Good advice from the Gwinnett Business Journal for small businesses on how to cope during tough times.
As recovery creeps up on the U.S. economy like molasses going uphill in the winter time, small businesses are starting to feel the pressure ease, but that doesn’t mean it’s time to go back to “business as usual.”
That’s the opinion of consultant Jim Muehlhausen, CPA and author of The 51 Fatal Business Errors and How To Avoid Them. He wants to help owners keep their cool as the economy starts to warm up. He has narrowed down the reasons why small businesses tank during the lean times.
Small businesses face more challenges than the large corporations with huge cash reserves to help them through financial crises. They are more susceptible to market fluctuations, have fewer clients to support them and generally have more transient staff. On the flip side, they also make up 70 percent of the businesses in the U.S., so as goes small business, so goes the economy.
• Represents 99.7 percent of all employer firms.
• Employs about half of all private sector employees.
• Pays nearly 45 percent of total U.S. private payroll.
• Has generated 60 to 80 percent of new jobs over the last decade.
• Hires 40 percent of high-tech workers (such as scientists, engineers, and computer workers).
In order to prevent the ensuing panic and confusion to consume your business, Muehlhausen has devised six basic rules that can help steer businesses clear of the pitfalls of recession:
• Focus – Pay more attention to your business model and your business and pay less attention to the economy.
• Don’t throw the hail mary – Don’t make dramatic changes. Work on the tactics already in front of you. Keep moving and keep working at the tasks that have traditionally helped your company succeed and don’t count on that big order or some other source of instant salvation.
• Stop fretting – This is a terrific time to tune up systems, make large time investments in future products/services that you just did not have time for when times were good. Rather than lamenting bad times and wasting time on activities aimed at making things better right now, focus on two years from now while everyone else is short-term focused.
• Buy a competitor – Now is a great time to buy weaker competitors. Prices are low and rolling their business into yours can add valuable employees and sales at bargain prices.
• It’s not the economy, it’s your model – The weak economy has hit businesses with weak business models much harder than those with solid models. If the economy has hit you hard, this is not bad karma. It is a sign that you need to tune up your business model.
• Ignore Web 2.0 at your peril – Yes, Web 2.0 is just as valid for B2B as it is for B2C. Web 2.0 has very little to with Facebook and Twitter. At its core, Web 2.0 is nothing more than an automated referral system. If your business does not need additional referrals, ignore Web 2.0, but beware that traditional marketing methods will continue to loose effectiveness while Web 2.0 methods will continue to improve.
“Decisions made out of panic and anxiety are rarely, if ever, the right ones,” Muehlhausen said. “I’m not sure there is a single business book or consulting firm that has recommended running scared when times are bad. That being said, far too many business owners let fear affect them and their choices. Times are not great, but people still have money and companies are still spending. For every business that is closing, ten more are surviving. So, relax, focus and get smart about how to navigate the tough times. You may find you wind up doing even better than before.”