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9 Ways to Make Your Small Business Recession-Proof
INDUSTRY NEWS
9 WAYS TO MAKE ASSOCIATION INSIDER YOUR SMALL BUSINESS RECESSION PROOF By Bobbi Jackson
SPOTLIGHT INDEX
When consumer spending declines, small businesses are at greater risk than larger, better-established companies. Smaller businesses often simply don’t have the financial wherewithal to struggle successfully through extended economic crises. However, by taking measures to prepare in advance for difficult times ahead, you can help your commercial power sweeping business become more resistant to threats from recession. Follow the recommendations below for cost-cutting, marketing, customer retention, and other measures, to help make your business as recession-proof as possible.
HOW TO BEGIN RECESSION-PROOFING A SMALL BUSINESS
Start your recession-proofing initiatives by first assessing your market and the dollar value of your pavement sweeping service line and other service channels, based on your sales success with your customers. Factor this estimation into a strategy for prioritizing cost-cutting, existing customer development, increasing efficiency, and price raising (if necessary) in your combined multiple recession proofing measures.
To whatever respective levels you decide to raise prices and cut costs, expect more than one approach to be necessary to successfully offset predictable shrinkage of profit margins during extreme external economic circumstances across the B2B environment.
Of course, such conditions already exist, currently due to the COVID-19 pandemic triggering the global economic shutdown of the past several months. But, you should still act to implement some or all of the nine measures discussed below, as
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needed, to help mitigate hardship for your small business INDUSTRY NEWS over the coming months and to get a better financial position to withstand future challenges from external economic changes.
9 WAYS TO HELP RECESSION-PROOF YOUR POWER SWEEPING BUSINESS
Here are some key methods that you can implement to help recession-proof your commercial pavement sweeping business. Keep in mind that the more of these changes you make, and the more diligently you adhere to them over time, the greater your success in making your business more resilient during a recession will likely be.
SPOTLIGHT IMPROVE OPERATIONAL EFFICIENCY.
First, examine all your operating metrics, and determine what needs to be done to meet standards in any areas of under-performance. Conduct a needs assessment to find ways to optimize functioning in workspaces and storage areas and foot traffic routing. Strive to maximize the use of every minute of work time and cubic foot of workspace. In other words, go lean. Perhaps you can even eliminate some work areas and lease those out to other businesses. Shut down under-utilized spaces and downsize to smaller facilities, if it makes more sense in terms of your growth rate.
Evaluate the potential savings in having as many people as possible work from home, for at least part of the workweek. Telecommuting has proven to increase productivity in several large studies. Use the URLs listed in the Resource section below, to access findings reported in the Harvard Business Review and Inc. magazine from studies showing productivity increased by double digits and staggering reductions in employee attrition.
Find areas to cut utility costs throughout your facilities, without negatively impacting work efficiency. Replace
appliances and lighting fixtures with more energyefficient versions. Weather-proof access points around your buildings. Develop an energy-conscious workplace culture, encouraging employees to turn off electricity to INDEX equipment and rooms while not in use. Look at solar and wind energy alternatives.
STICK TO WHAT YOU KNOW BEST.
Continuing to manage services or supplementary product lines that aren’t generating enough income to make it profitable to spend valuable time on running those, in effect, wastes money that you could be making by refocusing your energies on what your team does best. Such revenue channels are also not very likely to be offering sufficient added value to your customers to be meaningful contributors to your brand reputation.
Evaluate all your revenue lines and shut down any that are nonproductive. Freeing your budget and team from the burdens of maintaining services and product lines that don’t pay the costs of keeping them active enables your staff to devote their time fully to your most profitable core income channels.
BUILD MUTUALLY PROFITABLE RELATIONSHIPS WITH CURRENT CUSTOMERS.
Too many businesses disregard the wealth of profit potential in spending more effort on further developing their existing customer base. Yet, the path of least resistance toward recession-proofing a business is in
increasing income from value for your dollars is in order. current customer accounts. Emphasize increasing your Offering internal Ask your regular supplier if they can offer a better deal, and if customer lifetime value (CLV) discount promotions, necessary, move on to a provider across your existing income base. referral incentives, that delivers similar quality at more competitive prices.
The secret is stepping up and joint promotional REDUCE YOUR your game on service quality. So, consistently go the extra opportunities,...can also
Offering internal discount promotions, referral their future careers. Interns can yield more time for your incentives, and joint promotional opportunities, among regular staff to increase output in important projects and other relationship-building initiatives, can also create continued on page 12 opportunities for your business and your customers to work together in generating more sales for both of you. Creating these win-win opportunities can save much, vs. absorbing the high costs of obtaining new customers.
FIND WAYS TO REDUCE INVENTORY COSTS.
Take a hard look at possibilities for cutting inventory costs while maintaining quality and seamless services to customers. It may be time to make some changes. Maybe it’s time to lower the quantity for some items you’re keeping in stock. Consider implementing a KanBan system to help control spending, by prompting replenishment only when stocks of various items reach designated levels for reordering. Also, examine your shipping costs, and see if there are more cost-efficient alternatives.
Further, buying from the same supplier forever isn’t necessarily always to your advantage as a business consumer. Sometimes, shopping around for a better
PAYROLL COSTS.
