Small Business Survival Guide: Where to Focus Your Budget During Hard Times
In turbulent times, it’s very hard to keep your focus and mitigate risk. But there are business survival strategies that can keep you afloat, if not happily thriving.
Qantas is one of the most shocking examples of what can happen to a large company in a crisis. The huge drops in ticket prices for the year 2020 are well-documented and the airline had to drop most of its international lines to keep them afloat.
Fortunately, the situation isn’t that bleak for all industries.
Use this survival guide to explore some of the most effective tactics to offset the impact of the worldwide business slowdown, and to gain practical advice and tips for small business owners.
Better Financial Visibility
It’s past time that you got your cash flow forecasts and financial statements ready. Understanding your finances is crucial to ensure your business survives and adapts during challenging times.
Despite the current downward trends, it’s best to invest in getting the core accounting statements done. Because with the numbers at hand, it’ll be much easier to assess what’s going to happen in the coming months. You’ll also get a much better overview of your financial situation. Make sure to document all sources of capital and have proper agreements in place to protect your business interests.
While you’re at it, you can rest assured that there are other companies that have to struggle to meet every bill. On the bright side, you can avoid following that path because your financial statements will serve as a reference for your investment and purchasing decisions. Effective business planning can help guide these financial decisions and keep your business on track. You can find out if you’re spending money that might hurt your cash flow.
The critical thing is to be rational with your decision-making in relation to your spending. Planning also plays a key role in managing financial risks and ensuring your business remains resilient.
However, a thorough analysis may actually reveal that your business is doing just fine. It may turn out that the only thing you should focus on is to be clever with how you spend money and pay attention to the details in your financial statements.
Collect Debts
It goes without saying that you have to keep an eye on your accounts receivable. Shifting your focus to other things may make a major impact on your cash flow, especially for SME business owners.
But how can you chase down debtors without souring relationships with your clients? Maintaining strong relationships with clients is essential for customer retention and ongoing business success.
For one, make sure to automate payment reminders and invoices. There are plenty of services that streamline this process and you can integrate them into your business. Keeping clients involved in the payment process through regular communication can help foster loyalty and ensure they remain engaged with your business.
At the same time, you should reach out to your customers and ask if they have problems making payments. As applicable, it may serve your interests to negotiate a more favourable payment plan. For instance, debtor financing could be an option. It’s also important to have clear contracts in place to protect your business when collecting debts, as contracts serve as legal safeguards and records of your business engagements.
In consideration of the payment options, these are the things to keep in mind.
- Invoice size
- Debtor profile
- Time elapsed
Stay Frugal
In the midst of hard times, tightening the belt is critical for your strategic thinking.
Are there any expenses that you can cut right now? How many luxuries is your business indulging in?
And if you have to make cuts, you should once again refer to your financial statements. The idea is to create room for keeping your business afloat before it’s too late.
In the case of Qantas, the company had to cut more than half of its staff. This happened in the first weeks of the global business standstill. A great many companies even had to temporarily or permanently close their doors. It’s important to analyze what went wrong in those businesses so you can avoid making the same mistakes.
On the other hand, it might not be necessary to let go of most of your staff. Small businesses may have the option to reduce employee hours instead. Having the ability to choose between layoffs and reducing hours can make a significant difference in maintaining morale and operational capacity. And if it comes down to that, you can always discuss pay cuts with your employees.
For example, you can convert a couple of full-timers to part-time, instead of laying off one of them.
Streamline Business Operations
When times get tough, streamlining business operations becomes a top priority for small business owners. By focusing on the most important processes, small businesses can cut down on waste, boost productivity, and better manage their cash flow. This approach not only helps businesses survive challenging periods but also sets the stage for future success. Many business owners find that simplifying operations allows their company to operate more efficiently, freeing up valuable resources and improving overall performance.
Identify Core Processes
The first step in streamlining your business is to identify the core processes that truly drive your company forward. Small business owners should take a close look at which activities generate revenue and foster growth, and which ones can be trimmed or outsourced. For example, a small business owner might use digital marketing tools to automate repetitive tasks like email campaigns or social media scheduling, allowing more time to focus on strategy and building strong customer relationships. By pinpointing these essential processes, owners can develop a strategy that maximizes impact and minimizes wasted effort.
