Small businesses are tough to start in any economy, but creating one in an unstable economic environment can be incredibly challenging. Part of the reason for this is that getting financing can be difficult when credit markets are tight. That is why would-be entrepreneurs must ensure their business plans are honed and well-crafted.
Following are some tips for successfully building your business in a tough economy.
Devise an Evolving Business Model
In times of economic uncertainty, customers are less likely to give a “new kid on the block” a try, i.e., they tend to be more risk-averse. As a result, you need to develop a business model that is flexible enough to accommodate the mindsets of your potential clients.
Identifying structural pain points is easier when you are a new entrant in an industry. It allows owners of new businesses to mould their strategies around these points, making customers realise they’re the best fit for them. Being flexible might enable you to weather a downturn in your industry by bringing about a paradigm shift.
Get the Right Financing
Even in tough times, funding a new business in Ireland is still possible without resorting to bootstrapping. But, before choosing one of those methods, ensure your business plan is flawless and detailed by asking trusted friends or advisors to review it for you. The funding methods mentioned above include:
- Cash – Access cash through your personal savings, family, friends, and government grants.
- Equity – Get part ownership of a company in exchange for cash.
- Debt – Raise money by borrowing from a lender, such as a bank loan for a business.
Your business and personal finances require a backup plan if your initial revenue projections don’t materialise. In addition to securing funding for your new enterprise, prepare a plan for failing to meet your business and personal goals. Ensure you have enough cash reserves to last between six and twelve months.
Offer a Lower Price Than Your Competitors
In an economic downturn, people are most concerned about money and how to spend as little of it as possible. The top priority of most potential customers is to protect their bottom line. You can take advantage of this mindset by making your products and services more affordable.
The downside to being more affordable is that you will make fewer profits in the short term, but your reputation will improve, and you’ll gain more respect from your clients. Eventually, you’ll establish a sustainable, well-developed customer base.
As a result, your profits will need to be cautiously managed at first. Ensure you only spend what you have and value every penny you earn. Always put away enough money for the most crucial payments: food, utility bills, insurance premiums, and rent/mortgage.
Think Smart When Marketing
The start-up of a business in an economic downturn takes ingenuity and creativity. In other words, you can only stay competitive with well-developed marketing.
Having a niche in mind increases your chances of success. You can strategically target your marketing by cutting and dicing your original customer base. Here’s a good example – If you offer a service for women, can you target women within a specific geographic location, career type, or age range?
Alternatives include modifying and promoting your services or products to gain a wider audience and increase sales. Boost your promotion strategy with video content marketing: visual content with a creative edge is bound to attract potential customers, create leads, and more.
Innovate to Create Value
Creating real value for your industry is the key to your business’s survival. Many sectors will begin to “slim the fat” of low-value companies, as they did in 2009. When such companies don’t bring anything new or innovative to their industries, they don’t have a high value, and their demise will not affect their respective industries.
As the economy fails, these companies will likely be the first to go since consumers realise they aren’t essential to their needs.
Your chances of success during economic uncertainty can increase if you jump-start your business with technological innovation. Consider using web-based payments, employing productivity/project management apps, incorporating cloud computing in your business, and similar strategies.
Join Forces With Other Businesses
Partnering with companies with similar customer bases is another way to grow your business during economic uncertainty. If you do this with companies in or outside your industry, you can benefit from each other’s expertise.
Remember that a long-term, formal contract isn’t required to partner with another business. Trading services or goods directly with another enterprise is an excellent way to establish a loose partnership. Various charities, organisations, service providers, retailers, wholesalers, and manufacturers can fall into this category.
Partnering with other companies can also be accomplished by offering referral programs. You can motivate your customers to refer new customers by offering them rewards. Referral programs can also be provided to your employees to encourage them to bring in new clients.