Slow times are part of any small business. Fortunately, you can act to help your business survive, and even thrive, through them. Here’s how.
Know That They’re Coming
You can’t predict all the slow times, of course. But if your business has trackable trends, such as a summer sales boom and a typical winter lag, stay aware of it.
Look at the bigger picture, too. Tracking trends in your industry can help you see when cyclical dips and upticks tend to happen.
Keep Tracking Your Cash Flow
Tracking your cash flow is good, but a short-term view of cash flow can get you into trouble. Some business owners will see a high sales month as a sign that it’s a good idea to expand their expenses. Additional expenses may be fine as long as your sales are high, but not once you hit that low season.
To keep your cash flow consistently healthy, don’t add on expenses just because you have one or two good months. Track your cash flow by quarters and seasons, not week or months.
Prioritize All Expenses
Reducing expenses, is, of course, an effective way to help your business handle lean times; but how does one do that, exactly? First, make a list of all your expenses. Then arrange those expenses in tiers, or levels of priority, from 1 to 4:
1. Non-negotiable, uninterruptible expenses (rent and utilities and salaries).
2. Non-negotiable but interruptible expenses (inventory purchases).
3. Negotiable but important (marketing, fleet maintenance).
4. Negotiable, less important (supplies, seasonal decor, bonuses, training).
Don’t Reduce What Makes You Money
The biggest temptation during slow times is to cut out the biggest expenses. Unfortunately, these are usually the expenses that bring you income: salaries, inventory, and marketing.
Cutting the things that bring in funds might seem like an answer; at the offset, you will have greatly reduced expenses. You will also soon have even more severely reduced funds.
You can’t make money if you cut out the expenses required to make produce and sell. Reduce the expenses that don’t relate directly to sales. Maintain the expenses that drive your sales. Generally those are your employees, your products, and your marketing.
Do negotiate with vendors for better terms and deferred payments. If you’ve been a good customer with a good payment history, you should be able to get some wiggle room for a few months.
Do ferret out those overdue accounts and start collecting. Send a friendly but firm reminder to all past-due. Follow up with a friendly call a few days later to confirm that the reminder was received
and the payment has been sent.
Do examine your payment process and look for ways to streamline it. The faster you get paid, the better off your cash flow will be. Be sure your invoicing process happens immediately after the sale. And if you can expand your payment gateway to include more options, do so.
Focus on What You Can Do
Spend time on the projects and improvements that normally get shoved to the back burner.
Focus on improving your business. How about organizing your inventory, improving your accounting system, or streamlining your follow-up process? Improve the parts of your business that help you run more efficiently, improve quality, and keep your finances on track.
Focus on increasing customer loyalty. Write that email newsletter. Read all the customer feedback you can get. Send out a survey. Talk to the customers who are around. Follow up with the customers who aren’t.
Focus on targeted, special promotions. Maximize your social media and content marketing. If you have time (but not money), you can research how to write a blog post, best practices for using Pinterest, and the optimum times to update Facebook. Then you can start implementing what you learn.
Focus on training your employees. Spend the time improving your customer service practices, writing scripts and documents needed for daily use, dealing with common clogs in the workflow, and establishing the policies and procedures that you should already have in place.
Lean times aren’t fun for small business owners, but they can be productive. And if you use them wisely, they can help you to maximize the busy times when they do come around again.