4 tips to survive a weak economy

Like the Auckland weather, it’s often just as difficult to predict the economic climate accurately.  During a recession or economic downturn, disaster can quickly strike small business entrepreneurs who are not prepared to weather the storm.

Fortunately, all is not lost.  You can stay strong in lean times and help is often at hand to help you keep your small business operating during tough times.  Here are 4 tips that I have put together for you to survive a downturn:

Reduce overheads

Cash flow is the number one killer for small businesses and the last few years has seen record numbers of bankruptcies and liquidations.  It’s crucial to manage your cash flows, at all times.

Reducing overheads means finding ways to keep more hard earned cash in your bank account.  Look to trim off some of your administration overheads – can you email quotes, invoices, etc, rather than pay for postage?  Look for opportunities to produce your product or deliver your service more cheaply – do you need to produce as much?  Review your rental and loan agreements – could you renegotiate better terms?

Staying solvent is crucial and trimming the fat on some discretionary overheads will help.  Use your time effectively.

Maintain good lines of credit

I recently wrote about maintaining good business relationships with your Bank Manager.  Banks also have to adapt to market conditions and regularly change strategies to survive.  One way they do this is by reviewing their lending policies and tightening their belts.

Don’t give them any reason to terminate your loan.  Make your repayments on time.  If you have a good track record with your bank, you’ll probably be an ideal customer for them, so you should still be able to open lines of credit with them if you need a “helping-hand”.  Lines of credit can give you a financial buffer to ease cash flow.

Revise your marketing

I’m not suggesting that you slash your marketing budget.  But you should look to make sure that your marketing budget is used wisely and that you’re not wasting money on advertising that doesn’t work for you.

What is your target market?  Sit down and review your current marketing strategies.  Look to tailor your marketing efforts so that your money and effort is allocated towards your preferred customers.  Consider using the internet more – with the correct approach you’ll be able to focus on targeting the right customers for your business.

Seek out an Online Publishing & Media Distribution firm who specialise in designing highly focused, marketing campaigns.

Seek help

Government departments know that small business entrepreneurs are finding it tough at the moment.  They understand that small businesses contribute significantly to the economy and want to do whatever they can to help.

If you’re finding it difficult to honour your tax and payroll commitments, don’t be afraid to discuss repayment options with them.  Or better still, ask your accountant to liaise with them – you’ll find that a good chartered accountant or business advisory services specialist will have skills and experience to negotiate on your behalf.

Many small business entrepreneurs do survive economic downturns.  The successful ones take responsibility and seize the opportunity to analyse their situation and then act appropriately. Keep your Bank Manager happy, stay in touch with chartered accountant and use a small business advisory services specialist when necessary.