The current economic atmosphere is hardly positive, with many economists predicting a slow recovery or at worst a double dip recession. So are you looking for tips on how your small business can thrive in recession? With the current economy, it’s been difficult to stay positive, which is why businesses need to keep their customers in mind in order to be at the top of their industry. Businesses in recession, might be tempted to scale back, but a recession is a unprecedented opportunity to in fact expand your business. Unfortunately, when the economy is good and money is coming in, it’s easy to forget about the basics of a good business model. By using the 3 ways for small businesses to thrive in any economic cycle, you’re bringing back the basics of good business.
1. Always talk to your Customers
Always keep in mind, that it is ultimately the customer that is going to be paying for and using your product. It doesn’t take long for businesses to fail in today’s world, especially if they are out of touch with customer needs. There are many ways of going about this for different businesses, but there is one example that could be used as a guide for small business owners. The car rental service Enterprise Rent-a-Car is one such example. In order to gauge customer attitudes and satisfaction, at the end of every rental; every customer is asked to fill out a survey regarding his/her experience with the car rental service, and how it could be improved. In exchange for filling out the survey, Enterprise offers incentives directly tied with their business, such as discounts on the customer’s next car rental. This way not only does Enterprise accurately find out what the customer felt about their service, but the extra discount also makes it likely that the customer will come back in the future and rent again with Enterprise.
2. Always reinvest your profits
Whenever your business makes a little extra money, you may be tempted to give yourself an early bonus but try instead to put it back into your business. Warren Buffett learned this early on. In high school, he and a friend bought a pinball machine and decided to put it in a barbershop, for which they paid the barber a share of the weekly profits. With the money they kept, they bought more machines until they had eight in different shops. When the friends sold the venture, Warren Buffett used the proceeds to buy stocks and to start another small business. By age 26, he’d amassed $174,000 or $1.4 million in today’s money. So even a small amount of money can turn into a huge cash pile, you have to manage it efficiently.
3. Always try to differentiate yourself from the market
Every market has a variety of competitors, all of whom that are looking to make money and gain market share at rivals expense. So in world with so many product offerings, it is essential to stand out in order to get customers to come to your business instead of your competitors. This can be done in many ways, but sometimes it only takes a few simple changes to make your business truly shine from other market competitors. On the website Duct Tape marketing I found a very useful example by John Jantsch, that many small business could use for guidance in their marketing efforts.
The Cheese Board Collective Pizza, in Berkeley, California has created a simple innovation and incredible point of differentiation that’s made for a very healthy and marketable business.
Instead of serving up a menu of pizza variations and cooking each to order, the restaurant offers one unique pizza each day as it’s only menu item. Patrons order any amount of the pizza they like at $20 per pizza and, as seating is very limited, often plop down outside and around the store and eat picnic style while listening to a jazz trio. The fixed menu, fixed price, make it in quantity approach allows them to serve thousands a day, but the pizza has also gotten some of the best reviews, with lines regularly going out the door. While it might seem difficult to capture the cult-like following this place seems to enjoy, it sure looks like a duplicatable concept waiting to happen.
A couple other important mentions that add to the differentiation – the pizzas are always vegetarian (might seem like they are limiting their market, but hey, it’s Berkeley). They also use only higher end ingredients, such as organic crimini mushrooms and goat cheese, since their business model allows them to make greater margins.
So, basically it all comes down to simple innovation, try tossing some ideas around with your employees, and you might be surprised to find out that it only takes a few changes to become a niche competitor. You don’t need to hire a marketing agency or be a rocket scientist to differentiate, you just have to keep an open mind for your business to be able to thrive in any economic cycle.