13 top survival tips to help you bring your A-game to your business in tough times
With small businesses struggling to survive the current economic downturn, successful South African businessman Rael Levitt shares his top 13 tips for helping keep those company doors open!
“Instead of buckling under the pressure, now is the time to review every aspect of your business, starting with checking your progress against your business plan,” suggests Levitt, the CEO of Inospace, whose business acumen has seen him build a portfolio of 26 business parks across the country and internationally since 2017.
“You can’t control the environment, so be intentional about controlling what you can,” he adds.
Cash flow is everything
Cash flow is the lifeblood of any business, so when there is a downturn, you need to be agile. This is the time to strap in and prioritise. Consider what you’ll do if revenue drops by 30%, 40%, or even 50%. You need to know how your business will survive in each of these scenarios in order to be properly prepared for crunch times. Also, examine your operating expenses and make the tough decisions about what can be cut if it really comes down to the wire. You don’t want to have to cut back drastically without having done your prior planning, so make sure you do that essential prep work.
Reduce discretionary expenses
Any time there is financial instability (whether it’s due to the economy or company shortfalls), the first step is an obvious one: reduce discretionary expenses. Re-evaluate your company policies for travel, entertainment and office supplies, for example. During a recession or other types of financial challenges beyond human control, seek practical ways to reduce overall overheads. Also, analyse vendor output and decide if you park online advertising, web design, accounting or other miscellaneous services until things improve.
Work with your creditors
Demonstrate good payment behaviour and increase your line of credit prior to a recession, because you may need a higher credit limit during the downturn. Banks consider credit history when making credit line decisions, so making payments on time is critical. In addition, paying more than the minimum amount due, and paying in advance of your due date, will help you build a profile as a lower-risk client.
Stay focused on your long-term goals
While boosting your savings reserves for rainy days, always stay true to your long-term goals. You may have to change the approach or timeline, but you don’t want to lose focus of the end game. If the business does slow down during a tough time, take time out to examine what has worked, and what hasn’t. Then, figure out what you can do to build and/or maintain your unique competitive advantage.
Seek ways to optimise ROI
The best way to prepare your business for the next recession is to begin paying attention to areas where there is a notable return on investment (ROI). Keep an eye on ways in which ROI can be optimised, with business growth in mind. Then, adjust and correct accordingly. Be willing to test, learn, and adjust quickly.
Manage debts properly
To prepare a small business for a downturn, owners should reduce debt before the economy slows. Less debt means more flexibility. If you can afford to do so, pay off debt aggressively, as early on as possible. If you can’t pay off your debt, tackle your highest-cost balances first to get the most bang for your buck. Always ensure that you’ve secured the lowest possible interest rates on loans, and aim to pay off personal debt to minimise the potential for added stress on that front.
Cultivate a growth mindset
One way to prepare your business for a downscale is to cultivate a growth mindset. A positive attitude will be especially beneficial when your employees themselves come up against roadblocks. Make sure to lead by example; if you expect your staff to put in the extra hours for less money, for instance, then you must do the same.
The power of a business plan
Creating and sticking to a solid business plan always leads to success. Be sure to review your business plan regularly - at least once a year for new companies. Take note that losing sight of prescribed goals can bring unwelcome results. It’s crucial to strictly monitor key performance indicators (KPIs). Some of these include the performance of loan covenants and analysing trends to ascertain whether they’re moving in a positive or negative direction.
Get creative with debt collection
A tough economic climate is a great opportunity for your business to extend better customer service. For those clients who might be struggling to make ends meet, get creative by separating collections into smaller payments, for example, or extend the payment period. These types of clients will later reward your commitments with long-term loyalty, and will often refer others to you in recognition of your sound business approach.
Right-size your team
Remember that the bigger your dream, the stronger your team. You can’t get to be world class with a low-performing staff complement. To protect your company during hard times, you must demonstrate brave leadership, so look at where you can right-size your workforce. Low performers must go, and top-performing employees should stay.
Develop multiple business strategies
To prepare your business for the next economic decline, multiple strategies are required; there is no one-size-fits-all formula that works for different circumstances. You and your stakeholders should meet regularly to discuss the market conditions and any predictive signs of an economic crisis. You should plot different strategies for various scenarios, to ensure that you are prepared for anything.
Sell, sell, sell and market, market, market
Tough times are when you need to demonstrate shrewd business sense. This means aggressively selling your products and services to customers, and being intentional about securing new ones. Find cost-effective ways to market your company. One of the best ways is also one of the cheapest – one-on-one interaction with existing and prospective customers.
Achieve your A-game
Stop being so hard on yourself. You’re only human and you can’t control the environment. Control the controllable however. Plan your week in detail every Sunday morning. This removes the need to make multiple decisions every day, because you already have a blueprint in place. You also need adequate sleep, a proper diet and regular exercise to be able to perform optimally - and to be happy, healthy and strong. Remember that, in the past, your pain has served your growth. Your setbacks have strengthened your character. And heartbreaks help heroism. Let resentments go, and trust that life has your back.
Inospace is an owner and operator of serviced business parks offering a wide range of industrial, logistics, storage and work spaces in one location, enhanced with a suite of innovative business benefits. Our mission is to support businesses through offering our clients flexibility, affordability, community, and simplicity. Established in 2017, Inospace owns and manages a growing portfolio of 26 branded business parks in South Africa and the United Kingdom, and is home to a diverse base of 1,200 clients.