Small business owners are still reeling from the recession.
A Bank of America Survey in Spring 2015 revealed that about 64 percent of small business owners have yet to recover from it.
On top of that, industry studies estimate that only half of all small businesses stay in business after five years, many only lasting a year or two.
If you own a small business, you can’t afford to be content with small losses or just breaking even.
You have to fight to be profitable because expanding your small business is not a choice, it’s a necessity. It’s something you need to do to stay in business.
One way to expand your business is to cut costs and then allocate the money you save on different marketing strategies.
You will automatically lower your overheads while bringing in more customers.
Let’s look at four ways to win even when the odds are stacked against you:
2 Ways to Cut Costs
1. Eliminate negative cash flow
If you have to give customers a 30 to 60 day credit, then you are spending money before you receive it.
This may mean that you are using an interest-based loan to survive until you get paid or you are eroding your capital.
If you are paying interest, you are paying for the money you get, which is setting you farther behind.
If you are using your existing capital, you are reducing your reserve funds. This money could be used for handling an emergency or for improving your business.
Neither option is a good one.
One way to get into positive cash flow is to factor your invoices. By selling your invoice to a capital company, you receive an advance to pay for your overheads right away. In the meanwhile, the capital company will collect their money from your customers when the invoices become due. In other words, they wait to get paid so that you don’t have to.
2. Hire less, outsource more
One of the biggest costs a small business faces is hiring employees. While it may be necessary to hire a few people to help you run the business, you can reduce your employment needs by outsourcing some of the work.
You can outsource the work to freelancers who don’t expect any employee benefits. For example, instead of hiring an in-house writer to create content for your blog, you can find a freelance writer who will just accept a per-piece or per-project fee.
You can also outsource whole departments. For example, instead of hiring people to manage your human resources, you can outsource all your HR needs to a firm that will do it for you.
2 Ways to Improve Marketing
1. Market online
Even if you are a brick-and-mortar company, you can still market online. You will slash your advertising costs in print magazines and radio spots. Online advertising is not only less expensive, it’s also more effective.
If you place an ad in a newspaper, you are basing your response rate on a small percentage of the total circulation of the business. This percentage is estimation for your industry calculated by the advertising department. It’s based on past performance—an average of the responses others in your industry received from the newspaper’s readers. However, you don’t know who is reading your ads and if the statistics will hold true for you. In addition, since you are taking up space on a limited page, you have to pay for the privilege.
Online, advertising is a completely different story. If you place a Facebook ad, you can hone in on the exact demographics of your readership through the use of keywords. In addition, you can tell exactly how many people click on your ads. Since you are able to track who reads your ads and how many clicks you are getting from your target audience, you can fine-tune your marketing to improve response rates. In addition, since Facebook is a virtual space, you don’t have the high space costs associated with a newspaper page.
In order to take advantage of the marketing opportunities, you should create an online presence. At the minimum, this should be a website. However, you should also create a blog, post social media websites, and upload videos to video-sharing sites to create a more expansive Internet presence.
If you have more time than money, you can even skip paid advertising altogether and generate leads through video marketing, forum marketing, and guest blogging.
2. Give public service talks in your community
As a business owner, you have expertise in something. If, for example, you own a pesticides business, you have expertise in removing bugs. By giving talks on tips to remove wasp nests in the attic or termites from the inside walls of a home, you will attract people who are dealing with these issues. You can give talks in public libraries or for service organizations like Lions, Rotary, or Kiwanis.
Your talks should not be a pitch fest. Instead find a way to turn your expertise into tips that the general public would find helpful. Many people will not be interested in doing the work themselves and would prefer to hire an expert to do it for them. For instance, going back to our previous example, someone who has a wasp infestation inside or outside their home would rather hire an expert with all the right equipment and protection to do the work for them rather than take a personal risk.
By saving money and increasing revenues, your small business will not be a casualty of a challenging economy marked by conservative banking practices and frugal consumers.