The current business climate is challenging for your business, but you’re not alone. Most businesses are affected in some way by economic uncertainty — including your suppliers, customers and competitors. Many small business owners face opportunities and threats seemingly at the same time. According to SunTrust Business Owner Research, most business owners see an upside and are finding ways to take advantage of the environment by:
While you might feel a lack of control, the reality is, owners have more control than employees. For many businesses, a challenging economy is a time to reconsider every line of your business plan. You can institute zero-based budgeting to question every cost, challenge existing processes to find productivity leaks and evaluate the value of every customer relationship. Consider these seven areas to gain even stronger control of your business.
1. Your target markets and customers. Customers, markets and products are not created equally. Calculate the profitability of each. Research new markets, especially those with resilience to economic challenges, and consider ways to sell more to your most profitable customers.
2. Your level and quality of service. Assess your product line, and identify your most profitable products. Consider customer usage and think about how customers will respond to add-on services to maintain pricing. How will they respond to eliminating unprofitable services?
3. Your prices. Don’t assume a price decline. Instead, complete a price review to include competitive information, new bundling options, terms and customer ideas.
4. Your budget and overhead. Institute zero-based budgeting, which starts with a blank piece of paper. Evaluate every cost, and determine the business rationale for every expense.
5. Your productivity level. It’s human nature to identify real costs you can eliminate or reduce in the short term. However, productivity improvements pay off in the long-term. You add permanent capacity to your organization by improving efficiency 10 percent.
6. Your time and energy. Keep a detailed account of your time for one month. Many owners allocate too much time serving existing customers. Instead, you should train and develop employees to handle existing customer responsibility and reallocate your time to business development.
7. Your point of view. Take full advantage of ownership benefits during a downturn. You have the ability to make the call on issues surrounding flexibility, service, innovation and cost controls. Communicate your point of view to employees and business partners to keep them on board with your plans and actions.
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.