Being a small business during a recession is tough; ask any small business owner, your business decisions and strategies impact the future of your business immensely during a recession. Every business tries to deal with the recession in their own way, some may cut back on employees and work more hours themselves, others will shorten their store hours to decrease costs, and even some other businesses cut back on advertising and marketing expenses. I would like to share with you my tips on how to keep your small business afloat during a recession.
Add value to your customers: As a small business it is nearly impossible to win a price war with big conglomerates, e.g. Walmart, but one thing small businesses can always do that these big guys can’t quite offer is great customer service. Being able to spend time with your customers, and understand their needs to help them make the right decision is definitely going to keep people shopping at their local store rather than these large conglomerates. Having a knowledgeable and friendly staff keeps people coming in because they know they can rely on you for the right answers to their questions.
Cut back on overhead and operating costs: There are many expenses businesses incur which can be reduced. One expense many businesses don’t plan on, are the expenses tied to printers. Once a business owner buys that printer they never really think about the cost of toner per month, plus maintenance. So when you purchase new toner for your printer, make sure to purchase the compatible toners, not only will you save up to 70% on some cartridges, you will not have to worry about voiding your printer’s warranty. Although many people believe that using compatible toner cartridges on their printers voids the warranty, it is not the case according to the Magnuson-Moss Warranty Act, so don’t be afraid to save yourself a ton of money by using compatible toner cartridges.
For those businesses that do not use printers as often, you can rely on creating a more effective inventory management system. Product that sits out on the shelf for a long period of time costs you money. Although, it does not directly cost you money, but there’s an opportunity cost of that stagnant product. By opportunity cost I mean the amount of money you are missing out on by not having a product on the shelf that sells a lot quicker. Say your store sells CDs, DVDs, and VHS, typically your store sells 10 DVDs for every 1 VHS, you would want to make sure that your DVD section is a lot bigger than your VHS section, giving the customers more options to buy DVDs as opposed to VHS. Not only will you sell more products, you can also purchase DVDs in larger quantities considering you have more space to store them, and therefore lessening your cost of shipping, and potentially creating a discounted price per DVD if buying in a big enough bulk.
Other ways to cut back on overhead and operating costs is to shorten the business hours of your store. Although it may inconvenience a small portion of your customers, you typically won’t see a huge drop in sales, as long as you put a good amount of thought into your store hours. Say if your store barely has any sales on Weekday mornings, it would make sense to open the store at noon everyday as opposed to 8 am, not only will you save the 4 hours a day worth of salary you typically pay an employee to open the store, you will also save a ton of money on utilities. It would be around an extra 80 hours a month of no power being used, and well that can incrementally add up to a large sum of money.
Another operating cost that can easily be cut back on is office supplies. If you are a small business and have a pretty large need for office supplies, it sometimes makes more sense to go through an online office supply retailer. These online retailers do not need to pay for a big place of business and typically save money that way, inevitably they will be able to provide your business with cheaper supplies since these discounts then are passed down to their customers to provide their customers the greatest value for their office supplies.
Increase marketing expenses: Many people may disagree with this, but before you decide it’s a terrible idea and skip over this section, give me a few seconds of your time to explain why marketing during a recession is such a great idea. During a recession, many customers are looking for the lowest cost possible, which as stated before, will typically not be the small business provider. But say you are a small family owned deli and since your products only have a certain lifespan, and typically Wednesdays are really slow days for you so, to help increase your business you can start a special for half price sandwiches on Wednesdays to help drive traffic to your store. Although you won’t be making nearly as much money per sandwich, but you will be at least gaining a larger customer base. With more and more people coming, and as long as you treat your customers with the utmost respect and care, they will be more inclined to go there even though it’s not a Wednesday. Also, less of your products will go to waste. Another example similar to the previous one is customer loyalty cards, more and more places are creating these customer loyalty cards, for example one place I go to quite often gives you a free coffee after you buy 5 coffees there. So once every other week I am able to get a free coffee and now I go there every morning.
Hopefully with these examples I am able to help you think of how you can implement these to your business plans in the future, to help keep your small business flourishing during a recession. We can all use a little help here and there, so please feel free to comment with any other tips you have to help small businesses stay afloat during a recession.