Article Contributed By Maureen Aylward of Zintro
The Wall Street Journal reports that small businesses in the US are still struggling in the worsening economy. The study says that small businesses are tweaking business plans, shifting marketing strategies, and making changes to clientele, products, and services. Zintro experts tell us what they think the tweaks small businesses are making to stay afloat.
Wayne Spivak, an expert in accounting information systems, says that a lot of small businesses are hesitant to make what they deem to be a bold move, because they don’t know what is happening and that volatility is driving everybody crazy. One issue that Spivak sees regularly in his consulting business is the need for a CFO. “Small businesses need a CFO, but they can’t afford someone five days a week,” he says. In addition, he says that sales teams are making more visits to potential clients because these clients may take longer to sign on. “I am seeing longer sales cycles, but in the end, small businesses may see more business from this extra attention.”
MJS, an entrepreneur and president of a company, says that medical device companies have been affected by the slow economy in a number of ways. “Non-critical procedures have been put off. Hospitals delay and minimize purchases and hold on to older, existing equipment thereby reducing demand and shipments of new products. This delays development of new technologies and reduces R&D and product development,” he says. “The federal government has raised questions about the regulatory approval process and certification, which has added to uncertainty and risk. This in turn reduces investment which would lead to new jobs and expansion in general.”
MJS points out that federal regulatory requirements, in recent years, have become more stringent, forcing new products to be tested and approved outside the US. In addition, he says that reimbursement or payments by Medicare and other payers have been reduced as financial pressures are squeezing clinicians and their facilities, reducing revenues and purchases of products. “Companies have been reducing work force and delaying new projects as demand for new products has diminished,” he says. “Only companies and a select few investors who have money reserves, vision, and expectations of the economy turning around in the next couple of years are continuing new product development.”
Jerome Williams, a small business development expert, says that in Miami-Dade County, Florida, small businesses are taking classes on financial management and are learning about marketing through social media outlets. “While many social media sites provide marketing tips and tools and provide some level of marketing and online networking for free or at minimal cost, some small business owners have reported that the process of generating valuable leads through this process is time-consuming. Many of the older small business owners do not have the technical skills or knowledge to post blogs or utilize social media,” he says.
SeanJC, an IT strategist, says that the tweaks small companies are doing to stay afloat are by making better use of the Internet and all its forms. “Most small businesses already have e-commerce offerings on websites and are now utilizing other online avenues to increase costs and boost profits, including using cloud-based services, out-sourcing, and increasing social networking and communication activities. I am finding that more advertising budgets are now spent on social media services than ever before.”
Tony Rodriguez, an expert in consumer goods and media in the San Diego area, says that some CEOs mistake their goals or vision for strategy and fail to tackle the more vital chore of identifying the key challenge and developing specific strategies to over come it. “Successful strategy execution is based on root cause identification and insightful solutions with specific action plans,” he says.
Danish Khan, a strategy and organizational development expert, points out that the tactics a small business might adapt will vary depending on the background and experience of the owner, many of whom are self-made entrepreneurs. “Small businesses often do not have too many processes, protocols, and tiers between the owner and the customer; therefore, any tactical moves yield results right away. In fact, any change, good or bad, will happen through the eyes of the owner,” says Khan.
Khan identified several shifts that small businesses are making:
- If a business owner has sufficient liquidity, he or she is buying the property the business is on to avoid the rent expense and write it off on accounting books.
- Owners are cutting back on headcounts by replacing staff with technological applications and solutions even in supply chain management with respective suppliers.
- Small businesses are focusing extra attention on high yield clients that can yield 80 percent of the revenue.
- Small businesses are reducing overhead costs by purchasing smartly, and that means they are no longer spending money on storing inventory.
- Small business owners are diversifying their operations being in several locations that focus on multiple ethnic groups and demographics; therefore, they churn inventory between locations.
- Owners are focusing on building a relationship of complementary products and supplementary products to manage operations smartly.
Richard Owen, a management consultant, says that small businesses do not usually have the luxury of reducing their overhead in comparison to larger competitors. “The alternative is to add value. Small businesses can do this by hiring experienced professionals that have been laid off. This allows the company to provide a much higher level of care and value to existing and probably even new clientele,” he says. “The small organization that can tap this labor market with mutually agreeable terms will soon become a ‘go to’ employer for ever increasing talent. Combine this strategy with direct marketing about how these new hires are helping clients and how the company is working with the new professionals and a company can have an expanding business in a down economy.”
Gary Shelton, a small business development expert, says that business plans should be updated annually. This forces the small business owner to take a serious look at where they are and where they are headed. “Changes in the economy strongly encourage small business owners to seek change within their own companies,” says Shelton. “Current trends show that small businesses are re-inventing themselves to be more user friendly. Areas of interest that have gained strength are federal certifications.”
Shelton says that small business owners are looking for ways to expand into the federal marketplace. “This is an opportunity for success. It is a known fact that the federal government is required to do a percentage of work with small businesses annually. In most cases the government does not reach its goal. If a small business will take the time to register with the commercial contractor’s registration (www.ccr.gov) and research federal business opportunities (www.fbo.gov), it may be more than likely they will find a fit for the business.”
MJ Plebon, a marketing consultant, says that small businesses realize that their customers are changing habits and as a result, small business must tweak their marketing strategies. “Customers are no longer using the yellow pages or local newspapers. They are going online to search for local products and services and demanding this information on-the-go with smart phones,” he says.
Many small businesses have invested in a website; however, a smart business owner realizes that a website is not enough, and a company now needs to market its message online in different formats, such as in blogs, articles, videos, classified ads, Facebook fan pages, directory listings, and LinkedIn company pages, suggests Plebon. “Business owners are realizing that the Internet is different from the more traditional forms of marketing such as newspapers, Yellow Pages, radio, or TV. It needs a laser target for the message to reach a well defined customer profile that has a specific problem that the business owner can solve,” says Plebon. “Mass advertising doesn’t work with online marketing.“
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Zintro connects Clients (expert-seekers) with subject-matter Experts for consulting engagements (ranging from one half hour phone consults to multi-month on-site engagements).