Small business owners across the country, have been affected by the challenges of this economy more than any other type of business. They are the group that has the least resources and leverage to counter what is taking place in their businesses. Phones that rang relentlessly only 1 year ago, are barely ringing today, if at all. Customer cancellations are abundant.
They are experiencing declining sales, increasing costs and decreasing lines of credit. Plus, they are realizing a shortage of cash that cannot be generated quickly enough to stay competitive. It's no wonder advertising and marketing budgets have been substantially reduced, it not eliminated. So, what's next for the small business owner, and how do they survive? In some cases, a business cannot be saved, as the pressures of this economy can weigh too heavy. However, for those small businesses determined not to give up, there is help and resources from all 3 branches of governmnet; city, state and federal?
First, there are two choices these business owners must make; to struggle through, taking no action, while hoping for a quick economic turnaround or map out a plan for survival. For the entrepreneur who is determined to come out of this still standing, here are some approaches being used for the purposes of gaining new customers, continuing to build business and ultimately increase cash reserves.
Expand Marketing Strategies
- Increase in networking:
Networking groups are increasing in number and so are the participants. Business owners are using these groups more frequently to increase business and gain referrals. Some are attending 5 or more networking events per week, 2-3 per day. Also, memberships in online social networking groups is increasing.
The quality of a networking format and agenda is also becoming more useful for the entrepreneur. Many local networking groups are no longer getting together only for lunch or to exchange business cards. This type of networking is non-beneficial for someone looking to grow their business through substantive business connections, as little time is made for actual networking.
An alternative is a networking group structured to provide brainstorming and consultant advice, free of charge. Here is how it works; a business is randomly chosen each week to receive expert advice, and the other networking group members critique the chosen businesses' strengths and weaknesses, as well as, its marketing strategies.
The business is offered advertising and marketing suggestions on how and where to attract more customers, based on the needs of the business and market conditions. Because this format gives the business owner a greater opportunity to network, retention is high.
If a networking group cannot be found with this meeting outline, it can easily be established.
- Complimentary services and products
In exchange for publicity and free advertising, some entrepreneurs are giving away services and products to showcase their abilities and gain new customers. The company or event receiving these freebies are often prepared to provide a great deal of advertising exposure to the donating business. This is somewhat in the form of bartering, as discussed below.
- Businesses merging:
In order to strengthen their businesses, some entrepreneurs have decided to merge. This includes competitors. For some small businesses, merging is not an option, its a necessity. If constructed properly, the merger can survive the downturn and thrive in the new economy.
- Online advertising:
Due to cost, many entrepreneurs are reducing their print advertising while increasing online advertising. Many are switching to online advertising, as the rates are less expensive, and then there's the potential to reach thousands more. As more and more people have access to the internet and begin their search there, it makes sense given the cost of print advertising.
- Co-op Advertising
Advertising arrangements between business owners (manufacturer) and vendors are also being utilized more. This is a form of co-op advertising where both parties share advertising costs. A bartering arrangement can take a struggling business off life support. The vendor's brand can create awareness of their product.
Barter Exchanges are on the rise. Although bartering is the exchange of goods without the involvement of cash, there is a monetary value to this arrangement, and does require an accurate accounting of the transaction. as in the above case of exchanging advertising exposure for a donated product or service. Some entrepreneurs are using this method as a way of building business relationships. In most cases, it is hoped these new relationships will result in paying customers.
Diversifying product offerings is a good business strategy, and should always be considered. Likewise, individual small business owners can tap their own skills, as well as, explore investment and business opportunities to create income.
Robert G. Allen wrote a book called Multiple Streams of Income¹, which is 350 pages and 18 chapters of ways to diversify one's business interests. Allen talks about getting paid for using skills that many business owners already possess, such as:
- Selling Information - Desktop Publishing - Website Building - Public Speaking
Because most business owners must wear a multitude of hats, these skills can be turned into sideline profits.
It is well known that anyone who starts a business must be willing to be uncomfortable most of the time, because we are always stepping outside of ourselves. Clearly, this is one of those times when it cannot be business as usual. In these days, business as usual could mean no business at all; so, isn't surviving in this economy an extension of that belief? Shouldn't small businesses be prepared to make adjustments, to change strategies, and to adopt some of the methods listed above? There needs to be a viable plan that can lead to implementation and cash generation. To do nothing, can be fatal to the already struggling business. And, no survival plan should look like that.
Source:¹Multiple Streams of Income¹, Robert G. Allen, Second Edition
About the author
Debra Barrow owns a small homebased business, and is also an Affiliate Marketer, specializing in online stores. She has backgrounds in education and corporate business and financial analysis. She is a member of IAHBE, International Association of Home Based Business Entrepreneurs, a division of SFI (Strong Futures International)