For almost 2 years, the Covid-19 pandemic bitterly hit on small entrepreneurs.
With the current state of a depressed economy, many small business owners feel as though there is no need to plan ahead.
Some are just praying to endure these uncertain times best as possible, hoping for a brighter future, while some are capitalizing this opportunity to commence or enhance.
Small entrepreneurs often tend to give up amid tough times in business. According to business experts, only about half of all new establishments survive five years, and only about one-third survive 10 years or more. Calling yourself an entrepreneur is not a tough job. What is tough is to be an entrepreneur and survive the tough times in business.
In this article, we will briefly talk about a few companies that survived and enhanced well, with special emphasis to those who did during the 2008 economic crisis.
- Survive tough times in business
- Preparation is the Key
- Bottom Line
Survive tough times in business
The path of an entrepreneur is not always a smooth one. There will be times when you will face difficulties and challenges that will test your mettle. Here are the key things to consider if you want to get out of the tough cave, some valuable diamonds stuck on your clothes:
Believe in yourself
The first and most important step is to believe in yourself. If you don’t believe in your own abilities, it will be very difficult to convince others to invest in your business. For example, if you’re pitching your business idea to potential investors, they will be more likely to invest if they see that you’re confident and passionate about your business. One such business is one that sells you your favorite pizza, Domino’s. 2008 was really tough for them, widely defamed for the most disappointing pizza. Domino’s Pizza saw its stock rise 5,000% from 2008 to 2017. This was due to their CEO’s decision to change their marketing campaign, which improved their reputation. They also improved their recipes and changed their whole process. They had faith in themselves and now call themselves a “technology company” instead of just a pizza company. This change in mindset led to great success.
Look for opportunities, even in tough times
In order to survive tough times in business, you need to be adaptable. Things change quickly in the business world and you need to be able to change with them. For example, when the recession hit in 2008, many businesses went under because they were not able to adapt to the new economic conditions. The businesses that were able to survive and even thrive during the recession were the ones that were able to change and adapt their business models to the new reality. One such company is Uber. When the recession hit, people were no longer willing to spend money on luxuries like taxis. Uber saw this as an opportunity and adapted the conventional wisdom to offer a more affordable alternative to taxis. This change in the default helped them to survive the recession and even grow their business. The purpose of this example is to let you know there are always people who do benefit from a financial low.
Keep on marketing
It’s tough to say, but most businesspersons do not have an inkling of how important marketing is, let alone during tough times. Marketing is what keeps the business afloat and helps it grow. It is the lifeblood of any business. During tough times, it is even more important to keep on marketing as it will help you to reach new customers and grow your business. Many businesses make the mistake of cutting back on marketing during tough times, but this is the wrong approach. You need to keep on marketing and promoting your business even during tough times. Reckitt Benckiser, for example, increased its advertising outlays by 25% during the recession following the 2008 financial crash. This was done in order to persuade consumers to continue purchasing its more expensive and better-performing brands, despite the harsh economic climate. By doing this, Reckitt Benckiser was able to grow revenues by 8% and profits by 14%. This is in contrast to most of its rivals, who were reporting profit declines of 10% or more. It’s always to remember that advertising should be done in a way that is an investment. If you see it as an expense, then it will only cut into your profits, regardless of whether or not you make it.
Something is missing
Take a look at what you are doing and see if there is anything missing. This is the time to get creative and come up with new ideas that will help your business to grow. Many businesses fail because they become complacent and they don’t change with the times. You need to be constantly innovating and evolving if you want your business to survive. For example, Kodak was once the leading company in the photography industry. But they failed to innovate and change with the times. They didn’t embrace digital photography and as a result, they went bankrupt. On the other hand, companies like Apple and Samsung have been able to survive and even thrive because they are always innovating and coming up with new products. So, if you want your business to survive tough times, you need to be constantly innovating and evolving. If you are not changing, you are missing onto something.
