Measures for small businesses to survive during an economic downturn.

A question was posted  by Chad Moray Chief Economist & Director of Economic Research at U.S. Small Business Administration,

What measures should Small Business take to weather this economic downturn?

 My reply was this:

 Spend smart. Spend your money with businesses that can refer business back to you. Create strategic alliances. Barter and partner for symbiotic relationships. If your vendor/supplier isn't a customer, find one that will be. A "yes" is a powerful bargaining chip. 

Rather than spending money on broadcast inch deep promotions, get very targeted on your customer base and make it personal. Face to face meetings, not mailers. Sweat equity has the still has the best rate on the market.

Look for new channels, and experiment with low-cost channels. Low margin sales are better than just plain low sales- keep your product/service flowing/ Then focus on that word of mouth referral business- take this opportunity to grow your market share.

No, I don't mean dilute your product lines or services... treat it as a "We're all in this together" promotion - maybe for a 90 or 120 day period, or get creative and keep the promotion until the Dow Jones hits XYZ number...

Whatever you do... do NOT skimp on your people!

"Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory.”
- Andrew Carnegie

Do not overload your current workforce by not replacing people that leave - shame on that comment! Now is the time to enlist all your employees as your sales force, keep them happy - reward them for bringing in business and finding cost savings - If you can't reward them monetarily, reward them with time off. Enlist them for ideas.

Keep moral up! Have some fun low cost activities -Have a "Gas Prices are so high that ...." joke contest, Friday off for the winner.

Treat your employees well and make them part of the solution! Unhappy, overworked employees will only result in lost productivity and a mass exodus when there is an upturn.

Now- You do not need to hire full time mediocre employees to milk the payroll - there is a lot of executive level (currently unemployed) talent out there. You can leverage that to get high dollar talent to come in on an interim basis, you can negotiate for partial days with a revenue share. Take advantage of their knowledge, they want to work. Get a rock star and let them help grow your business so you WILL be able to afford them full time.

Wouldn't you rather hire 30% of a 100K seasoned talent that can hit the ground running and get immediate results? Or would you prefer 100% of 30K junior level talent that will have to learn all those valuable lessons on your payroll? Ok, that was a bit of a shameless plug. http://lilliantaylor-blackmon.com/welcome.pdf

Overall, the doomsayers are probably those who've never had to kill what they eat. It takes a little more creativity and effort, but spend smart, keep the faith, do the right thing and it will all come back to you.

 

Entrepreneurs, Networking, and MLM, Oh My!

I've been immersed in the self-employment world for several months, I've attended Chamber of Commerce events, networking groups, seminars, etc. I can't decide if I've become energized or disillusioned. I  try to find value in everyone I meet. Unfortunately there are a lot of "entrepreneurs" out there, following some proven method for instant success, they are quite articulate, I see them gain following, and it's so frustrating. 

I'm not saying that all of these folks are charlatans, though I am sure there are some, just that they do not have the experience  to be pitching what they are pitching, nor do they really believe in the value or have researched the ethics of the stuff they are pitching. They start to drink their own Kool-aid about wealth, and encourage others to join in. 
 
I've seen small business owners taken in for thousands upon thousands of dollars, with nothing of value provided. I've seen 6 hour "seminars" that are nothing but a money makers for the host.  I've seen folks lured into "free seminars" only to endure a sales pitch that manipulates them into spending $395 for photocopies in a binder and en empty promise of success. Or they spend $399 to recruit other people to spend $399 to be millionaires at just 8 levels!  There are all the "methods" for getting business, closing the deal. Frankly it makes me feel dirty just watching.

What's worse is when you try to use a method of marketing that has been exploited by those people, you get lumped into the same bucket and you have to work twice as hard to gain trust. 

I've done so much work at no charge because they either don't have the money or have been taken so many times they just won't trust anyone. It's frustrating when really all you want to do is help people using what you know, you're not out to create some money generating retire at 40 scheme, you just want to make a living and feel good about how you do it. I'm not saying I know everything, but I've seen and done a lot, through sheer effort, trial and error, I found a lot of ways to tackle problems and find creative ways to get things done. 

Some folks believe business savvy is finding techniques to make more with less, create reoccurring income and those people are revered as icons and role models. They focus on quarterly goals and stock prices, etc.  I'm not against making a lot of money, lots and lots of money. I just want to do it by providing a solution, treating people well, and sharing the success with the people who help make it happen. Until recently I didn't feel that was rare. If I could convey anything to business owners it is follow your heart, respect your customers, and try to do right by them and your employees. Be fiscally responsible and charge enough so you can continue to do that into the future. That's what it's about, and I don't know about other people out there but if I can't be successful doing that, I'd rather fail miserably. 

$700,000,000,000?? Really?

I preface this with a statement that I am an analytical person not a political person- I try not to form an opinion until I believe I understand the situation. With that said- I am not also not an economist, so I am pretty certain that I do NOT understand the entire situation. 

However, 700,000,000,000 . WOW. I’ve tried to comprehend the enormity of that number/decision. 
Like I said I’m not an economist…but what would happen if we let that massive chunk of tax payer money trickle UP rather than down?

According to the Census Bureau in 2004 there were 5.8 million US business with employees. Let’s just assume it is the same now.
If we were to divvy up that 700,000,000,000 to 5.8 million employers, that would net approximately $120,000 for each and every employer in the US. 
With millions of small businesses infused with 120,000 cash… well…how much more bank credit would they really need? 

Let’s say those businesses each hire 1 to 2 people or increased employee pay with that $120,000…. That would put 5 - 11 million people to work.
Maybe all those better-paid and working people could make their mortgage payments, spend and invest?

OR … What the heck, skip the employers! The population of the US is a little over 301 million, let’s just say we divvy up that 700,000,000,000 to every man, woman and child in the US. That’s a little over $2300 per person… For my family of 5, that would be over $11,000. Talk about an economic stimulus check! 
Perhaps my family could invest that $11,000 back into the economy how we see fit? If we choose to invest back into the players that evidently handled it so well to begin with …then great - so be it. 

Either way, with an extra 700,000,000,000 running around ….folks that need credit or assets purchased have plenty of places to seek investors.
Maybe I’ve missed something, but is that not the premise of free capitalism? Do we not all have the equal opportunity to both succeed and fail? I saw a quote attributed to Warren Buffet “If we don’t get this bailout, I may have to go back to delivering papers”. Great guy or not, philanthropy aside, I do not think anyone will organize a 5K for him, there are plenty of Americans making a living delivering papers now – will they see anything from this bail out? 

I do not view myself as a cynical person, but somehow I don’t think that $700,000,000,000 will trickle all the way down to the folks who truly need a bailout. Like, I don’t know… maybe Dallas Independent School District? Can we bail them out? They may have made some serious mistakes – but you know they were not in business as a financial institution and now we have 1100 people out of a job, and kids without enough teachers. 

Maybe my husband is on to something, is this the No Millionaire Left Behind program? 

I just hope this works and we didn’t just swallow a $700,000,000,000 bitter pill because we were so desperate to make something happen that no one had the courage to say “700 BILLION? Really?”

Lillian Taylor-Blackmon, Principal
Brains By The Hour