How to Grow Your Business in a Downturn
How to continue to drive growth in your business, even during a recession
Patrick Sullivan and his business partner didn’t pick a great time to start their digital-music royalty tracking service – it was late 2007 when they founded New York City-based Rightsflow. But that hasn’t stopped the company from growing. At the end of 2009, Rightsflow had grown tenfold during the year and Sullivan expected revenue to quadruple in 2010.
To promote the company, Sullivan says Rightsflow joined eight different trade groups and attended every conference they could find, handing out 10,000 business cards in the process. Eventually, their efforts paid off in client referrals.
“The name of the game for us was bootstrapping,” he says. “We did every creative thing we could think of to control our cash. Then, we followed the dollar and found clients who still had money.”
The down economy has many small business owners feeling glum. But savvy entrepreneurs are continuing to grow their online businesses. We asked two small-business experts for tips on how to grow your business – Cameron Herold of Back Pocket COO and Stephanie Chandler, author of Leap! 101 Ways to Grow Your Business (Career Press 2009). Below is their advice on the best steps to take to drive growth.
Ramp up marketing. If competitors aren’t marketing, now’s the time to buy ads, says Herold. You get great value for your ad dollar right now as publications and Web sites are discounting their ad prices.
Use article marketing. Draw new customers by marketing your expertise through distributing informational articles or blogs in social media, Chandler says.
Get free exposure. Get listed in every free directory online, says Chandler. If you belong to networking or trade association groups, be sure to take full advantage of the online profile perks that come with membership. Sell some goods through free Craigslist ads, just to circulate your brand name to their audience. Another key exposure spot for Chandler: online city guides such as CitySearch, especially if your business is primarily local.
Turn all your employees into salespeople. Herold advocates for offering all company workers a raise – by asking them to do more selling, and paying them entirely on commission. There’s no up-front cost, and you can boost sales.
Fire bad customers. It’s a general rule that 20 percent of your customers bring you 80 percent of your revenue. Examine your client list and figure out which clients aren’t worth the time you’re spending on them, then let them go. This will free up your time to seek better-quality clients.
Find a new niche. If business is suffering in the industry you’ve been targeting, research new industry sectors that could use your products or services.
Use new channels. Chandler is a fan of selling some products or services through eBay, just for the exposure to a different audience. “I know an airplane parts company that started selling their parts on eBay, and found a whole new audience,” she says.
Eliminate the competition. Herold is fond of an old saying attributed to McDonald’s founder Ray Kroc – if your competitor is drowning, stick a hose in their mouth. Aggressively recruit their key employees to weaken their business, or actively pursue their key customers. It may not be friendly, but it could help your business survive. “If they’re going out of business,” Herold says, “make that happen faster. Their best employees are just waiting to be poached.”
Reposition. Look at your existing products and services and how they fit into the current down market. If they’re not selling well as is, maybe they can be broken up into smaller, more affordable pieces, bundled together into a set and sold for more, or repackaged to fit current trends.
Build partnerships. “When I was the COO of 1-800-Got-Junk,” Herold relates, “we locked up a relationship with a major garbage company. They didn’t haul trash, so they gave us all their referrals.” To do more business with less administrative hassle, Herold says to find 20 strong partnerships with online companies that could send you business and pay them an affiliate fee, rather than letting hundreds sign up as marketing affiliates. Make it exclusive, and those few affiliates will work harder to help you sell.
Remember that many of the most successful companies today were started during recessions. If you can learn to run your business lean and land clients now, when the economy improves, you’ll be set to take off.