. Search Engine Optimization (SEO)
This blog is the right place for you if you don’t understand SEO. It’s vital to pulling in web traffic, but it doesn’t have to be scary.
We can help you start up your SEO and make sure it’s working. Let’s talk about why SEO is important.
During economic uncertainty, customers don’t have as much money to spend. They’ll spend their limited funds and then stop shopping.
With proper SEO, your business can outrank the others on search engines. Customers will spend their money with you before your competitors.
Activities like starting a blog not only give you online marketing, they beef up your presence on the web.
6. Use Online Directories
Have you ever searched “restaurants near me” and used the results to pick your dinner choice?
According to Google, 72% of people who searched locally visited a store within five miles. The easiest customers to get in that case are the ones who drift within five miles of your business.
Online directories, like Google, are what help people find businesses when they search locally. There are other directories you should register with, too, but Google is the most frequently used.
Contact Google to register your business with them.
Benefits of Registering with Google
When you register with Google, a special box appears on the search results page with your business information. Consumers can see contact information, photographs, reviews, and more at a glance.
Google also adds a link to your website, directing traffic there.
You appear on Google Maps when you register. People can see your business pop up on Google Maps when they get close.
In a time of economic uncertainty, Google offers customers a clean and simple touchpoint to find you.
Don’t be afraid of the word outsourcing. During economic uncertainty, people think outsourcing means that you’re sending your jobs to another country.
Outsourcing can be local. It means that some of your functions aren’t in-house anymore.
Outsourcing reduces costs and frees your capital for use in other areas.
When you hire a contract or freelance employee, they’re already trained. You don’t have to pay an HR employee or other trainers to bring them up to speed.
With less training, you can focus HR where they’re needed for a more efficient department.
Outsourced employees can start new projects immediately. In house, it can take months to prep the necessary resources for a project.
Large outsourcing companies also have much more efficient resources in place due to economies of scale. Outsourcing lets you benefit from those without spending the extra money.
Those efficient resources mean outsourced employees complete projects faster than in house employees.
With jobs handed off to outsourced employees, you can focus on the important stuff.
Outsourced employees assume the risk of their position. If something goes wrong with the project, it’s their problem to handle.
Since they’re experts in that area, they know how to avoid risk in it.
8. Turn Economic Uncertainty into an Opportunity
Economic uncertainty gives you a special opportunity to focus on tightening up your business practices. Instead of freaking out, take that opportunity to focus and create a better business.
Put some special focus on these areas:
Your customer relationships are your most important relationships during economic uncertainty. Use your improved customer service to deepen those relationships.
Offer rewards programs to show your long-term customers that you appreciate them. Incentive programs encourage your customers to spend more money with you, too.
Refine your technique for getting new customers in the door. This is your chance to try more aggressive techniques.
If your sales are declining in this uncertain economic climate, you need to limit your overhead. Treat this as an opportunity to tighten that area of the budget.
Analyze your overhead and determine which areas you can cut. Not only will a tighter budget get you through an uncertain economy, but your revenue will increase when economic conditions improve.
Your fellow businesses face the same economy you do. Some of them might be worse off than you.
Deepen your business relationships. If your customers are businesses, you want to show them that you’re worth a portion of their budget.
You don’t want to get cut out when they’re tightening their own purse strings.
9. Be Prepared
Thinking you’re immune from sales losses is a mistake that will shut you down. During economic uncertainty, you should plan for how you’ll handle losses in your cash flow.
Take a good look at your cash flow and your budget. How much money will you lose if your sales decrease by up to 25%? Adjust your budget for all potential losses.
If you have a customer making up a large portion of your sales, figure out what you would do if they went under.
Having a plan in place for the worst case scenario can prevent your business from closing.
How long would a supplier closing delay your product timeline? Avoid that delay by preparing a list of potential suppliers should yours stop existing.
You should also check into supplier quality during economic uncertainty. If your supplier is cutting corners to save cash, seek out a new one.
10. Expand Cautiously
This almost said “avoid expansion,” but you can grow if you’re smart about it.
Economic uncertainty is a chance to tighten up your operations. Improved efficiency and customer service give you a competitive edge that makes expansion possible.
Keep these things in mind if you want to grow:
Fulfill a Customer Need
If you followed our advice and listened to your customers on social media, you narrowed in on a solid customer need.
Do your research there and otherwise to ensure the need is strong before you grow to fill it. Check in as you’re developing your new product/service.
Is the need still there? How can it inform your development?
Creating a new product/service for your current customers promises the most sales. They already have a buying relationship with you.
Play it safe and only pursue high-profit margins. A high-profit margin gives you more room for error.
If the economy takes another turn as you’re growing, a high-profit margin is the best cushion for new ventures.
Only use your current cash flow to finance new ventures. Economic uncertainty causes interest rates to skyrocket, making financing pricey.
Once you develop an independent business credit history, you might want to take advantage of the additional available credit. But new ventures have no guaranteed return.
If you want to avoid late payment penalties (or worse), rely on what you already have for payment.
Economic uncertainty isn’t necessarily the end of you. There are still opportunities to thrive and grow if you treat it as an opportunity.
Take a hard look at what you can do to tighten up your operations.
Take an inspired look at what you can do to grow them, like online marketing. With that, your business will be fine.
Contact us for help growing your business during this economic uncertainty. We can help you with your online presence and more.
March 17, 2021