Tips to help your business stay afloat
In response, to the islands troubled economy our law firm recently established an Asset Stabilization and Strategic Economic Recovery Team (ASSERT) to help businesses stay afloat.
Here are some pointers from our team.
- Stay in close contact with your current customers.
- Most companies find that new business opportunities come from existing customers. Identify your customers’ needs by visiting with them. Be proactive — don’t wait for them to call you. When there are limited growth opportunities, your competitors will try to take customers from you. Don’t be vulnerable by being absent.
- Reduce operating costs, but don’t cut indiscriminately.
- Examine your costs to determine what expenses can be reduced without hurting the company. While marketing and advertising are often the first areas to get cut, trim — don’t slash. Many studies have been conducted, which indicate that companies that maintain their marketing and advertising investment during a recession perform better than their competitors and for several years after.
- Narrow your focus based on fact. Some businesses become more profitable when they focus on specific types of work instead of trying to do it all. We may provide goods or services that take resources from the business, but contribute little to the bottom line. Get help to analyze the cost vs. benefit, so if you do have to make cuts in operations, you’re making decisions based on fact.
- Manage billing and collections.Bill quickly. The longer you wait to bill, the longer it will take to get paid. Customers will never perceive more value than they did the minute you delivered the product or service. . Too often, a company will send a bill and wait for the client to pay, failing to take any action until the bill is “over 90-days” due. At that point, it’s difficult to collect the full amount.
- During slowdowns, customers may try to extend the time they take to pay you. Monitor the terms you have and notify them immediately when they are not meeting them. To be paid first, not last, you may want to include an incentive. This approach may work better than a penalty for late payment, which is typically hard to collect.
- Talk to your team members.Tell them what’s going on. Those who have information from the top are more likely to try to contribute to a solution and less likely to imagine the worst. Not talking or making comments about “tough times” hurts morale, which has a direct impact on your bottom line.
- Invest for the future.The bad economy and high unemployment can provide opportunities for growth when the climate recovers. You might get better rates on leasing space, construction, office equipment, etc. You may also be able to acquire key personnel or outsource projects to contractors who may be unemployed and looking for opportunities.
- Keeping a close eye on overhead, tightening up on billing and collections, narrowing your focus, and taking advantage of opportunities, will help your business weather the current economic situation.
Tom Bolt is managing attorney of Tom Bolt & Associates, P.C., a St. Thomas-based business law firm.