In a struggling economy, businesses suffer. Whether the company is a local store selling knick-knacks or a multinational corporation producing auto parts, many managers and owners have learned of late that credit is tight and customers are wary. Folks are tightening their belts. In fact, before a recovery really takes hold, many more firms will shut their doors and seek bankruptcy protection.
That's the bad news. On the flip side, some businesses — even small businesses — actually thrive during tough economic times. What sets such companies apart?
- They focus on core products and services. If your firm has diversified far outside your core competencies, it may be time to pull back. Of course, if a sideline product has become a cash cow, you might want to morph into an entirely new business. On the other hand, sticking to the stuff you know best is generally a wise course to follow.
- They engage in prudent cost cutting. When recession hits, some firms panic. They slash inventory, lay off workers, cut prices to the bone. But when customers can't get help because your firm has too few workers, or can't get goods because your shelves are empty, they may conclude that your business is on the ropes. Cutting costs and reducing prices should result from a well-designed plan that fits into a long term strategy.
- They seek opportunities. When businesses fold, new markets often open up. Five auto shops have to share the wealth; when only two shops are left, yours may gain new customers. Also, some of those newly laid off mechanics just might come to you — with a little wooing.
- They pamper loyal customers. When money is tight, it's vital to retain your customer base. That may mean offering discounts, gift cards, or loyalty rewards. A recession is also a good time to focus on your best customers. Let your loyal clients help build your business.
- They stay visible. Letting people know that your company is still operating is crucial during the down times. Keep attending chamber of commerce meetings, promote your firm on the local radio or television station, or write an article about your products for the newspaper.
Business success depends on many factors, some of which are outside your control. But following the proven habits of prosperous companies can help your firm thrive as well.