On the Nightstand
Author offers tips for businesses in recession
BY RICHARD PACHTER
Miami Herald, Kansas
Author Steven D. Strauss is a small-business maven. This USA Today small-business columnist and author of "The Business Start-Up Kit" and "The Big Idea" recently released a new edition of his "The Small Business Bible," a veritable cornucopia of advice and information.
His Web site, MrAllBiz, www.mrallbiz.com, is a one-stop resource for enterprise.
In light of the current economic anomalies and challenges, it seemed like a good idea to touch base with Strauss, so we sent a few questions to him by e-mail. Here are his responses:
How should small businesses deal with the current economic state of affairs in terms of marketing, advertising, personnel, customers, vendors, financing, expansion, insurance?
The biggest and most common mistake small businesses make during times like these is that they cut back in the areas that are actually needed the most right now -- marketing and advertising. Here's why: Customers are volatile; loyalty is something that most people abandon when what they really want are discounts and value for their dollar. The result of that is twofold: First, you will lose customers; we all will. Second, there are plenty of new customers out there to be had as habits change. But the only way they will find their way to your door is through your advertising and marketing. It is shortsighted to cut back in those areas.
That said, belt-tightening is smart. For example, if you can legally turn an employee into an independent contractor, do so. That can save plenty on costly labor expenses. Keeping overhead low in ways that don't hurt customer acquisition is key.
The other smart thing to do is to focus on customer service.
Can the Internet help companies survive the downturn?
The Internet is crucial to survival. Aside from the fact that it is where everything is headed anyway, the power on the Net in this economy is that it is so inexpensive to use, yet so powerful.
I recently saw a statistic that over 50 percent of all small businesses still don't have a Web site. That is shocking! You simply must have one, if for no other reason than Web sites are increasingly where people go to determine if they want to hire you or buy from you.
To what extent is the economy cyclical? Is it just a matter of "riding it out"?
I love this Paul Harvey quote: "In times like these, it helps to recall that there have always been times like these." It felt like the economic sky was falling when the dot-com bubble burst, and also after 9/11. We made it through then and we will again. Is this worse? Of course! But it is survivable. People are looking for bargains. Give them what they want.
What's something that most companies neglect to do when things get rough, but shouldn't?
Too many companies fail to see opportunities during rough times because they are so focused on survival. And while it's important to keep your eye on the ball, it is a mistake to lose sight of other possibilities.
For example, recessions are great times to innovate. The cost of goods and labor is less, and you and/or your staff probably have some extra time on your hands. Use that time to come up with new ideas and try them out now.
Recessions are also good times to see what fat can be trimmed. Find a cheaper supplier, or less expensive insurance.
But it's also important not to think the only way to increase demand is to cut price. Price cuts aren't the only way to stimulate demand, and they aren't the best approach for entrepreneurs. On average, entrepreneurs are more successful when they compete on service, quality or something other than price.
Richard Pachter is the business book columnist for the Miami Herald.