Uncertain economic times present challenges and opportunities for you and your business. While most business owners feel pressure to perform even better during a challenging economy, they also understand the secret to sustaining and growing their business value depends on fortifying business fundamentals.
The following six strategic priorities represent ways to strengthen your business position and build in flexibility to roll with the highs and lows of economic volatility.
Productivity initiatives make the most of what you have, including people, technology and business “know how,” and they create long-term savings each year. Invest in productivity with an emphasis on “systematizing” or automating tasks, creating more value from the people and resources you have.
Create rewards to encourage and motivate employee improvements. Bring employee teams together to brainstorm around solutions to improve productivity. Investigate systems such as quality control and process automation to automate, reduce or eliminate work.
Business systems give you more control over spending, service quality and your employees’ effectiveness. They also grow the value of your business assets by saving cash, growing profit margins and giving you more free time to work on building the business, instead of performing mundane tasks.
With hundreds of thousands of jobs eliminated by large organizations, growth-oriented smaller businesses can acquire talent unavailable in a booming economy. Spend time talking to your current employees and reviewing the drains on your own time, so you know the type of talent you need.
Spend one month tracking how you spend time, and identify opportunities to delegate activities other than sales and people development. SunTrust Business Owner Research shows you can get the largest return on investment by allocating more time to business development and training, as well as developing people who can take on greater customer service responsibilities.
Don’t slash marketing spending, but measure marketing performance and sustain effective marketing activities. Take greater advantage of word-of-mouth referrals, and use technology like email campaigns, Facebook, Twitter and LinkedIn to motivate and reward customers for referrals. Invest resources to track where new customers come from. Tightly link marketing activities to traffic or leads in your pipeline.
Choose your customer prospects carefully, as not all prospects are created equal. Spend time assessing which of your current customer segments are most profitable. Which are the most resilient to economic turbulence?
Based on your analysis, create a customer acquisition plan to reach out to new customers with higher competitive value. Higher value doesn’t always mean discounted pricing. Consider product bundling and added services to differentiate and deliver greater value.
Invest the time to identify and target your highest-value customer segments. Create a marketing-potential worksheet to evaluate customers on the following:
Increase communication with current customers, so you can anticipate changes in their needs or spending patterns. Uncertain economies are not the time to assume what your best customers are thinking. Stay actively engaged with your most profitable relationships. You may need to be creatively flexible to help them weather uncertainty. The more you know about their situation, the better you’ll be able to anticipate and fulfill customers’ needs.
When targeting new markets, consider the economic resilience of sectors like energy, health services, consumer staples, agriculture and systems and information technology.
Work with supply chain partners to create more value and rationalize costs. Improve communication with all of your business partners. It will pay off with improved efficiency across the board. Implement electronic purchasing, so you can optimize payment terms and inventory control, which will ultimately improve cash flow. Most businesses seek to reduce unnecessary inventory and stretch working capital during periods of economic uncertainty.
Invest in educating your banker about your business, the strength of your cash flow and the market niche you serve. Identify banks with strong credit discipline and balance sheets that remain committed to business lending. If cash flow is an issue, your banker can help you implement systems to better manage and maximize cash flow by speeding receivables, putting extra cash to work and tracking budgets more closely.
If you don’t yet need additional capital, keep your banker in the loop, and maintain the relationship in case your needs change. It is much easier to activate the process of securing financing with strong, trusted relationships already in place.
About SunTrust Business Owner Research: SunTrust surveys small business owners and advisors as part of its ongoing business seminars and symposiums. The small business owners attending these events include both SunTrust client and non-client business owners and are representative of the broad spectrum of businesses located in the SunTrust markets. The research cited in this report is extracted from these 5,425 small business owner surveys collected between 2007 and 2011.
This article is general in nature and does not constitute legal, tax, or investment advice. SunTrust makes no warranties as to accuracy or completeness of this information, does not endorse any non-SunTrust companies, products, or services described here, and takes no liability for your use of this information.