Q: My
micro-business services an industry where there have been a lot of
cutbacks over the past year. Having just got our year-end statements
back from our accountant, we see a need to cut back in some areas.
Can you give me any advice about where to cut? I am, for instance,
tempted to pull our advertising.
A: Think in terms of creating efficiencies rather
than cutting back. In a slow economy, cutting back on the things
that make your business grow - like advertising and marketing, or
inventory - is a bad move.
For instance, in terms of marketing, target more
carefully. Identify the companies that will bring in the most money
for the least cost. Don't stop advertising. Just be more focused
or find cheaper, more innovative methods or venues. And make sure
you can track response.
Back up your advertising with personal contact. Hit
the phones. Cement the relationship you have with current customers
and target those new ones. Point out all the ways that doing
business with your company can save them money. This may mean
offering discounts, special deals, bonuses, new payment terms, etc.
But doing less business is better than doing no business at all.
While you have your customers on the phone, ask them
for referrals. Again, since they are in tough times, you might have
to offer a financial incentive for their help.
This is also a good time to hone your selling
skills. An investment in sales training for you or your sales staff
will pay off now or later in more closed sales.
Try not to cut back on inventory. The competition will
(just like they might slash their marketing efforts), which means
you will be appreciated for your continuing selection. If you look
like you are increasing your inventory and the competition is
cutting back, you may gain customers.
You might want to adjust the type of inventory you
carry, in order to appeal to your customers need to save money.
Suppliers also may be feeling the pinch and be happy to offer you
increased discounts in order to preserve cash flow. Then you can
pass along the savings to your suffering customers.