How exactly does redefining the term for a recession help businesses? It doesn’t bring more customers in, it doesn’t lower costs of inventory or supplies, it doesn’t reduce operating expenses or help with payroll. It doesn’t increase profit margins. The only thing it can do is change the way some choose to reference the current economy and maybe change the way the history books will represent this period in the future. Which may be helpful if you’re in politics or the media business; however, any other business, not so much.
I’m not an economist, but I do understand the concept and importance of cutting costs, cutting corners, tightening the belt, and sometimes utilizing every financial tool available. I’ve been there and done that. Whatever you want to call it, it generally hurts. It either involves cutting back, some may say, all the fun and/or benefits out of business, employment and personal life. It involves hard decisions such as choosing a lesser quality of ingredient/s or products, going without certain conveniences or reducing the size of your business altogether. An old nautical term that my family still uses is “battening down the hatches to weather the storm”. It means closing all windows and doors (hatches) on a ship to prevent excess water getting in and sinking the ship. Another phrase is “prepare for the worst and hope for the best”. This is probably the frame of mind most businesses are currently in.
Unfortunately, many small businesses have already been in this mindset for years just to stay afloat (I do like nautical references). So, if you’re already running a skeleton crew, have cut expenses to the bone, and are running with as little provisions as possible, what then? Where do you go from here? Do you run a white flag, or a pirate flag up the pole? While the Pirate Flag may be the more appealing, going to jail for it isn’t (debtor’s prison anyone?).
So, what now? Before scuddling your ship (seeing how many nautical references I can fit in) try looking to the financial sector. I’m not talking about a loan. I am referring to leveraging money you already have to work for you. Here are a few map destinations to plot coordinates to (that one was a bit of a stretch, sorry). Options to look at:
Electronic Payables- No start-up or incremental costs, and the processor pays your business a rebate on the revenue the transaction generates. This is usually a percentage of the total amount of the payment you make. The processor will take on all the work and has the proper incentive as they do not get paid unless you get paid. It also reduces the use of printed checks, envelopes, postage and printer ink, etc. AKA: E-Payables, E-Pay, Epay, or just EP. Some processors can provide “Integrated Payables” which are electronic payments combining virtual credit cards, ACH payments as well as push pay and others to maximize digital payments for you and your supplier’s benefit. Your processor would contact all your suppliers/vendors to find out what payment options are available and set up digital payments where applicable. The Enrollment Specialist works hard to find the right payment match that works best between you and your supplier. That’s my job, (shameless plug). Any interchange fees collected by virtual cards are divided up and a percentage becomes your rebate bonus. At no cost to you and adding a new revenue stream, it is pretty much a win/win option.
Negotiate! Banks, lenders, credit card merchants, etc., don’t make any money off of your business if it’s closed, so there is room for negotiation. Talk to the Managers and try to lower any fees that they may be charging for banking business. Even if you only talk them down .1 or .2 percent that’s still an improvement. Or find lower fees somewhere else if you don’t like to parlay.
Scale back confusing services, product or sales options. Your customers are getting their wallets hit by the economy and inflation as well. Try to give them something they can afford. Develop an Economic Menu (let customers know you care about their finances). Services can scale down with less options to reduce time, cost and prices to keep some customers. In an economy where shrinkflation and rising prices is the norm’, scaling back and offering affordable smaller options might be the key to staying open and keeping customers.
Shrinkflation is serving or doing less for the same amount of money. Scaling down is offering individual items, priced appropriately. Examples are toast with a poached egg, sausage wrapped with homemade dough (oven baked) with maple syrup. Maybe an individual build your own salad with a bowl of lettuce & spinach starting at a basic price and the customer gets to add their own toppings for additional cost per each (not a salad bar). I’m suggesting getting crafty and breaking bundles apart to let the customer decide what options they can afford and what they can live without. Straight forward value and efficiency.
Using ingenuity, self-reliance and some out of the box thinking, we can re-evaluate all departments including accounts payable and implement solutions to operate cost-efficiently to survive the economic storm. Or should I say lower sails, stow all luggage and loose articles, batten down hatches and secure safety lines. Instead of raising the white flag or black flag, let’s hoist the American Flag.
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