Inflation, recession, a war overseas, supply chain issues, stock market volatility and more… business owners face A Lot as we start the New Year.
What steps can we take to be in the best position possible for 2023? We spoke with several experienced entrepreneurs and business consultants and spotted some reoccurring themes when it came to preparing themselves and their businesses for possible hard times ahead. As Donna Werner, the chief administration officer of GhostBed says, “You can’t foresee what will happen in the future, but you can prepare for it.”
According to the experts, the basic tenets of preparing your business for hard times can be organized into four primary categories:
- People – yourself, your team and your external partners
- Promotions – appropriate marketing
- Plasticity – being flexible
- Pennies – your finances
GhostBed’s Werner is just one of many executives who looks first to their employees when it comes to preparing for hard times. “Your employees are your most valuable asset.”
Kimberly Lee Minor, CEO/CMO of Bumbershoot, recommends looking at any open positions you might have intended to fill. “Can the current team stretch to perform without those roles? If you can hold off on the hire, give your existing employees a small pay bump. Save the remaining money for future needs; it will go a long way toward retention and loyalty.”
Cindy Monroe, founder of Thirty-One Gifts and author of More Than a Bag, gained experience leading her company through market changes, from the highest highs to the lowest lows. She recommends focusing “on what sets your brand/company apart from others.” That focus can include saying “no to some things so that you have the margins and capacity to appropriately react to shifts” happening in the marketplace. “During times of uncertainty, I always found that overcommunicating the company vision and updates to stakeholders was most important for retaining your talent and your customers.”
Lesley Hensell, co-founder of Riverbend Consulting, helps small business owners who sell their products through the Amazon marketplace or other e-commerce channels. Hensell advises her clients to, “Check in with your valued team members—often. While natural attrition may be welcome in a tough economic environment, you must guard against losing the employees who drive financial and operational goals forward.”
Promotions and marketing
While tough times sometimes mean budget cuts, our experts warn that indiscriminate slashing of your marketing budget can have serious side effects. Hensell urges entrepreneurs to “Understand your profitability by product or service. Now isn’t the time to burn cash by promoting products that aren’t contributing to your bottom line. Focus on products that keep the cash flowing.”
Danielle Langton, CEO and Founder at Danielle Langton Strategic Business Consulting, advocates for creative audience acquisition and nurturing: “How are you staying top of mind for your people? Connecting with your audience means talking about your products and services, the value you add, being a thought leader, sharing testimonials or reviews and more! Be your biggest fan, and tell your friends, family, customers and community how they can support you. Think outside of the box for ways to drive awareness of your business.”
Entrepreneurs should be willing to adjust their “’ideal’ 2023 plan to support customer needs well during times of uncertainty,” says Monroe. “Listen to your customers and know where they are engaging with you and where they are quiet or squeaky. Invest in the areas that focus on helping with customer uncertainty. That could be a change to product positioning to focus on new uses and benefits, casting your vision more frequently to remind stakeholders of their desire to work with you or investing in more data to remind them of the value you bring.
Monroe continued, “Always invest in relationships and remember to communicate frequently. Ask your stakeholders ‘How are YOU doing?’ Work right now to prioritize your annual strategy so that you and your team know what is most important in 2023 and can make decisions quickly.”
Pennies (your finances)
Experts like Langton start their hard times planning process by analyzing existing cash flow. “Without understanding where and when our cash is coming from and going, it’s nearly impossible to run a sustainable business. Having a cash tracking model (+ CPA + bookkeeper) is imperative to understand how to thrive financially. Have expenses that aren’t relevant anymore and are weighing you down? Consider reassessing these investments and paring down to only what you truly need, use and actually moves your business forward.”
Langton then moves on to plan and project future cash flow. “What’s working best—and what will people need most for the next six months to a year? If a product is too expensive to produce, or a service is too much of a time investment, table it to focus on offerings that address what your customers truly need and want for the foreseeable future. (Hint: Less is more!)”
Hensell says, “It’s time for business owners to batten down the hatches. Maintain a keen focus on the products and services that bring in profits while reducing expenses.”
She has some specific suggestions, including:
- Review all of your company’s software subscriptions. Make sure every subscription is adding real value and that you are not overpaying for seats. If you aren’t using the advanced features, downgrade.
- Make continuous improvement your top operational imperative. To avoid making dramatic cuts, your team must improve revenue and profitability in other ways. Challenge team members to drive continuous, incremental improvements in every area of operations, customer service, and more.
Monroe sums it up nicely, “Cash is always important during times of uncertainty. Have a plan for the worst-case scenario. Review your plans frequently, stay focused and communicate often for alignment.”
In the end, hard times come and go—but good business practices are always in style and can help you drive success and growth at any time.
Be sure to read 2022: The Year of Dashed Hopes?