How small Firms can Thrive in Lean Times- Babatunde Fajimi

Modestly put, lean times are unfavourable to small businesses but smart entrepreneurs know how to keep their business afloat and thriving in spite of economic downturn.

The sun isn’t smiling

The business climate mirrors socio-economic temperature of the country. The horizon is bleak. The sun loses its radiance and is unable to generate or transmit smiles on the faces of entrepreneurs who deserve rewards for their risks.

                               Babatunde Fajimi

Times are hard and government policies somersault; infrastructures collapsed; customers are few; revenues decline; expenses snowball and employees are disillusioned. The brave hearts and beautiful ones who work without salaries for months are tired.

Yet, the hard working and hard pressed entrepreneurs are beginning to cave in as they strive to crack the code to outwit high costs of doing business, depression and bankruptcy which conspire with hard times to choke their dreams.

Cultivate a customer-centric culture

Basics matter when times are hard. Entrepreneurs should redirect their businesses to focus on the customers during lean times. This is because customers may become few and hard to increase during this period.

Customers operate in the same market and they too experience recession. However, they have needs that must be met no matter the scale. Small businesses should target these customers for growth and sustainability in lean times.

Grow core competences

Secondly, the entrepreneurs should focus on what they know how to do best in lean times. They may be tempted to consider multiple options for income generation. This is all right as long as it does not pull them away from their core businesses and areas of strengths.

The first law of survival in economic recession for small businesses is to invest energies in growing core competences in current businesses to ensure that customers get more than the values they deserve. This is the secret for doing it better to become bigger!

Without improving on existing business and the effectiveness of its delivery channel to the customers, the entrepreneur may lose advantage in the market.

Outsmart competition

Small businesses can raid big businesses for a share of their markets in lean times.

The small country boy faced a war general with rudimentary fighting tools and won the battle. In the asymmetric sword-and-sandal warfare that ensued, David smartly exploited the weaknesses of Goliath and used his own speed, agility and dexterity with small weapons to launch a surprise attack against the war general. Like the bear and lion, the boy killed the general.

Experts say 22 per cent of the customers of big businesses defect. Entrepreneurs in small businesses can use size, nimbleness, mobility and personalised services to attract these customers through product differentiation to give them quality, speed, convenience, comfort and consistency.

Tame cash flow

Cash is also critical to small businesses in lean times. As long as the enterprise is open for business, there will be expenses to be made and cash flow problems may occur.

Entrepreneurs have to improve sales to boost revenues. The more customers buy the better the bottom line. Inefficiencies around inventory and invoices should be dispassionately eliminated. Customers cherish and promptly respond to businesses that present their invoices on time.

The credit policy should be reviewed. Credit facilities should be extended to only credible and reliable customers whose words are their honour with regards to payments of bills and services rendered.

There should be conscious attempts to reduce expenses and wastages through cost-saving initiatives on procurement, utilities, bills and salaries. There should be an inventory and all idle assets or unsustainable liabilities should be re-negotiated and a feasible payment plan worked out with the vendors and service providers.

Smart entrepreneurs are known to not default on prompt payment of statutory remittances and bills. Prompt payments help cash flow management. It is penny wise pound foolish to defer these payments until they accumulate and embarrass the business.

In the same way, service providers and vendors can be approached for a favourable extended payment periods for supplies. Available cash can be creatively utilised to keep the business afloat and thriving when supplies can be paid for within sixty or ninety days instead of promptly parting with cash.

Groom employees with empathy

Employees become nervous and aggressive during economic recession. They may also become irritable and impatient with customers for reasons not related to their jobs. This survival mode negatively impacts their ability to render quality service to the customers.

The truth is employees need to get out of themselves away from their comfort zones and demonstrate the capacity to enter into the world of the customers to experience them for better understanding on how to develop strategies to excel in service delivery.

Interestingly, customers do appreciate employees who can show understanding even when they (the customers) are not reasonable. Employees with empathy own the customers; they also own the future.

No trophy for tears

Entrepreneurs do not have to produce ‘sweat, tears and blood” to grow their businesses. Instead of throwing up their hands in despair and bemoaning the state of affairs of the country, they should roll up their sleeves and work smarter in pursuit of excellence.