Three Ways to Prepare for the Recovery
July 1, 2009
At the end of May, the President said that we have "stepped back from the brink" with respect to the economy. Whether or not this signals the long-awaited recovery, you can book on the fact that the economy will turn around at some time (hopefully very soon), and you want to be prepared to take advantage of opportunities for growth. Here are three ways to get ready.
1. Understand the brave new world
The tough economy has shaken small business to the core. Many did not survive tight credit and lack of consumer spending. Those that did now face a new landscape in which to operate. Shake off the old doom-and-gloom attitude that has been so prevalent in the past year and start recognizing how things have changed and what you can do about this.
- Prepare for new competition. As people lost jobs, many of them started businesses. Those new businesses that were able to survive the tough economy present a new challenge for you.
- Pick up competitor's customers. Many businesses failed. If your competitors were among them, you have the opportunity to grow your customer base. Be proactive in reaching out to customers who previously patronized your competitors who now do not exist.
- Staff up sooner rather than later. There's certainly wisdom in waiting to add to your payroll until you're sure that things have turned around. However, looking for new employees now gives you a wider pool of talent to hire from; once large corporations start re-hiring, you'll face stiff competition in the job market. Also, the sooner you engage them, the more time you have to train them so they'll be ready to be productive as your business grows. Consider hiring Baby Boomers whose retirement plans have been put on hold because of what the stock market did to their 401(k) plan balances. Even if you don't expand your staff, be prepared for new incentives needed to retain your current staff (some may find it easy to jump ship now unless you provide reasons to stay).
- Renegotiate leases. Look around at all the empty storefronts and office buildings and you'll know that now is a great time to talk to your landlord. You hold the upper hand because demand for commercial space in most locations is very soft. Ask for the rent rate and terms you want. If need be, you can walk away from negotiations and find other suitable space.
2. Go back to the drawing board
Now is the time to review your business plan and your budget so you'll be poised to leap when the economy actually improves. Recognize that even if times are better, they won't be boom times for some time. Here are some points to keep in mind:
- Expect to spend more (time and/or money) in promoting your business. Just because times are better doesn't mean customers will automatically rush through your door. You still need to make your case and attract new customers. During the past couple of years, social networking (through LinkedIn, Facebook, Twitter, and other sites) has exploded and changed forever the way to promote a business.
- Recognize the higher cost of government action. As the federal government imposes more regulations on business, expect to spend more in compliance. Donít count on taxes, licenses, and other government fees staying down or even being maintained at current levels.
- Rethink your technology solutions. For many small businesses, investments in technology are key to growth. When financing was difficult and owners were stressed, investment in technology may have been put on the back burner; time to heat up consideration of new software and online solutions.
3. Learn tough lessons
While recovery will happen, hopefully soon, don't forget that tough times will surely reappear. The things you've learned from this economy should not be forgotten:
- Create your own "emergency fund" so you won't have to borrow when you face difficult financial circumstances in the future.
- Keep your financial house in order so you can continue to have access to credit for growing your business. Use technology analytical tools to help you understand the numbers so you can stay fiscally sound.
- Remember your customers and treat them well. They'll remain loyal in tough times if you stay connected with and responsive to them through all times, good and bad.