Are you one of the many small businesses whose market has dried up? Some industries that I’ve seen hit particularly hard are financial advisors, consultants, graphic designers, event planners, photographers, catering companies, esoteric retailers and many others that depend on discretionary expenditures. For some entrepreneurs it may mean cutting both their business and personal expenditures to the bare bone.
Continuing to pursue a declining or oversaturated market is only going to put you closer to the edge. When there are a lot more suppliers than there are customers something has to give. It’s time for some strategic decisions and action.
Many are taking creative, and sometimes drastic, actions to stay alive. They have recognized it’s time to save their business.
If it’s time to save YOUR business, ask yourself the following questions.
1 – Where else can I cut short term expenses now to conserve cash?
Make a projection of your cash needs on a monthly basis over the next 6 months. Use historical financial information to help you decide about the future. Keep in mind, however, that if revenue is down variable expenses may be down also.
Then make a projection of revenues for the same period. If you have gaps, now is the time to take action to cover those gaps. If a credit line or a loan is not an option you’ll run out of any cash reserve quickly if you’re not covering your expenses.
It may mean things as drastic as giving up your office, or your studio and working from home or a borrowed or bartered space. You may have to terminate all support. If you want your business to survive, do whatever it takes. A great deal of work can be accomplished virtually now. That can be a cash saver also. Question all subscriptions, memberships, travel, sub-contractors, etc. If you must cut deep, keep only what you need to stay in business.
2 – Are my customers just not spending now or has there been a big shift in the market?
If a turn in the economy would likely bring back former sales levels, you may just want to cut back but keep the same business model and target market. If sales were slipping before the economy tanked, it’s a clue to look more closely at the long term trends in your industry.
3- Is it time to revise my business model?
If you’re in a fading or oversaturated industry, rethink how you can restructure your assets to meet a current and future need. I have a financial advisor client who is starting a financial management and bill-paying service for the dysfunctional elderly. She is targeting a brand new market, assisted living facilities.
4 – Is there a related need in the market that is currently underserved?
If you see that your current market may be slow to recover or is oversaturated, prudence says it’s time to broaden your horizons. As in the example above, the Baby Boomers are getting older; many will need help managing their finances at some point.
5 – What assets can I take in a new direction?
An assessment of your personal and business assets will help you identify what you have to work with in building a revised business model. Match assets to market need. The client mentioned above had been asked in the past if she provided bookkeeping and bill-paying services. She recognized she had the credentials, the experience and the growing market for active financial management for individuals.
6 – Will I need to restructure the business to leverage my new direction?
You may be able to set up a division of your existing business or it may need to be a whole new business entity. An executive recruiter decided to offer creation of a 3 minute video to attach to a job seeker’s virtual resume. Her new market is now the job seeker; before it was the employer with the job opening. Because it’s being offered to a brand new market, she chose to create a new entity for the video resume business.
7 – How soon do I need to make these decisions?
Do not wait to see what happens. Be proactive with a strategic plan. Take action now. The business you save may be your own.
The waters are rough, the sea is stormy. You may need to find any port in the storm, or you may want to change course and head for a new destination. As captain of your ship you need to make these strategic decisions and put them into action…ASAP.