19 Ways to Survive in a Tough Economy

Lynn Spry, Phillip Spry

Description

Strong economies come and go. Your business shouldn't have to!You may have heard the statistic that nine of ten small businesses fail in the first five years of operation. Did you know that for those that make it to year six, an additional 90 percent will fail over the next five years? This means approximately 99 percent of small businesses won't survive their first decade in operation.
19 Ways to Survive coaches small-business owners how not to fall victim to these statistics. The book presents practical solutions in easy-to-understand language.
Notice xv
Introduction xvii
1 Commit to Making Your Business a Success 1
1. You Can’t Learn to Swim in a Classroom 2
2. It’s Okay to Fail Sometimes 2
3. Risks Lead to Rewards 2
4. Mistakes Mean You Are Learning 3
5. Commit to Success 3
6. Control Your Business 4
7. Communicate Your Goals Clearly 4
8. Lead by Example 5
2 Comply with All Government Rules and Regulations 7
1. Protecting Your Personal Assets 7
2. Set up Your Business Credit 9
CONTENTS
iv 19 ways to survive: Small-business strategies for a tough economy
3. Taxes 9
3.1 Get every tax deduction possible 9
3.2 The high cost of not paying your taxes 9
3.3 Prevent tax problems in the future 13
4. Follow Regulations and Rules 13
5. Post All Required Notices 14
6. Forms, Documentation, and Disclaimers 15
7. Finding Reliable Information 15
3 Eliminate the Financial Obstacles 17
1. What Is Your Real Monthly Revenue? 18
2. Required Expenses versus Desired Expenses 19
3. Negotiate and Reduce Your Bills 20
4. Reduce Unnecessary Employee Expenses 22
4.1 Reduce perks 23
4.2 Reduce benefi ts 23
4.3 Control costs of after-hour meals 24
4.4 Find a solution for excessive overtime 24
4.5 Deal with weak employees 24
4.6 Review employee expenses 24
5. Eliminate Hidden Marketing and Advertising Costs 24
6. Check Your Own Charges 26
7. Do Away with Superfl uous Expenses 26
8. Keep Costs Critical to Expansion 27
9. Review, Repeat, and Reduce 28
4 Understand the Financial Health of Your Organization 29
1. The Balance Sheet 30
2. The Profi t and Loss Statement 30
3. Cash Flow Statement 32
4. Other Types of Reports to Help You Stay on Top of Your Business 33
4.1 Daily and weekly margin report 33
4.2 Daily and weekly gross revenue report 33
4.3 Detailed inventory report 33
4.4 Customer surveys 34
Contents v
5 Understand Your Industry to Become a Leader in Your Field 35
1. Special Note for Franchise Owners 35
2. Learn Your Industry for Free 36
2.1 Join online chats and newsgroups 36
2.2 Regularly check competitor advertising 36
2.3 Visit your competitors 36
2.4 Review your vendor’s literature 36
2.5 Study large competitor websites 37
2.6 Sign up for industry newsletters and magazines 37
2.7 Take free training courses 37
3. Investing in Your Education 37
3.1 Complete certifi cations 37
3.2 Online courses 38
3.3 Group membership 38
3.4 Read the latest industry-related books 38
4. Spread the Knowledge 38
6 Ask for Support and Assistance 39
1. Ask for Help 39
2. Get Support from Your Spouse 40
3. Take Your Children to Work 41
4. Get Advice from the Experts 42
4.1 SCORE — Counselors to America’s Small Business 42
4.2 US Small Business Administration (SBA) 43
4.3 Resources for Canadian businesses 43
5. Develop Relationships with Other Business Owners 43
6. Get Advice from Your Franchise Company 44
7 Take Stock of Your Supplies 45
1. Reducing Inventory Costs 45
2. Stock Products, Not Catalogs 46
3. Get Rid of Old Products 47
4. Reducing Assembled Product Costs 47
5. Reducing Service Costs 49
vi 19 ways to survive: Small-business strategies for a tough economy
6. Revenue Does Not Equal Profi t 50
7. Your Products and Services Cost 50
8 Focus on Your Target Market 51
1. Products That Appeal to Everyone 51
2. Identify Your Target Market 52
3. Discover Who Your Customers Really Are 53
3.1 Learn about your customers 54
3.2 Discover your customer demographics 55
3.3 Find your most profi table customers 57
4. How Effective Is Your Advertising? 59
4.1 Check your advertising demographics 60
4.2 Tracking advertising effectiveness 60
4.3 Find the real cost of all your advertising 62
4.4 Cancel your ineffective advertising 64
4.5 Increase your best advertising 64
4.6 Track brand loyalty 65
4.7 Referrals = free advertising 65
9 Keep Your Customers and Clients Happy 67
1. How Did You Treat Your First Customer? 68
2. Always Deliver on Your Promises 69
3. Become the Solution Provider of Choice 69
3.1 When customers want more 70
3.2 When customers complain 70
3.3 When customers pay late 71
3.4 When customers stop paying 72
4. What Type of Customers Do You Want? 73
4.1 Sometimes you have to fi re your customers 73
10 Motivate Your Employees 75
1. The Problems Associated with Overstaffi ng and Understaffi ng 75
1.1 Personnel problems 76
1.2 Productivity issues 76
1.3 Errors 76
2. Determine If Your Company Is Overstaffed Or Understaffed 76
Contents vii
3. Do You Have the Right Team? 77
4. Firing Employees Can Improve Morale 78
5. Finding and Hiring New Team Members 78
5.1 Before the interview 79
5.2 Preparing the candidate for the interview 80
5.3 Interview tips 81
5.4 Never hire the “best” candidate 81
6. Branding Your Team 81
7. Build a Championship Team 82
11 Manage Your Problem Employees 83
1. When Good Employees Turn Bad 83
