9 Secrets to Growing a Business in These Still Tough Times
By Gerald G. Smith, Certified SCORE Mentor
So, do you think the tough times are over? Are we really out of this awful recession?
Right around the end of 2008, our economy crashed. It had not done too well in the two years prior to then either, but those months were horrendous. The nation’s Gross Domestic Product (GDP), the major measure of economic activity, fell over 4%. That hit our businesses, especially those involved with housing, like a ball-peen hammer. So far, I have said nothing you already did not know and understand. What I am saying that you might not have realized is what really happened next.
According to our federal leadership, we suffered further declines for just a few quarters before a turn-around took hold. The truth is there has been almost no recovery at all. While GNP has grown about 2% a year since then, population and inflation have grown about the same amount or more. “Normal” growth over the preceding 50 years or more, including past recessions was in the 4% range. Business has grown only because the number of potential customers grew. We are still in tough times. In the past, recessions have been followed by extra high growth that quickly returned GDP to pre-recession amounts and got back to the “normal” rate in ensuing years. In this case, all that has happened is that GDP declines have almost stopped, but GDP has been flat or even negative when population and inflation are considered. We are still almost 20% behind where we would be in a “normal” recovery. We still need to use strategies that assume a tough economy.
How do some small businesses manage to grow and thrive, even in tough times, while others struggle and miss opportunities that come their way? Experts say that most successful business owners display some clear patterns and habits.
SCORE has built a reputation working with companies through challenging times as well as the good times. Our group – made up of several former entrepreneurs – sees business owners making the same mistakes that are often avoidable. Based on these years of experience helping businesses grow, we have come up with 9 secrets for achieving growth and stability even in a poor economy:
- Grow or die – Many small or local businesses assume it is best to cut back to survive tough times. While this is instinctive, sometimes the answer is to do just the opposite – grow. Before cutting back and shrinking your business, consider first whether some other actions such as additional funding or new/changed products might help. Cutting back leads to losses that can be suicidal.
- Know when to keep trying – Stick to your plan. Many would-be success stories end prematurely because they give up when challenges mount. Do not let problems stop you. Step up your market knowledge and use your expert team to push through.
- Know when to change direction – This may sound like a flip-flop, but there are times you may need to change direction completely and having the courage to do so can be liberating. You may end up with a clearer picture of what will or will not work. In this situation, you might benefit from an outside, unbiased opinion.
- It is not just about you – You know your business inside and out, but that does not always make you an expert in everything you need to know to run it. Smart business owners know what they do not know. Don’t be afraid to ask for advice and then, take it.
- Hire someone to do what you do not do well – Farming out accounting, administration or advertising could allow you the more valuable time for other business growing activities.
- Remember your best fans – Many entrepreneurs seem to forget who helped them get started. If you have investors or key customers, keep them apprised of what’s going on. Good communication is key. Keep them involved. We have had cases where loyal customers have stepped up to save the business by buying more or even contributing time and money.
- Share for good PR – In today’s business world, success and influence are in the hands of those who share their ideas and information. Yes, you might lose a little competitive edge by sharing a few of your small secrets. But you will gain influence, and possibly success. So when you have found a great tool or solution, or gained insight, tweet it, blog about it, author an article, post it to Facebook.
- Watch your cash flow – One mistake that kills a growing business fastest is running out of cash. Business may seem great, but the need to extend credit to customers and not collecting soon enough to keep the bills and payroll up to snuff can kill you. This problem is more prevalent in hard times when customers try to stretch their terms to the max. At the first sign of problems, do not wait; talk to customers about it; meet with lenders and suppliers proactively to see if there are opportunities to restructure debt, payment terms, etc. Having cash on hand is critical to stay afloat and continue to grow.
- Make marketing pay – Evaluate your marketing program to improve efficiency and effectiveness. The old ad adage is that “I waste half of my marketing dollars. I just do not know which half.” You cannot afford to do that in tough times. If you cannot see ways to maximize your results, get some advice. Do not cut your budget, make it pay for itself. We have seen many businesses take advantage of a downturn with increased marketing exposure at lower rates while competitors pull back. The resulting increased market share holds up when markets grow again.
If you want help growing your business, SCORE provides free guidance from highly qualified volunteer mentors. You can sign up for a free meeting at www.ScoreCentralOregon.org or stop by for a first-come-first-served 30 minute mini-meeting at the Bend Library between 5:30 and 7:30 pm Tuesday of every month September through May.