Running a small business is hard work, but now that the economy has taken a dive, finding ways to manage and expand a small enterprise is even more difficult.
Brian Hamilton, chief executive officer of Sageworks, a provider of financial analysis on privately held companies, says a poor economic climate gives the business world an opportunity to winnow out the worst performers in a sector, thus making way for the remaining companies to thrive.
What it takes for a small-business owner is to seize the opportunity, Hamilton says.
“Remember…you are a single, independent business,” he says. “Now is the time to differentiate your business from others and be way above average. Many great businesses are started or flourish in the middle of economic downturns.”
He encourages companies to focus on their specific economic data or KPIs (key performance indicators). For example, a KPI for a direct-mail company would be the return on mailings; for a construction company, a KPI would be gross margin on projects. Doing so, Hamilton says, increases a company's liklihood of operating successfully.
Although many companies may be able to see their way through the current downturn, several sectors have logged disappointing track records. Businesses in the fields of real estate, furniture and car sales have seen steady declines in consecutive years since 2005, most notably in 2008. Keeping expenses low, while maintaining expenses such as advertising and marketing, and selling as much as possible, are the best ways to survive, he says.
A guest columnist for Forbes.com, Hamilton recommends that small business owners focus on making a great product and providing excellent service to its customers.
To generate more sales and entice people to walk through your door, he says, listen to your customers and "make your products the best in the marketplace, Hamilton says. "Be obsessed with customer service, and people will run over themselves to get to you.”
Another way for a small-business owner to survive is by using available resources, Hamilton says, such as CPAs.which he calls “the most underutilized resource in business.” Certified public accountants have seen countless businesses similar to yours, he says, so take advantage of the advice they have to offer." He recommends a visit to a CPA at least once a year to review financials and to "develop strategies to deal with both the economy and your business.”
For more information, check out Hamilton’s company at www.sageworksinc.com