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Many entrepreneurs in startup mode may be getting a crippling case of cold feet in this pandemic. But the truth is even startups can prosper in hard times like this. Know how
In the wake of the Coronavirus pandemic, the world economy is taking a downward turn. Businesses are struggling to stay afloat, yet this is just the beginning of the tough economic times ahead.
For startups, the looming economic crisis will be a defining moment. So, if you are an entrepreneur, wondering how you’ll keep your business afloat, this article is for you.
We’ll look at seven steps you can implement right now to help your business survive.
Let’s dive right in.
Step 1: Strategic Financial Plan
Every business must have a strategic financial plan in place. The plan helps you outline your business goals and how you’ll reach there. A strategic plan guides you on the best ways to spend your finances, resources and time.
You can assess how stable your business is financially and come up with strategies beforehand to cushion your business during an economic crisis.
As a startup, it’s time to have a strategic plan if you don’t have one already.
If you do, the next thing is to check your cash reserves. How long can it sustain your business? Ensure you have a cash reserve that can take care of your business expenses for six months in case of a crisis.
If you don’t have one, start by saving a percentage of your business’ profit to a bank account.
The longer you can sustain your business during a crisis, the higher your chances of going through the hard times unscorched.
Step 2: Take Charge of Your Cash Flow
You have a plan. The next thing is to have a clear picture of how much your startup makes. The key questions to ask yourself are:
- What are my sources of income?
- How much do I make from each source?
- How is it spent?
A thorough review of the above questions will help you outline your business’ income. From there, you can put into perspective your financial situation and have a future projection. You can also review areas that need adjustments.
An understanding of your cash flow comes in handy in building the cash reserve we talked about in step one. You’ll have the needed data to devise a profit saving plan that will take care of your business when the cash flow diminishes.
Step 3: Secure Financing Now
Remember, as you are preparing for the tough times ahead, every other industry is doing the same, including financial institutions. In the coming months, financial institutions might adjust their terms of lending to prepare for the coming recession period.
As an entrepreneur, stay ahead of the game by securing your finances now. Do not wait until the last minute when your business can’t sustain itself to seek funds.
So, how do you secure the funds?
First, maintain communication with your bank. Inquire about any changes in their lending procedures. Strive to understand if your industry is affected by the new guidelines. Further, ask about the amount you can borrow.
Secondly, check other lending options. With the right information, you can make an informed choice. Next, have the required documents in place. If you are a personal trainer, you’ll need a tax compliance certificate, financial statements and personal trainer certification online among other documents.
Lastly, maintain a good credit score. Also, remember that getting a loan takes time, so start the process in good time.
Step 4: Focus on Your Company Strengths
During a crisis, it is risky to experiment with new products and services. This is because of tight finances. So, focus on the services and products you have been offering and perfect your services.
Analyze your customers to understand their pain points during the pandemic and tailor your services to meet their needs. For example, if you are a brick and mortar store, you can have your products online and offline.
Also, you can offer free delivery. You can further niche down to lure a specific group of people. People always want to be part of something they feel resonates with their personal beliefs or situations.
Stay consistent with what you are known for while exploring ways you can better solve your customers’ challenges. This is not the time to try new markets. Instead, focus on improving your current services.
Step 5: Make Your Customers a Priority
Customers are the lifeline of any business. Therefore, as a startup, this is the time to ensure your customer relationship is top-notch. Start by maintaining a great relationship with your current customers.
Your current customers have experienced your services first hand. They trust your services. It is easier and cheaper to ensure they become repeat clients. So, make them a priority by giving the best customer experience. Deliver exceptional services.
Think of ways to add value beyond a customer’s purchase. You can have after-sale services or incentive programs. When your customers enjoy your services, they’ll be your ambassadors. You’ll attract new clients at no cost.
As a startup, you cannot afford to lose even one customer during this time. So, take good care of them.
Step 6: Cut Down Costs
Depending on your industry, look for ways to minimize overhead cost and expenses. Cut down the number of employees and use sites like Upwork to hire freelancers on a need basis. You can temporarily suspend business projects that are not critical.
Suspend trying new markets and products. Minimize expenses associated with marketing and sales.
In a nutshell, access your business, see what you can do without and get rid of it. This way, you’ll be able to save more in your cash reserve.
Step 7: Up Your Marketing Game
It’s time to spread the word to your prospects on different platforms. To get the best of the limited budget, analyze your competitive advantage. Identify what makes your services unique and use this as your unique selling point.
Leverage the power of digital marketing and ensure you are creating compelling copies that keep your customers engaged.
Many companies have transitioned to remote work. Therefore, the competition is massive, meaning you must put more effort to grab the attention of your audience. Use proven strategies that will help your business stand out from your competitors.
Over to You
As we prepare for the worst and hope for the best, you can’t leave anything to chance. You need to take the necessary precautions when there is still time.
Your business can still thrive with the right plan. So, take the next step and implement the guidelines above.
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