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3 Keys To Building A Solid Small Business

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How To Be Prepared To Weather Any Business Crisis

by Lenka Davis

As with life, any business needs to know how to weather a business crisis. Economic or global changes can render your current business model obsolete or challenged. In research that looked at post economic downturns in the early 2000s and the pandemic found key factors that helped businesses get through the tough times. These factors can be applied to your small business.

Focus your attention on and prepare plans that can be grouped into three main categories.

1) Strategic Focus

Focus on core products

Focus on your best core products and services. Your customers have already voted with their dollars and loyalty so continue to offer those. Customers may also be weathering their own challenges yet, if you have offered great customer service and products they want to have in the future, they will support you. Now is the time to say no to a thousand things.

Continue marketing

Don’t cut your marketing budget. You want to let your customers know you are still there for them. For example, restaurants that had customer’s email addresses used them for communications during the pandemic shut down. One local restaurant let customers know they were still making meals in their kitchen, offering curbside pick up, and included their slimmed down menu. Curbside pick up was never in their plan, and using customer emails they had were probably only slated to be used for general marketing. In this case it was a lifeline to keep their restaurant open and their employees working.

Be on the same page

As in friendships and other partnerships, businesses are only as great as the people running them. If you have a partner or are running the business on your own, continue to keep everyone involved in your business on the same page and going in the same direction. Use each person’s super powers and encourage them to communicate with each other. Successful teams work well together because they share complementary working styles or skills. They have figured out how to get projects done.

Key points on Strategic Focus

  1. Focus on core products and services

  2. Don’t cut your marketing

    1. Stay visible during a downturn helps you maintain market share

  3. Running the business alone or with a partner, make sure you are on the same page

    1. Have complimentary skills

      1. For example, one likes to run the business and other is good at sales

      2. You work in the same style

      3. If you come from a similar company culture then how to approach the business and the philosophy work well together

2) Financial Resilience

Setting your business up to succeed means you will need to pay your expenses even in hard times. Have enough funds to get through a tough time by reviewing and tightening expenses when times are good. Set up cash reserves as soon as possible to have a rainy day fund. 

Key points on Financial Resilience 

    1. Review your budget - Review and tighten expenses

    2. Build up cash reserves

3) Organizational Capabilities

Reinvent and Adapt

When companies are affected by economic crises that are outside of their control, the best way forward is to adapt and reinvent the business. Those companies that are ready to implement a new process or can pivot can come out of the slow down successfully. During the 2001-2003 stock market downturn Apple stock dropped with the whole market to a low of $6. The drop was caused by external factors and not by anything specific that Apple as a company did or did not do. Steve Jobs continually told his team that, “we will innovate our way through this”.

Process Ready

Last but definitely not least, have a team that can be ready to reinvent and adapt to necessary market changes. Pivoting a business usually does not have to happen overnight, however, the pandemic challenged businesses to do just that. Teams that had set up processes that could be run remotely and/or online had a head start to those that had not made any progress in either of these directions. 

Key points on Organizational Capabilities 

    1. Be ready to reinvent and adapt

    2. Processes and people need to be in place for implementing new transformations; train your people

Fun Fact

Apple’s Think Different marketing campaign did not only describe their customer’s mindset. It also reflected the internal team's approach to constant innovation and adaptation to market forces.”that reflected the philosophy he thought had to be reinforced within the company he had co-founded” Wikipedia

“Craig Tanimoto is also credited with opting for "Think different" rather than "Think differently," which was considered but rejected by Lee Clow. Jobs insisted that he wanted "different" to be used as a noun, as in "think victory" or "think beauty". He specifically said that "think differently" wouldn't have the same meaning to him. He wanted to make it sound colloquial, like the phrase "think big".” Wikipedia

Think victory
Think beauty
Think big
Think different

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Resources

HBR Lessons on Resilience for Small and Midsize Businesses

Four Ways Small Businesses Can Prepare For A Recession

Questions Potential Business Partners Should Ask Themselves

WSJ Why It Pays to Start Companies in Recessions

HBR Roaring Out of Recession