Six strategies for surviving the dark nights of small business

It is said that death and taxes are the only two certainties in life. But for business, there is another: downturns. They’re inevitable, like the rising and setting of the sun. Be it in the broader economy, your industry, or your location, there’s one waiting somewhere for your business.

One thing only is guaranteed to get your business through those uncertain times: cashflow. Your business survival is a simple matter of arithmetic. Can your income can cover your expenses over the length of the downturn?

The best way to get some insight into this question is to run some scenarios. How long can you cope with sales down by 10%, or 20% or more?

Knowing this will set you up to understand how far and hard you need to push the status quo.

Tips for surviving downturns often involve things like optimizing payment terms or finding an investor or source of emergency funds.

But those strategies rely more on the willingness of others to help than on things that are directly within your control.

Let’s take a look at six strategies where the decisions rest with you, rather than with someone else.   

1. Tighten your belt

Non-essential costs are like ticks sucking on your lifeblood. They should be removed as quickly as possible.

Analyze your expenses to identify where discipline has been relaxed, leaving you scope to cut back.

This might be insurance, property and leasing, consumables or elsewhere. Obviously you should focus on preserving critical operations, but even in your core business you could explore new lower cost alternatives for services or supplies.

2. Evaluate your product margins

Reviewing expenses provides an opportunity to think about something else: concentrating on your most profitable products or services. Give thought to pulling offerings that aren’t paying for themselves so you can focus those resources on the stars that your customers love.  

3. Connect with customers

Speaking of customers, retaining existing customers is cheaper than finding new ones, especially during times of economic instability.

Reinforce your connection with your customers. In a mass market, implement loyalty initiatives to reward repeat business. In a niche market, reinforce relationships with top-performing accounts to maintain recurring revenue.

4. Diversify your income

Connecting with customers will give you an opportunity to identify complementary products or services that you could quickly and easily offer to current customers.

You might also identify a new channel that your customers would prefer, or that could help broaden your reach.

5. Look for low-cost marketing opportunities

Cutting marketing activities to survive a downturn can be a self-inflicted wound. Instead, look to low-cost strategies that you can lean on.

How can you better utilize social media or email newsletters to drive customer connection, maintain visibility and engage with your audience?

Off-line, what opportunities are there to participate in local events or forums to build brand awareness and foster community support?

6. Find a business partner

A downturn may be a lousy time to bring an investor onboard, but it could be a great time to find a business partner, who might be more motivated than usual to join.

A motivated business partner can bring a range of benefits including wider networks, useful existing relationships, strategic partnerships, access to new customers and potential investors.

Partners may also contribute in-kind resources, such as office space or access to specific tools or equipment.

A good partner might even help improve decision-making by providing someone to sanity check ideas and suggest strategies of their own.

A final thought

You may have been struck by something reading this list: these aren’t just good business strategies for uncertain times; they’re good business strategies full stop.

Which brings us to a point about timing. Don’t wait for a downturn to prune non-essential costs, focus on connecting with customers, diversify revenues streams or find a partner who can help build value for your business.

The best time to start strengthening your business against a downturn is five years ago. The second-best time is right now.