2. Confronting Confl ict 84
2.1 Employee complaint 1: I am irreplaceable! 84
2.2 Employee complaint 2: I am underpaid! 85
2.3 Employee complaint 3: I know better! 87
2.4 Employee complaint 4: I bring in the customers! 87
3. Take Proactive Steps to Prevent Sabotage 88
3.1 Conduct regular performance reviews 89
3.2 Provide constructive feedback 90
4. Setting Level Employee Expectations 92
12 Document Your Critical Processes to Ensure Consistent,
Quality Customer Service 93
1. The Benefi ts of Documents and Processes 94
2. Picking the Right Processes to Document 95
3. Designing Forms That Save Time 96
4. Measure What Matters 97
5. Regular Reviews 97
13 Train Your Employees to Increase Sales and Improve Profi tability 99
1. Sales and Satisfi ed Customers 99
1.1 Sales myth 1: Our products are too expensive 100
1.2 Sales myth 2: I’m not in the sales department 101
1.3 Sales myth 3: That customer can’t afford it 102
viii 19 ways to survive: Small-business strategies for a tough economy
1.4 Sales myth 4: That customer doesn’t need it 102
1.5 Sales myth 5: We haven’t had a serious buyer all day 103
1.6 Sales myth 6: Customers just don’t like salespeople 103
1.7 Sales myth 7: Sales is just a numbers game 104
2. Look for Sales Opportunities 104
3. The Right Products to Up-Sell 105
3.1 The right time to up-sell 106
4. Everything Should Be for Sale! 107
5. Taking Sales to the Next Level 108
14 Turn Your Store into a Showplace So You Can Attract
New Customer Dollars 109
1. Transforming Your Store 110
2. Creating the New Layout of Your Store 110
3. Remember the Best Changes Are Free 111
4. Take Advantage of Professional Designers 112
5. Positioning Products in Your Store 112
5.1 Positioning popular products 112
5.2 Positioning popular products in your service business 113
5.3 Product location increases impulse purchases 113
6. Boost Sales by Offering New Ancillary Products 113
7. Keep Your Customers Comfortable 114
7.1 Music 114
7.2 Airfl ow and smells 115
7.3 Temperature 115
8. Tots + Toys = Transactions! 115
9. Reduce Shrinkage and Lost Dollars 116
10. Keep Your Place of Business Organized and Clean 117
11. When to Implement Your New Design 118
15 Adapt to Changing Market Conditions 119
1. Expand Your Service Offerings 120
1.1 At-home service 120
1.2 Home delivery and shipping 121
1.3 Online service 121
Contents ix
1.4 Product consulting 121
1.5 Free product maintenance 121
2. Expand by Selling to Local Businesses 122
2.1 Identify the company demographic you are targeting 122
2.2 Choose a repeatable offering 123
2.3 Include an impulse purchase 123
2.4 Leave a fl yer or advertisement with the potential business customer 123
3. Finding Profi table Partnerships 123
4. Taking Advantage of Free Ideas to Continue to Grow 124
5. Markets and Customers Change — So Should You! 125
16 Compete Effectively with Big Businesses 127
1. Don’t Compete on Their Terms 127
2. Stand out in a Crowd 128
3. Personalize Your Presentation 129
4. Find Your Unique and Uncommon Products 129
5. Sell Your Company’s Industry Knowledge 130
6. Be Prepared for Direct Competition 130
7. Be Positive If You Want to Win Customers 131
17 Take Advantage of Barter Opportunities 133
1. What Is Barter? 133
2. Why Barter? 134
2.1 Seller benefi ts of barter 135
2.2 Buyer benefi ts of barter 135
3. Taxes and Barter 136
4. Finding Businesses That Will Barter 136
4.1 Bartering within a barter group 137
5. Paying Your Expenses through Barter 139
5.1 Paying your bills through barter 139
5.2 Paying yourself through barter 139
5.3 Paying your employees through barter 140
6. You Can Barter for Anything 140
x 19 ways to survive: Small-business strategies for a tough economy
18 Protect Your Business from Theft and Fraud 141
1. The Risks of Accepting Checks 141
2. Avoiding Credit Card Fraud 143
3. Preventing Shrinkage and Outright Theft 146
3.1 Reduce the payoff 147
3.2 Lock up valuables 147
3.3 Install a security system 147
3.4 Get steel roll-down doors 148
3.5 Work with your landlord and neighbors 148
3.6 Watch your customers 148
4. What to Do If Your Employees Are Stealing 148
5. How to Avoid Business Scams 149
19 Ensure That the Functions Critical to Your Business Are Stable,
Backed Up, and Insured 153
1. Easy, Low-Cost Data Backup 154
1.1 Media backups 155
1.2 Computer hard drive arrays 155
1.3 Off-site backups 155
2. The Risks Associated with Saving Information Longer Than Necessary 156
3. Uninterruptible Power Supplies (UPS) 156
4. Insure Your Business Assets 157
5. Patents, Copyrights, and Trademarks 157
6. Get Rid of Piles of Paper 158
7. Make Sure You Have a Backup Plan for Your Job 158
8. Test Your Backup Systems 159
20 Now That You Know the “Ways,” Continue to Search for
New Opportunities 161
1. Expand Beyond Your Boundaries 161
2. Acquire Another Company 162
3. Franchise Your Processes 162
4. Increase Your Holdings through Commercial Real Estate 162
5. Take Advantage of New Opportunities 163
Contents xi
TABLES
1. Customer-Tracking Grid Including Age and Zip/Postal Code 55
2. Customer-Tracking Grid Including Gender 56
3. Calculating How Much Each Customer Spends 58
4. Tracking Your Advertisements’ Effectiveness 61
5. Cost and Margin of Advertising per Customer 63
SAMPLES
1. Balance Sheet 31
2. Profi t and Loss Statement 31
3. Cash Flow Statement 32
4. Up-Sell Possibilities 106

