Necessity really is the mother of invention. While the recession continues to batter small businesses, some wily entrepreneurs are using unconventional strategies to hold their own.
They’re finding creative ways to tighten their belts, do more with less, and drum up unexpected sales. And because I facilitate peer advisory groups—where small business owners meet to share ideas and experiences—I’m lucky enough to learn what some of them are up to.
I’m also happy to share the buzz with you. Perhaps you can use some of these ideas in your business, or let them inspire you to brainstorm some new moves of your own.
Let’s Make a (New) Deal
One of the upsides of a soft economy is that everyone is hungry for business. That makes it the perfect time to renegotiate terms with vendors. For example, one entrepreneur I know crafted this unusual announcement, which he mailed to all his suppliers:
“We value your services and want to continue our relationship. However, due to the current economic environment, we must adjust the amount we can pay you to [fill in the blank]. In the interest of our relationship, are you willing to work with us during these difficult times?”
Was he rebuffed? Actually, no. In fact, he got some surprisingly good results. After all, who wants to lose good business right now?
More food for thought: if you’re willing to enter into longer-term supply contracts, now’s the time to lock in more favorable terms with your vendors, including discounts, promotion allowances, restocking charges, you name it.
Collections: Don’t Strong Arm, Charm
For many, growing collections are becoming an ever-bigger headache. Instead of turning to collection agencies (often an expensive, ineffective strategy), I know a business owner who is turning on the charm. Now he’s writing “love poems” to his delinquent customers, like this:
“Roses are red, Violets are blue,
When will I receive payment from you?”
He’s also been known to send flowers and candy to the people approving his invoices for payment. Guess what? His silly, simple strategy is working. Apparently, it’s more difficult to ignore someone who’s funny and friendly than someone who’s unpleasant and demanding.
Go Back to Basics with Barter
Barter is one of the oldest forms of commerce. It is also a good way to stretch your dollars, or in this case, “trade credits.”
When you join a barter association—most states have at least one—you trade excess inventory or capacity for goods and services provided by other members. Transactions and trade credits are managed by the association.
If your business earns a reasonable gross profit or offers a disappearing asset, it may lend itself to bartering. Before you start, determine how much of your business you can afford to barter. Then, encourage your association to actively promote your offerings.
For example, one bed-and-breakfast owner I know is doing very well with barter. He’s filling empty rooms by promoting weekend getaways, something everyone could use right now. Then, he’s using his barter dollars to purchase ad space and hospitality supplies, reducing his out-of-pocket expenses.
Do the Unexpected: Ramp up Marketing
When money gets tight, what’s the first expense that many firms cut? The very thing they shouldn’t: their marketing activities. Studies confirm that companies that maintain or increase marketing efforts during a downturn rebound higher and faster once the climate improves.
I know several entrepreneurs who’ve taken advantage of current conditions to upgrade their marketing programs, cutting sharp deals with ad agencies, PR firms, and the publications that run their ads. After all, this sector is especially eager for new business. To make it work, set a goal, develop a plan, and then drive a hard bargain.
In other words, there are many ways to outsmart the economy—it just requires a little creativity.