The dominoes are falling. First it was the housing and financial sectors that collapsed. That led to related industries (home improvement stores, furniture stores, appliance dealers, etc.) reeling. Consumers started feeling the pinch and shut down spending across the board, which is affecting everyone.

But you don't need to be a domino passively waiting for your turn. Now is the time to take measures to ensure you not only survive, but thrive.

There are three critical tactics you need to employ right now:

Maximize Profits

The first step to maximize profits is to really understand your profit and loss statement and get a handle on your operating expenses. In a growing economy we often have the tendency to focus on sales.  "More sales are better"; this strategy is referred to as "top-line marketing."  In a tighter economy, the focus should shift to increased gross profit margins. Yet increased gross profits become a wash if we fail to minimize or reduce operating expenses. This can be thought of as "bottom-line" marketing. The combination of keeping your eye on increased profits and reducing operating expenses will give you a positive bottom-line.  

Watch Your Cash Flow

At the same time entrepreneurs would be wise to keep their eye on cash flow.  Cash flow is the oil that lubricates the engine of your business. Three ways to improve your cash flow include:

Nurture Your Customers

The third strategy is to continue to focus on your customers and providing exceptional customer service. A tight economy gives your clientele the opportunity to be picky about the product service they are experiencing.  This is the time when retail and service businesses can stand out by providing outstanding service. By coaching employees to provide stellar service, a business can keep valuable customers and ride out the downturn.

 

Take a look at the sidebar for ideas from Deloitte and read their article on Managing Customers in a Downturn.

 

Need Help Implementing These Ideas?

You may be in business for yourself, but you are not in business by yourself. The Redwood Empire SBDC  one-on-one advising can help you apply these tactics to your business. Give us a call--we are here to help.