It seems that there has been so much focus on the Banks in this wave of the credit crunch that very little is being said about how the next wave will affect small businesses. I have a feeling that for some businesses it might be a case of “credit crunch? What credit crunch?” To be in this position your business would probaly have little reliance on bank borrowing and be selling into markets that will not be as affected by the credit crunch (apparently L’Oreal and Pilsbury are actually doing better as people can’t afford big treats but still want to have small treats!)
For the rest of us it will NOT just be about being careful with cash. Keeping a tight rein on cash is a great idea all the time, not just during this credit crunch. My point here is that once you have as tight a rein on cash as you can have, what then? Rather than wait until you reach this point start looking at a more proactive strategy for surviving the credit crunch. I would suggest:
“sell profitable products and services to profitable customers and keep your costs under control”
Do you know which of your products and services are the most profitable for your business? Find out. Can you make them more profitable by adding value or controlling costs? Sell more!
Do you know who your most profitable customers are? This might not be the ones who spend the most with you. I know of some businesses that have “sacked” some large customers when they did the calculation to see if the level of sales being achieved was actually making any profit for the business. When you take into account the levels of discount they want, the length of time they take to pay, the amount of time and effort taken to service the account is there anything left for you? Find out. How can you make your existing customers more profitable for you? Where can you find some more? Sell to them!
Do you know what the key costs drivers are in your business? This includes the direct costs of supplying your products and services and the running costs for your business. Find out. Control them!
Do all this and continue to control the cash!
The good thing about the credit crunch for business owners is that it is causing them to behave as they should even during the good times. Why wait for the bad times to come to have the motivation to control your business? Do it all the time and the good times should be even better and the bad times won’t be as bad when they come along!
All the best for the next wave.
The Credit Crunch may also be an ideal opportunity for getting some new business from companies or organizations who are cutting back on spending and need to find cheaper suppliers.
Our job (small businesses with lower overheads like mine) is to make contact with, and try to persuade, decision makers in these large companies that your product or service is just as good as that of larger suppliers – but at half the price. Ask them the questions: Are you getting value for money from your current suppliers? Are you happy with the service? Would you consider using us / giving us a chance to see if you like the way we work?
Of course these are the usual questions and the hard part is making contact with the right person – but you know all that anyway. What I am saying here is there are many, many companies out there at the moment looking fort deals and ways of saving money as their budgets have been slashed. Offer them those savings and you may just get a foot in the door, as you now have the edge.
Its just up to us to persuade them of this and that’s where your sales techniques come in.