Sujets

• Strategic planning
• Small business

Informations

• Publié par: Self-Counsel Press
• Date de parution: 01 juillet 2012
• Nombre de lectures: 14
• EAN13: 9781770408869
• Langue: English

Extrait

19 WAYS TO SURVIVE
Small-Business Strategies for a Tough Economy
Lynn Spry and Philip Spry
Self-Counsel Press
(a division of)
International Self-Counsel Press Ltd.
USA Canada

Copyright © 2012

International Self-Counsel Press
All rights reserved.
Introduction

A storm is looming on the horizon, the clouds are an angry gray, and the rough water is tossing the ship around like an eggshell. The ship’s captain could turn back and wait for clear waters and mild winds, but that would mean losing the investment in this voyage, not to mention the lavish rewards for completing a successful trip. So the intrepid captain chooses to press on and weather the storm.
An equivalent to this brave and audacious captain is the entrepreneur who takes on the challenge of running a small business. The obstacles are large, but the rewards are even larger. A successful small business can propel the owner to financial freedom very quickly. Through franchises, taking the business public, or simply adding more stores, small-business owners have the chance to succeed in ways that most people working a nine-to-five job will never see. Owning a business is risky but the rewards are significantly greater. If it’s done right, business ownership is the opportunity to make more money than any job can ever pay.
In these tough economic times, with unpredictable gas prices, a depressed real-estate market, and rising employee costs, the minor problems your business has had can be magnified many times. You may have already started to see the impact on your business. Maybe your sales have slowed, customer traffic has dwindled, or when customers do come in, they don’t spend as much money. Your products and employees are becoming more expensive. Even if your business has been running successfully for years, it can be impacted. This isn’t an isolated problem and you are not alone.
Some people will choose to shut down their businesses while others will sell and hope they make enough money to retire. Those worse off may simply close their doors and walk away, ignoring their debts and obligations. However, some people will face the challenges head on and, like the successful ship captain, they will prepare for the storm and ride it out. They will redesign their businesses to become successful during this tough economy. These redesigned companies will be well positioned to grow once the crisis is over.
You may be wondering how a small business can grow during this difficult time. It may be challenging, but it can be done. After all, many large companies were in this exact position at one time or another. This book was inspired by the challenges our own small business faced. In early 2006, in Arizona, at the height of the real estate boom, we purchased a small computer store: Arizona Computer Outlets. At that time, houses were selling for 30 to 40 percent more than the purchase price; within two or three days of being listed, sometimes within hours. The store was thriving in a market in which home equity loans were inexpensive and people had more cash than they could spend. Within a few months, the environment changed dramatically.
As interest rates increased, the Phoenix housing market began to tumble. Consumers who had adjustable rate mortgages on their homes saw their monthly mortgage payments rise dramatically. Their disposable income shrank as a larger percentage went to paying for their houses. As if that weren’t bad enough, higher gas prices restricted consumer spending even further. By December 2006, sales in all industries were slowing and as a small local retailer, we felt the pressure of a slow holiday season.
Over the next seven months, store sales continued to slow, until we hit rock bottom in July 2007. The store lost more than $9,000 that month alone. We knew we needed to make significant changes, but had very few solid ideas on what to do. We found that many books discussed opening a new store, but there were few resources targeted at turning around a small business. We knew that to stay afloat, we needed to change. Desperate to survive, we contacted other small-business owners, read all the business and management books we could find and, by September, had the start of a plan to recover our business.
Within six short months the business had turned around, even though oil prices had reached new highs and home prices had fallen more than 10 percent. Pundits around the country were starting to discuss the possibilities of the country entering a recession, but at Arizona Computer Outlets things were very different. New customers were coming in based on referrals alone, profits were up, and expenses were down. February 2008 was our best month ever, even beating the month we bought the store!
