Business owners are, rightly, concerned about how the financial crisis and recession will hurt their businesses. Yankee Group analyst Steve Hilton shares his insights about ways that you can use technology to survive these tough times.
Each month, SMB expert Steve Hilton of Yankee Group answers real reader questions about small and midsize business.
It's the economy. Enough said. Rough sailing ahead or partially clearing skies -- either way, some fiscal and business prudence will help us all weather this storm. And that's the subject of Ask Steve this month.
Merle from Albany, N.Y., asks: Any suggestions for helping my five-location dry cleaning and laundromat franchise make it through tough times?
Steve: No one should minimize the impact of a recession on all sorts of small and midsize businesses, including services companies. That being said, business owners can take solace in knowing that over the past eight or so recessions, small and midsize businesses have generally come out of recessionary times faster than large enterprises.
My advice for surviving tough times falls into three categories.
- Prudent Business Ideas Irrespective Of Economic Weather
Whether bull or bear market, you need to watch your financials. And in particularly rough economic climates, review your financials every week. Often customers who buy on credit slow down their payments, which can quickly have an affect your receivables. Be understanding yet firm with customers who buy on credit by setting clear payment terms and timelines.
Don't Miss: Financial Crisis Survival Kit
Another good business idea is to review your marketing mix. Let's all reflect back to those Marketing 101 classes. A marketing mix includes your products, pricing, promotions, and distribution channels. Sometimes your products need some tweaking during recessionary times -- maybe some new packaging even. Do you do laundry delivery? Maybe you could use some of your current employees -- equipped with company-sponsored GPS-enabled smartphones -- to make deliveries. The technology would minimize wrong turns (and gasoline costs) and keep them in touch with you via e-mail while they're on the road. Maybe the devices also could log customer pick-ups and e-mail itemized receipts to customers. Another thought -- consider adding a micro-sized product/service to your portfolio, a product that might appeal to budget-conscious consumers in tough times. Also, consider changes to your promotions, advertising, and market messaging. Are there special promotions to increase laundry loads per customer or the overall number of customers using your establishments?
- Smart Revenue Enhancers
During bad economic times, people spend a lot more time at home. Without as much discretionary income, potential customers sit at home and pretend to be entertained. Do you have a Web site? Do you do online or other types of advertising? Is there now an opportunity for you to explore e-commerce offerings? Those prospective customers sitting at home are probably surfing the Internet.
Bad economic times also allow you to focus on increasing customer satisfaction. Do your establishments have free Wi-Fi that customers can use while waiting? How about a flat-screen TV on the wall with a Wii (and charge 25 cents for 5 minutes or buy-one-game-get-one-free)? Would patrons find Guitar Hero more entertaining than the spin cycle? There are plenty of small technology consultants who can help you set up a reasonably priced entertainment and broadband Internet area in your establishments.
Along those same lines, reward loyal customers. Imagine reward cards that offer one freebie after 10 purchases. Reward cards also allow you to capture customer information, including e-mail and snail-mail addresses, which affords more marketing opportunities.
- Smart Cost Containment
Every expense matters in tough times. Look at those expenses that account for the large percentage of your costs -- utilities, maintenance, customer care, finance charges, merchant services charges, communications, and employee costs. Make your cost-cutting decisions carefully, realizing that some decisions can have large impacts on the future of your business. This might be a good time to invest in some "green" IT. A little more spent on the technology might lower your ongoing operational costs for years to come.
If you need new technology, consider both premises-based solutions as well as managed/hosted solutions. Paying for technology on a per-user-per-month or similar basis might allow you to conserve precious capital dollars. All sorts of solutions are hosted these days, including phone systems, CRM, sales force automation, ERP, etc. Ask your technology adviser for some options and look at the total cost of ownership over several years before making decisions.
Don't Miss: 12 Easy Ways To Cut Your Company's Tech Costs Now!
Hang on, Merle, this economic storm will pass and hopefully you'll not only weather it, you'll be better positioned for the future.
Do you have a question to ask Yankee Group analyst Steve Hilton?
Send your questions to asksteve@yankeegroup.com. Please include your name, city, state (province), and phone number. Only first names and locations will be published.
See more Ask Steve columns
Steve Hilton is VP of Enterprise and SMB research at Yankee Group. Hilton is recognized as a leading global SMB expert.
FREE RESEARCH:
- Yankee Group: Unleash The Hidden Power Of Your SMB
- Yankee Group: What Wireless Broadband Networking Means For Small and Midsize Companies