Considering offering unpaid mile for customers. Find ways create opportunities. or nominally paid internships to add value to the services for time-intensive jobs that you deliver. Identify customers’ require little or no professionalneeds, and eagerly reach level performance but that also out to meet them. Make your customers’ success and offers students an abundance of opportunity to develop happiness in your business priority. important fundamental skills they’ll need for success in
tasks that drive the company forward. MOVE FROM IN-HOUSE TO
Outsourcing is another cost-saving alternative for CLOUD SERVICES. INDUSTRY NEWS businesses to get volumes of work done while avoiding Cloud services have become typically cheaper, the high costs of employer marketing, HR expenses, and more secure, and more feature-rich than the most training. Outsourced services are available for a wide affordable in-house IT system affordable for small range of tasks, like accounting, administrative support, pavement sweeping businesses. Cloud systems can tech management, and even HR. also be conveniently, quickly, and inexpensively scaled,
Outsourced contractors allowing you to pay may also come with their supplies and equipment ASSOCIATION INSIDER for just the amount you need as more employees come and For many entrepreneurs, and possibly work dropping marketing go, as more customer portals remotely from their own offices or trade shops. They have their liability is a knee-jerk reaction to try to salvage profits are added, as additional software applications are needed, etc.
STAY THE COURSE WITH YOUR
MARKETING EFFORTS. unused in your business, but that you still must pay Don’t quit marketing. On the contrary, depending for just to get access to the few applications your team on your regional and local market conditions, it does need. may be more advisable to increase your marketing Further, before you buy expensive custom software initiatives for your power sweeping service. For many for your sweeping service, check the latest entrepreneurs, dropping marketing is a knee-jerk affordable field services integrated platforms that reaction to try to salvage profits when revenues drop link remote workers to administrative teams, sharply during economic downturns. instantly populate accounting data directly from
But, keep in mind that, like you, your prospective the field generated invoices, provide auto email customers are seeking ways to cut costs and maximize prompts to ensure timely customer responses, and value on the dollar during tough economic periods. so much more. These options are major time savers So, while budgets are being squeezed is the ideal and service quality boosters that reduce employee time for you to demonstrate that your company offers frustrations and operating costs. them the superior value available in their local area. (If you’re tech-handy, you might also consider Accomplishing this, of course, means continuing to looking into easy-to-use open-source software invest in your marketing. design options, vs. custom software designs.)
Unlike in-house IT equipment SPOTLIGHT insurance and employee INDEX when revenues drop purchasing, installation, benefits plans. This option may make a lot of sense for many sharply during economic downturns. maintenance, and repair, cloud systems do not require large upfront, annual, or monthly growing sweeping expenditures. They also don’t businesses. necessitate purchases of software packages that end up remaining mostly
During a recession, you can borrow the money needed to keep your power sweeping business running,
INCREASE YOUR PERCEIVED BRAND VALUE BY RAISING PRICES.
When increasing efficiency and cutting costs can’t take your small commercial pavement sweeping service to a recession-proof financial operating mode, a price increase may be a smart option. Of course, you want to offer your customers the best possible price that is realistic. But, there’s something to be said for pricing to improve your profit margins as well.
Interestingly, pricing your services reasonably higher may set your business apart from competitors in a positive way. As consumers, we tend to perceive a higher price as an indicator of higher quality. Raising your price can potentially help prospective customers recognize your business as one that is not competing in a race to the bottom on price. Other business leaders tend to respect that.
For business managers in your target market who have had experience with poor pavement maintenance services, it can also actually give them a sense of encouragement and relief to be able to choose a provider who is confident in competing on quality against unrealistically low-priced vendors. These customers understand and especially appreciate service value that makes sense for the price, and they may be more inclined to stick with you as long as you continue delivering that strong value.
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INDUSTRY NEWS WORK ON RAISING YOUR CREDIT RATING.
Routinely check the three major reporting agencies business to maintain profitability during a severe economic downturn. Ultimately, stepping up customer — Experian, TransUnion, and Equifax. Improve your retention measures can make much of the difference credit score, to qualify for lower interest rates and between loss and profit from month to month for a better payment terms. Check the web for one of the small power sweeping business during a recession. many repeats of the list of simple actions you need to However, beyond building strong relationships of take to improve your credit rating. Over the next year, eliminate as many of your
During a recession, you small service business systems, tightening budgets, can borrow the money needed to keep your to maintain profitability and closely managing spending. power sweeping business during a severe Finally, a comprehensive running, if you have built economic downturn. recession-proofing strategy strong enough personal and must also include taking any business credit ratings. Talk other essential measures to your local Small Business Administration financial that may be specific to your own regional and local counselor, for help in identifying SBA loans that are market area to maintain positive cash flow and help easiest for you to obtain during an economic crisis. ensure business continuity of your power sweeping IN A NATIONAL OR GLOBAL RECESSION service during a prolonged economic downturn. Recession-proofing your pavement sweeping business is not an exact science, of course. Much depends Additional Resources on your business model — i.e., the kinds of revenue https://www.americanexpress.com/en-us/business/ channels, service system, inventory management, trends-and-insights/articles/10-ways-to-cut-costs-foryour-small-business/ personnel system, budget policies, and short- and https://hbr.org/2019/08/is-it-time-to-let-employeeslong-term strategic growth planning that constitutes work-from-anywhere your business’s mode of operating. It also involves https://hbr.org/2014/01/to-raise-productivity-let-moreunderstanding your market area’s client business employees-work-from-home types and their challenges. https://www.inc.com/scott-mautz/a-2-year-stanford
The message here is that it is likely to take more than study-shows-astonishing-productivity-boost-of-workinga one-track solution of raising prices for a small service from-home.html
The message here is TION INSIDER loyalty with key customers, a small power sweeping company owner should highest-interest accounts as that it is likely to look to make modifications possible. Also, ask creditors take more than a across the board, including to extend loan payment terms on lower-interest one-track solution of in increasing income from new business, streamlining SPOTLIGHT accounts. INDEX raising prices for a all field and administrative
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