By Diana Clement
MSN NZ Money writer
Recessions are a great time to increase your competitive advantage, buy out the opposition, and grow. A recession isn't time to sit tight and hope for survival from the raging storm.
Believe it or not, some businesses thrive in a recession. It's also worth remembering that if you can survive the lean times you'll be there to profit from the recovery and next boom.
How can your small business survive a recession?
New Zealand Trade & Enterprise has launched a guide to surviving the recession. The seven critical success factors, says the NZTE, in this market are:
- Focusing on core business and gain market share from competitors.
- Improved process and efficiency and fast action to trim costs and/or correct wrong turns.
- Strategic divestment which means shedding non-core operations to concentrate focus and resources.
- Contingency planning for adverse conditions that considers real scenarios that could befall your business.
- Acquisitions and strategic alliances to position the company for increased growth and profitability. Recessions make acquisition targets cheaper.
- Increased advertising and marketing. Don't retrench your spending in these times. Recessions are the time to spend more and increase market share. At the same time advertising rates can be very competitive.
- Research and development. New product releases can have greater impact in a downturn as competitors are slower to counter with a "me-too" offering.
Anyone setting out in business or with an existing small business ought to read the full report.
Important things to remember
- Don't panic.
- Get to know your books better and set up a good financial control system.
- Brainstorm and be flexible.
- Negotiate with creditors most want you to stay in business.
- Study your competitors' strategies.
- Attempt to increase demand rather than cut prices.
- Offer creative deals.
- Work hard to keep existing customers.
- But beware of extending credit to failing businesses.
- Chase your debtors to pay on time.
- Invest in your business if you can.
- Snatch up highly skilled employees who are out of work or insecure in their existing job.
- Motivate your staff.
It's also important to maintain the attitude of a winner. It may sound trite but believing all is lost isn't going to translate into productivity and profit.
And finally, seek advice. That can be from your local enterprise agency, from business advisers, business bankers, finance brokers, or even other business people who you network with.