As a business, economic downturns can be frightening. This is especially true for small businesses who are largely dependent on revenue and may not have investor capital to survive on. So what can small businesses do to stay afloat? Here are a few tips!

 

• Keep track of cash
  

 

This sounds boring and tedious, and maybe it is, but it could make or break a company in the end. By monitoring inventory and keeping close track of cash flow, you know where every cent is going and it pays off in the long run to be precise. 

Try negotiating with suppliers and manufacturers. Will they give you an extension, work with you on pricing, or let you do payments? Many will, especially if you’ve built a good relationship with them. Remember, they need money right now too, even if it’s in payments. In all cases, be honest about your financial situation, including with your bank and landlord. Many times, if you come to them early and work something out they are more likely to be lenient and respect you as a businessperson than if you wait until the last second or miss payments.

One quick way to get cash is to sublet your space or building. For example, a dance studio with lower attendance than normal might sublet empty rooms to dance instructors looking for a space to do private lessons. Or if you are a small software company, combining office spaces with another small company could be a way for both of you to save money during rough times.

Also, get your employees involved! People are very creative and innovative, especially if it means they can keep their jobs and work fewer hours or do job sharing until things return to normal.

 

 

• Strategize
  

 

Strategy is going to be very important when money and resources are tight. One thing you can do is watch the competition. If they are holding back on marketing during tough economic times, maybe you can spend more on marketing and gain a larger share of the market. Instead of launching new products and services, focus on your value proposition. Stay strong in doing what you do best, beat your competitors, and steal their customers.

Speaking of customers, it’s also a great strategy to use this time to strengthen your relationship with them. Show them you care and build rapport by checking in with them and even offering extensions. Thinking long term, offering extensions means when the economy picks up you’ll have an abundance of extended contracts with your customers that lead to a steady income. You can also use this downtime to call colder leads and win old customers back.

 

 

• Pivot
  

 

Lastly, it’s time to get creative! We have two great examples of this right here in Utah. Waffle Love is a restaurant and food truck that serves sweet and savory waffles with the tagline “love at first bite.” Since opening in 2012, they are now in five states, with eight locations in Utah alone! When the COVID-19 pandemic hit and everything began shutting down, that didn’t stop them. They began offering quarantine meals that families could pick up and, most recently, Waffle Love dough that can be used to make waffles at home. Normally, families and friends would come in to eat and visit and by getting creative, they were able to recreate that experience in people’s homes.

Another example of a pivot is a student business founded by UVU senior, Tyler Nyland. The Kreative Kiln is a pottery shop where people can do group lessons and activities or just use a wheel to practice their art. With only having recently moved into their own space and out of a garage, this experience has been a wild ride. He admitted that at first, he thought the Coronavirus wouldn’t have a huge effect on them, but when UVU moved all classes online and the group sizes allowed by the state got smaller and smaller, things began to feel real. 

He knew they could just shut down and do nothing, but why would they choose to do that when they knew they could do something? From chatting with friends, he and his wife, Mercedes, came up with the idea to do pottery kits and named them “Kreative Quarantine Kits.” They got together one day and filmed some instructional videos for six hours straight with no breaks. It was a lot, but everything was shutting down, group activities were canceled, and they knew they had to act fast. They compiled the videos, cover letters, and steps people could follow and boosted it like crazy on Instagram and Facebook. 

Because of this pivot, they have been able to pay rent and recover the cost of making the videos. The consumer response has been amazing with feedback like “Thank you! I can finally do something cool with my kids inside!” He noted that the response has been so positive they can hardly keep up with orders right now. They currently offer curbside drop off and pick up, for those who want their project finished with kiln and glaze, and plan to explore this source of revenue even after business returns to normal. 

They are putting together date night kits and looking to team up with other companies that do food and drinks. Their overall goal is to help families be creative at home together instead of just in their studio. They are also looking into projects that can be finished and glazed at home or use other types of clay, so stay tuned for that! 

For all the businesses out there in limbo, Tyler suggests getting creative and finding something that will work to get them through these times. It is scary for sure! He admits he was a stress case before launching the videos and Kreative Quarantine Kits. It paid off for them and is just the beginning of something they plan on continuing to offer. 

  

 

Hopefully, you find these tips helpful and inspirational during this turbulent economic time. As always, the Entrepreneurship Institute is available (virtually of course!) to help in any way we can. Follow our social media (Facebook/Instagram/Twitter/LinkedIn) to stay up to date on virtual events and conferences, or make an appointment to meet with Mark.