Grow your business in a down market

I work with a lot of business owners who are struggling with this tepid market – in particular, how to grow their revenue and market share. Depending on your customers and market, here are some ideas which might just get things moving again:

• Adjust pricing: Many pricing decisions may have been made in a much different market, and your current levels may be either too low or too high. If prices are too high, they’ll drive customers away. If too low, you’ll be giving away your profit and the ability to invest in other areas.Ask yourself: If you were just starting now, how would you set pricing for the current market? Don’t assume that a tough economy means that customers and competitors always exert downward pressure: You may still find those opportunities to be rewarded for providing unique and compelling value.
• Provide loyalty incentives: I understand why some companies focus on giving discounts to new customers they acquire, but this just helps to reinforce a market where people are encouraged to switch. You’ll end up spending huge amounts to acquire new customers, who will jump to your competition at the first opportunity.Your current customers are the ones who are – we hope – satisfied with the value you provide, and would like to have reasons to return. But they need to know that you value their business, want to continue to serve them, and have useful products and services to address their needs. What are you doing to maintain that relationship, and clearly articulate that customers’ lives will be easier if they don’t go to your competition? Do they have any reason to continue to do business with you?
• Get back to basics: Would you rather try to grow your business and go bankrupt, or shrink the company and survive? Sometimes it’s better to concentrate on that core value which is extremely valuable to your customers and give up the optional extras, because you’ll conserve your cash until the market starts to grow again. This can be an incredibly tough decision to make, but may be necessary for the survival of your company.
• Restructure your products or services: I see a great number of cases where the structure of customer offerings is no longer appropriate for an economy where people are pinching every penny. If you ask for a large payment at the beginning of a project, for instance, you might be asking the customer to take on too much risk.Perhaps you require your customers to purchase bundles that are much larger than what they need. When you do this, you’re opening up the door to new competition that’s not constrained by past structure, who can deliver something much closer to the customer’s need at a more appropriate price.
• Give customers options for payment: It’s not as simple as just constantly reducing your prices. Many times, people just want options which better fit into their cash flow needs. Occasionally this can mean that customers want to pay earlier, such as with year-end tax breaks. More often, they just need to find ways to pay you when they have money come available. That might be on payday, on a predictable monthly cycle, or when a business gets paid by their own customers.
• Work your Accounts Receivable: It’s not uncommon for customers and partners to use the weak economy as an excuse to stress your payment terms to the edge. But if you’ve done your part of the bargain, it’s appropriate to get paid according to the agreed terms. When negotiating contracts, make sure that you’re creating a fair and sustainable balance for both you and the other party.Hiring an expert who can ensure you get paid on time can be a sound decision, perhaps immediately paying for the cost. Just make sure that this person works to maintain the larger relationship. If you hand things to a collections agency, then you’ve decided that the relationship is no longer worth maintaining, and that it’s OK to lose this customer and anyone they might have referred.
• Expand your uniqueness: Customers will pay for something which is unique and has compelling value for them. Perhaps that does not include your products, which may be easy for competitors to provide. Maybe it’s the quality of experience you provide, lasting customer satisfaction, or auxiliary services.

I’ve actually been impressed by the number of companies which have shown that my loyalty is important to them, and work hard to ensure that I have reasons to prefer them over their competitors. Most don’t, of course, but you can bet that I take my business to those that do.

If you want to survive the current economy and emerge as a future leader, then it’s critical to use this time to examine your business, and adapt as swiftly as possible. Growth is quite possible for those who are resourceful and attentive and take focused action.

Carl Dierschow is a Small Fish Business Coach based in Fort Collins. His website is www.smallfish.us.

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