Are you still waiting for the economy to bounce back to pre-recession days? You might be waiting a long time. Instead, check out today’s guest post by Patricia Sigmon of LPS Consulting (left) for some smart suggestions on how to survive and thrive in the “new normal” economy.
Welcome to 2012 and the “new normal.” It’s time to accept that operating lean and mean will be necessary for the foreseeable future. Your mission statement, your business plan, your 2012 budget – everything needs to set a different bar with different sales and expense expectations that, in essence, represent your new 2012 business. If you’ve held on to that large office waiting for things to pick up, kept an extra car, maintained a larger-than-needed staff, have too many cell phones, etc., it’s time to start a “new business,” scrap what you can, and feel the relief.
This is about major regrouping, major renovation, and creating a brighter, less stressful, more optimistic view of the new year – your new normal. Here are 8 ways to get started.
1. Fire some customers.
Did you ever notice that the highest-maintenance, most time-consuming customers are the ones who pay you the least? Analyze the profit margin or lack of profit margin that each customer produces. Fire customers who are not helping you be profitable – period.
2. Reward your best customers.
Look at which customers are giving you the most profit, and coddle them, woo them, don’t lose them! Offer them frequent buyer rewards. Send them a small gift at their one-year anniversary. Give them a random call every few months to “check in,” thank them, and ask what else they might need. Treat them like gold.
3. Start relationships.
This year, it’s time to overhaul your sales behavior. Turn all one-time sales efforts into relationship sales. Start monthly maintenance plans, suggest auxiliary services, sell complementary products, or offer retainer plans covering 50 to 100 labor hours, for example.
4. Pay yourself.
Stop thinking you will get a paycheck sometime in the future. Build a minimum pay base into your budget to pay yourself. Just like dieting, when you starve yourself for too long, you will just gobble up too much food later on. Stop pretending that you don’t need to be paid.
5. Erase those expense lines.
Reduce your operating expense budget to the lowest possible number. If that means selling your car or closing the office, so be it. You can’t build a new profit base when you are still using yesterday’s expense model. Go through your expenses, line and by, and get rid of everything you can live without this year.
6. Outsource, outsource, outsource.
Whatever service you need, think long and hard before hiring a new employee and think long and hard before keeping an old employee. Look at each “department” or each “person” when you are trying to manage costs. Can you eliminate positions, combine jobs, delete processes, and outsource tasks? Outsource exactly what you need for the right amount of time and the right amount of money.
7. Update your networking.
From blogs to Twitter to LinkedIn to Facebook, invest in the presence you need to compete in the New Year. Businesses that don’t leverage social networking will be left behind. Jumpstart new relationships in 2012 with forum building. Update all your sites. Keep your online relationships fresh and dynamic with news, blogs, newsletters, tips, and surveys. Find an online forum in your industry and become a regular contributor.
8. Take your office with you.
With cloud technology, you are no longer bound to a desk. Log onto some new interactive cloud-based systems that can help you do your business anywhere. Make sure to triple-charge that Internet connection so you have it on all devices. Everything you once needed to do in your own office can now be done remotely. Best of all, when all of your employees are sharing files in the cloud, it makes for a much more cohesive, connected team.
Patricia Sigmon is founder and president of LPS Consulting (www.lpsconsulting.com), a 30-year-old technology firm that specializes in creating technology solutions for small to midsize businesses, with profit generation and return on investment as the focus. Sigmon also provides profit-generation advice in her boutique, profit-centric firm, David Advisory Group (www.davidadvisorygroup.com). A successful entrepreneur, a sought-after speaker, and a leading expert in the field of profit management, she is the author of Six Steps to Creating Profit: A Guide for Small and Mid-sized Service-Based Businesses (Wiley).