Surviving Tight Times As A Small Business
There has been panic in the streets over the past couple of weeks about the state of the economy, and much of it- in Australia’s case at least- has been overly-dramatic. But while the overall economy is strong, the year ahead could be tough for small businesses, especially in retail or hospitality. Here are some tips on riding out the leaner times.
The Basics
Looking at your major outgoings is hard, especially when one of them is undoubtedly your labour costs. Don’t bury your head in the sand over it, the sooner you look at it, the earlier you can start restructuring and talking to your staff about ways to improve the situation. Talk to your landlord about the rent. Yahoo! Finance suggests that you would be paying a higher rate than elsewhere, if you signed your lease when the economy is booming, and your landlord should be made aware of that. From their point of view, it’s better to keep a good tenant than make a couple of extra dollars and risk a bad one.
Raise Prices
Where I live, there are cafes starting to display signs apologising for the rise in prices. It’s a nice gesture, and people take it on the chin. What else are small businesses expected to do in tougher times? I’m not suggesting rising prices without the need for it, or profiteering off the slump, but if produce is costing more, it would make sense to customers that providing it at a restaurant is also going to be more expensive. Work out your margins and make sure you are still holding onto the profit line.
Get Imaginative
Smaller portion sizes is not an imaginative initiative. People see it straight away, and it leaves a bad taste in their mouths. Work out imaginative ways to keep your costs down- plant your own vegies, or rewrite your menu to contain cheaper ingredients that are still delicious. Look at sourcing new items for your store, and locally, so as to save on transport costs. Start building up a network of direct communication with providers, there’s no need for the middle man. Go to the markets yourself, find some local artwork or food items or ingredients and talk to them directly. You’ll get a better deal and save on the cut the middle man would take.
Communicate
Your customers don’t live in a tower, they can see what’s going on just like everyone else. So be honest about it. Tell them what’s new in your business, and why they should come back and try it out. Don’t leave the shelves looking empty, nothing will turn people away faster. Think about ways to keep people engaged- get a mailing list, start a Facebook page. If you’re a cafe, get a local musician to come and play every Sunday for a month and bring all their friends.
Close Early
At work, we stay open until 5:30 every day. Sometimes, rarely, it’s a worthwhile gesture. A tour bus will come through, or a group of middle aged people, desperate for a cuppa to keep their eyes open on the drive back home. But generally, around $50 upwards is spent on our wages alone with no possibility of recouping the cost. Being more flexible with your hours and closing when it drops off is a smart way of saving a bit of money.
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