Everything I need to know about running a business I learned in the recession

Many people have asked us why we chose to start a business in one of the worst economic downturns that we will know in our lifetimes. The answer is simple; we didn’t know this would happen in May of 2008.  Having said that, would we have made a different decision? Absolutely not! In fact, I would recommend more people make the move when times are tough. We have learned and will continue to learn lessons that take some businesses generations to learn. Here’s a list of my top 5 lessons tough economic times teach all of us.

1. Frugality: Separate your needs from your wants and make smart purchasing decisions. Sure, we all want the grandiose office space that gives the impression of success and prestige, but that cost can be prohibitive. All costs need to be worked into your pricing structure and your overhead may put your pricing above the industry average. In some instances this is ok, but you don’t want your hands tied. Reevaluate where you’re spending money as a business and make sure it’s in line with your goals and vision. You may want the mac-daddy signage/computers whatever, but is it necessary? Determine a set of criteria by which to judge all purchasing decisions and stick to it! As with most rules, there are exceptions and the big exception to this rule is saving money on your people. Do not undervalue or underpay your people. In the end, it’s your people that will help get you and your business though the tough times.

2. Never get complacent: I think we’ve all seen that in tough times the individuals who lose their jobs aren’t necessarily the ones that should have moved on in the first place. In tough times everyone worries about their job because decisions are being forced to be made based on the bottom line. For small businesses, this means always challenging your value proposition. Why did your clients hire you? How do you contribute to their bottom line? Everything comes back to ROI.

3. Move faster than your surroundings: The economy and the market will dictate change. This happens very quickly when things are tough. Anticipate these changes and move faster than the market and certainly faster than your competition. Is the market demanding a new product/service or a change to your current product/service? If so, determine if you can make the necessary changes in a cost-effective, timely manner.

4. Be the best, even if you’re not the only: As the saying goes, “when the tide goes out, you’ll see who’s been swimming naked.” This isn’t a lesson for tough times this is a basic for anyone starting or buying a business. Determine early on what your point of difference will be. You will never be the only, ever, but you can be the best. Always look at what makes your business stand out against your competition and make sure you offer something different and/or better. The market will determine who’s left standing when the economy turns around.

5. Think big, act small: This lesson wraps up the first four lessons. Make smart purchasing decisions always keeping your business goals in mind. Always challenge your value proposition and point of difference, and make changes in a timely manner. Many times, people assume that tough times call for lower prices. Lowering prices in tough times is very rarely the answer. This is why this lesson is extremely important. Don’t forget who you and what you’re business represents. Lowering your prices or giving away free products/services will only train your consumers to expect the same in a good economy. Figure out how to work better and more efficiently. The tough times will eventually end, but the new processes you’ll develop will help you retain employees and increase revenue in a good economy.

blog comments powered by Disqus