It's simple animal instinct: When confronted with something unknown or frightening, the initial gut reaction is to stop, freeze, and not move a muscle until you can assess the situation and make a decision on whether to "fight or flee." It's the "deer in the headlights" syndrome.
Today's economy is presenting small business owners with the same scenario. Sales are dropping, financing is drying up, employees are restless and worried. Your first instinct may very well be to pull back, not rock the boat, not make any sudden moves or operate outside "the box" that has been your safe zone for perhaps many years.
While this economy certainly does call for prudent thinking, the one thing that will not work is standing still. If you remain the paralyzed deer in the headlights, your businesses' days are most certainly numbered.
Assessing your situation
Now is the time to make an honest assessment of the health of your business. Hopefully you have been operating from an established business plan that includes a series of self-assessments, checks, balances and regular analysis of your balance sheet and marketing reports. If not, it's time to play catch-up and take stock. If you've been following a basic business model, you should be able to assess the health of your business by examining the following:
Are revenues and expenses on track with budget? If not, what, specifically, do you attribute declining revenues to? Don't immediately assume downturns are always related to "the bad economy." Many companies that are failing today are doing so because of poor past business practices that are just beginning to catch up with them.
Once you know where money is coming from, and where it's lacking, it's time to assess products and services. Can poor-performing products or services be tweaked in such a way that they become less expensive to produce; altered or enhanced so they become more valuable to the customer; eliminated or replaced?
What costs can be reduced or eliminated? Put every expense on the table and eliminate all but the necessities. Prioritize your cuts so that when your business starts to recover you can add them back in according to their importance.
Do you need to increase spending in any area? It may go against conventional thinking to increase expenses at this time, but as the saying goes, sometimes you need to spend money to make money. Would a new sales position or new product line help your bottom line? Don't discount bold moves.
Shop your competition. If the majority of your competitors are shoring up operations, now is the time to swoop in and take up the slack. Perhaps this means changing or extending your hours of operation or offering a service your competitor has eliminated.
Don't cut off your nose to spite your face
While change and adaptation are going to be the key to economic recovery, take care that you aren't making fear-based decisions. For example, many companies are cutting back on their advertising budgets, or eliminating what they consider "non-critical" job positions, such as customer service reps. The result? No one knows about their business, and those that do can't get service! It's time to change your thinking about what elements of your business budget are indeed expendable and which ones will help you survive a slow economy. This is a great time to solicit input from our customers so you can be sure you're focusing on what matters most in the moment, and for the long-term.
Take a page from entrepreneurs
One of the reasons entrepreneurs are often credited with surviving and thriving in slow economies is that by their very nature, entrepreneurs are self-starters who are willing to be bold and think outside of conventional, traditional means. All businesses today need a dose of that entrepreneurial viewpoint to help them move forward toward a speedy recovery. Change is about being open to new ideas, being flexible in operations, and not allowing fear to dictate your willingness to try new things and make calculated decisions even if they fall outside your, "that's the way we've always done it" way of thinking.
Another note: If your business is in trouble, or if you simply want assistance assessing the viability of operations, contact SCORE's Crisis Management Team for a free consultation at www.score.org or call 784-4436.
Dave Archer is chief executive officer of Nevada's Center for Entrepreneurship and Technology. Contact him through www.NCET.org.
