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Monday, October 13, 2008

Small Business: How Do You Adapt In Times Of Financial Crises?

It's not news that things are tough today. For small businesss and sole proprieters especially.

For example it has become very difficult to spend money on non-critical activities. It also means having to let go people (if you have employees). But it seems also that by doing so, we loose on competitiveness. It is a real catch 22. How do you adapt? What should small business owners do to keep their head above the water?

I think the details of how you adapt will vary by company and industry, but the fact is that small companies actually can adapt more quickly than big ones. One or two people can make a decision, and with electronic communications (email, website, twitter, or whatever) that change can be cheaply and quickly communicated.

The problem for many small companies is that they don't have any emergency cash reserves (sometimes because the owner has just taken everything out over the years things went well) .... so they *THINK* they can't adapt. But the problem is not size, the problem is available reserves.

I know of businesses who have started to bid on what was in the past not lucrative enough projects, just to keep their work force employed. Even though there will be no profit. One company started a new entity so that their "high end provider" image wouldn't be tarnished by taking what the owner calls "el cheapo" jobs.

There are also companies who are offering certain vendors longer term commitments in the future against smaller payments now.

These sorts of decisions can't be made quickly in large companies, but both of them were made AND implemented by small companies.

It's also a great time to buy out competitors. Even those in good shape but where the owner might be older and ready to retire anyway.

There are lots of opportunities in this type of market where there is fear, and a partial but not complete loss of value, but not a real classic case of a bubble bursting with nothing inside.

From another angle .... The answer does not come from looking INSIDE your company, but rather from looking at your customer.

What changed, is their thinking. Before you can decide where to spend, or what to change, you have to find out how your customer's thinking changed - how have their needs and wants changed?

Answer that, and you know how to adapt. All other changes that you make in your company come from that.

I also suggest that beyond this .... now is the time to market your company. I know this seems crazy, but beefing up your sales and marketing will help you make it through the tough times.

The thing to do with marketing is find your most profitable clients and market to them and similar prospects. Market only to them, not just "ok" clients and prospects. Marketing to marginal prospects will cost you too much money in hard times. The key is knowing your target audience extremely well and making them offers they can't refuse. Think of what is in it for them, not what's in it for you.

I know times are a little crazy, but keep servicing your customers and exceeding their expectations and you will be OK.

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