August 15, 2011

It has been a scary month for every small business. Hearing the politicians in Washington play a game of "chicken" with the national debt ceiling was not entertaining. Watching the gyrations of the stock market is enough to make anyone sick. Many financial experts believe that the market is always a leading indicator of where the economy is headed. Some are even predicting a "double dip"  recession. How will the tumbling of the stock market affect your small business?

My survey of small business owners last week revealed the following

Forty-eight percent thought sales from their customers will “decrease as a result of a fear of a new recession." These owners were definitely worried that customers would emotionally pull back as stocks lost their value and the negative press on the economy grows.

Forty-three percent replied that “it would have no effect at all.” These owners were confident that the stock market fall was temporary and that the fundamentals of the economy and their business were still sound.

Whether the U.S. is headed into another recession is unknown. But, small business owners can stop wondering about what to do next and should take more control by following these five steps.

1. Forget Chicken Little

Ignore the daily stock market ups and downs. To listen to the pundits, the world is coming to an end. It is not helpful to get caught up in the emotional hysteria of these massive swings. Don’t try to "time the market" on your own personal investment strategy either. You may get lucky, but for most of us, this is a loser. Turn off the daily negative media if that helps.

2. Find your millions

The U.S. is a $14 trillion economy. Do you think you could find another million dollars worth of sales to help grow your business in such a large pool of buyers? Darn right! Stick to the fundamentals that have worked for your business.

3. Watch your cash flow

Cash tends to slow down in a tough economy. Make sure that customers are still paying bills within terms. Watch inventory levels so they do not grow more than sales. Negotiate longer terms with your vendors. Each of these metrics is critical. Businesses that have positive cash flow can always find opportunities to prosper.

4. Get boring fast

The knee-jerk reaction is to broaden your company’s solutions to gain more customers. This is the absolutely wrong strategy. Focus on the areas where customers have the most pain and where your company solutions can profitably solve them. Customers will always buy painkillers.

5. Keep selling every day

Again, the first reaction is to cut costs and curtail “overhead expenses” like marketing and sales. Results show that companies that market through difficult times are more profitable when customers get more money to spend. Remember growing a company is about building long-term trustful relationships with customers, prospects and influencers. None of this can get accomplished successfully if your business stops marketing itself daily.

Is the sky falling? What tactics will you be taking through the remainder of 2011?

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Barry Moltz, Article, recession, stock market, economy, financial management

Join the conversation ( 2 )

• Tom Wuellner 9 months ago

  

  Barry,I believe you, but I am curious to know your source for this statement in point #5--which I want very much to believe: "results show that companies that market through difficult times are more profitable when customers get more money to spend." I would like to quote this research. Appreciate your response.Tom Wuellnertwuellner@gmail.com

  • barrymoltz 9 months ago

    

    Hi Tom- I have great examples of this in my second book, Bounce! Can I send you a copy?