one of the key benefits from reading it is that you’ll get dozens of excellent…
I don’t think many will disagree that the last couple of years have been difficult for most small business owners. The lack of readily available cash and customers has made some small businesses think hard about what they are doing, whilst some still seem to be content to “baton down the hatches” and await economic recovery. During this period, the businesses I have seen perform the best have all possessed similar traits. They have applied the lessons below and all still talk positively about their business and it’s prospects. Sure they admit it’s been tough but some of them are experiencing better periods of growth than ever before. So what have the key lessons been?
Pre recession we were lazy with our finances. If debtor days reached 90 days we didn’t bother too much as the banks would bail us out with loans and overdrafts. Now we need to live on cash generated from our customers and the effective collection of cash has become a priority. We didn’t concentrate too much on pricing as there was plenty of business to be had to make up for margin shortfalls. Now pricing and margins are critical to business success. We need to avoid models which are just centered around lowering prices and offering discounts, unless there is an infrastructure in place that backs this up. Price wars rarely work as there is always someone who can do it cheaper than you.
We were lazy with our marketing. In times of abundance there was plenty of business around and we didn’t have to fight very hard to get at least our natural market share of what was out there. Now the markets are smaller and customers are more choosy where and how they spend their money. I remember talking to a mortgage broker not long after the recession had started. For many of the years prior to the recession he had had constant leads passed to him from estate agents. He had never had to market his business and was making lots of money. As soon as the housing market went “pop” he had absolutely no idea how to attract new clients.
Innovation and creativity in small businesses wasn’t always considered. There has been an explosion of “me too” businesses in the good times, businesses which were essentially copycats of all the others in the same industry. Even now, when we attend networking events, we see many businesses that look the same (apart from the name) and there is no differentiation in their promises or offers. No longer is it acceptable for a business owner to say that their unique selling proposition is “great service” or “personal service” because that’s what they all claim to offer! There needs to be clear difference in the service offering, tangible benefits to fit with consumer needs.
We were lazy with our processes and systems. We may have had labour intensive businesses, but it didn’t matter because the sheer volume of work available meant we still made a good profit. Now, we need to think “McDonalds” and ensure that we have systems which help deliver better and more consistent service, which are much more cost effective and efficient than what we are used to.
Customer service certainly wasn’t king. How many times have you received poor service in a restaurant or shop? How many times has it taken your website designer weeks to return your e mails? Pre recession it didn’t matter as there would be someone else along tomorrow to take their place. Keeping your customers happy and keeping them coming back for more is now vital to making a success of your business.
The Frog and the Boiling Water
I’m sure you’ve already heard the story….If a frog is dropped in a pan of boiling water it jumps straight back out. It takes action!
During the last two years I have seen many business experience fantastic growth. These businesses weren’t necessarily business built up to deal with particular recessionary issues. They had been around well before the recession started. However, they realised what was going on around them and took action….they did something. By considering the above points and taking action they have not only survived, but some have experienced some of their best years of growth.
What lessons have you learned over the past couple of years?