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We are in the middle of turbulent economic times and businesses of all sizes are experiencing reduced sales and plummeting profits. Some small businesses that prosper in a steady economy find their very existence challenging during these times.
Each business is unique and carries its own set of rewards and risks. It is this uniqueness that makes it difficult for one business to follow another’s turnaround strategy. Keep on reading to learn about some common strategies used by successful small business owners. My coaching clients are implementing these suggestions well and seeing exceptional positive outcomes.
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Look at the big picture
Our first reaction to big and obvious problems is to deal with them swiftly. A better solution would be to account for the bigger picture. This will help you make lasting and positive changes in your organisation.
Be aware the size and the scope of the problems at hand while at the same time understanding the company’s business model. This will give you a good idea of your company’s strengths and weaknesses and how they can be used to better your company’s problems.
Imagine you are a small business owner who suddenly discovers that two of your employees have been making repeat errors with the inventory. These mistakes have caused certain supplies to be overstocked and others to be understocked. Your initial reaction might be to fire these employees. You might even decide to fire the manager who hired them.
When you examine the bigger picture, you look deeper into the problem. Here are some questions to ask yourself:
- Did the hiring and supervising manager provide proper training?
- Does the fault lie with the manager instead?
- Will better training help the employees perform their jobs better?
You might realise that firing the manager or employees could damage your business. This might happen if the manager has good relationships with your existing clientele and brings in repeat business and new business.
Solution: By taking a top-down approach and looking deeper into the problem you can understand where your organisation’s strengths and weaknesses lie. You can then take necessary actions to reduce/eliminate the chance of similar problems occurring.
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Take staff inventory
Business owners spend a lot of money on hiring. You don’t have to wait for a problem to arise to take inventory of your staff or to ensure that you have only the most productive people on board.
The cheapest workers are not always the best workers. Sometimes you need to spend more money to get the most productive people. Hiring a worker who is 20% more expensive but 40% more productive is also a better economic decision. You pay them more salary to get more work done.
Solution: Continue to review resumes and interview candidates even during trying business periods. Change your staff to increase productivity and increase efficiency at the workplace.
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Always have access to cash
Small business owners need access to funds when money is hard to come by. Ready cash is your safety net during times of crises.
Solution: Understand how to obtain a bank loan and open a line of credit in advance to help tide you through tight times.
Have a number of reliable sources of capital such as savings accounts that you can dip into, family members that you can borrow money from and stock holdings that you can liquidate.
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Have an eye for detail
While it’s important to look at the big picture, it’s also important for you to make sure that the smaller things are not overlooked as these too could negatively impact your business.
For example, if your company’s signage is blocked by a large tree, people might be unaware that your business even exists. Customers might not want to visit if you have inadequate parking or difficult access. Ineffective advertising is another example of not making an effort to bridge the gap between potential customers and your business.
Solution: Consider all the factors that bridge the gap between you and your potential customers. Then identify problems that might deter them from getting to you.
Expenses are easy to miss, and you might be spending more money than you know. Review your expenses every quarter. Keep an eye out for small purchases made regularly that might be draining your account for example, office supplies like paper, printing ink or pens.
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Never sacrifice on quality
When the going gets tough, hold on to quality and never let quality deteriorate. If you have an existing problem with the quality of a particular product, don’t hesitate to make the necessary changes to ensure better quality . Be sure to update your employees of these changes.
If you plan on improving margins on a particular product, don’t make drastic changes to the product, as this might upset your customers. For example, the owner of a pizzeria might try to cut corners to increase margins per pizza. They may substitute the original expensive cheese and sauce with cheaper ingredients. This strategy could backfire if customers become dissatisfied with the taste brought about by the cheaper ingredients and decrease sales.
Solution: If you plan on increasing your margins by cutting down on your costs, ensure you improve or at least retain the quality of your product.
“The opinions expressed by BizWitty Contributors are their own, not those of BizCover and should not be relied upon in place of appropriate professional advice. Please read our full disclaimer."