Cut Non-Essential Activities
Many businesses unknowingly spend time and money on activities that don’t contribute to their bottom line. Small business owners should regularly review their operations to identify and eliminate non-essential tasks—think unnecessary meetings, redundant paperwork, or outdated procedures. By cutting these activities, businesses can reduce expenses, lower stress levels, and create a more productive work environment. This not only helps conserve resources but also makes it easier to attract and retain top talent, as employees appreciate a streamlined and efficient workplace.
Invest in Efficiency Tools
To truly optimize operations, small businesses should consider investing in tools and technology that enhance efficiency. Software solutions like project management platforms, communication apps, and automation tools can make a significant difference in how a business operates. For instance, using a tool like Trello or Asana can help a small business owner organize projects, delegate tasks, and keep the team on track. By leveraging the right resources, businesses can improve productivity, reduce errors, and stay competitive in their industry—even during challenging times.
Employee Management in Lean Times
Managing employees effectively is more important than ever for small business owners facing lean times. The way you support and engage your team can make a significant difference in your business survival. Focusing on creating a positive and inclusive work culture, nurturing strong relationships, and recognizing employee contributions can help your business weather the storm. Many business owners find that investing in their people not only boosts morale but also drives long-term success.
Retain Key Talent
Retaining your best employees is essential for small businesses, especially when resources are tight. Recruiting and training new staff can be costly and time-consuming, so it’s important to focus on keeping your current team engaged and motivated. Small business owners can create a supportive environment by offering opportunities for professional growth, such as training or mentorship programs, and by recognizing and rewarding achievements. Open communication and regular feedback also go a long way in building trust and loyalty. By maintaining a strong, committed team, small businesses can improve productivity, maintain their competitive edge, and set themselves up for future success—even in the toughest times.
Boost Your Email Marketing Campaign
Nowadays, there’s a rush to email as many of your contacts as possible, and there’s a good reason for this. Email marketing has proved to be very resilient to market downturns. But if you’re just blasting your contacts, you’re not off to a good start.
Put yourself in the shoes of the email recipients. With their inboxes flooded with offers and everything else, your emails may get lost in the torrent and remain unopened.
But this doesn’t mean you should stop talking to your customers. You just have to create an emailing strategy that would best address their pain points. As a general rule, make your emails short, to the point, and actionable. It’s important to be present in your customers’ inboxes with relevant content to maintain engagement and reinforce your brand.
More specifically, you should start using a software tool that can personalize and automate your emailing effort. As for the content, focus on why you’re contacting the client and how you can help. Providing excellent service through your emails can build trust and show customers you genuinely care about their needs. You may want to test a few different approaches to see what works best.
Move Everything Online
Transitioning your operations to the digital world may seem daunting. But in reality, it isn’t that difficult and there are lots of tools that can make your job easier. One major benefit of moving your business online is the increased efficiency and broader reach it can provide. Of course, this applies to both small businesses and large enterprises.
For example, retailers can choose from a wide variety of ecommerce platforms. Most offer competent inventory management, a drag-and-drop website builder, and different payment integrations. Even better, you can get 24/7 customer support to help you get started.
You can start by weighing your needs against the options available. For instance, you may want a platform that can send automated emails and that you can integrate with your company’s CRM software.
Whatever you do, don’t hesitate to get in touch with the provider and tell them what you want to set up. Also, make sure to protect your business data and customer information by implementing strong cybersecurity measures and privacy policies when operating online.
Surviving the Storm
This business survival guide only touched on the basics of weathering the storm. Other options that you may want to consider include tax payment plans and government incentives. Seeking legal assistance can help you navigate these opportunities and ensure compliance with all requirements. And as for the latter, you may agree that the Australian government has done a decent job of making things easier for business owners.
The key is to stay on top of your current financial situation and adapt. Your business strategies should reflect the current economic climate to remain relevant and effective. Remember, business disruptions can impact both your business and your personal life, so resilience and planning are essential. And if there’s room to take an asymmetric risk in your favour, consider taking out a small business loan. This may be just what you need to seize an amazing advantage in your niche and attract the interest of potential investors or partners.
By strategically adapting to challenges, building wealth and becoming successful are possible outcomes for your business.
