10 Tips to Survive the Turning Economy

Whether the Global Economic Crisis is over yet or not is still debatable but its effects on the business world can be viewed as both positive and negative.

 Before the economic crisis, there were millions of new businesses springing up because so many people could make money. Existing businesses were riding the cream and cashing in big time. Business was plush; people were buying like crazy because they could.

This provided a false illusion about how easy it is to actually run and survive in business. Mistakes, riding cashflow, bad customer service and a lack of the essential business skills were all easily covered up by the wave of people consuming. Business was great therefore many believed they must be running a successful business and were doing the right things.

However, when the hammer of doom hit and people suddenly had their spending spree clamped, those business models flourishing under this false illusion suddenly collapsed.

When crunch time came, those businesses built on straw foundations collapsed. What happened was the economic global crisis provided a large filter for all businesses. Those that had no substance, no proper operating models, large overheads and lots of extra fat, bad customer service and no sustainability strategies got crushed.  So, for these businesses it was really bad news.

However, what came out of this global crisis filter system were fewer, stronger businesses. Those that had substance, proper business pillars and had built in survival strategies came through, larger, stronger and with less competition. So for these businesses, it was great news for the future.

So how do you ensure your business will survive another global economic crisis? Here are 10 tips to help you ..

Tip#1  Have Economic Crisis Overheads. Structure your overheads as though you were always in a crisis. When business starts to become easier, there is a natural complacency for overheads to pick up weight. Trimmer, fitter athletes win consistently. Make sure you run a healthy, lean machine.

Tip#2  Review your Processes. This was a major problem pre economic crisis for many businesses. Business was so good, it did not matter if customers got upset or had issues. There was always a queue behind them and companies just seemed to reach their numbers. But when the river runs dry, every drop suddenly becomes precious. Review your processes. Are you customers experiencing exceptional service from you? Do you really care? Are your company processes or policies getting in the way of great customers service?

Tip#3  Be Accessible.  What defines excellent customer service? Accessibility to someone who can provide a solution, not someone who can just listen. There is nothing more infuriating (and that fuels a burning desire to find a competitor) than when you vent your frustrations to someone who then has to refer it on for resolution. Provide an instant solution. If you want to separate yourself from your competition, structure a customer care conduit that allows instant access and ability to provide solutions to your customer problems.

Tip#4 Invest in Development. What happens to old buildings that are not constantly renovated? They become worthless over time. They get knocked down and replaced by modern up to date, more valuable structures. Experts are the world’s best learners. They never stop learning and developing themselves. As soon as they stop acquiring knowledge, they lose their edge and someone else overtakes them. So if you don’t want to be knocked down and be replaced, keep developing and continuously upgrade your knowledge. This way, you will remain at the edge of your game.

Tip#5   Spend your time on Growth. As a business owner you should be spending 85% of your time and energy on growing your business. Sales, marketing, growth strategies, joint ventures, exploring opportunities. These are the things that should take up 85% of your day. If you have cashflow issues, low sales or slow growth, I can almost guarantee you are spending most of your time on non revenue generating tasks.

Tip#6  Understand the value of your clients.  Do you understand the difference between the value of a transaction occurring at the moment versus the life value of that customer? An easier way to ask this is “Do you know what the value of your customers are?” 

If you don’t know and you own the company, how will your staff or managers know?” They won’t, and this can be very costly. So many businesses get this wrong. They will fight with their customers to preserve the profit of the transaction and in doing so, lose the life value of that customer.

Tip#7   Build a relationship with your database.  Is your database a list of names with zero value or is it a healthy, living entity that you consistently communicate with and market to? Your database has zero value unless you have an effective communication strategy that is designed to strengthen relationships with every name on the list. No relationship =  No value!   

Tip#8   Strive for consistency. If you customers enjoy an experience with you, they will come back to relive the experience. How often to do you go to a restaurant or get your car fixed and you have an amazing experience? However, the same experience that motivated you to return is not relived the next time around? I would say more often than not. That is because so many businesses have no systems in place to provide a consistent customer experience. So if you want to keep customers coming back, structure your business to be consistently good.

Tip#9  Spend with Cash, not Hope.  One of the greatest reasons for businesses failings is spending before the cash is in the bank.  The big deal is done, all the ducks seem lined up, we have shook on the deal....lets buy that machinery we need, lets invest in the resource to cater for the expansion....and then the wheels fall off and the deal never happens. Sound familiar? Don’t spend your cash on hope, spend it once you actually have the cash in hand.

Tip#10  Use a Sounding Board. Why do safe motorist have wide angle side mirrors? To help highlight blind spots. 

One of the biggest expenses and causes of failure in business is making bad decisions. Bad decisions are made because blind spots hide the real danger. How do you prevent this? Get another perceptive, get another opinion. Get a wide angle mirror for your business. A sounding board made up of other experienced business owners can shed light and opinions on your decisions and can prevent you a lot of expense and pain.