How to Weather Economic Ups and Downs
By: Karl R. LaPan, President & CEO, Northeast Indiana Innovation Center
Highs and lows are part of life—and business in no exception. No enterprise is immune to the fickle and unpredictable nature of a competitive marketplace. The truth is that all business climates are entrenched in cyclical patterns, that business leaders must accept in exchange for the opportunity to pursue entrepreneurial dreams. When I worked at GE in the 1980s–1990s, Jack Welch always believed that the time to double down was when others were retrenching in bad economic conditions. It helped ensure your ability to win when things rebounded.
While the overall economy may pose some threat to small businesses, most owners may be more in control than they think. That’s because even in down markets, people spend money and buy goods and services. Better managed and leveraged businesses are the ones that come out ahead following weak market conditions–if they prepare for the ride.
There are several things you can do now in order to survive and ride the natural ebb and flow of the market:
- Always keep marketing (and ABC – Always be Closing). When times are bad, it’s tempting to take a myopic view of your business and gut the marketing budget. But that’s the worst thing you can do. Instead, consider focusing your marketing firepower funds on the most optimal channels like online and content marketing and social media. You have to build relationships based on shared and mutual value.
- Remain innovative. When there’s any inkling of tough times head, weak competitors will go into hibernation mode. This is prime time for creative business leaders to make their moves and gain market share. Get to know your clientele better to offer additional value-added solutions that best serve their needs.
- Find smart tax advice. Taxes may be the single biggest cost to a small business. A solid strategy developed by a tax professional can reduce your tax burden. That newfound cash flow can be used for marketing, expansion or reinvestment in the business.
- Maximize the highs. In good times, take the time to prepare for the long haul and focus on the larger strategy. By running your business a minimum of 90 days ahead, you’ll likely be proactive versus reactive to volatility. A general rule of thumb: All small businesses should maintain a cash reserve of six months of expenses at all times. A strong line of credit can also provide cushion for unexpected opportunities or surprises.
- Be straightforward. You owe it to your employees to communicate the state of the company on a regular basis. When engaged and informed, employees become understanding and helpful. When things are good, reward them. Then they’ll be more apt to stand by you and work extra hard. Celebrate the small successes along the way. It breeds higher self-confidence and a little more swagger when you need it most.