Small Business: Surviving a Cash Strapped Economy

By D. A. Barrow

Small business owners across the country, have been affected by the challenges of this economy more than any other type of business. They are the group that has the least resources and leverage to counter what is taking place in their businesses. Phones that rang relentlessly only 1 year ago, are barely ringing today, if at all. Customer cancella-tions are abundant.

They are experiencing declining sales, increasing costs and decreasing lines of credit. Plus, they are realizing a shortage of cash that cannot be generated quickly enough to stay competitive. As a result, advertising and marketing budgets have been extensively depleted. So, how do they survive in this cash strapped economy, given these circum-stances? How do the remaining businesses keep from joining those that have already closed their doors?

First, there are two choices these business owners must make; to struggle through, taking no action, while hoping for a quick economic turnaround or map out a plan for survival. For the entrepreneur who is determined to come out of this still standing , here are some approaches being used for the purposes of gaining new customers, continuing to build business and ultimately increase cash reserves.

Expand Marketing Strategies


§ Increase in Networking:

Networking groups are increasing in number and so are the participants. Business owners are using these groups more frequently to increase business and gain referrals. Some are attending 5 or more networking events per week, 2-3 per day.

The quality of a networking format and agenda is also becoming more useful for the entrepreneur. Many networking groups only gather for lunch to simply exchange business cards. These can be non-beneficial for someone looking for business guidance or a real business connection.

An alternative is a networking group structured to actually provide brainstorming, consultant advice, free of charge. A business is randomly chosen each week, and the other networking group members critique the chosen business’ marketing plans. The business is offered advertising and marketing suggestions on how and where to attract more customers, based on the needs of the business. If a networking group cannot be found with this meeting outline, it can easily be established.



Complimentary services and products

In exchange for publicity and free advertising, some entrepreneurs are giving away services and products to showcase their abilities and gain new customers. The company or event receiving these freebies are often prepared to provide a great deal of advertising exposure to the donating business. This is somewhat in the form of bartering , as discussed below.

§ Businesses merging:

In order to strengthen their businesses, some entrepreneurs have decided to merge. This includes competitors. Merging reduces costs as common tasks performed by both companies are combined.

§ Online advertising:

Due to cost, many entrepreneurs are reducing their print advertising while increasing online advertising. Many are switching to the popular online advertising sites. As more and more people have access to the internet, it makes sense given the cost of print advertising.

§ Co-op Advertising

Advertising arrangements between business owners (manufacturer) and vendors are also being utilized more. This is a form of co-op advertising where both parties share advertising costs. This is a very valuable arrangement, especially if a vendor is not as well known as the manufacturer. The vendor’s brand can create awareness of their product.

§ Bartering

Barter Exchanges are on the rise. Bartering is when a service or product is exchanged for another without the involvement of cash. as in the above case of exchanging advertising exposure for a donated product or service. Some entrepreneurs are using this method as a way of building business relationships. In most cases, it is hoped these new relationships will result in paying customers.

Diversification

Diversifying product offerings is a good business strategy, and should always be considered. Likewise, individual small business owners can tap their own skills, as well as, explore investment and business opportunities to create income.

Robert G. Allen wrote a book called Multiple Streams of Income¹, which is 350 pages and 18 chapters of ways to diversify one’s business interests. Allen talks about getting paid for using skills that many business owners already possess, such as:

§ Selling Information
§ Desktop Publishing
§ Website Building
§ Public Speaking

Because most business owners must wear a multitude of hats, these skills can be turned into sideline profits.

In closing, it is commonly said that people who start businesses are risk takers and should be accustomed to dealing with change; so, isn’t surviving in this economy an extension of that belief? Shouldn’t small businesses be prepared to make adjustments,to change strategies, and to adopt some of the methods listed above? Truthfully, the greatest risk will be to do nothing but wait and hope. And, no survival plan should look like that.

¹Multiple Streams of Income¹, Robert G. Allen, Second Edition


About The Author:

Debra Barrow owns a small homebased business, and is an affiliate to SFI, Strong Futures International with backgrounds in finance and education. Also, is a member of IAHBE, International Association of Home Based Business Entrepreneurs, a division of SFI.

For more information:
Strong Futures International