Building on Strengths in Tough Economic Times
By Doug Howard

The current business climate is subjecting most small businesses to
extraordinary challenges. For many, sales are down, competitors are lowering
prices, customers are paying slower, expenses are rising and access to
capital is severely restricted. There are a great many small businesses that
have already lost too much, borrowed too much or spent too much to continue
as a viable enterprise. So, who will prevail in such times? It will be those
that build on their strengths, seize opportunities and offer a proper
defense.

The first strength to build on is an existing, loyal customer base. If your
business has built such a customer base, you should reach out to them and
make sure that you make an effort to show appreciation for their business
and seek opportunities to build on those relationships. In these uncertain
times, individuals and businesses are spending cautiously. You may be able
to improve your business performance by providing more to your existing
customer base.

As times get more and more challenging, too many businesses are resorting to
price cuts to get or keep business. In many cases, this generates sales, but
leaves the business short of gross profit. In other words, the increase in
sales does not offset the fact that less profit is being made on each sale.
Thus, the business falls further behind. When a business competes on value,
it is less necessary to compete on price. Value is another strength that a
business can build on. While some businesses compete on low prices, others
compete by providing higher value. This can be found in the quality of
products, the level of customer service, professional expertise and other
ways.

Technology can be another business strength. For companies that have already
made an investment in technological advantages, this might be the time to
expand or enhance those capabilities. Internal processes, web-based customer
interfaces and other tools designed to increase revenue and decrease costs
can be great advantages during difficult times.

The most important strength in any business, but particularly in a service
business, is the people. Retaining good people and providing continuing
training opportunities can make this an even greater advantage for
businesses. However, this is an area that all too often gets cut when times
get tough. In fact, this may be the very best time to attract new talent
given the number of very talented people that are out of the workforce due
to layoffs and business closings.

Good businesses will build on their strengths during tough times. They need
to focus on their core businesses and their key customers. They need to
enhance what they do well and avoid the temptation to panic or take a
scattered approach to marketing. In future articles we will look at reducing
costs, creative financing and other business strategies for beating the odds
and making through tough economic times. 

Doug Howard is president of BDG Entrepreneurial Services and founder of Start-Up Carroll, a program that assists individuals starting businesses in Carroll County, Maryland.