Free Advice

Originally published in the South County Journal, January 20, 2001

Slowdown, recession, soft landing, hard landing or more of the same. Who’s to say. A major Wall Street firm recently announced we are in a recession. The U.S. Government disputed it. Banks are tightening credit policies, help wanted signs still appear everywhere but employers, especially in high tech, say there are many more responses to job ads than there were just a few months ago.

The only thing certain is change is upon us. Locally, we appear to be somewhat sheltered from the storm. The State of Washington, in their most recent Economic and Revenue Forecast, predicts Washington will be better off than the U.S. economy in all areas including job growth, personal income growth and construction. They have also predicted stock option income in 2001 will be half of what it was in 2000.

How will all of this effect your business?  Do things right and you may jump way ahead of the competition.

Here’s seven strategies for thriving in a cooling or down economy. These are not the “obvious” tips such as reduce your debt or pay attention to your energy usage (very real in 2001). Large corporations have departments to research the economy, trends and make predictions. As a family owned business, you have to do your own research and rely on gut instinct. Pay attention to these key factors and you’ll maximize your efforts.

1.                  Manage your margins. It’s more important than ever to beat your previous margins and to beat the industry average. Work with your suppliers to make sure the prices you pay are in line. Put your business out to bid. Negotiate a lower price in return for an annual commitment.
Keep your customers happy and paying sooner vs. later. Monitor and be aggressive in collections. The difference between payment in 30 days vs. 90 days is 2%. That’s why so many companies offer a 2% discount if you pay within 10 days. The cost of money makes it a wash. Don’t wait to send out bills at the end of the month. Send them out daily or weekly.

2.                  Do more marketing, Both internally and externally. Keep your employees apprised of your strategies and objectives. Let them know you plan to capitalize on the economic situation and make  sure they know their role. At the same time, keep your name in front of as many clients as possible. There are numerous sources for word of mouth marketing. Find those sources (one good resource is “The Secrets of Word of Mouth Marketing” by George Silverman, AMACOM 2001 or at www.mnav.com), study them and implement a low cost marketing program.

3.                  Emphasize sales. Over the last two years employers have constantly complained that a big problem is finding sales people who actually get out and sell. For those people, a wake-up call is on the way. Make sure you have a sales staff not an order taking staff. Make one more call a day, put in a serious sales effort and monitor what works and what doesn’t work.

4.                  Know your competition. You need to be the one sneaking up on the competition, not vice versa. Start with doing some research. Know your strengths and weaknesses and maximize them. Know their strengths and weaknesses and exploit them. It’s a lot easier to beat them using your strengths instead of trying to improve your weaknesses.

5.                  Provide value. Novel concept, isn’t it? Become a partner with your customer. Jointly diagnose problems and make sure the solution is unique to your product or service. Do more than just “make a sale” and you’ll be able to raise your prices and have your clients happy to pay.

6.                  Keep your focus. A cooling economy is not the time to drift. Stay focused on your objectives. Pay attention to details. Don’t let side projects distract you. Get everything running at 90% or better.

7.                  Maximize employee efficiency. The market is changing. Capitalize on it. There may be excellent employees out there, who weren’t out there even three months ago. One client received four times as many resumes for an inside sales position as he did last summer. Retain your good employees and keep them happy. Let them know where they stand and make them an integral part of the business.

© Copyright John Martinka 2001. All rights reserved.