As businesses adapt their strategies toward the recent changes in consumer actions and business operations, finding alternative ways to save costs while boosting sales is all businesses’ most significant challenge.
For small retailers and mom-and-pop businesses, being flexible in operations can be difficult, problematic, and costly if not done strategically.
To survive and thrive can demand some creative solutions for long-term growth as well as solving some short-term issues.
Let’s be honest, the biggest challenge that small businesses face is with an inadequate infusion of cash, whether from the lack of liquidity of assets, slower sales, or added costs.
A long-term growth strategy requires some introspection as well as outward forethought.
Understand Your Market: Understanding your market and potential clients is one of the most critical ways to improve your brand and sales base. This may seem like a no-brainer, but the reality is that a large percentage of small businesses believe they understand their markets and clients without performing any research for trends and areas for potential growth.
For example, if you’re in Real Estate, the market has been scorching for the past year, and projections are that the trend will continue for the foreseeable future. But without your own data points, you’re making assumptions based on the total number of sales, inventory level, and other very obvious trends.
But delve a little deeper, and you’ll see the historically low-interest rates, the motivation from COVID for residents to move into larger homes with more outdoor property, the flight of individuals and families from urban areas to the suburbs and rural properties as contributing factors.
Know Your Potential Clients: Understanding your potential client’s needs and motivations will help you position your business into a place of strength as your brand is perceived.
To better understand your clients, host surveys, conduct product and sales research, follow popular influencers on social media, and see what they are promoting are a few suggestions.
Short-Term Strategies For Cutting Costs With A Small Business
For the short term, some strategies include cost-saving measures that typically cut overhead, such as payroll and unnecessary expenses, but there are alternative ways to cut costs.
In addition, there are plenty of consultants, guides, and resources for small businesses to make up for the gaps in cash flow short term.
Finding Short Term Fixes For Cash Flow Issues
For example, were you aware that some municipalities have incentives for businesses and residences to lower energy usage during peak times.
Those programs, called demand response programs, give rebates and other financial incentives to decrease energy demands when an area needs peak energy. These demand response programs may be offered through local utilities, state, or federal programs.
Another cost-effective strategy for small business survival is to pivot toward online sales and distribution options rather than the traditional brick-and-mortar store.
Again, Amazon is the prime example of the potential for online retail as it is the number 1 retailer globally, with sales topping $220 Billion for the fiscal year 2020.
By shifting sales to distribution and online retail, a business can operate 24 hours a day without labor and staffing issues associated with the process.
The automation can be taken a step further and include hiring a fulfillment center, such as Amazon, to handle your products’ storage, selection, and distribution at a small fee, saving a ton on costly retail and labor costs.
Whether a business becomes more fluid by going the online and fulfillment route or not, there are short-term stopgaps for cash flow issues.
However, without a strategic accounting of your current sales and expense reports, knowing the market trends, as well as understanding where to increase your client base, may make any strategy futile.
Take A Longview Approach And Address Short Term Problems
It’s a combination of short-term and long-term planning that will position your business for the potential of success and growth. Regardless of whether your business is meeting quarterly growth expectations or not, this accounting needs to take place to further position your business on solid footing moving forward.
The reality is that most small businesses fail within the first 5 years of operation. The problems often stem from a poor cash reserve at startup, lack of understanding of the market, and cluelessness on the part of the business to find and retain clients.