One of the most important things you need to do during tough times is to be frugal. You need to cut costs and reduce your expenses. This doesn’t mean that you should stop investing in your business. You still need to invest in your business, but you need to be more mindful of how you are spending your money. For example, you might want to consider outsourcing some of your work to save on costs. Or you might want to renegotiate your leases to get lower rent payments. There are many ways to cut costs and you need to find the ones that work best for your business. And yeah, it is difficult to do this when you are used to a certain lifestyle. But, if you want your business to survive, you need to be frugal.
Don’t give up
The most important thing is to not give up. You need to have grit and determination. You need to be resilient and be able to pick yourself up after every setback. Many businesses fail because entrepreneurs give up when things get tough. They give up too easily and they don’t fight for their business. But the businesses that survive are the ones that don’t give up. They fight for their business and they find a way to succeed. So, if you want to survive tough times in business, you need to have grit and determination. You need to be resilient and be able to pick yourself up after every setback.
In difficult economic times, it is tempting to lower your prices in order to attract customers. But you need to be careful with this approach. If you lower your prices too much, you will erode your margins and your profits. And if you’re not careful, you might end up in a race to the bottom where everyone is trying to undercut each other on price. So, you need to be careful with pricing. You might want to consider other ways to attract customers, such as offering discounts or coupons. Or you might want to focus on providing more value to your customers. But whatever you do, don’t panic and lower your prices too much. What do low prices mean? Especially during tough times in business, low pricing does not mean something lower than your previous pricing. Rather, it is relative to your competitor’s price range.
Focus on your core competencies
During tough times, you need to focus on your core competencies. You need to focus on the things that you do best. This is the time to streamline your business and get rid of any non-essential activities. For example, you might want to focus on your core products and services and get rid of any peripheral products and services. Or you might want to focus on your most profitable customers and get rid of any unprofitable customers. The key is to focus on your core competencies and get rid of anything that is non-essential.
Do not let your company run out of working capital
Another crucial problem that most newly established businesses face is running out of working capital. While focusing on solving your customers’ problems, you need to think equally about whether you are maintaining the balance between fulfilling your customers’ demands and making your business basically work.
Handle employees properly
Employees are key factors for your business. In order to handle them effectively, perform a critical staff analysis. Find out who the key employees are to maintain minimal levels of operation in the survival period. Then communicate with your employees about them modeling a reduction in hours themselves. After holding a creative discussion, try to reach such a common conclusion that it will be beneficial for both parties; employer and employees. This is because you will need those capable employees when everything goes normal after the time of this pandemic.
If you’re really struggling to cope with tough times in business, you should get help. There are many organizations that can help you, such as the Small Business Administration (SBA) or the United States Chamber of Commerce. There are also many private organizations that offer help to small businesses. You can also get help from mentors, advisers, and consultants. The key is to get help from people who have been through tough times in business and have survived. They will be able to give you the help and advice you need to survive tough times in business.
Preparation is the Key
Any size of business can go through tough times. It doesn’t matter if you are a big corporation or a small business. The key is to have grit and determination. You need to be resilient and be able to pick yourself up after every setback. One of the best edges to have during the tough business times is to be prepared. So, even if you are not facing tough times right now, it is always good to be prepared. It just can’t hurt. The following are some of the things you can do to prepare for tough times in business:
Have an emergency fund – This is one of the best things you can do to prepare for tough times in business. You should have an emergency fund that can cover your expenses for at least six months. This will help you to survive tough times without having to make any drastic changes to your business.
Review your expenses – You should regularly review your expenses and see if there are any areas where you can cut back. This will help you to save money that you can use to survive tough times.
Have a contingency plan – You should have a contingency plan for your business. This plan should include alternative sources of income and ways to cut costs. Having a contingency plan will help you to survive tough times without having to make major changes to your business.
Diversify your income sources – You should diversify your income sources. You will have more than one source of income.
Build relationships – You should build strong relationships with your suppliers, customers, and employees. They will be more likely to stick with you during tough times.
That was pretty much covering the basics of how to survive tough times in business. If you are able to pick yourself up after every setback and have grit and determination, you will succeed as an entrepreneur. But like every business journey, it won’t be easy. You will face difficulties and challenges. I can’t help but emphasize that the key is to never give up. So, don’t give up and you will find a way to survive tough times in business.