That Nigeria is now officially in recession is no longer news. But the good news is that you can still survive even in the midst of recession. In an economy as tough as this one, you may need to change your business drastically to pull through.
As an entrepreneur, how do you succeed in recession?
Here are 10 strategies for surviving the recession
Nearly every business has felt an impact from the recession. There has been no escaping. The root causes were universal and had a domino effect.
Some small-business owners believe they’ve seen the bottom and they are surviving — they are OK and they expect to persevere with modest adjustments. These small-business owners are kidding themselves. The bottom has not been reached, and it will be a long slide until it does. We are in for a five- to 10-year disaster.
Defeat the Downturn
During such times, it’s easy to panic. Panic, which is fear-driven and not based on fact but on emotion, has tremendous power, the power to change the direction of business. But do you want to give in to panic, throw your hands in the air and accept self-destruction, actually accelerating it, becoming a part of the panic, stimulating more?
There’s an alternative to panicking. We are confronting change, and change is an opportunity for advances. Now you have the choice to take advantage of change it or allow yourself to be buried by it.
Make the right choices today and see the results tomorrow. It’s not just about adjusting prices — you need to broadcast your differences, tell people why they should shop with you, provide them with added value, and not discounts, and watch your business grow in a down market.
Be a leader, and the people will follow. As a small-business owner, you can help lead the way out of the recession. Start with your employees, move to your vendors, and then support your customers and your market area. Announce the good news, and everyone will line up.
Here are 10 rules of engagement that will help you successfully recast your business and succeed in the new economy:
- Evaluate and eliminate excessive debt. If your revenues have dropped, you may not be able to service the debt you took on when your revenues were much higher. Any debt can be worked out — secured debt, loans guaranteed by the Small Business Administration, mortgages, lines of credit, and even leases.
- If you haven’t already, reduce your headcount and overhead. You can deliver the same amount — or more — by increasing productivity.
- Track your finances daily — and start today. Install a key indicator system to track your business and have daily, weekly and monthly financial reports issued. Follow profitability per job, per week, per client, per product. Use these indicators to focus on your most profitable products or services. Make nothing that does not bring in a profit.
- Reduce inventories and overhead at any cost. Look for items that does not move or turn frequently. That’s where your cash is locked up — in your cost of materials, labor, and so on, waiting to be turned into cash after it’s sold and the receivables collected. This can result in a huge cash drain.
- Train and cross-train your staff. If every job or task is learned by at least one additional person, when the primary person is out, the secondary person cross-trained to perform the task can leap in and save the day. And so work continues, and productivity remains high despite the absence of a key player. Smoother production, greater productivity and happier customers mean a better bottom line.
- Review your marketing and reduce spending on traditional media. Use the internet and focus on existing clients first; get more out of them. Internet marketing will save many companies.Consider what’s called the long-tail theory, coined by Wired Magazine Editor-in-Chief Chris Anderson. In short, it means that there are folks on the internet making profitable hits of niche products, services and entertainment.
- Resist profit-eating sales and discounting. Don’t give away your product; instead, compete with service, quality and uniqueness. Create a niche and have a competitive advantage. The big box stores cannot compete with you, especially on service. It’s the small-business competitive advantage.
- Expand geographically if possible. Internet marketing can take you anywhere, especially if you can create an expertise or a niche item or service. Find what you do that is unique and do it as large as possible.
- Manage effectively. This means tracking and analyzing key indicators, financial reports and productivity. Get smaller first and more profitable; then grow slowly and carefully.
- Focus on quality. That’s what wins in the long run. Never forsake this principle.
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