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HOW TO SURVIVE THE RECESSION

The seven fat years are over and we may be in for seven lean years. Despite all the negative reports a time of recession has its advantages. It forces you to think more, you may have more time on hand and you quickly determine what adds value to your business and what does not. Strengths and weaknesses that may have been hidden in good times quickly reveal themselves. Below are some ideas that may help you to survive the recession until the seven fat years return.

Increase sales

  1. Try to sell more to current customers. Ever noticed that McDonalds are offering a Jumbo for a few rand more? Order a burger and they ask whether you want chips with it.
  2. Look in your accounting records for customers that have bought from you before, but stopped buying. Try and sell to them again. Wake those sleepy customers.
  3. Understand your customer’s needs more than ever before. Customers think more carefully before buying in times of recession.
  4. Keep advertising. You may actually increase your market share, as many other businesses are not advertising. However, monitor advertising carefully to see what works and eliminate what doesn’t work. A study by McGraw-Hill Research found that companies that maintained (or increased) their marketing throughout the 1981-82 Recession saw an average sales growth of 275 percent over the following five years! But those companies who cut their marketing saw sales growth of 19 percent over the following five years.
  5. Change your product mix. In times of recession people sacrifices luxuries for more essential articles.
  6. Work together with companies that offer products complimentary to yours. It allows you access to others people's customers that are in your target market. You can create a win-win situation for both.
  7. Look at products in your own range that supplement each other. How can you bundle products together in a creative way that will generate more sales?
  8. Tie up with banks and offer easy finance and aggressive rates.
  9. Have a systemised sales system to track customers. Use the system to get in touch with customers on a regular basis, but don’t spam. Always allow the customer to opt out.
  10. Remove all doubt in the customers mind. Offer a full money back guarantee.
  11. Simply ask your customer how you can help them during the recession. They may give you very good ideas.

Increase you margins

  1. Get one of your staff members or a temp to phone all suppliers and tell them you are doing a supplier review to see whether you are on the best price terms possible.
  2. Rank your products and see which products contribute most to your profit. Focus your advertising on these products.
  3. Only cut your prices as a last resort. Rather think of ways to add value.
  4. Offer extended warrantees instead of discounts.

Reduce expenses

  1. Instead of retrenching people offer them a drop in salary. It is better for the moral of your staff and you don’t have to pay a retrenchment package.
  2. Offer workers a shorter work week. Three days instead of five days a week or a half day instead of full day.
  3. Cut perks and reduce overtime. Be open with your employees and explain to them why you need to do this.
  4. Use both sides of paper for printing or instead of printing, use technology. Email invoices and statements.
  5. Sell unwanted and unproductive assets, pay off loans and reduce interest.
  6. Travel less by using technology. Also, downgrade from business class to passenger class. Top management must set the example.
  7. Look at ways to improve your systems. What can you do in two steps instead of three?
  8. Spend less. That is the easiest way I know.
  9. Look at communication costs. Install a telephone management system and review cellphone bills.
  10. Save rent. Let some of you staff work at home or move to smaller premises if you can.
  11. If possible, share resources with other firms.
  12. Pay less tax. Do your planning early.

Cash is king

  1. Clean out customer debt, especially old ones even if you have to offer them a discount to settle their account.
  2. Offer discount for advance payments.
  3. Get extended credit terms from suppliers. Everybody is under pressure and you may be able to negotiate better terms.
  4. Make sure you collect your debtors on due date. Send out statement and reminders frequently.
  5. Watch stock levels carefully. It ties up a lot of stock.

Other

  1. Keep a firm hand on your financials and get proper reports for all key areas.
  2. Brainstorm with your employees. These people are already on your payroll. Use their brainpower.
  3. Hire better skilled workers now at better prices and remove the bad ones.
  4. Many businesses are under pressure. Monitor your debtors very carefully, as the risk of companies failing is much higher.

Don't get overwhelmed by all the negative talk in the media. Newspapers publish stories that create sensation, because sensation sells newspapers. The recession is not nearly as bad as the newspapers make it out to be.

An excellent book to read is Guerrilla Marketing During Tough Times. It carries a 60 day no risk money-back guarantee, so you really have nothing to lose.

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