Growing Your Business in a Slow Economy
Q. I've been trying to grow my small business, but the economy has made it very difficult. Do you have any tips for growing a business in this economy?
A. Growing a small business is challenging in any environment. It’s even more difficult in economically troubled times. In conducting research for our book, we discovered five tips that can help entrepreneurs overcome these challenges.
Focus on low-cost solutions – Dollar Tree operates a nationwide chain of retail stores. Every item on the shelf sells for $1. It caters to bargain hunters. The years between 2007 and 2011 were the most economically difficult period we have experienced in our lifetimes. During this period, Dollar Tree’s sales grew by 56 percent and its profits by 143 percent. To grow your business in a downturn, focus on offering lower-cost solutions.
Allow customers flexibility – In trying economic times, people are uncertain about their future income and are hesitant to make long-term financial commitments. Allay your potential customer’s fears by not locking them into extended contracts. Consider leasing rather than selling products. Think about whether some sort of buyback provision makes sense. Make a potential customer comfortable that if his or her economic situation changes, there is a way out.
Offer short-term, tangible paybacks – In tough times, customers are looking to make ends meet today. Often, spending more now to save in the long run is not an option. Focus on those parts of your business that offer economic advantage in the short term.
Answer the critical questions – Every business owner must be able to answer one critical question, “Why should a prospective customer buy our product or service rather than a competitor’s?” When times are tough, getting the answer right is even more important. You have to separate your business from the competition to survive.
Make sure that the segment of the market that values what makes your offering different is large enough to support your business. Finally, you’ll need a clear plan to reach this segment. Whoever said, “If you build a better mousetrap, the world will beat a path to your door,” was just simply wrong. If no one knows that you have built a better mousetrap, people won’t be knocking on your door. Develop a plan to inform your target market segment that you have what they want.
Don’t be afraid to ask for help – If you want to build a house, you could learn by trial and error. You could read books on carpentry, plumbing, residential wiring and HVAC. But, you wouldn’t. You’d talk to an architect or a contractor. You’d build on the accumulated knowledge regarding residential construction. Successfully growing a business in economically difficult times is more complex than building a house. If you haven’t navigated these waters before seek the help of those who have. When times are tight, missteps can be fatal.
Growing a small business in a downturn is tough. Many entrepreneurs won’t make it, but some will thrive. Do you and your business have what it will take not only weather the storm, but to flourish? Following these five tips will help you to clear the hurdle.>