There are some advantages to a credit crunch that can work for you if you capitalize on them. Take this as an opportunity to scrutinize every aspect of your business from expenses to employees to clients. Pairing down what weakens your business will strengthen it.
1) Cut costs – expenses that aren't necessary
Which costs are necessary and which are optional? Candy on the receptionists desk – optional. Electricity – necessary. Color copies – optional. Supplier contract – necessary. And so on.
From the necessary expenses, which costs can be reduced? Ask vendors for more favorable payments terms, whether extended terms or a discount for paying early – this can help your cash flow and bottom line. Decrease your electricity bill by conserving energy – turn off lights in unused rooms and when you leave for the evening and turn off computers when the user will be away for more than 30 minutes. A penny saved is a penny earned – you can do this.
2) Human resources – consider who is on board
Every team has its weak link. Maybe your business has someone on the team who isn't adding to the bottom line or the strength of the company. This could be someone who just doesn't pull their weight, or someone who lowers the morale of those around them. In either case – now is the time to change.
The downturn in the economy means that there are a lot of great people looking for work right now. Begin the recruiting process and find someone that will fit in with your corporate culture and add to the bottom line.
3) Costly clients – are they worth it
You know who they are. They are the clients that take up more time and resources than they pay you. They can be difficult, not pay on time, and suck the energy right out of you and your team. If you don't see your relationship improving in the next 6-12 months – fire them. If something costs more than you sell it for you're losing money. You can't afford that right now. Stay focused on the goal – stay in business and make money.
4) Discounts – they don't always help
Now is also the time to shore up your business to protect you from the worst of the crunch. It can be tempting to lower prices to attract more sales, but this can eat away at your profits quickly. Consider promotions on particular items while the rest of the inventory stays at full price.
Put your business in a good position financially so that you can tough it out now and prosper later.
In a previous post we discussed shoring up business finances to make it through a down-turn, to read it click here.
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