Given that America is in the midst of a terrible economic cycle, it’s safe to assume that all businesses, one way or another, have been impacted.
While many, myself included, are quite optimistic about a recovery, it most likely won’t come to fruition as soon as any of us would hope. Many businesses have not only suffered during this downward economy, but also have overlooked some ripe opportunities to bolster their business in ways that only happen during a recession.
Here are five key steps that business owners can take right now, during this lulled economy, to grow their market share and profit amidst the feeling of the widespread panic.
Hire Quality Staff at Discounted Rates
Having worked in the recruitment industry during the 90’s, I’ve seen the demand for quality workers far outpace the actual supply. During this flush economic period, I actually witnessed bidding wars between companies to hire key personnel. Clearly, the tables have turned dramatically, especially during the past 24 months given the onset of huge layoffs by some very prominent employers. Savvy businesses are bringing on personnel at a reduced rate, while utilizing contract workers to fulfill various projects at a fraction of the cost originally budgeted.
Many workers are looking for stability these days, rather than the higher salary they used to command. Let’s be honest, salaries are spiraling just as out of control as housing prices! Bringing on high quality personnel right now, and allowing them to grow with you as this economy rebounds, enables your company not only to build a strong foundation, but also positions the business to race ahead of the competition in the future.
Negotiate Better Terms
One benefit of a hurting economy is that everyone is willing to bargain for a better price. In fact, now is an ideal time to negotiate deals for many business-related expenses, especially three: commercial properties, advertising space and payment terms.
Commercial Properties: Businesses are willing to sacrifice margin to take sure bets. Several colleagues of mine were able to secure tremendous discounts on office space by simply committing to a longer-term lease. Most property management firms are happy to lock in a commercial renter, even if there’s essentially no profit margin, so that way they at least know they’re not losing money and mitigating their risk for a much bigger downfall.
Advertising Space: It’s no secret that traditional media has been dramatically hurt by the on-set of the Internet. As more and more marketing budgets shift toward the Internet, the ability to get premium traditional advertising space at a much reduced rate has never been easier. The key is to keep in close contact with the owners of these advertising spaces. More times than not, as a deadline to fill a space grows closer, you can find some amazing deals, providing that there are no buyers and you’re able to work quickly to have your product to them on time.
Payment Terms: The strategy for negotiating payments terms is to work with your vendors and discuss the need for increased cash flow – then you can adjust your terms accordingly. If you’re a good payer and someone who presents little risk, most companies will extend your credit terms and allow you to utilize your cash flow more effectively.
Explore Trading and Bartering for Services
Despite the fact that most businesses have seen a drop in their overall revenues, companies can still receive nearly the same benefits if they can trade or barter for services. Personally, I was able to trade my company’s online marketing services in exchange for a highly sophisticated phone system, one that enables us to scale across multiple regional offices seamlessly. At the same time, the phone system vendor we bartered with has seen a tremendous increase in his online search results and in turn, has gained some very significant clients.
In setting up these trades and barters, always make sure that the expectations for each side are clearly explained in order to avoid any future disagreements. Most importantly, make certain that the trade will benefit you. As your business grows, you might receive offers for trading of services that would have very little impact on your bottom. Leveraging these sorts of opportunities enables you to minimize additional costs, while obtaining the tools and services you need to grow your business.
Create Partnership to Grow Ancillary Revenues
In times where revenue growth has been hard to come by, many businesses are willing to discuss partnership opportunities as a way to increase revenue. Partnerships of this nature have been instrumental to the most successful growth of my businesses. They key to creating partnerships is to discuss opportunities with businesses that focus on your same client demographic, but are not competitive with your services. For example, our online marketing services division has formed partnerships with large traditional advertising firms that refer clients over to us quite frequently. We, in turn, provide the agencies with compensation for business we acquire through their efforts. This creates a revenue stream for the advertising firm that was not previously there, and is an excellent way for my company to gain new clients, with minimal effort.
Be sure that all partnerships are sealed by a contract. I’ve heard many stories from colleagues of once successful partnerships that have gone bad, leading to huge battles over revenue. Always protect yourself and make sure that the compensation you’re providing for these referrals is substantial for you to make a profit.
Prey On Others Fears
While it certainly sounds cutthroat, the truth is that business is a game of survival of the fittest and in times like these, everyone is tested, and only some will persevere. Now is a fantastic time to explore acquisitions, as some companies have essentially given up and are willing to be acquired at a very realistic cost so that they receive some level of security. Don’t be afraid to approach potential acquisition targets to gauge their level of interest. You might find that many of them are willing to listen and the terms that you offer could be quite conducive to you increasing your market share, without any heavy upfront costs.
I’ve seen some big players gobble up competitors at a steep discount and essentially take ownership of the market share in their space. If you are well-capitalized, now is perfect time to leverage your ability to eliminate competitors and gain market share.
Right now is an ideal time for businesses to grow and for start-ups to get a footing in their industry. Certainly, loans and venture financing have all but dried up; but if you are willing to keep a very strong grasp on your bottom line, don’t overspend, and work hard – I am certain that with these five techniques, you can position your business for success as the economy begins to recover.
Ken Wisnefski, Founder & CEO, Webimax. Wisnefski is a seasoned web entrepreneur and a respected leader in the online marketing industry. Prior to founding WebiMax, Wisnefski was the CEO and founder of VendorSeek.com, a business to business lead generation platform that grew from a basement start-up to a $5 million a year venture in just 5 years. Prior to VendorSeek.com, Wisnefski owned and operated Impact Direct, an online marketing firm that focused on Search Engine Optimization and E-Commerce based services.