1. Cash Flow Is King
A business fails when it can’t afford to pay its expenses—you may have all this money coming in next month, but if you can’t make payroll at the end of this week, then it’s basically all over.
2. Build a Stockpile
Careful cash flow management and projections aren’t immune to sudden emergencies. Always make sure that you have enough liquidity for emergency bank loans or credit lines.
3. Stop buying crap
Spending money can make you feel really productive: you get to make a decision, enter a credit card number, and hit send. It feels like you’ve achieved something, your brain gets a nice dopamine hit, and it’s taken just a few minutes. Don’t confuse making purchases with being productive. If you’re not quite sure about a purchase that’s not business-critical, wait one day before you make a final decision. Putting it off will give you more perspective on its actual importance, helping you resist the urge to impulse buy and giving you more control over your expenses.
4. Selectively pay invoices
Pay invoices from critical suppliers that are also small businesses before the due date. This banks you an incredible amount of loyalty, which may come in handy down the track. For example, we always pay our recruitment firm within 24 hours of an invoice and we make sure that they know this. Why? Because since they know we’ll pay them immediately, they’re going to offer a great candidate to us first, before their other clients. Delay paying invoices from large, multinational suppliers as long as you can, however, as unlike a small business there’s no personal relationship there. You most likely have nothing to gain from paying today instead of in 60 days’ time.
5. Hire slow, fire fast
Hire the resources you need at the very last minute to maximize your cash. Eliminate underperforming people as soon as possible to improve productivity and, again, to maintain your cash flow.
6. Don’t hire average people
If you have 10 people in your business and one of them is average—or worse, an under-performer—then literally 10 percent of your workforce sucks. That’s a scary number. Here’s the strategy we use when hiring top talent for WORK[etc].
7. Don’t hesitate to outsource
You can cut down on overhead by moving some of the work overseas. Of course, you have to make sure that whoever you hire is passionate about the work and doesn’t treat it as “just another job.” Check out WORK[etc]’s outsourcing strategy here.
8. Upskill your team
Even when you switch your company’s engine to overdrive, an economic downturn will likely lead to fewer sales calls. Use the downtime to enroll your team members in crash courses, seminars, and online academies like Udemy. Let them broaden their skills and make them even more competent at their positions.
9. Look after yourself first
A lot of modern business advice tells us to always put our team first. The problem here is that it fails to recognize the importance of management and the entrepreneur. If you’re not paying yourself properly, if you’re stressed out of your mind working 70-hour weeks for months on end, then it doesn’t matter how your staff is feeling. If you’re not at your best, you can’t expect to stay in business for long.
10. Own your advertising spend
It’s easy to waste money on advertising. Don’t fall for the “mutually beneficial partnership” routine—more often than not, this just means the ad sales people will try to milk as much of your money as they can without any hard guarantees on returns. Also use the “wait another day” method above; you’ll probably find that the longer you wait, the more discounts you’re offered.
11. Always be marketing
Treat every piece of communication that you send out as another chance to market your product. Add detailed information about your product, special discounts, and new service announcements in your quotes, invoices, and even follow-up emails.
12. Hitch your wagon
Partner with a large organization for distribution. Aside from additional sales, you expose your brand to a larger audience without having to spend millions on advertising.
13. Business isn’t a democracy
A lot of modern management advice talks about getting input on key decisions as a team. Do it, but remember that you’re not required to take this input on board and give it an equal vote. Manage your business less like a democracy and more like a finely-tuned operating room, where information from only the most knowledgeable people is fed up the line, while clear, decisive decisions are sent back down.
14. Make strong, fast decisions
Numerous studies, including one published in The Academy of Management Journaland another from the Strategic Management Journal, show that strong and fast strategic decision-making is linked to company growth and profit. Of course, that doesn’t mean you just make decisions off the cuff. The Academy of Management Journal found that fast decision makers actually used more information and developed more alternatives compared to slow decision makers.
15. Don’t hesitate to delegate
Let’s say you’ve decided to handle all social media work in-house. It might be faster to just, for example, do the social media post scheduling yourself right now instead of teaching someone else how to do it. That one thing, however, will soon turn into a hundred other things that are added to your plate. You’re here to grow your business, not get buried under a mountain of things that you couldn’t bear to delegate.
16. Tune out the noise
Cut pointless meetings and stop handing out your cell number and personal email address. Before you agree to a meeting or a “quick 5-minute phone call” (that never seems to last just 5 minutes), ask yourself if it’s something that you really need to do. If it isn’t, then it’s OK to just say ”no.”
17. Streamline your sales cycle
When you send out a proposal, include a contract that is ready for signing. Send out the first invoice on the same day that contract is signed to further reduce the time on your sales cycle. Cutting just one day from your sales cycle means you collect money on a sale one day sooner. Multiply this by hundreds of sales in a year and it can add up to whole weeks of extra productivity and thousands in additional revenue.
18. Don’t reinvent the wheel
Identify the common activities your team does every day. Turn these into simple checklists and look for opportunities to make them more efficient. You increase productivity while building an internal library of business know-how at the same time. These documented processes will come in handy if you should ever let someone go.
19. Avoid long-term contracts
The business environment and your business requirements change quickly. New and improved products are launched every day and better offers come and go. Avoid signing contracts with terms of longer than 12 months. You have to be a cutthroat negotiator here, but most vendors will agree with you rather than risk losing a sale. Besides, you’ll have a new opportunity to renegotiate for a better deal in 12 months’ time.
20. Rebrand services as “products”
Products feel more tangible than services; a product can be boxed up, branded, optioned-up, supported, and renewed. Services can appear too vague and lead to questions like “What am I actually getting?” and “How much is this going to end up costing me?”. When your service becomes a product, your customers feel more confident about their purchase decision.
21. Tighten your focus
The 80/20 Rule, also known as the Pareto Principle, states that 80 percent of your revenue comes from only 20 percent of your clients. Identify the ones in this 20 percent and bring all your guns to bear on them. You can never please all of your customers at the same time, so focus instead on giving maximum value to your most lucrative clients.
22. Learn to say “no”
Learn to spot pain-in-the-ass customers and don’t be afraid to show them the door. Think about opportunity cost, the time and resources you waste dealing with difficult customers instead of looking for and signing new paying customers. If the opportunity cost is significant—for example, attending to your difficult customer actually costs you more money than he makes you—just drop him and focus on building relationships with new, hassle-free customers.
23. Don’t skip low-hanging fruit
Low-hanging fruit are goals and targets that are easy to achieve. It’s easier to get an existing customer—the “low-hanging fruit” in this context—to buy more (you have a 60 to 70 percent chance, according to CMO) than it is to find a new one and convince them to buy for the first time (5 to 20 percent probability). Low-hanging fruit are already making you money, so concentrate on getting more out of them. After all, customer acquisition costs up to seven times more than retention.
24. Gain customer loyalty
It’s hard to get new customers in an economic downturn, so make sure you do whatever you can to keep the customers you have. Give your best customers small “wows”—a small discount on their next invoice, free training sessions, or just a free shirt, for example—and turn them into true believers, advocates that champion your product simply because they like it and your company. Your competition is just as desperate as you are and may be looking to poach your customers; don’t give them the chance.