Uncertainty can be really scary for a small business owner. Inflation and a potential recession would be big challenges on their own, but today’s reality is that we’re dealing with both. Until the state of the economy becomes a little more stable and certain, there’s not much we can do to make these fears go away.
But there are steps you can take to make your business more financially stable and help it survive the more challenging times. Taking these steps can help you feel more confident in the future of your business and relieve a lot of stress. And many of these involve stepping back, taking a hard look at your business, and making more sound decisions for your business. That’s a good thing to do for every business, even in the best of economic times.
Guide your decisions with data, not fear.
It’s natural to be scared when inflation is rising, or there are rumblings of a recession. And there tends to be a ripple effect where we feed off each others’ fear and spiral even further. In the last few years, when the economy was booming, there was a huge increase in new small businesses. Now that things are looking a little less bright, some small business owners will start to have doubts about their business and wonder if they made a mistake starting it.
The problem is that fear and doubt are not helpful to smart decision-making. They make us irrational. You started your business for a reason, and good economic times will return. The important thing here is to be very careful about your decisions and guide each decision with data, not fear. Making changes to how you operate your business during a challenging time can be a good thing, as long as these decisions are carefully thought out and backed by data instead of emotion or intuition.
Focus on your most profitable marketing activities and ease up on the rest.
This is a perfect example of how data can help you make stronger decisions. Chances are you’re probably relying on a variety of marketing tactics to find new customers. When the economy is doing well, it can be smart to spend more money on advertising and experiment more with different tactics that may or may not work.
Take a step back and really look at your marketing mix. Which activities are actually giving you the most ROI? It might make sense to pause spending on some marketing tactics that are more of a longer play (like building out a robust content engine or focusing on SEO) and double down spending on activities that are giving you more ROI in the short term. Do an audit of your spending and focus your marketing dollars on the activities that bring you the most ROI.
Trim your fat and cut unnecessary spending.
Marketing isn’t the only area where you should be doing an audit of your spending. Look at your last few bank and credit card statements and see where you can make cuts. Subscriptions tend to be an area where we collect monthly purchases as we go without realizing it. Any that you aren’t regularly using might make sense to cut.
Other unnecessary expenses may look different for each business. But taking the time to go through and decide which spending makes sense and which does not can help you save while you give the external climate some time to settle and see if things start to improve. Not only will this save your company money, but it will also help alleviate your stress by reassuring you that you’re being conscious about your spending and have better control over your finances.
Invest in your existing customers.
Building loyalty with your existing customers is much less expensive than constantly trying to find new ones through different marketing channels. And there are so many different ways you can do this. You can offer them deals or discounts to get them to keep them spending with you or you can get personal and send them birthday wishes and discounts.
You can even use insights from their purchases to help you get creative. If they tend to purchase certain types of products or services from you, you can send them offers around new products you have that are similar to this. Many companies pour time and money into finding new customers when it is actually much easier to remind your previous customers that you’re there and offer them incentives to come back to you.
Take a look at your pricing strategy.
This doesn’t necessarily mean that you stop selling your higher-priced products but don’t ignore the fact that during difficult times, everyone tends to be a little tighter with their spending. If you shift focus on promoting and selling your lower and moderately-priced items, you’ll probably be able to get more sales and the customers who are not feeling financial pressure will still be there to purchase your higher-priced items and services.
Offering pricing bundles is another great way you can get creative about sales during an economic downturn. Sometimes, offering things like buy one get one or discounts when you purchase a certain amount can help you try and get higher volumes out of each sale when customers are spending less. This can help bring up your sales and keep them up during times when spending is a little lower.
Eliminating the uncertainty from your business operations.
When we’re anxious or afraid, there can be a temptation to stick our heads in the sand and hope everything blows over. But the more uncertainty you can remove from your business operations, the more comfortable you’ll be with uncertain and difficult times. Looking over your business operations and the way you manage your money helps you gain confidence that your business will be alright at the other side. And you just might come out even stronger.
Lili is a banking platform built for today’s small businesses. Lili combines banking, accounting, and tax prep into the same platform so that each part of your finances works together more effectively. This makes the financial aspects of your business easier to understand and manage so that you can focus on growing the business you love. Learn more about Lili here.