Earlier this year, we saw the return of the dreaded R word to headlines. Not since 2008-2009 had we seriously talked about a recession. But after the Canadian economy shrank in the first two quarters of the year, it was hard to deny that Canada was in a recession.
According to new data released by Meridian, Ontario's largest credit union, more than half of small business owners say economic uncertainty is their greatest anticipated challenge in the year ahead. So, it was welcome news when Statistics Canada recently reported 0.3 per cent growth in July with economic growth expected to continue at a modest pace.
Despite all the news about plunging oil prices, a weak dollar and hits to the manufacturing sector, small business owners are optimistic that they can weather any ups and downs in the economy. Meridian's 2015 Small Business Banking in Ontario Study conducted by Leger found that an overwhelming majority of respondents believe they are recession-proof. In fact, 86 per cent anticipate a growth in business while 43 per cent plan to hire new employees. Only 10 per cent of respondents anticipate a decline in business.
As someone who works with small business owners on a daily basis, it's promising to see that they are confident that they can weather the storm and not just survive but thrive in the face of economic uncertainty. It's not without great effort though. Small business owners must evaluate their costs and core offerings and be agile enough to overcome any potential obstacles and flow with any shifts in the marketplace.
If you're worried about staying afloat, the following are the top five tips to help small business owners weather an economic storm:
Step up your client service: If business is slow, ensure that you are going above and beyond to satisfy your existing customer base. Rather than invest a lot of time and money into winning new business, focus on existing clients as a steady source of revenue. This is a good opportunity to remind them why they chose you in the first place. Over-serviced clients who feel they are in good hands become loyal customers ensuring repeat business doesn't dry up. Offer incentives to these loyal customers to refer their friends, family and colleagues your way.
Play it safe: Avoiding risky decisions is critical in minimizing the impact of a recession and will be vital to the survival of a business. Now may not be the time to take a risk on a new product launch or similar risky endeavours.
Build surplus deposits: Just as you would set up a rainy day fund for personal expenses, try to gradually set aside excess money to grow an emergency cushion for your business for when finances are a bit tighter. This can help make ends meet in tough times and also enables a business to consider expanding during a sluggish economy when their competitors cannot.
Revisit the business plan: Remember that plan which was created when the business first launched? It should be updated periodically but if it's been a while, this is the time to dig it out, dust it off and revise if necessary to ensure the business is on track and meeting customer needs and demands.
Cut your costs: During a sluggish economy a business may need to reduce expenses. While this is never easy, streamlining costs to ensure the company remains in the black may ensure the business lasts for the long-term.
If you're feeling overwhelmed or are worried that rising costs are seriously impacting your bottom line, it's critical that you seek professional help. Whether it's a successful mentor or a small business advisor, reach out and explore and assess options that best meet your needs. If you don't do your homework or seek support, there's a good chance you might make a rash or unnecessary decision that could be costly or detrimental to your business.
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