By Mike Michalowicz
Author, The Toilet Paper Entrepreneur
Ina recent blog postI explained why now is the best time to start a new business. As your competitors run for the hills and newbie’s decide to wait out the storm, you are sitting pretty
to launch your company. But what if you are already in business? What if you were just hitting your stride, and got smacked in the head as the economy came to a screeching halt? Most are, as I said before, running for the hills. But I am here to tell you that you are far from finished. This is the time to take decisive action, and leap frog your competitors… and you can do it without spending a penny. Here’s how:
1. Show Some Sympathy – Everyone is feeling the crunch of the economy, including your cherished customers. This is the ideal time to show them your concern for their finances and cut prices. Now don’t cut your nose off despite your face. You MUST remain profitable. But a small cut in prices now (before everyone else does), just might result in a huge surge of purchases.
Does this work? Heck yes! Just listen to any radio station for an hour and you are sure to hear Old Navy and other major retailers announcing their “50% price cuts in an effort to help consumers.” Jeez! That psychology worked on me; I just picked up three new t-shirts in the nick of time for winter!
2. Bye, Bye Bad Tomato – Spend a day reviewing your customer list. Which ones are bringing in the most money and treat YOU the best? These are the top-shelf customers, and you need to treat them extra well – but I am sure you were doing that already. Now, look at the bottom of the list. Who are the crap customers, who pay late (or never at all) and cause you to grit your teeth when they call? This is the perfect time and perfect excuse, to fire them. I recognize this sounds counter-intuitive. Here’s my logic: Let your competitors fight over these distracting scraps, as you serve your best clients, better. Plus when you see the next step, you will understand how this will make you more bottom line profits.
3. Fire Three, Hire One – With the weak customers gone, it’s time to fire the weak employees. It may sound harsh to fire someone in a down economy, but there is never a “right time” to lay someone off. Also, and I promise you this, when you fire the ineffective employees, the good ones will ask you “what took you so long.”
Don’t fire just one or two weak employees, fire anyone who is a C-Player or worse. Combine this cleaning of house with the ditching of bad customers, and both morale and profit goes up. But wait… there’s more. This is also the ideal time to pick up A-Players. Big corporations are firing people left and right. In the mix are some amazing people. And if you hire just one of these A-Players, they will out perform the three or four C-Players you just fired, combined. You can even pay your new A-Player at 150% of the C-Player salary, and still be way, way ahead of the game.
4. Go 20/80 (Not 80/20) – In a down economy, you will feel a sales crunch if you don’t do anything. So you need to increase your sales efforts… but that means doing more of what you were already doing (that costs money). There is another way, evaluate your historical sales. If the 80/20 rule applies (and it almost always does), 20% of your products/services are yielding 80% of your revenue. It is time to shift nearly all your sales and marketing attention on the 20% of stuff that is making you the money. Let the other stuff take a back seat, for now.
5. Negotiation Time – Pull out the credit cards, call the land lord, and get the bank on the phone. Start asking for better rates and terms NOW… before you need it. You just might get a break from a few or even all the creditors you contact, and that will come in handy if you don’t pull off tips 2, 3 or 4.
6. Pick Up Their Slack – Unfortunately for many, behaviors don’t change – fortunately for you, behaviors don’t change. You can expect many businesses to start floundering now and just sit in the proverbially corner sucking their thumb (AKA - not listening to these tips). Odds are their customers/clients are going to get lack luster service, presenting you with an opportune time to jump in and dazzle them. Watch the papers closely and see which companies are having layoffs or are struggling. Then focus your sales efforts on calling upon customers in their vertical. The customers will be primed to come on board with you.
I wish you great success in growing your business. It is the best of times, after all!
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