How to grow your business in a slow economy
3 minutes read
While growing a business in an uncertain economic climate can present extra challenges, with the right strategy, entrepreneurs can thrive regardless of economic conditions.
Here are seven steps you can take to remain on the road to growth.
1. Diversify your customer base
If you are too dependent on one or two customers for the bulk of your sales, you are putting your business at risk if they run into financial difficulties.
A BDC study on diversification found that even a modest degree of diversification is associated with superior financial performance, regardless of the size of the business. The most diversified firms experience by far the fastest growth.
2. Don’t neglect your best customers
While it’s important to ensure you have the right mix of customers, it’s also wise to treat your best customers with extra attention. By nurturing relationships with key customers and building their loyalty, entrepreneurs can grow along with them.
Knowing your clients also means you need to be aware of what is happening in your market. Ask yourself: What are some key customer trends I should keep up with? And act on those answers to continue being a preferred supplier for your best clients.
3. Take a proactive approach to marketing
No product or service sells itself, especially not in a slow economy. And word-of-mouth marketing often isn’t sufficient to grow a business. You need to define and promote your unique selling points.
Consider creating a well-defined marketing strategy that defines your target customer, uses the right tactic to reach them and uses quantifiable metrics to measure your results.
4. Step back from day-to-day operations to focus on strategic goals
While it can be easy to get lost in daily details and neglect your strategic plan, the consequences can lead to failure. It’s essential to keep your mission and values in mind as day-to-day operating decisions are made. Know what your strengths are, what you want to achieve and how you plan to get there. Also, make sure to keep your strategic plan documented, updated and shared.
5. Foster a positive attitude in your staff
Everyone within the organization needs to be trained and coached to understand the company’s strategy and proactively promote the business at every opportunity. When hiring, look for people with the right qualifications, but also the right attitude.
6. Consistently monitor your cash flow
Most entrepreneurs are very focused on managing the bottom line by monitoring sales, gross margin and expenses. But they often ignore cash flow management. You should make monthly financial projections and then monitor your progress through the year. It’s also important to balance short-term and long-term needs with short and long-term sources of funds.
If you foresee problems on the horizon, now is the time to talk to your bankers. Never surprise them with bad news.
7. Balance an entrepreneurial approach with sound analysis
Try to maintain the enthusiasm and spontaneity to react quickly, but do your homework and base your decisions on facts, not just feelings. It’s easy to make the mistake of neglecting or ignoring market feedback and analysis of the facts.
Don’t stick with what works until it stops working. Be aware of the warning signs. Evolve and grow by optimizing systems, adopting best practices and installing the latest technologies.