How To Survive This New Business Environment

I have been predicting what is now happening for many months, yet I understand the reluctance of small business owners to make major changes before they are certain what is going to happen. Now we are certain. Here are the basic rules of engagement, to successfully recast ourselves ready to do business and succeed in the new economy:

1. Downsize immediately, even if you think you’re fine and immune from the changes. No one will escape unscathed as the market is suffering, unemployment is growing, people with jobs are not buying, real estate is gone and credit is scarce. This will all have a ripple effect throughout the country. Every business should downsize immediately. Even if you’re doing fine, downsize anyway. Believe me, you can deliver the same amount – or more – with fewer people by increasing their productivity. It’s true.

If, like so many businesses, you’re experiencing severe pain from the reduction of revenue, downsize drastically, forcing profitability by reducing your overhead and increasing productivity. It can be done!

2. Install a key indicator system to track your business and have daily, weekly and monthly financial reports issued. You cannot wait another day! Follow profitability per job, per week, per client, per product. Make nothing that does not bring in a profit.

3. Evaluate and eliminate your excessive debt, based on your downsized business model.  Yes, this too can be done through debt workouts. 

4. Flatten your management system and add incentive-based rewards throughout the business.

5. Reduce inventories at any cost – create cash.

6. Reduce overhead wherever possible.

7. Train and cross-train everyone to be better and more skilled.

8. Review your marketing program and reduce the standard approach. Utilize the Internet and focus on existing clients first to get more out of them. Internet marketing will save many companies; it’s called the “Long Tail Theory”. Resist profit-eating sales for no good reason, compete with service, quality and uniqueness. Do this immediately.

9. Emphasize service – it’s the small business strong suit.

10. Reduce your focus to your most profitable products or services, consider joint ventures for growth and development. It’s cheaper, far more effective and faster, too.

11. Expand geographically if possible. Internet marketing can take you anywhere, especially if you can create an expertise, a unique specialty or a special item or service. Find what you do that is unique and do it as large as possible. Of course, you can out compete the big boxes, just be smarter and play your strong suit.

12. Manage effectively: Flat management, incentives, key indicators, financial reports, productivity control, profitable sales and effective marketing. Get smaller first and more profitable then grow slowly and carefully. Get rid of your debt.

13. It’s all about quality – that’s what wins in the long run. Never forsake this principle.

14. Consider vertical growth if you have the right product. If you make it, or are prime, distribute it, wholesale it and retail it as well as going direct to the consumer through the Internet.

If you cannot make the transition, stop and liquidate as soon as you make this determination and milk the company of its cash as you wind down. Eliminate all but the critical employees and wind it down as quickly as possible.

The horse is out of the barn, it’s time to close the door, and quickly. Get better, get smaller, or get out.

There are posts on every one of the subjects mentioned in this blog, read and learn.