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Maureen Stephenson: Fear: the great motivator

Know the Score

Posted: March 20, 2009 10:42 p.m.
Updated: March 21, 2009 4:55 a.m.
 
Fear is a great motivator. After all, it keeps us out of harm's way most of the time - but it can also paralyze you if you let it.

During hard times like these, many small business owners will allow fear to beat them and keep them from making the right choices to survive.

I'm sure a lot of entrepreneurs have spent the last few months putting together cost-savings plans and survival strategies, but because of fear these plans could cause severe damage to their long-term prospects and even weaken their company.

Many businesses will go under during these times, but many will survive and come out stronger. If you want to come out of an economy that's falling apart and emerge stronger then before, there are some things you must consider.

n Don't forget that recessions always "end."

n Reducing selling time is not a financially viable alternative. Cutting the hours your business is open may save you pennies in overhead, but it can cost you big bucks in sales.

Even if you deal in what is considered "luxury items" (art work, jewelry, photography) you can never be sure that your next big sale wasn't missed because you closed early. Never give the impression that you're not busy enough to stay open your normal hours.

n If you have more than one facility, and shop No. 2 is not pulling its own weight by covering expenses, don't take half-hearted measures. Don't cut business hours there; consider closing it down completely and concentrating on the shop that's bringing in the bucks.

n Get creative and negotiate. During hard times you may think you're not in a position to bargain with your landlord, but think again. Approach him/her with the proposition of cutting your monthly rent by 30 percent for the next six months and tacking the
cut on the end of the lease.

If you're paying $10,000 a month that would reduce it to $7,000 a month, and by the end of six months you may be in a better position to pay back it back at only $13,000 a month instead of $10,000. That would give you some break for covering expenses and salaries when profits are down.

n Do something similar with your staff. After all, these are not great times to be looking for work, so rather than laying off staff, try cutting everybody from a 40-hour week to a 32-hour week.

Stagger your staff so that everybody gets three days off in a row and they might like the time off. After all, it's a better alternative than being laid off.

Make sure that you assure them this is only a temporary change to get your company through some hard times, and that everybody has to do their bit.

n Reconsider how you handle restocking your inventory. You may have gotten used to spending thousands a month just to keep stock up to the max. Consider how you could manage your inventory and cut cost at the same time.

Maybe you don't have to order stock every month, or maybe you only need to replenish some of the inventory. If it didn't hurt your sales to only restock every other month, then do that.

n Don't get overly anxious to cut prices or run sales; it's important for businesses to hold the line on prices during a recession if it's possible. Instead, consider something like a "Customer Appreciation Week" and offer something extra to the clients who make a purchase during that time.

n Thinking of getting a small business loan to tide you over? During the current economy (and this is only my educated opinion) I don't think that's a great idea.

At the end of the recession, the winners will be those who took advantage of their most important asset - "imagination and creativity."

Maureen Stephenson is a local author and owner of Santa Clarita-based REMS Publishing & Publicity. Her column represents her own views and not necessarily those of The Signal.

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