Risks are inevitable when you take the entrepreneurial path. You will commit business blunders along the way. You will encounter unforeseen circumstances that may hit your business operations hard—it could be that economic forecasts are not in favor of your industry or perhaps the market is increasingly becoming competitive.
Regardless of the industry and size of your business, you must be prepared for the lean months. Slow business days or months are all part of a business lifecycle. There are many ways to keep the cash flow going but a wrong move can be damaging to your business.
Here are measures you can implement to survive the rainy days:
Check the books.
It is easy to neglect counter-checking the books when business is booming. If business is slow, take the downtime as an opportunity to verify the books. Make sure that your record accurately reflects the status of your business. Take note, fraud and embezzlement account for a huge chunk of business failures. Moreover, check your inventory and ensure you’re not missing any deliveries.
Analyze your income and expenses. Where are you spending the most? Is it a cost that you can reduce?
Reduce operating costs.
When business is slow, reducing the operating costs can give you more leeway. This does not have to be as drastic as letting go of people. Review your current costs and look at the areas that will not cripple your operations where you can cut costs. Here are simple examples:
- Go paperless. Instead of printing piles of forms, make it available online. Share reports, white papers, and corporate news through GoogleDocs or email.
- Conserve energy. Turn off the lights when not in use. Take advantage of natural lighting whenever possible. Unplug office equipment that are not being utilized that much.
- Reuse, reduce, recycle. If you have a pile of documents you no longer need, use the other side for printing internal documents. Look at items in your office that can be recycled. Many recycling centers will pay for items like empty printer cartridges, water bottles, and such.
- Ask for discounts. If you deal with suppliers regularly, you can negotiate and ask for discounts.
- Hire an intern. Many interns are happy enough to be given the chance to learn in a small business settingt. Create an internship programme that will result into a win-win scenario: the intern will learn and satisfy his school requirements, and you will have a helping hand without an added cost.
- Cut overtime expenses. You may choose to remove overtime expenses for employees—at least until your business is generating revenue once more. This may seem like a rash move but this option is better than risking bankruptcy.
If your plans to buy that new equipment coincides with a slow time in business, maybe it’s for the better. Unless the ROI will take only a few months, delaying investments or capital spending makes sense when business is slow. Of course, in the long run, investments are needed to make the business grow. Investments must be sustained. Spending your capital can result in losing investments if you can’t make the monthly commitments. During rainy days, it makes sense to try finding shelter first before buying a lot where you can build your own.
Lower or improve working capital.
When money is tight and business is slow, it makes sense to collect receivables as fast as you can. Reducing inventory during slow months, even if it means selling them at a cheaper price can be good if it means getting money into your pockets to stay afloat.
Leveraging on your good relationships with suppliers will also come in handy in rainy days. The better the relationship, the higher the chances the suppliers will support you in crisis or emergencies. Inform suppliers of your current situation and request for an extension in payables.
Work with creditors.
We know how stressful calls from creditors can be, especially during slow business periods. It’s easier to evade them but in the long run, you’re just delaying the inevitable. Creditors, like lean months, are parts of a business lifecycle. Instead of working against them, build honest and strong relationships instead.
Just like your suppliers, if you build a good relationship with your creditors, they will be more understanding and supportive in challenging times. If you have pending penalties and interest rates, ask if they can be waived or delayed. Inquire if it’s possible to have extended terms on your loans or if you can pay via installments. Instead of hiding, meet them eye to eye and communicate. Be honest about your situation and collaborate on how to work around the problem.
Work on client relationships.
Setting up a company in Singapore is easy and can literally take only three days. That’s the easy part. The real work starts when you build it and in order to make it grow, you need to have clients – maybe not as much as others, but having the right ones will definitely help you get to the next level.
When business is booming, it’s often hard to squeeze in one-on-one meetings with regular and old clients. When business is slow, treat it as a rare – but definitely welcome – opportunity to meet old and current clients and further build the relationship. Invite them to lunch or, better yet, invite them to your office and give them a tour of your facility. You can even turn it into an opportunity to generate a new sale.
When business is slow, it’s time to bring out the big guns of advertising. You might think, wait, that’s just another expense. Yes, traditional advertising is not cheap, but with the widespread use of the Internet, it’s time to leverage on powers of social media and digital marketing.
A survey found that 84 percent of business to business (B2B) marketers utilize social media to nurture their leads. While this doesn’t really come as a surprise because of today’s highly connected world, some business owners tend to forget that majority of their clients, even the CEOs are within reach online. Use your business downtime to create a strong brand for your business and build an online presence.
According to the Social Media Singapore 2014 report compiled by Hashmeta, Singapore had a population of 5.4 million people in 2013 and four million of them use the Internet. About 74 percent of Singaporeans use social media on a regular basis wherein an average Singaporean spends a combined 2.1 hours on all social media channels. Facebook remains a top favorite among Singaporeans with 3.8 million registered users.
However, it is advisable that you connect with clients using various online communication tools. Twitter is a favorite among brands while LinkedIn is B2B marketers’ top social media platform choice. It all depends on who your target market demographics.
Lean on analytics.
Younger business owners know the powers of analytics in decision-making. If your business has a website, social media presence and a series of digital marketing campaigns, you need to learn how to use Google Analytics to make sense of all that data.
Google Analytics makes sense of all the online data generated by website visits, likes, followers, fans, retweets, video views and more. It helps businesses understand the online landscape even those who don’t have digital marketing or even marketing backgrounds.
Don’t lower your standards.
Saving money during hard times doesn’t make it advisable to sacrifice quality. A business owner’s principles are crafted during times of adversity.
If you’re in the food and business industry, replacing your ingredients with cheap, inferior counterparts can keep some cash in your pocket but will affect the cash coming in. Some patrons and even some employees will find the move offensive and will affect your standing in the long run. It is better to stick to the quality despite the smaller quantity than risk damaging your reputation with an inferior product or service.
Turn lean months into a growth strategy.
In essence, it’s how you view these lean months that will ultimately help you get out of it. Instead of making drastic decisions like letting go of people or slugging it out until the peak season arrives, take the proactive approach and convert this down time into a rare growth strategy.