Help Your Small Business Survive and Thrive in 2020
We asked Barry Moltz, a widely recognized expert on small businesses, for tips on how small businesses can thrive in today’s economy. Barry’s tips are based on his hands-on experience as a small business owner and his research as a professor and published author. So whether you’re a provider on Elance or an employer, you’re sure to get a lot out of these tips:
I often joke that the original title of my first book was: “The Worst They Can Do is Eat You! Surviving Your Business during Tough Times”. That title seems very appropriate today as we head into a very tough part of the economic cycle.
How do we survive and thrive in 2020? Check out these 10 tips:
1. Do you feel lucky? You should.
We are fortunate during these tough times. That’s right, we are much more fortunate than our big business brethren. It is much easier for us to have a good month since it only takes one more customer to turn around our small business.
As a freelancer, a few more customers can really have an impact on your bottom line. You only need to find a few great clients to make sure your business thrives.
Freelancers are not weighed down by huge overhead and can react to market or customer changes now, rather than later, in order to get more projects.
2. Focus on profitability, not growth.
Many times we need to invest in order to grow our business. In a recession, you can only grow if you are profitable. As a small business owner, if you cannot be profitable and grow at the same time, then focus on just being profitable and learn to market yourself. For 2020, growth can wait.
3. Sell painkillers.
During difficult economic times, people only buy when they are in pain or have a very great need. Focus on selling the painkillers in business, not vitamins. Find your niche and understand who is in pain and what you can do to solve that pain.
Do some research – find out who solves your customer’s pain now and give them a reason to switch to you. Face your fears and start asking prospective clients “will you buy our products?” That answer will be the only one of your small business needs.
4. Challenge all of your business assumptions.
This is no time for sacred cows. If your business can be done in another more efficient way, then adapt – or die. Cockroaches do this extremely well in bad times.
Think about what you can do to increase your gross margin. How can you satisfy your clients at a lower cost? What parts of your business make a profit? Which clients are profitable? What are the nice-to–haves and luxuries in your business? Take no prisoners.
5. Upsell your clients – substitute current products for higher cost ones.
Your product may have become a cheap alternative. In a recession, price trumps it all. Ask your clients if they’d rather purchase a similar, less expensive replacement product or service – and then offer it to them.
6. Focus on cash flow.
Forget about the sales line on your profit and loss statement. Look at your own cash flow statement. Focus on getting paid from your clients, extending your payments to vendors and keeping your inventory as low as possible. Ask clients to pay using Escrow.
7. Get an A+ in customer service.
Outstanding customer service, unless you are a utility company, is the only sustainable competitive advantage. This is how you, as a freelancer, can separate yourself from the rest of the pack. Clients will stay with you and give you more business if you treat them right.
8. Cut costs now, even if revenue has not gone down.
No business owner has ever regretted cutting costs too soon. Don’t get caught in a death spiral.
First, in deciding which costs to cut, use the “cringe factor”. Which bills make you “cringe” as you pay them at the end of each month? And which payroll checks make you “cringe” as you sign them?
If you’re cringing at these costs, it means that you are not getting value out of the expense and you need to either cut it or find another way to get by. Look for more efficient alternatives such as hiring a freelancer to get work done on a project by project basis.
9. Match revenue and expenses.
Keep your resources variable and available. When you hire a provider on Elance, you reduce your overhead and match every expense with offsetting revenue to ensure a profit.
10. Finally, take your eyes off the stock market and your portfolio.
If you have checked the market and gone over your portfolio with your financial advisor, then it’s okay for the next five years. Leave it alone. There is nothing more you can do.
Remember your resiliency. Economic cycles come and go. You have been here before and survived. Cheer the good times with parties, awards and trophies. Mourn the bad times, but then let go. Value action so you have more chances at success.
