With so many businesses going under, signs that used to read, “open for business” now read “Going out of business blow out sale,” or “Out of Business.” How can you avoid putting an “Out of Business” shingle up in a weakening economy?
It’s not just about watching the bottom line anymore and the old business models seem outdated in an economy that has even established business such as Mervyn’s, Circuit City and the Sharper Image having companywide liquidations and closing their doors forever.
These are just a few of the casualties in an all out struggle to bring consumers back on board for spending. Many businesses have already scaled back on their spending and are laying off employees in record numbers. Macy’s will be cutting 7000 jobs this month alone. It’s a new era where only the strong can survive and to be strong, you have to think outside of the box.
Here are three ways that may help you change your business strategies and perhaps help you stay in business during this time of economic crisis.
1. Cut back on expenses in ways that are outside of the normal procedures. Most businesses know to check their bills to make sure they are accurate. They stop spending money on benefits such as free coffee, company parties and picnics and other extraneous expenditures, including layoffs, leaving more people without jobs and those people will be spending less in the economy, which will help further the current recession.
Why not take a different approach? While cutting back on spending, why not start working with your employees by giving them a vested share in your company? If it’s come time to lay off employees, there may be a way around it. How does it work? First, you must be flexible because no one can work for free.
Here is the plan. You have a 9-5 software company. You don’t want to let your employees go, but you cannot afford to pay the same salaries. Gather the employees for a meeting and lay out the problem and a plan.
Either you can lay them off or you can keep them at the current salaries with one exception. Instead of being paid for five days a week and overtime, you will pay them for three days a week and give them a stake in the company based on their work and successful strategy input during their unpaid days.
That means, when the company makes money, each employee, including the owner, takes home an equal share of that profit based on the work done. The flexible part comes in the hours. Because your employees will need to still make the same amount and in the beginning, they may need to find supplemental work to see them through the economic storm until their vested share starts to pay off.
People work harder for something they own, rather than something they are simply paid to do. You may find your company begins to see more profit because each employee has an equal say in marketing and ideas and an equal share in the profits.
1. Diversify. Straight and simple. If you own a furniture shop and sales have plummeted because no one is buying new homes and the foreclosure of existing homes has escalated, think beyond selling.
Why not rent your furniture out for functions at very reasonable prices. Because the furniture is sitting in your shop, gathering dust and becoming outdated, why not put it to good use before it becomes obsolete?
Why lose money, go out of business and get stuck with the same furniture only to watch your debtors haul it away in trucks. By renting it out to events for very low prices, you will eventually earn back the wholesale cost and perhaps make money on it.
Having an insurance policy to cover any damages during the rental is something to look into. You will need to have a clause of course that states if the renter breaks your property, they have to pay a pre-designated figure.
1. Start making an alliance with local business owners in your area. In this economy, in order to thrive, we must start working as “we,” instead of a “me.”
If you put a local business alliance together, what one business does not have the other will. What one business is lacking in the other may be strong in. Example: You are a marketing expert, but your neighboring business is not. However, they are great at accounting and you are not. Exchange services in order to avoid an extra fee to pay for outside help.
The gist is this, working together, thinking outside the box and diversifying your products and ideas, will help your business survive the economic blows that are reverberating around the world. The choice is simple, work together, in fair and honest business practices that include everyone, or work alone and be stranded with an out-of-business shingle as your last statement.
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