Recent weeks have felt eerily similar to the market crash of 2008.
I remind myself and many of the entrepreneurs I work with that while the last financial crisis left our personal and business finances beaten, we came out of it with massive growth in the years that followed. This also led to innovation – we improved our operations by not overextending credit, keeping expenses low and retaining cash in case of a market correction.
Using these strategies at my business, Talk Shop, has allowed us to purchase commercial property, diversify through acquiring new businesses and rank as one of Canada’s top employers. But in no scenario of our careful business futureproofing had we planned for a pandemic that would see so much of that revenue dry up overnight.
With the coronavirus leaving few businesses unscathed it feels like we must keep moving and adapt for survival. For many of us, that comes from digging in, evolving and getting smarter and scrappier when it comes to our day-to-day operations. Here’s where we begin.
1. Get Back To Essentials
A deep dive into your monthly expenses will show many luxuries that may have become the status quo but are certainly not essential to the survival of your business. From expensive CRMs to technology you may be underutilizing, ask yourself “what would happen if I didn’t have this?” Cutting costs is painful and will change what you and your team are used to, but shaving hundreds to thousands of dollars from your bottom line each month is critical to improving the financial health of your business.
2. Plan For The Worst
When many were still not convinced the pandemic and social distancing was cause for concern, we had already adjusted anticipated revenue and adjusted expenses. This is a difficult exercise that allows for a real picture of what operating in a recession would look like – what income would be and what you would need to operate on for absolute survival. We planned for a scenario in which the businesses we work with would default.
Getting paid for work would get harder. As such, place extra effort on building up protocols and safeguards, planning for a scenario where you may not get paid what you were expecting.
3. Make Cashflow King
In tough times, vendors will become pushy to get paid while the money you were counting on may not come. Cashflow can make or break your ability to stay in business. If there is one area to invest your time and creativity, it’s in ensuring you have implemented every opportunity for payment to encourage cash flow. Consider incentives for early payment. Also start conversations with your bank, landlord and anyone you owe to look for flexibility and extensions. Everyone is facing tough times and many financial institutions and landlords are supporting small business through extended terms.
4. Adapt And Market New Revenue Streams
Use this time to diversify revenue streams with the aim of having up to seven different places to earn revenue in your business. The more diversified your offerings, the less of a major impact will be made if a product of service dries up. Beyond new product, there’s a need to understand where the market is going and how you can service it. One investment we continue to look at is online marketing, ensuring that as we pivot our service offering, we have the marketing in place to quickly and easily take our services to market, drive sales and provide data to show the response it is having.
5. Show the Love to Existing Customers
If there was ever time to show the love to someone, it’s now, to those regular, long-term customers who have supported your business. Build loyalty with those who continue to stand by you and your business by offering extras. Say thank you and remind them you are also a small business that appreciates what they do for you. Provide a special rate or bundle additional services at no cost. Loyalty is an investment that pays multiples and will help protect and stabilize future income.
While times are tough, they have been tougher. What has persisted in every drop in the economy is the need for innovation, new ideas and new ways of doing things. I believe we will come through this stronger and financially better equipped than ever before.