Tips to Help Your Montana Business Survive a Recession

By David Howlett

If you hadn’t already noticed, times are getting tough for businesses in Montana. In the bigger scope of things, it is safe to say that things are getting harder all over. These are economically scary times for Montana businesses, and fear and uncertainty seem hard to escape these days. With the unfortunate forecast of many small businesses going belly up, we wanted to provide a few strategies to help ensure that your business can weather the storm.

Don’t Panic – Stay Focused

Getting caught up in the panic and everyday struggle can easily lead to short sightedness, and even worse catastrophic failure. Although difficult, maintaining your focus on long-term goals and business objectives can help ensure your success both during and after slow economic times. Take measures to help keep your aim down the long run, like writing down some key objectives you would like to accomplish.

Once you have outlined your objectives, it is time to make a plan. If you want to recession-proof your Montana based business, you are going need to come up with a strategy to reach your goals. Set your targets in a financial plan for income and expenses and take steps to ensure that every decision made regarding your business fits into your overall business strategy. When times are uncertain, straying too far from the straight and narrow path could have dire consequences.

Leverage What You’ve Got

When faced with times like these, it is essential for businesses in Montana to investigate the resources they may already have in place. Look around… there are almost always things that can be done to help your business run as lean as possible without diluting the value of the service it provides. Make time to research ways to improve your product, maximize your advertising dollars, improve work flow, reduce costs, and sharpen your business model… the dividends will show up on your bottom line.

Explore new ways to engage with your customers, and don’t be afraid to find out how the current economic situation is affecting them and how you can help. By simply tuning into their needs you can develop strategies to make it easier for them to purchase from you. After all, a well satisfied customer is usually a repeat customer, and it is far cheaper to retain customers than it is to attract new ones.

If you have employees, quiz them for suggestions they might have for making your business better. Asking your employees what they want/need will help you to better understand and meet your customers needs. Chances are you will find the feedback you receive from employees on the front line a valuable asset. As an added benefit, employees who have a say in their job are often happier, and happy employees are usually more productive and tend to call in sick less too.

Dare to diversify, because the more services you can provide, the more customers you will ultimately be able to attract. When you explore ways to be innovative and force yourself to think outside the box, you begin to create an edge over your competitors. No matter what type of service your business provides, you should be able to develop ‘new’ offerings by repackaging your services to attract potential customers who may have overlooked you as an option in the past. Thus opening yourself up for attracting new customers.

Finally, do everything within your power to make your Montana business shine on all levels – from amazing customer service, clear on through to outstanding management and leadership. Steps taken in these departments will have great long-term benefits for your organization, and will help your business stand out from the crowd.

Cash Is Best

One of the many lessons to learn in a recession, it is that that being liquid is paramount. The importance of cash flow in the fiscal health of your business should not be overlooked, because it is the ultimate factor in determining whether you can keep your doors open. So do your business a favor and take measures to build up your cash reserves.

One of the things you can do immediately to help increase your cash flow is collecting on your accounts receivable. After all, if there was ever a time to chase after delinquent accounts… now is the time. On the other hand, you should pay your accounts payables as slowly as possible without getting yourself in trouble.

Using the measures above coupled with keeping your expenditures low can assist in freeing up some cash flow in your organization. That is not enough though, I urge you to maintain a sharp eye on your bottom line and calculate whether you have enough cash to pay your expenses if revenue were to suddenly drop. Just because money is coming in the door today, does not necessarily mean the same can be said for tomorrow.

Manage Your Credit Wisely

Businesses that strongly rely on credit to manage their dealings are usually the first to fail when the economy goes soft. Of course some credit is a good thing, but if your business has several lines of credit, you might consider renegotiating any outstanding loans or lines of credit taken out more than six months ago. With the current credit crunch you may have a chance to negotiate a more favorable rate, which will in-turn help you to increase your cash reserves.

Don’t Cut Your Pricing

Although it might be tempting, you must avoid slashing prices to try and sell more product in an economic downturn. When you cut your price structure there is a chance that more product will be sold, but the down side to this is that your profit margins will decrease and you risk the chance of your brand image becoming diluted. If cutting prices cannot be avoided, try offering discounts only to current or repeat customers. This is important, because if new customers are given discounts, they will expect similar discounts when doing business with you in the future.

Watch for Opportunities

When financially crippling times occur, there are basically two types of stand out businesses… those who suffer and those who prosper immensely. The key to surviving – or perhaps even prospering – during an economic downturn is being aware of opportunities and positioning your business to take action when they occur!

For example, you are probably not the only one feeling pinched. Chances are that your competitors are also struggling to make ends meet and some of those weaker competitors may be prone to failure. This usually leaves some favorable opportunities in the form of skilled employees, tools, equipment and gained market share in the wake of a collapse. That is why during hard times, keeping one’s ear to the ground to stay abreast of changes in the market can prove to be very beneficial.

