BETTER BUSINESS Issue Twenty Eight, March 2009
In this months issue:
"further rules of engagement" for a recession:
1. Review your marketing strategy – not with the intention of pulling back, but with the intention of what else can you do? Look for points of differentiation and yell them from the roof tops.
2. Do not discount! Instead, try to reposition your product or service to emphasise economy or value for money. But at the same time, take out costs so that you preserve your margin. If you simply reduce the price without changing the feature/benefit mix, you will struggle not only to get margin in the short term, but you've made it much harder to reposition at a higher price later, when the economy picks up.
3. Look for the opportunities as they will certainly be there. If you are feeling the pressure, your competitors will be feeling it also. This may present some acquisition opportunities.
4. Look to expand your markets and look to sell more products in to your existing markets. Remember the four ways to grow a business:
a. Increase the number of customers
b. Increase the frequency of transactions
c. Increase the average dollar sale
d. Increase the efficiency or Gross Profit
5. Talk to suppliers about your buying opportunities, and look to the market for alternatives if you have to. Your incumbent will be very keen to keep your business, so stay with them if you can but remind them about alternatives and take ideas to the table about how you can both be better off.
6. Squeeze the surplus cash out of your balance sheet. Reduce stock, sell up surplus assets and as previously mentioned, collect all debts.
7. Review your borrowing structure, pay off debt where you can and consolidate to get the most effective cost of funds.
Finally, and most importantly remember this is only a phase. The economy moves in a continuous cycle and it will improve. You need to be ready when it does.
Disclaimer: Information contained within this document is of a general nature and does not constitute advice. Readers are cautioned not to act or rely on it without first seeking professional advice.
