How to Prepare Your Small Business for Lower Revenues
In this post, we’ll review four strategies that will prepare your business for the ebb-tide season.
1. Focus on core services
A small business can be compared to the human body. When we’re in danger, our organs reduce the amount of energy used on side processes and concentrates only on the core actions. This feature of evolution has kept humankind alive.
The same principle should be applied to your small business when revenues are lower than normal. The smartest thing you can do to keep your business afloat is to delegate the non-core services. Everything that doesn’t bring direct income should be altered, reduced, or outsourced.
For instance, if you have a full-time accountant or other employees with specialized roles on your payroll, offer them part-time contracts. That way, your budget will stay intact and the quality of your basic services won’t be affected by decreased revenues.
2. Negotiate a just-in-case credit backup
Many small businesses rely on lines of credit. This is a natural thing to do, even when the economy is in the high-tide period.
Due to this, you should consider negotiating a credit backup. When your business is generating high revenues, you’re likely to be granted a line of credit. This isn’t the same thing as a loan. A line of credit will be only a potential borrowing amount, with a clearly defined limit that you may or may not use.
Check out this post about applying for a business line of credit, so that you can receive business financing.
3. Accelerate the payment process
Regardless of the current condition of your business’s industry, you should always request payments from your customers soon as possible. Long payment periods are typically for large companies that have more assets than a small business.
The first thing you should do to ensure fast payments is offer the most popular payment solutions. PayPal and Stripe are among the most widespread online payment options on a global scale, so add them to your payment options. In addition, you should accept a variety of credit cards, such as Visa, MasterCard, and American Express. That way you’ll give your customers a wide range of payment options, so they can pay you as soon as possible.
As for business partners and suppliers, always reward early payers with discounts or other improved conditions. Also, use simple business invoice templates for those payments, to make procedures simple for them.
4. Make marketing more efficient
When you’re trying to keep your head above water during economic challenges, it’s crucial to assess your existing marketing approaches.
The first thing you should do to improve your marketing efforts is to make the best use of modern, online media. To do this, re-evaluate your marketing budget, and cut any projects that aren’t generating revenues. Ultimately, during times of low revenues, you need to focus your time (and wallet) on strategies that are going to increase sales.
In addition, you should aim to optimize your marketing processes through various automation tools. Making your marketing as succinct as possible will save you time and money going forward. Similarly, if you’ve been paying a marketing agency, you might consider terminating the collaboration to handle marketing on your own.
Preparing a business for bad periods, revenue-wise, is something you should be doing from day one. It’s the only way to survive a difficult financial crisis and run a sustainable business. So, make the best use of the strategies presented in this post, and consider your business’s individual needs, as well, to build and manage your business successfully in all market conditions.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.