With the current health and economic uncertainty and instability, it only makes sense for small business owners to not panic, but rather be well prepared. Every couple of years the universe throws curveballs at us, as a world population. These curveballs always seem to trickle their way down the economy and reach us, the small businesses. There is a reason small business owners have the reputation they do, they are fighters and survivors and by sticking to the 5 P’s of success (Proper Planning Prevents Poor Performance) they will be able to weather the storm and come out on top.
We have, as the Fundrr Team, done our research and revised some smart strategies that will help you ride out and survive the difficult times.
Know Your Finances
As a business owner, it is of the utmost importance to know the ins-and-outs of your finances. Understanding the financial well-being of your business can assist you in having your “finger on the pulse” on a continuous basis. Whether you do it yourself or get assistance from your bookkeeper, it is of utmost importance to have a constant view of your financial reporting and more so, learning to understand them and read them properly.
These financial reports can help you in understanding where your business is at a specific point in time, past history of where the business was and give some sort of estimation of where it is going. Financial reports can also help you understand what measures and strategies you can take to improve your financial situation.
Reduce with Precision
When it comes to big corporations, we hear all the time of cost-cutting strategies in the news that they implemented and went on with their business. When it comes to small businesses, it is a bit tougher and more sensitive. Cut too much and your business might never recover, cut too little and your cashflow pressures might not go away.
It is therefore imperative as a small business owner to understand exactly what it is that is causing cashflow pressures during tough times. This can only be answered by analyzing and dissecting your business and figuring out exactly which areas in your business need to be cost-cut and by how much. It can only be done by trial and error, so we encourage small business owners to start implementing cost-cutting strategies during these tough times and see slowly the effect it has on their cash flow to allow them to survive.
Low Budget Marketing
With regards to the point above, when a small business owner decides to take measures and to implement cost-cutting strategies in his/her business, usually marketing is the first area to get cut. While we do agree that in some businesses, marketing budgets need to be amended to the current economic and cashflow situation that the business finds itself in, we do not believe in cutting marketing completely.
Marketing in a business is a driver for future turnover and income. If you stop marketing, it will be guaranteed show an effect on your revenue. We, therefore, encourage small businesses to carry on marketing but rather in a selective and cost-efficient manner. These cost-effective marketing techniques include PR, public speaking, networking, organic social media posts, word-of-mouth, specials, etc.
Do Not Lose Sight of Competition
In tough economic times, it is easy to get tunnel vision. It is imperative that you, as a small business owner, not lose sight of your competitors. Always keep an eye on what they are doing. You must always remember that if your business is facing pressure from the economy, most chances are that your competitors are facing pressures too. They are in the same industry as you and most likely are having the same issues.
It is important to see what they are doing during these tough times and see the results they are experiencing with their actions.
Keep an Eye Out on the Economy
Always keep up to date with the news to understand what is currently happening in your economy. Understand the potential threats and potential opportunities. Always brace for impact by keeping solid cash reserves and not spending recklessly. Keep an eye out on your stock levels and make sure you are not overstocked. By understanding and being updated on the economy, this will teach you and give you a slight indication of where the spending patterns will lie.
For example, currently, in South Africa, we have been alerted by some of our clients that are situated in shopping centers, that their landlords have minimized their operating hours and that has a direct impact on your business. This means that you will trade for fewer hours and therefore need to reduce stock levels. This does not happen overnight and if one would have had an eye out on the economy, he could have braced for it and saw it coming as much as one can. We see this trend continuing throughout South Africa and one should understand what effect this can have on his/her business.
The current full effects of the worldwide pandemic, COVID 19, has officially reached South Africa. We need to stay proactive and aware of the situation every day. As business owners, you have to start understanding what effects this has on your business and act accordingly. We, at Fundrr, plan on continuing to support small businesses and we are always here whether it is for financial help or general business advice. Our team of dedicated advisors will be glad to assist in any way possible.