Blog Post: How Entreprenuers Can Prosper in Tough Times

Isn’t it wonderful?  We’re in very rough economic times in our country.  Do you know what that means for us as entrepreneurs?  It means that some of our less intelligent competition who has been taking away some of our potential customers are going to go out of business, meaning more for us!  If you want to take advantage of this fantastic time, use it to get mean and lean, and then don’t get lazy when the boom comes.  You’ll dramatically increase your bottom line and be better businesspeople for it.  Here are a few tips.

1).  Get rid of your “bricks and mortar” office…or at least most of it.  Our company, after many years of having our own office, did what many intelligent small businesspeople are doing and moved into a great executive suite, The Boardroom of Cherry Creek (for info on this call Nathan at 303.331.9100, www.boardroomdenver.com ).  We, like most companies were paying for a break room/kitchen, had a small conference room, a workroom, and so on.  We also had to have two coffee pots going all day, much of which, at the end of the day, was wasted.  In an executive suite there are normally several conference rooms of various sizes (this is true at the Boardroom where we are), and shared things like a break room, work room, copiers and printers, etc.  Since dozens of people split the cost of these, it saves money.  It also saves on energy, which is not only a rising cost for most businesses, but a social issue that many of your customers care about (everyone is going “green”). 

Additionally, we were paying for an admin, but only really using her less than an hour a day.  This meant that we were paying for a very expensive computer solitaire player to sit there and answer phones all day.  Now, we have better admins and a great receptionist, but we only pay for the admin part when we actually use an admin.  Same with high quality printers, copiers, a work room, and even coffee (since they provide it included in the service).  The office is squeaky clean, and Nathan is consistently upgrading things.  As the office space is shared, it is better than we could afford on our own and it truly improved our image…and it saved us literally thousands of dollars.

What is even better for some small businesses is to go for a Virtual Office ( Nathan again at 303.331.9100, ).  This means that you only use an office or conference room when you need it, but have a place to get your mail, have your phone answered, and access to many other services.  If most of your job is at client sites, at your home or you travel a lot, why are you even paying for an office?  Go to a Virtual Office and get all the advantages of having a professional appearance at a small fraction of the cost.

2).  Maximize your staff’s duties.  Is your staff being used to the best advantage?  Are there things you are “farming out” that an idle staff member could do and save you money?  Could a couple of jobs be combined if someone leaves.

I don’t like to lay off people in this economic climate.  If you keep them, even if it is rough for you, you will usually get a very loyal employee for a very long time.  But that doesn’t mean that you have to hire someone to replace an exiting employee.  See if the job of the exiting employee can be divided two, three, four or more ways between existing staff.

3).  Does a staff member have hidden talents?  Do you know everything your staff can even do?  (Create a survey on Survey Monkey.  www.surveymonkey.com.)  Send out a survey asking for hobbies, skills, talents and desires.  You might find that one of your existing staff has a hobby that can be turned into cash for everyone, or is dying to do something that you purely hate to do, thus freeing you to make more dollars.

4).  Farm things out.  Conversely, are you paying people to do things that could be more cheaply done outside of the office?  There are lots of hungry “consultants” out there who will do a variety of things inexpensively in this time.

One function that almost every small or medium sized company should farm out is payroll.  It is very easy to make a mistake that gets the IRS upset (these guys have no sense of humor of which they are aware), and a major pain in the behind.  Additionally, there are new services that are “virtual assistants,” (http://www.longerdays.com/)  doing many things that either you had to do or hire someone to do.  Be careful that they are U.S. based, though, and use only U.S. labor who speak good English.  Many are based in India and don't necessarily offer great service, though they are cheaper.

5). Negotiate, negotiate, negotiate.  Many of your vendors will do almost anything now to make a sale (so long as they can still have it make sense…sometimes it is best just to walk away).  Politely ask your vendors about any special deals they can offer you.  Maybe they don’t want to negotiate price, but will throw in an extra service or something.

6).  Ask long-time vendors for a “loyalty discount.”  There’s a great commercial on TV now where a “Stepford Wife” “customer service” person keeps telling someone that their special offers are only for new customers.  (Can someone tell me why they call it “customer service” when it is usually “customer DISservice?”)

Many companies do something very stupid.  They offer big discounts for new customers, make them sign a contract for two years, then “stick it to them” as soon as the introductory period is over.  For me, it assures that, as soon as the introductory period is over, I’m going somewhere else — especially since companies with contracts like this usually have the worst “customer service.”  Ask me about my experiences with Sprint — one I’m going to change as soon as the contract is up.

Ask your existing vendors to recognize your loyalty and give you a deal similar to what you’d get by changing vendors.  Let them know that you really want to give them your business, but, in these tough times, it is about the bottom line.

One caveat on this.  Make sure you’re comparing apples to apples.  I, for example, am somewhat more costly to use as an Executive Coach than some other firms.  But I have 28 years of experience, vs. their 4 or 5 years, and a very long, very successful track record.  I will “walk” with a price buyer.  But I can buy aspirin, for example, at any store.  I’ll go to the store where it is cheapest.

7).  Review your pricing structure.  Make sure that, when others are comparing apples to apples, that your pricing structure is appropriate.  In some cases it makes sense to raise prices on some of your services and lower them on others.  If your competitors are charging substantially more than you are, a buyer looking for quality rather than just price will often go to the competitor, thinking they’re getting a better product.  Make sure that you keep your prices just a small amount lower than the competition.

These are a few things that entrepreneurs can do to lower their costs.  Start with these and you’ll think of some more.  This way, you’ll be one of the companies that is fiscally sound and ready for the coming boom.

John Heckers, MA, CPC , BCPC, is an Executive Coach, Corporate Trainer and Transition Coach in Cherry Creek, Colorado .  He welcomes your emails at jheckers@heckersdevgroup.com or your calls at 720.581.4301 .  Read his other blogs at http://ceoskillscorner.blogspot.com, http://executiveexpert.blogspot.com, and http://employmentskills.blogspot.com.