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FROM: SEP-OCT 2009 ISSUE | BY MARK WARDELL
Some of our clients are feeling the effects of the current economic downturn. What advice do you have for helping them successfully navigate the recession?
A recession puts a magnifying glass on a business, so small problems that were once manageable suddenly become big problems. It does not change the rules of the game, it simply makes the fundamentals more important. The work businesses need to do during a recession is the work they should be doing at any time. The economic downturn serves as a wake-up call for businesses that may have become complacent.
Rather than focusing on the economic doom and gloom, business owners can profit by honing in on the essentials of their business. Cash-flow, customer service, and marketing are three fundamental areas that will benefit from their close attention. That attention, in turn, will benefit their business overall.
First, cash-flow. Now more than ever, cash is king. Collecting accounts in full and on time, for example, can help provide that ready cash necessary to see a business through tough times. Make sure your clients understand their cash requirements and monitor their cash-flow carefully. As financial experts, you are well-positioned to advise them on this matter.
While tracking the slow payers and improving cash flow, your clients need to scrutinize all their accounts. And they need to think strategically about their customers. Who exactly are their best customers? What are their demographics? What are their buying patterns? Such analysis supports another key area of focus: marketing.
Many business owners typically react to weaker sales by cutting their spending on marketing, which can be a mistake. In recessionary times, the most important thing is to generate new business. Customers are spending less, so businesses need more customers. They also need to keep the ones they have, which brings customer service to the fore.
Customer service and sales are like the two sides of a coin. You can’t have one without the other. To ramp up sales, businesses should start with their existing customers. These relationships are the most vulnerable in a down economy; however they can be cemented by providing over-the-top service. Great customer service generates client loyalty, repeat business, and valuable referrals that lead to new business as well.
Once customer service has been polished to a high sheen, businesses should market constantly – in a strategic fashion and to a targeted market. Customers in general are on edge and will leave one business for another if you give them a good reason. So customer service can be an effective method of not just keeping great customers, but of attracting new ones as well.
Capturing market share is the name of the game. Customers may buy less individually, but if businesses can maintain momentum by attracting new customers, they will survive, possibly even thrive. On the positive side of the ledger, a recession always has an upside: market share, supplies, equipment, and labour are all more available or affordable.
Business owners need to focus on fundamentals like customer service and marketing. As the red ink recedes and the economy turns back upwards, their businesses will rise with it.
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