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How to Keep The Doors Open During Tough Times

Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System, speaks at a conference examining the recent U.S. recession. (Photo by John Moore/Getty Images)

At a recent business function I was meeting the people who were seated at my table. As we went around I was asking everyone how their business was doing. Everyone was singing the blues except one owner who said his business was up over 200%. “What do you do?” I asked. He replied, “I make ‘Going out of Business’ signs.”

Tomorrow morning, when you open the door to your business, one of two things will happen. Either it will be another successful day, or it will be your last day of business. Due to economic conditions more and more businesses are experiencing the latter and in many cases it could have been avoided.

Your Worst Day of Business

Stop and think for a moment. What would you say was your worst day of business? Could it have possibly been your first day of business? You have no customers, no one knows your business name, your location is yet to be a landmark, and your level of customer service has yet to be established. Even your employees may not be tuned in to the long-range vision of the business.

Go back in your mind to that first day of business. What did you do to get the business name out there? Grand Opening sign? Balloons? Lots of advertising? The point is that you did not skimp on being noticed. You spent money even though no money was coming in.

What Is The Life Blood of Any Business?

Right … its qualified paying customers. If your business has been around a few years then you probably have a core group of loyal customers. If you are a new business then one of your primary business goals is to start building a loyal following by providing quality products and good customer service. No matter which category you fall into, as a business owner, success or failure lies with you.

An Action Plan

Being successful in business is a lot like losing weight. When times are good, food is plentiful, and you gain weight. But when times are bad, and food is scarce, not only do you lose weight, but your nutrition may also suffer. Therein lies the problem — the lack of nutrition in your business.

Business owners who live and die by price alone are going to have a very hard time during current economic conditions. When times are good, you are selling more, even though your profit margin may be lower than it should be. In other words, you are eating more of the wrong foods in order to nourish your body. However, during lean times, with a low profit margin, less money comes in and your bottom line suffers. You are eating less of the wrong foods and your health (business) suffers.

To correct this problem you must work smarter, not harder. You have to start eating the right kinds of food. That means having an adequate profit margin on all your products and services and training everyone in your organization to sell value (nutritious food) instead of price (junk food).

Next, look for ways to cut waste. I’m not talking about reducing hours or laying people off. It’s easier to reduce waste by 2% than increasing sales by the same amount. If your profits drop 6%, and you have to lay off 20% or your workforce to compensate, then you are simply a poor manager.

Some Final Thoughts

The main reason people use price as a measure is because they are not educated about the value of the product or service. People rarely buy things based solely on price. If you create value, you will create customer confidence that will build that core base. Recessions only affect those that allow it to affect them.

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