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In a poor economy, being a small business owner is nothing short of a challenge. After all, rising unemployment and dwindling retirement savings put less money in people’s pockets and more fear in spending what they have. What is a small business owner—who relies on customers to buy his or her product or service—to do?
Millbury Savings Bank President and Chief Operating Officer Rob Morton and Vice President and Commercial Loan Officer Kevin Higginbottom have some advice for ensuring your small business not only survives an economic downturn, but comes out stronger on the other side.
Many small business owners attempt to borrow more money when things turn sour. But now is the time to decrease debt and make sure that, whatever your business spends money on, it’s done wisely.
First, talk to your suppliers, service providers, insurance companies, and other vendors about how to reduce your ongoing costs of materials and services, and then obtain competitors’ quotes to make sure you’re not overpaying.
Second, take a good long look at your staffing levels—something no small business owner likes to do—as well as your assets. “It’s all about efficiency, from your headcount, to your equipment, to your inventory,” Kevin says. “Keep them at optimal levels, because they all have costs associated with them and, in times like these, your revenue may not be enough to cover any excesses.”
Many businesses enjoy success in good times without ever marketing. But only a few can do so in bad times. Rob and Kevin agree that doing nothing and simply waiting for things to turn around will hurt your business in the long run.
“Use every tool you have available, from Internet social networking like Facebook and LinkedIn, to Chamber of Commerce functions, to good old-fashioned pounding the pavement to hand out business cards,” says Rob. “The most important thing is to get out there, knock on doors, shake hands, and meet people, to help generate business.”
Kevin adds that while small business owners generally are not marketing-oriented, those that want to be successful in trying times have to be willing to think creatively and try new things. “You have to break out of the dogma that, ‘This is how I’ve done business, and this is how I’m always going to do business,’ while striving to show how you can add value that others can’t.”
Service the heck out of your existing customers
Often times, businesses thrive without a formal marketing effort because of the sheer size and strength of their referral network. And that comes from having a base of highly satisfied customers to draw from. “In this environment, customers can choose whomever they want to do business with, so you’ll need to do extra, go further for them,” says Kevin. Doing so, he adds, will retain them as customers for the long term, which will provide a larger base to grow from when the economy turns around.
Talk to your bank...sooner rather than later
Your bank—especially small community banks like Millbury Savings—wants and appreciates honest, up-front communication that your business is struggling. Rob emphasizes, “There are businesses we’ve been able to keep out of harm’s way because we were given the opportunity, early on, to help them take proactive steps. Don’t wait until it’s already too late.”
Learn from the experience
Eventually things turn around, although experts agree an economic recovery is measured in years, not months. But the most successful business owners will take the lessons they’ve learned and adopt them for the long term. “If you go through a down period, there’s no question you learn how to become a better manager,” Kevin says. “The experience ultimately gives you the confidence that you can manage your business through almost anything.”