What to do in tough economic times
Content provided by Sanlam. See Financial Solutions for Business Owners, for tailormade financial advice.
Recently I asked the 15 finalists and winners of the 2016 Entrepreneur of the Year Competition, sponsored by Sanlam and Business Partners (see www.eoy.co.za ), to tell me what they do to ensure that their businesses survive and thrive in the current difficult economic environment.
Their responses were varied, underlying the fact that no single “recipe” works for all businesses. Each business owner needs to carve out and implement the element mix which is optimal for his/her business. This article will focus on the elements which were generic across the feedback received.
1. Let the trend be your friend
Continuous and meticulous research is required to understand
- how client needs in your target market change over time;
- which technological advances will impact your business;
- what your competition is doing.
The interpreted findings can be used to update your product/service and value proposition.
2. Focus on marketing
It is prudent to keep marketing expense the same, or even to increase it, in challenging economic times. To decrease marketing expense is the conventional wisdom applied by most businesses that are looking at ways to decrease their expenditure. If you can continue at the same rate, then your business will stand out from the crowd, as your competitors will not be able to buy the same exposure with a smaller marketing budget. It is, however, important to review and choose the most optimal marketing mix for your business. Use every opportunity to market and promote the trademark of your business, products and services.
3. Income and cost considerations
Income can be increased if you diversify
- Client exposure – not to be dependent on a couple of large clients
- Market access – is it possible to move the boundaries of your geographical footprint regionally in SA or to vest an African, or even international, market expansion?
- Distribution – have you already considered e-commerce or an online distribution capability for your business?
Cost may be curtailed by
- Optimising operations
- Negotiating “deeper” discounts from suppliers – remember, they also need good paying clients
- Considering a 4 day work week – thereby not laying staff off
- Sharing premises/sub-letting
4. Differentiate on service delivery
Service delivery is not a hygiene factor in business. Meticulous efforts to continuously improve it, can serve as a business differentiator. Here are a couple of considerations:
- Reward client loyalty
- Run “specials” – not to engage in a price war with your competitors, but to keep your business top of mind for your target market
- Comply with all legislation (e.g. Health and Safety Act, BEE) to make it easy and rewarding for clients to do business with you
- Invest in “deep” client relationships; move beyond a transactional association
5. Treat employees as real assets of your business
People need to see proof that they are valued and respected.
Here are a few considerations:
- There is always room for personal growth – really vest a learning organisation
- Pay them fairly – an example was cited where overtime was converted into paid leave
- Recognise and reward them – profit sharing or even a paid holiday
- Value their opinions – let your staff participate in decision-making
- Support them on a personal level – an example is to help them materialise their dreams and aspirations and to provide mentorship support
- Use flexi-time to enable work-life-balance
- Provide them with a dignified office space and social facilities (e.g. cooked meals)
Much can be done to enable the success of your business, even in tough economic times.
Zig Ziglar (American author and motivational speaker) once stated: “If people like you they will listen to you, but if they trust you they`ll do business with you.” This might be a prudent building block for business success in South Africa.
To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success.
Go to www.sanlamgameplan.co.za to download your free copy.
Article written by Jannie Rossouw, Head: Sanlam Business Market
Copyright © Sanlam, 2016