19 Ways to Survive in a Tough Economy

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