Getting Tough In a Tough Economy
You don’t have to be beaten because the economy is tough. You just have to get into fighting shape. Here are some exercises that will make you more fit to deal with tough times.
- Tighten up your cash flow muscles – Consider reducing credit periods for customers and if necessary, use all the credit your suppliers give you.
- Shed excess inventory – Excess slow-selling inventory is unwanted fat. Analyze your inventory and put your money in the bank instead of on shelves.
- Measure your margins – If your product is selling fast, you may be under priced. Check to see if you are priced appropriately. Also use this opportunity to negotiate with suppliers for better prices.
- Monitor overhead costs – See if there are any areas that warrant cutting back and also check your standing orders and direct debits. You may be paying for things you no longer need.
- Promote, promote, promote – It seems the easiest and fastest way to reduce expenses, but cutting your marketing in tough times may not be wise.
- Don’t take the easy out – Research shows that people remember those who keep advertising through a recession, even if they don’t patronize the business immediately. And importantly, keep these principles in mind even when trading conditions improve.
The easiest ways to cut costs can end up costing you big time in the long run. Be creative in how you reduce your expenses, such as reducing employees to 4 day work weeks instead of layoffs. Offer employees a percentage of any savings they can create in purchasing and materials etc.