Starting a business is hard under any set of circumstances. If you’re building a business for the long term, at some point, it is likely that you’ll deal with a difficult economy, a hard funding climate or other financial circumstances that are out of your control. Learning to mitigate these situations during hard times will set your company up for success in the future, when the economy turns. While economic uncertainty is never a desirable situation, some of the world’s greatest businesses have started during a downturn or recession.
During a tough economic climate, consumers prioritise and reduce their spending. As sales start to drop, businesses typically cut costs, reduce prices and become risk averse. Expenditure in all areas, particularly marketing and communications, are often slashed across the board.
Start-ups, with their inherent agility, can take advantage of a weaker economy and come out on top. From day one, start-ups operate a lean business model, while maximizing value for customers. Invariably you can offer more for less. Outstanding customer service is also the only sustainable competitive advantage, not only when you start out but always. This is often easier to manage in a small environment. The challenge is to maintain this critical service once you start to grow.
A start-up agency built during tough times, will be flexible and innovative. Should these habits stay with you when the market recovers, you’ll have higher profit margins due to a mind-set of frugality. If you can build and grow a business when consumer confidence is down and businesses are tightening their belts, your business will be bullet-proof when things improve.
You will need structure and discipline, flexibility and willingness and you will need to be motivated to work independently. You must build strong business practises that will carry you into the future as your business grows.
Whilst we all want to offer free drinks on a Friday and ping-pong tables and other leisurely activities to our hard-working staff, these nice-to-haves should only be implemented when you can afford them. Entice the millennials with an opportunity to work on big brand projects, as opposed to being placed at the bottom of the food chain in a big agency. Inspire them to join you through acknowledgement of their ideas and enthusiasm and the fact that you, as a small agency, can mentor and coach them one-on-one because the small environment lends itself to this behaviour. So much more valuable to career growth than entertainment.
While business plans and goals are important, it’s all in the execution which means that it’s only about people. Collaborate with people that you want to start and grow your business with and stick with them. Build a strong personal and professional support structure. Go out and speak to potential clients and ask them if they will listen to what you have to offer. That answer will be the only one your business needs.
A start-up business is about cash flow not profit. If you can get your customers to pay a deposit or pay you when you deliver your product your company will be the stronger for it. And with the advance of technology, ask yourself, “Can we do more?”. Follow the growth, learn new capabilities and skills and make these part of an integrated offering, such a buzzword nowadays.
Points to remember:
· Become familiar with your numbers. Constantly evaluate your strengths and weaknesses.
· Manage the income and the costs will take care of themselves. (But frugality still reigns supreme).
· Target the right customers and know your value.
· Grow your industry so your share of the market becomes greater.
· Focus on how to publicise yourself and your business.
Mail & Guardian
Harvard Business Review