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How to stay afloat during lean times

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flat,550x550,075,fFor most small business owners, these are lean times. In addition to the global recession and lack of liquidity, the elections saga and related political uncertainty has dampened spending among both consumers and businesses in Zimbabwe. With sales plummeting the future might look bleak. Some are regretting having started businesses while others start wishing they could go back to work and earn a steady income.

True entrepreneurs do not give up easily. They are resilient, tenacious, creative and innovative. A problem is simply a challenge to be overcome, so they start thinking of how to solve the problem. There is no single solution that suits all businesses, but the following general strategies will help you from sinking.

First of all have a positive attitude. Most problems are not as bad as they seem at the beginning. It is usually the way we look at them that makes problems seem worse. It begins in your own mind. If you think it is going to rain, it will. I like this quote by Joseph Sugarman:

“Each problem has hidden in it an opportunity so powerful that it literally dwarfs the problem. The greatest success stories were created by people who recognized a problem and turned it into an opportunity.”

Take a bird’s eye view.  Some problems may overwhelm to an extent that they eat up most of your time and leave you much stressed. For example, you might find yourself in a cash crunch. A bird’s eye view means you look at the root cause; is it because sales are slow? Or customers are not paying? Or your expenses are too high? Ask why, why ,why until you get to the bottom of the problem, then take necessary action.

Sometimes an employee makes a number of mistakes and you quickly decide to fire him. Why not find out why he made those mistakes. Is he trained enough to handle his role? Is he motivated enough? Or is he experiencing some personal or domestic problem. If you probe deep you might find the cause and solve that.

Check if you have the right people. Sometimes we hire cheap people to keep costs down. The result is that those cheap people will produce poorer results than the right people. If you employ an effective salesperson you will save on salary expense but suffer from lower sales revenue. Cheap will cost you more. Sometimes you will keep staff numbers low. But that will reduce the productivity of your business and cost you in lost sales. Keep reviewing your staff all the time to ensure you have the best possible, otherwise you will sink with your poor performers.

Control your expenses. With money tight as it is, every penny you get counts. Spending is so easy. So have a proper budget for all expense items and stick to it. You budget must be within the range of your income. Review all expenses every month. Small things that may seem insignificant will add up and make a difference between profit and loss.

Have a cash backup plan. Cash may run out unexpectedly. A debtor may delay paying, or orders may be cancelled. What would you do when its time to pay your salaries or rent when cash is dry?

You need a back-up plan. It is wise to have a good relationship with your bank. Apply for a credit line before you need it.

You should also have other potential sources of capital lined up as well. This might include having a savings account that you can tap into, liquidating stock holdings, or borrowing from family members. A small business owner must have access to capital or have a creative way to obtain funds to make it through any lean times. There is no substitute for having cash at the ready.

Don’t overlook the small stuff. There are those small daily things that keep customers coming to the door. These include visibility of the business to customers, convenient parking, ease of buying, regular advertising, following up on customers, delivering on time and maintaining good quality. When stress levels are high these things can be overlooked, making the situation worse for your business. Keep a tag on the small stuff while also looking at the big picture.

There is  no single formula for survival for small businesses. These general tips will help you stay afloat. You probably have discovered your own survival tricks particular to your business. Please share them by commenting below.

Phillip Chichoni is a business development consultant who works with SMEs and entrepreneurs and is the author of the books “Business Planning Simplified” and “Three Steps to Developing a Strategic Plan to Grow Your Business”. He is also the founder BusinessLink Network and publisher of BusinessLink magazine. You may contact him by email, chichonip@smebusinesslink.com. You can also visit http://smebusinesslink.com.

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