LEADING A SMALL BUSINESS IN A RECESSION – PART II

Effective Sales & Marketing, Human Resources, and Operations Strategies

By Robert C. Benson III, CPA, CMC, CGMC

The U.S. Small Business Administration defines a small business as those with under 500 employees.

As I discussed in Part I, the U.S. economy is a huge ship – not a speedboat. The last four decades of recessions demonstrated it generally takes substantial time to recover from significant surprise economic interruptions that disrupt business and consumer trust in future economic conditions. Another challenge that generally develops as an economy weakens is that financial markets tighten financing criteria. That leaves some companies with the burden of having to survive on earned working capital (profits) instead of traditional bank loans. The following are some proven strategies for navigating the recession.

Therefore, continue to follow the cash management principles in Part I of this article and preserve as much of it as possible so you can keep key personnel and work smarter.

SEVEN CORE SALES AND MARKETING STRATEGIES:

Following are seven core strategies you can use to keep current business and replace lost business so you are able to continue in business.

1. During times of recession, you should not completely stop your marketing and advertising. Your customers may think you went out of business.
2. Do whatever it takes to keep your customers since it is expensive to generate new business.
3. Reactivate dormant accounts by finding ways to serve customers better.
4. Re-contact old leads. According to Thomas Publishing Company, 80% of sales to businesses are made on the 5th sales call.
5. Develop a marketing plan and implement, to the best of your ability, an aggressive new-business program.

• Downgrade your ideal customer profile slightly.
• Find ways to add value to your services/products.
• Look for opportunities in the wake of large company re-engineering, government spending, and the need for increased security.
• Postpone price increases and try to hold your prices at competitive levels.
• Explore new markets.

6. Give existing customers superior levels of service. Make sure everyone in the business knows they are part of your customer service strategy, not just the customer service department.

7. Sell value-added quality and service, not price, unless pricing is your Core Competitive Strategy.

 SIX VALUE-ADDED HUMAN RESOURCE STRATEGIES:

One of the more difficult areas is the redesign of your organization structure. Following are value-added strategies you can apply.

1. Redesign your organization to add optimum value at the optimum size you can afford. But a word of caution below.
2. Keep people (full-time or part-time/outsourced) on your team who add value. Down-sizing is often done without properly considering the value being lost or the talents needed for certain key duties or skill positions to deliver your Value Proposition.
3. Consider cutting everyone’s salary instead of laying off people you want or need to keep. In doing so, more employees have jobs and you will have more of the skills you need to function and compete more effectively in the marketplace.
4. Outsource functions that are not your core competency or executive-level skills you can’t afford or no longer need on a full-time basis; such as marketing, finance, information systems, business planning, CFO, human resources, etc.
5. Cross-train personnel to help you cover all duties with fewer people.
6. Use the massive layoffs as an opportunity to hire the right people for key positions to make your company better.

WISDOM & ENCOURAGEMENT   

“…remember the LORD your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant…” Deuteronomy 8:18

EIGHT KEY OPERATIONS STRATEGIES:

The key in operations is to streamline processes to do more with less. Here are some strategic tips.

1. Get everyone focused on their high-payoff activities. Set goals, identify priorities, and develop action plans to improve follow-through.
2. Re-engineer the business processes around customer needs to deliver more value and be more efficient.
3. Manage inventory more efficiently through better inventory control, effective forecasting, and management of over/understock.
4. Establish good information systems that are simple, efficient, timely, and valuable. Provide the information to everyone throughout the company who needs it to make good decisions.
5. Evaluate your security for health risks.
6. Maximize relationships with suppliers.
7. Establish performance-based incentive compensation plans to drive focus and the desired profit and performance objectives.
8. Work as virtual as you can to cut overhead and create efficiencies.

SUMMARY

Stay focused on your Critical Success Factors – the strategies, values, corporate culture, quality, and/or service standards that got you where you are!

Although a recession may be a painful and difficult time to manage your business, remember that everyone in business has the same difficult time. So don’t be discouraged. Take the time to do your planning.

Good planning in times like this is very productive and should be built on sound business principles, facts, and insight, defining reality and building a plan to survive and even thrive with the conditions we have – not the conditions we hope for or wished we had. Plan carefully with the assumption that an extended recession will likely follow this chaos.

The more you keep yourself, your family, and your company focused on a realistic plan to survive and/or eventually thrive, the better you will feel, the more focused you will be, and the better the results will be as your soul is restored from the shock of the situation. That will be a process.

Stay focused on the winning strategies above, as well as those in Part I, and they will help you manage your profits and growth in bad times and good times. And pray for God’s help and direction every day to get you through these uncharted waters. He wants you to seek Him and He wants to help you. God be with you and keep you safe!

ENCOURAGEMENT TO PRAY  

“But blessed is the one who trusts in the Lord, whose confidence is in Him.” Jeremiah 17:7

If you have feedback or questions for Bob or topics you would like him to write about, go to the website address below and click on CONTACT.

Robert C. Benson III (Bob) is the co-founder in 1984 and Past President of American Business Advisors, Inc., a full-service business and management consulting firm specializing exclusively in the unique opportunities and issues faced by small and mid-sized companies. While there he was a Business Strategic and Finance Advisors to hundreds of companies for 35 years

He successfully founded or co-founded seven businesses, including being a co-founder and former President of SecurCare Self Storage, Inc., now National Storage Affiliates (NSA), the 4th largest self-storage company in America. Bob is also the founder and former Managing Partner of Benson Wells & Co, now Corne Jantz and Associates.

Bob’s credentials include being a CPA*, Certified Management Consultant, and Chartered Global Management Accountant. He is also the author of STAND FIRM WITH GOD’S POWER IN BUSINESS and numerous business articles.

© Robert C. Benson III – All Rights Reserved

Several parts of this article have been taken from the Managing a Business in a Recession article Bob authored in 2001 while President of American Business Advisors, Inc. and special recognition is given to them for the use of that material.