The economy has been in the news lately and many of you have experienced first hand a slow-down or drop in sales as a result. Our article for our e-newsletter this month provides some great tips to help you and your business stay profitable in today's business climate. I am sure that you will find them interesting reading.
President, Medallion Fulfillment & Logistics
How to Stay Profitable in a Tight Economy
The economic forecast looks bleak as America heads into what most financial experts are now calling an economic recession. But all is not doom and gloom. It is possible to stay profitable in a tight economy. Savvy business owners can use the opportunity to strengthen their market position by tightening business practices and redefining their business model.
Every organization must be prepared to abandon everything it does to survive in the future," said Peter Drucker, renowned Father of Modern Management. While that may sound drastic, Drucker's point is that survival depends on an ability and willingness to embrace change. In the business world, only the strong survive in a down economy. Those business owners who are most willing to question their current business practices, approach problems creatively and embrace innovative new ideas are the ones who will survive the current economic upheaval.
To stay profitable in a tight economy, business owners must tighten up current business practices. Keeping a sharp eye on cash flow is key to weathering a down economy, say business experts. Follow these tips from business management pros to maximize cash flow:
- Monitor cash flow daily and watch for
- Rein in expenses and tighten up purchasing
policies. Buy only what is actually used
and don't stockpile supplies. Demand
should dictate order quantities. Review
and renegotiate purchasing and service
contracts. In a tight economy, competition
makes every expense negotiable; no expense
should be considered fixed.
- Scale back inventory and cull out poor-selling
- Tighten up credit policies. Be clear
about credit policies to customers and
exercise good credit practices when borrowing.
- Get aggressive about collections. Consider aging accounts at 15 days instead of the traditional 30. Start collection calls as soon as accounts come due. Don't allow accounts to drag on for 60 or 90 days and more. Refuse credit to slow payers.
But smart business practices alone won't guarantee ability to weather the current economic storm. Survival is as much a matter of attitude as approach, says business guru Steve Chandler. Great leaders don't assume; they question, asserts Chandler. Questions lead to creative and innovative solutions to problems. Business owners who tell themselves that no one buys in a tight economy doom themselves to certain failure. However, those who question the status quo and rethink their business model position themselves to capitalize on the changing times.
What questions should you be asking to stay viable in a tight economy? Try these suggested by business author, speaker and coach Michelle Pippin:
- How can we re-package our product to
appeal to a more affluent market?
- How can we make our sales department
stand out dramatically from the very
- How can we reward our people for making
our customers feel like family?
- How can we better serve our market?
- How can we recreate the buying experience for our customers to make it second to none?
If your business has been impacted by the economic downturn, now's the time to brainstorm and strategize with your team using some of these ideas as starting points.
A guide was leading a group of hikers through the wilderness. On the third day, the hikers noticed that they had been traveling in circles.
"We're lost!" on of the hikers complained to the guide. "And you said you were the best guide in the United States."
"I am," the guide answered, "but I think we may have wandered into Canada."