No one is immune to difficult times that can truly put your business to the test. However, you can successfully navigate economic uncertainties with the appropriate strategies in place. When you plan for unexpected challenges, your business will be better suited to maintain normal business operations, even in the wake of disruption. Over the course of the global pandemic, we’ve learned some lessons on how to stay nimble and make strategic adjustments to help your business. While every industry and business may face its own unique challenges, we’ve put together the basic elements of business resilience.
When an economic crisis hits, it’s wise to reduce your monthly outgoing cash flow. As we saw during the pandemic, things changed rapidly and without warning. It’s best to approach your cost cutting with precision and intention. When determining where to cut back and by how much, remember that cutting too deeply could be detrimental in the long run. There are many ways you can attempt to reduce your monthly cash flow. See if you can negotiate a lower monthly rent by signing a long-term lease with your landlord. Reduce marketing spend by leveraging social media – you can target your prospects and customers while pushing organic traffic to your website. Pull back on discretionary spending like new equipment or upgrades to your office. The common thread throughout these various methods is that you get to retain your workforce. Utilize this approach to cut costs and reduce outgoing cashflow so that you don’t have to cut employees.
When money is tight, you likely have less to spend on acquiring new customers. Let your best customers know how much you appreciate their continued support and patronage. Send a hand-written note or pick up the phone to have a conversation with your top customers and express your gratitude for their loyalty. Shift your sales focus from bringing in new customers to nurturing your proven customers. Some ideas include creating a customer reward program or an incentive program for your sales team. These touchpoints add value to your relationship and offer an opportunity to let folks know you are open for business, even if you have limited offerings. If you are closed or planning to close, let customers know that you will be back soon. And don’t forget about staying in front of them with low-cost marketing tactics like email and social media updates.
For most small businesses, your workforce is a critical factor for success. When your business faces a challenge of any kind, band together to make sure your employees’ morale doesn’t nosedive. Be transparent about specific hurdles and communicate clearly and frequently about the state of your industry. Use tough times as an opportunity to bond and build engagement with your employees, who often see each other as a family. If you strive to cultivate an air of camaraderie, your team will feel supported and ensured that you can all overcome this obstacle together. Employees often see each other as family—using tough times like these to support and lift each other up will make you stronger as a team and improve overall employee morale in the long run.
During times of economic downturns, it’s a given that many of your customers will be spending less. This will likely affect your business strategy and it’s important to be nimble – flexibility is a key element of business resilience. While you don’t necessarily need to abandon your long-term goals, you probably need to reassess your priorities in preparation for slower consumer spending. Improve your operational efficiency. Eliminate anything that doesn’t add value to your customers. Reassess outdated procedures and look for ways to streamline workflows to maximize your employees’ time and talent. Consider new revenue streams and diversify your offerings. Brainstorm with your key employees on new ideas at a variety of price points. This presents an opportunity to cross-sell products that may better align with your customers’ budget right now. Shift your messaging to emphasize the value of your product or services. Most consumers will also be mindful of the best “deal” out there, so it’s important to make sure you are positioning your business as such. Review your stock of inventory. It might be prudent to receive more frequent shipments with less inventory in each shipment. If you have stagnant inventory, liquidate that and move on. Connect with your peers and bounce ideas around. Reach out to fellow small business owners in your community or within your industry to gauge sentiment and discuss best practices. Join groups on social media. Stay in touch with mentors and anyone whose business philosophy you admire – observe their actions and ask their advice.
In the wake of a crisis, there is often an uptick in fraudulent activity, as scammers are looking to take advantage of those who are most vulnerable. For small business owners, this can also mean lenders who do not have your best interests in mind, so it’s crucial to watch for red flags. Predatory lenders exhibit several common traits, but it’s always best to do thorough research before borrowing money. Be on the lookout for unusually high rates and fees, high-pressure tactics and any over the top claims about “solving all of your financial problems.” Ask probing questions and weigh your options prior to committing to fast money that could come back to hurt your business in the long run. Cybersecurity should remain a top priority as part of your business resilience strategy. Do not answer robocalls, avoid opening emails or texts about checks from the government, and don’t click on any suspicious links online. You must remain vigilant. Phishing and malware scams are prevalent during and after a catastrophe. Many fraudsters are claiming to be with a government agency, such as the Federal Deposit Insurance Corporation (FDIC), the Center for Disease Control and Prevention (CDC) and the World Health Organization (WHO). Recently, someone claiming to be from the FDIC asked consumers to “confirm” or “update” confidential personal financial information. No government agency will ever demand that you pay by gift card, money wire or digital currency, nor would they ever ask for personal details such as bank account information, credit and debit card numbers, social security numbers or passwords. Be aware of fake charities. Sadly, when a major crisis occurs, scammers may try to take advantage of your generosity. If you are looking to give back to your community, do your due diligence to ensure it is a legitimate charitable organization. Refer to the Federal Trade Commission’s list of organizations who can help you determine that.
Live Oak is here to serve all of our incredible, resilient small business customers–we’re here with you for the long-haul. We encourage all small business owners to focus on business resilience, regardless of what’s happening. In good times and in challenging times, consider us your partner in your business. We’re happy to discuss any specific challenges you may be facing and offer guidance.