Economic Changes & Your Small Business

Small businesses have to weather this economy just as much as big businesses do and there are things you need to consider when you own a small business that are perhaps easier to deal with than a large company can. In a small business you have control over day to day running issues and you should look at your daily expenses and income as well as the overall results.

Make sure that you are aware of what it is that brings you the most income for your business and concentrate on that aspect. When times are lean take care of what is working for you. It does not mean you stop your marketing campaign or cease any focus on other aspects of your business but more that you maintain focus on your current earning potential. If necessary find a way you can monitor or check through previous months to evaluate where your top income source is coming from. Also look at why that particular area is more profitable than other areas and if you can incorporate changes to your other lines or services to get them increasing your profits as well.

Ensure that you are giving excellent service to your current existing customers and long term customers. This of course depends on the type of business or service you provide. But retaining customers, for any business is an important aspect of your future earnings. It is usually much easier to keep your existing customers happy than it is to use all your focus on obtaining new customers. You of course must have a balance between customer retention and obtaining new customers but don’t let the ones you already have get away.

If there are any opportunities to make any of your daily functions automated then you should consider these options. Perhaps there are computer systems or programs that can increase your efficiency on a day to day routine allowing you more free time to focus on your customers.

Any items in your business that require replacing or updating consider how much benefit the cost you will outlay will improve your business. If you can continue on with your current inventory of equipment without further outlay then you should try to do so as long as you can. Of course required repairs and maintenance must be considered carefully as ignoring problems can lead to eventual breakdown of the items concerned therefore ensuring you must purchase new goods.

Some things a small business can easily consider for cost cutting is attempting to reduce the business outgoings on a monthly basis. Be careful to ensure that you are not cutting costs in the wrong areas. For example if you reduce the prices of your services you need to establish the number of new clients you need to obtain to cover that cost reduction and beware that if the economy suddenly kicks back into life you will be in a position where you have to go up with your prices again so fluctuating too much will only cause upset customers.

Another consideration is perhaps making your employees into contractors to your business. That will put the onus for any legal or tax issues to be handled directly by the staff themselves. Be careful with this aspect as well as if you upset those staff you may find you end up with no employees at all so make sure this is something you consider as a last resort. You want to retain your employees if you can indeed afford it however when things get really tight you could consider this option.

There are many other options you can consider to reduce costs for your small business and the above is just a small idea of what quickly comes to mind. You know your business and what is required but sometimes we forget to take a long hard look at what we are doing. If you are doing OK now it is better to consider the question of a down turn in income before it actually happens so that you are prepared for any eventual changes to the way your business can operate. Not everything, especially the economy, can be under your control so take stock of your company – perhaps even literally!