If the turmoil on the JSE and the thought of further interest rate and power hikes have got you worrying about the future of your small business, relax! With a few strategic decisions, you can brace your business for the rough waters ahead and still turn a profit despite the general economic slowdown.
Historically, when recessions rear their ugly heads, HR and marketing are the first to get the chop. Yes, these people-centric functions put pressure on financial resources, but letting staff go and slashing all marketing activities are never sound strategies, no matter what the economy is doing.
A more balanced approach to cutting costs is necessary; one that takes into account your business’s current and future needs (because yes, the recession will not be here forever.)
Consider these cost-effective tactics:
- Invest in human capital: Don’t hire more people, but do increase your investment in the ones you have. People make a business, especially in difficult times. You can also extend your access to necessary human resources through partnerships and alliances or consider sharing resources with other partners. If staff resign during this time, don’t immediately replace them. Look for ways to constructively redistribute their workload to maximise efficiencies.
- Make your marketing more tactical: Get specific. Spend money where you can measure your returns, and put lead-generation marketing initiatives at the top of the list.
- Focus on what you do best: In this environment, bigger companies survive through mergers and acquisitions, while many smaller businesses simply fold. It’s time to act smart; focus on your core business and what you do best and outsource the rest. This is a good time to trim unnecessary fat.
- Be open to negotiation: Because of the ‘bearish’ market, clients have more negotiating power and are driving harder bargains, especially when it comes to cost. If you have clients that are negotiating to find the best deal, be open to this and provide considered alternatives that meet their expectations but don’t leave you out of pocket.
- Be flexible in your outlook: Instead of a five-year business plan, work on a shorter six-month business plan. This will allow you to quickly adapt, change and respond to movements in this volatile market.
By Brad Porter