When Economic Confidence Wavers
Originally published: 10.01.08 by Terry Tanker
Stay true to your business and your customers to maintain a competitive edge.
In August I discussed ways to manage in a down economy and some of the positive things that can happen for business owners who have positioned their companies not only to weather the negative economy but also to take advantage of opportunities in their markets.
Since then, we’ve seen several dominant financial- management companies merge, close up shop, or turn to the government for a bail out. Now the big news is the impact of this mess on businesses that use credit to fund operations or investment — especially small businesses.
Banks and other lenders have made getting new or additional lines of credit extremely difficult. For existing business owners with realistic cash-flow projections, excellent repayment histories, solid credit scores, collateral, and strong business plans, it still is possible to borrow money. However, if you are looking for start-up money, it will have to come from private investors.
According to the National Small Business Association’s (NSBA) August economic report, a majority (67%) of small-business owners say they have been impacted by the credit crunch. And, more than half (53%) say economic uncertainty is the most significant challenge to the growth and survival of their business.
With all of this doom and gloom, it is easy to miss the silver lining in the NSBA survey: Three quarters of small-business owners still feel confident about the futures of their own businesses despite the economy.
So, how can you remain confident about your business when your confidence in the economy is wavering? Unfortunately, there is no one-size-fitsall answer. There are, however, truisms to rely upon and common best practices to follow:
Cycles repeat. Understand that an economic downturn is simply the end of a growth cycle, and true to the concept, the cycle will repeat.
Avoid making rash decisions regarding your business or finances. Stay true to your business plan and make sure you’re not straying from the strategy you so thoughtfully developed.
Strengthen your customer focus. Continue to listen carefully to what your customers need and want; and what they like and don’t like. You can expand your relationships with loyal customers by offering incentives for new and improved services.
Don’t cross off advertising and marketing expenses. This is one of the first areas business owners are inclined to cut. But, in an economic downturn, you actually can expand your customer base by keeping your message and your brand out there. You’ll gain greater exposure as competitors’ messages pull back, leaving yours free of clutter.
Focus on cash flow and balance sheets. Understand how much credit you’re extending to your customers. Thoroughly understand the financial health of your company and monitor it weekly.
Take advantage of business discount programs that provide credit cardholders automatic discounts with participating merchants ranging from travel services to shipping companies. This will save you money on business products and services you purchase regularly.
Almost all news reports will say market conditions have had some type of negative effect on your business, but don’t let fear sap your confidence. Stay true to your business philosophy, co-workers, and customers. Above all else, lead your company through the storm and remain optimistic.
Articles by Terry Tanker
20 Questions In Memory of Jack Hutchinson
It is with heavy hearts that HVACR Business announces the sudden passing of Jack Hutchinson, Vice President of Sales, on March 13, 2014.
HVACR Business Publisher Terry Tanker collected memories from those who knew him well to create this month’s 20 Questions column.
Winners and Losers
20 Questions with Tony Petrolle
HVACR Business Publisher Terry Tanker sat down with Tony Petrolle President of Gaithersburg Cooling & Heating (GAC), Bryant’s 2013 Dealer of the Year award winner. The two discussed acquiring a company, assembling the right team, and the development of a quality assurance team to provide employees with the best work environment and customers with the best products, service and support.
20 Questions with Mike Reilly, President and Owner, EWC Controls
HVACR Business Publisher Terry Tanker met with Mike Reilly, president and Owner of EWC Controls, to discuss manufacturing, family businesses, and how his company can help provide contractors solutions to customer problems.
Common sense – it’s simply knowing the difference between right and wrong. It entails a personal and subjective process of analyzing a situation and finding a solution that works. For most people I think it’s their first instinct, the rational thing they would do without giving the situation a thought. Again, I said for most people.