In the circumstance that you actually do manage to hire key people from competitors in your industry, make the most of it and be sure to submit press releases outlining the changes. Leveraging the power of these opportunities for good PR normally proves to have long-term payoffs.

Grow Your Business

While your geographic location may be suffering during a weak economy, others might be thriving. Changes in the Montana real estate market (both residential and commercial) are subject to significant shifts in slow economic times. With prices dipping to historic lows, your business might be able to take advantage of expanding into a new location that might have increased square footage, a better location, substantially more foot traffic, or a host of other amenities. There is also a high likelihood that you can get a better interest rate and be able to take advantage of more favorable negotiating terms as well.

A recession is also the perfect opportunity to look at upgrading the major equipment your business relies on. The advantage here is that as suppliers become more desperate, discounts in the pricing structure of capital equipment usually become more evident. At times like this, forward-thinking customers like you are a welcome sight, and you might be able to cash in on some great purchasing incentives during the process.

Increase Your Marketing/Advertising Efforts

One of the worst mistakes businesses usually make during a recession is the decision to cut back on their marketing activities. Many of your competitors will fall into this category, so in turn you need to be more aggressive than ever! This doesn’t mean you should just throw your advertising dollars at the problem, on the contrary… the key to succeeding in marketing is to have a comprehensive plan of attack.

Start by making a thorough evaluation of your current marketing strategy. Highlight what is working and take note of what is simply wasting valuable revenue. During an economic crisis, it is more important than ever to track your advertising dollar, so make sure your marketing is cost-effective. Challenge your advertising venues to provide you with measurable results and don’t be afraid to ask your customers how they are finding you.

Set yourself apart from the competition by developing your own unique selling point (USP), which can be anything from superior customer service, to the lowest prices or even touting outstanding quality or craftsmanship. Once you’ve established your USP, make sure the everyone is aware of it by forming a great marketing campaign to exploit it. This will give prospective customers a good reason to do business with you over your competitors.

When it comes to marketing, remember to use every creative opportunity to advertise and build your brand. For example, try including marketing materials in things you already do… like mailing out invoices. This can help you save postage and other costs as well. You can also maximize your point-of-purchase opportunities by tucking coupons or promotional materials in the bag along with items a customer has purchased.

As another means of maximizing your marketing, you might also seek to combine your advertising efforts with that of neighboring businesses. When the market is slow, doing so will greatly help stretch your advertising/promotion dollars even further. By taking the time to partner with businesses in your vicinity you may discover ways to help each other out. Establish and nurture healthy alliances and in turn, favorable opportunities will be sure to flourish.

Take Advantage of Technology

These days there are a variety of new technologies that are designed to help save you money.  There are countless websites and web services that help save businesses just like yours thousands of dollars each year. Modern technology offers you the convenience of holding a conference call, sharing a online presentation, or even conversing via webcam with even the most basic of internet services. Now instead of traveling for business related functions, you can simply manage dealings from your office right here in Montana.

You can also use the power of the internet to find better deals on the products that you use most. If you need it, you can find it on the internet, and usually at significant savings too. If buying local services or purchasing made in Montana products is an important aspect of your business, than I suggest you show your local supplier the deals you can find online and see if they will be willing to come close to matching the cost.

The bottom line here is that if you haven’t taken a good look at all the opportunities the internet can offer lately, now is the perfect chance! What are you waiting for?

Swallow Your Pride

When things seem to crumbling down around you, don’t be afraid to ask for help or assistance. If nobody knows you are in trouble, no one will be able to help until it is too late. Reach out to people who care about your business, perhaps even people who have been in similar situations before or maybe even worse. Seek out savvy business people who have been hardened through Montana’s hard economic struggles in the past. Their expertise and guidance could be just the footing you need to help make it through.

Don’t Try to Just Wait it Out

In a recession, it is not a safe bet to simply hunker down and hope the whole mess will simply blow over. The most important thing you can do to recession-proof your Montana business is to take action. In this article I’ve given you some of the top tips, best tactics, effective strategies and things to do that will help your business survive during hard economic times. Start improving your situation today… I’ve shown you the way, but now it is up to you to take the ball and run with it. Don’t wait… start taking action right away… like now!

Incorporating the proper measures now can help you weather the storm. Remember recession is a temporary economic problem, in fact, most recessions only last for a few years. So although in the short term, there might be rough roads ahead, in the long term the positive changes you make now will benefit you for a long time to come.

A Few Last Words…

So that’s about it. The good news for you is that history has shown that businesses which are still around after a recession tend to do very well. The reason for this is that when the economy stabilizes, those businesses are already well established and the weaker competition has been weeded out.

That being said, your goal is to make sure your business is one of the ones that is still around when the sun finally comes out again. Until then, pack your umbrella and I wish you the best of luck.