The store’s net revenue had increased almost 90 percent from the July 2007 lows and the store turned a profit of almost $7,000 in February 2008. Sales were now in the pipeline and on the last day of February, we had $25,000 in sales ready to be closed in March. We had turned our business around and two years later, in July of 2009, we expanded to a second location.
This book documents the lessons learned from hundreds of hours of research and experimentation. It summarizes the advice and examples of other successful small-business owners as well as our own experiences. This book outlines exactly what you need to do to stay afloat in a difficult market. With tried and true methodologies to increase sales and improve customer service, you can grow your business even in tough times.
Many small businesses are still facing economic challenges, but you can turn your business around and successfully navigate through these troubled waters. Once you do, you will be well positioned to take advantage of the next economic boom. Remember, no storm can last forever. In the past, companies that have made it through difficult economic times have often gone on to become significant players when the market improved.
When your business is struggling, work on building, changing, and growing your business. Remember your goal: You wanted more or you wouldn’t have bothered starting your business in the first place. Your small business can become the stable, profitable company that you want it to be.
Take a moment to relax and think about how things started. Remember back to the day you first dreamed of having your own business. Think about the anticipation you felt when you decided that you were going to do it. At that time, you probably knew a few people who owned a store or company and they were very successful. But they didn’t start out that way: they were all just average people who wanted something better and worked hard to get it.
When you remember back, you probably think about the success you anticipated, the loyal customers, the brand you would create, your picture on the cover of Entrepreneur magazine, and most of all, the financial freedom! More than anything else, those goals were what you were trying to achieve and that lifestyle is what you wanted as your reward.
Your goals for your business are what drive you every day. This is why you go to work each morning and why you keep your business open during the tough times. This is the dream that you wish to achieve, the security you will provide for your family, and the freedom you will enjoy.
One of the biggest challenges you will face is figuring out what the best route is to achieve your goals. When you first started, you may have created plans, products, and processes that were designed to grow your business. However, as your business grew, you may have discovered that you had to dramatically change things in order to keep your business running.
As you read this book, you may find it challenging to replace your existing ideas with new ones. In our business, change was one of our challenges. It wasn’t until we were faced with almost losing our business that we realized we had to change to survive.
In order to make the changes your business needs, you have to be brutally honest with yourself. As a small-business owner, you have made hundreds of decisions to get your business up and running smoothly. Now, it is time to review each of those decisions. It’s hard, but you need to choose which ideas are working and which aren’t. For some people, this may be the most difficult part, but if you can commit to redesigning your business, changing what doesn’t work, and committing to what you have done well, you will be on your way to turning your business around.
With advice from many small-business owners who have survived difficult times and are still successful, you will have the knowledge and power to change your course, succeed, and reach your goals. Before you begin, take a moment, close your eyes, and imagine what your life will become when the business is growing and successful and you reach your goals.
In the following chapters, we will present 19 ways to help ensure you’re successful in this tough economy. We wrote down a list of things that helped us and other small-business owners remain successful and narrowed it down to the ones we felt were absolutely critical for success. Most of these, if ignored, could lead to the loss of your business. When the economy is booming, it’s easy to slack off, but that time has passed. The time to act is now, not when you’re facing financial ruin. It’s time to make a choice. You can turn back and give up your dream or buckle down, press on, and succeed. An unknown, wise person once said, “A bend in the road is not the end of the road ... unless you fail to make the turn.”
1
Commit to Making Your Business a Success

As the owner of a business, you are