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Weathering an Economic Storm
by Wendy Priesnitz
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.
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