Virtually Anything

The Economy and Small Business

Posted by collinsadmin on July 8, 2008

Due to the status of the US economy right now, many small businesses are having a hard time with sustainability.  Even though the price of gas, food, and other necessities are rising, small businesses are reluctant to raise their prices.  They don’t want to put any more of a hardship on their clients but yet they also need to be able to run a business that is profitable. 

 Raising prices for products/services should be a last resort.  A few things can be done to cut corners without compromising the service to clients. 

  1. Do you really need the newest gadget? In a world of cell phones, laptops, computers, blackberries, Iphones etc who wouldn’t want the newest greatest gadget to go with the technological world that we live in?  This is when you have to really sit back and think, do you really need it?  Are you losing time and productivity because of the technology that you have now? If the answer is yes then by all means if you can afford it, go out and buy it, but if you just want the latest, greatest, coolest gadget out there for the prestige, walk away. If you do feel that you need new equipment, check out sites like www.ebay.com, www.amazon.com, and www.woot.com for low-cost alternatives.  If you use Ebay, just be leary of what you are purchasing and make sure they have good feedback from previous customers. On Amazon, you can read reviews, and often choose between new and used. Always test a trial version of new software before you buy.
     
  2. Do you really show your clients that you care? There is more to customer satisfaction than just getting their work to them by the deadline. Your clients need to know that you care.  This doesn’t need to cost anything.  It can be something as simple as talking to them and finding out about their problems and then finding a solution for them. I don’t mean selling them more services/products, I mean actually listening and offering a solution. Doing small and thoughtful good deeds can mean the difference between retaining a client or losing one.
     
  3. Are you flexible in how to get more clients? With the economic woes, people are going to need different types of things than they once did.  People need to be more cautious about how they spend their hard-earned money.  Do you have a plan on how to capitalize on this?  At times, this may mean offering different types of services/products at different prices.  I don’t mean a lower quality but I do mean a lower price product. For example, if somebody only needs a letter tweaked, instead of charging hourly, just charge a flat rate or don’t charge at all unless it is intensive tweaking.  Are you willing to barter, will you help someone with a custom solution, and can you revise your product or service to meet a new need? You will gain more clients by showing that you care about them and their needs.
     
  4. Can you outsource any of your business tasks? Outsourcing does require you to spend money but it can also help you to receive money. Some people may think they are saving money by handling everything themselves from administrative work to website design and everything in between. If you are one of those people, next time you start working on your website or you administrative work, make a mental note as to how much time you are spending on these things and what you could be doing in that time to help increase your profits. If you are spending 5 hours doing a task that a pro could do in 1, you are losing money at it – if you charge $45 per hour for your time, and a pro charges less, you are losing money even if you can do it in the same time. If a pro can help you avoid costly mistakes due to inexperience, it also makes more sense to hire it out. 

Being a small business in hard economic times is doable it just depends on what you do to create the sustainability factor. It may require thinking outside of the box a little bit but it can be done in a wildly successful way.

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3 Responses to “The Economy and Small Business”

  1. Interesting and timely information. I have a home-based business and I’m also a fine artist. Interestingly, the small art gallery where I had work is closing its doors because the art market is so bad right now – actually the past few years. In our area about the only art galleries that are staying afloat are the ones that offer framing services or have national and international reproductions. So the gallery owner is going to have only her online gallery. Now I liked this gallery because her goal was to be “affordable,” which meant she followed a non-typical business model. But now, with only an online gallery, she has to do the classic 40% commission and so I’ve had to raise my prices. Funny thing to be in a depressed art market yet I have to raise my prices. Anyway, thanks for the interesting post.

  2. D Haynes said

    In 12 years this is without a doubt the worst year we have had. It is August 1st, and I have a sales total less than half of my total last year. My long term customers are going to “wait” until next year or beyond due to the economy. We do exterior and interior painting and refurbish decking and exterior wood to look like new. Over the years doing bids, I would sell 6 out of ten, this year 1 out of ten. Renewal business is way down. Can’t do business in the new area’s of the city due to the gas being so high. It has taken all I have to keep my business live and the 4 months of rain and floods here in Indiana didn’t help either. We are shutting out business down this season early by 3 months. My husband has taken a full time job just last week. But we will try again next spring to make a go of it, but this year I fear I will have to leave my home of 22 years and move out of the city to be closer to my husbands job which is an hour away. Its all such a mess.

  3. I understand exactly how you feel. My whole beliefs about the reason the economy is so bad is because of the gas prices. My husband drives about 70 miles everyday for his work and it’s killing our personal finances. It’s gotten to the point where we have to really sit back and think about what we need and what is actually a luxury. Hang in there. Our economy will bounce back but I do think that it will be long term before our economy is turned around.

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