Beating hard times

Mr Isaac Mugote, a banker shares that small businesses have to adopt better business practices to overcome these challenging times.

“Of course, we in the banking sector appreciate that the cost of doing business has gone up for our clients, but banking is also a business and we must be able to protect our shareholders’ interests,” he says.

However, he observes that these tough times have greatly eroded what were regarded as industry benchmarks.

Out of the five Cs considered before issuing a loan, only collateral can be solidly dependent since other factors such as capacity and capital can easily change in a few days after interacting with the client, causing large numbers of defaults in terms of loan repayments.

However, he advises that clients who are not in position to meet their loan obligations on time should keep an open relationship with the banks by keeping them in the know about the business performance.

To keep afloat in business during these hard economic times: Be part of the solution, not part of the problem. Look for ways to stay afloat and competitive.

Challenge your employees to be more innovative and welcome new ideas.

Plan for long term growth
Respected business leaders are those who thrive even during hard times. Be one of them by focusing on the long term growth of the company, other than the short term.

We may be unable to tell how soon the business climate may normalise, but one thing is certain, that every business leader and owner must take responsibility not just for the survival of their business but for their growth too.

According to about.com, surviving in hard times requires a steel determination and never-say-quit attitude.

But in today’s swift and merciless marketplace, more is needed than a winner’s attitude.

Here are six small business hard time strategies to help steer the chopping waters of commerce.

Cut with precision
The typical cost-cutting approach by corporations in hard times is to employ a wide sweeping cost reduction policy. For small business, cost-cutting needs to be implemented with the precision of a surgeon’s scalpel. Cut too deep and your business will never recover. Cut too shallow and cash flow problems could force you to the back of the unemployment line.

Look outside
It’s typical for the vast majority of small businesses to be local not only in location but in marketing focus. In hard times, looking beyond the regular boundaries of your business is good business. One such opportunity is international trade.

Use low budget marketing
When difficult times hit, the marketing function of a business is the first to get cut. With less advertising and marketing, the funnel of incoming prospects is reduced creating even more revenue decreases and setting up a vicious cycle.

The key to salvage any business in hard times isn’t to reduce your marketing activities but to replace them with low-budget marketing. Low-budget marketing included tactics such as PR, networking, public speaking, and more.

Connect with peers
Hard times in the form of market shocks impact more than just your business. Entire sectors of the market place can feel the heat. One useful approach to survive is applying the wisdom of crowds. A term coined by James Surowiecki in his bestselling book The Wisdom of Crowds, asserts that group wisdom is greater than the individual.

Fundamental focus
In good times, business comes easy. Your sales presentation or marketing may be less effective but will get results. Surviving hard times requires going back full circle to the fundamental principles of business.

Process don’t replay
It’s easy to fall into the trap of replaying the situation that got you here today. If you had a failed partnership, replaying your mistakes is a mistake. Research published in the Journal of Personality and Social Psychology by Lyubomirsky, Sousa, et al reveals analysis occurring during talking or writing is beneficial in difficult times while replaying negative events is detrimental. Learn from mistakes and move on.

Surviving difficult times whether personal or events such as a market shock requires a healthy outlook as well as good strategy. Remember bad times don’t last forever.