Small businesses: Ignore these tips at your own risk

Small Businesses: America is Depending on You

A recent survey indicated most Americans believe small businesses will lead the U.S. to a brighter future.  Other research and some pretty sharp people support this theory and it certainly makes sense as smaller business tend to be more flexible and better able to respond to opportunities quicker.  With the ever-present news about layoffs and difficulty in accessing business financing, lines of credit and working capital for the country’s biggest companies (we’ve bucked this trend have access to plenty of capital for businesses), perhaps it shouldn’t be a surprise that 63% of people are looking to small business and entrepreneurs to lead the way.

Finding business opportunities

Direct Capital is fortunate to be in the position to see first hand why this poll is right on the money.  Every day we speak to thousands of business owners and hear first hand accounts of what our clients are doing to help do their part to lead the way.  Even though the government is doing their part with the ARRA and is creating real opportunities, it’s by no means going to be an easy task given the severity of the recession in so many sectors of the economy.  However, what’s encouraging for us to hear is that many of the most vibrant companies are doing the same things that we are, thereby validating the approach we are taking to the recession. 

A Four-step recession strategy for businesses of all size

I wish there was a secret that would turn everyone’s business around, but sadly there is not. However, there are shared characteristics that can be seen among top companies rising to the top. For example, John Chambers, Cisco’s CEO (yes, they are a big company but Cisco’s strategy through this recession and previous economic downturns has been notable), summarized their strategy in a recent interview which is a good platform for any company to develop their recession strategy.

• “Take a candid look at how much of the downturn is due to macroeconomic issues, and how much was self-inflicted”.  If your internal strategy is solid and current business pains are strictly economic based, stick with your current strategy.
• “Determine the depth and length of the downturn”and plan accordingly by cutting expenses and getting lean.  This also includes better leveraging your existing assets (and recognizing hidden assets). Take a close look at better ways to leverage your people, business model and technologies.
• “Get ready for the upturn”. Don’t just survive, position yourself to thrive once the economy turns. The economy will turn around and those who plan for it now can take advantage of the huge opportunities it represents.  As a finance company Direct Capital did this by securing $200 million in credit facilities. One in February and one in April. We have also diversified our product line from strictly equipment leasing, to offering working capital, cash advances, lines of credit and credit protection products.
• “Get closer to your customers”.  Engage with your customer. Businesses leading the way focus on listening to their customers and developing the best product or service that will solve their customers problems. There is a shorter communication path in these nimble small businesses between the sales force, marketing, management and product development (sometimes they are all the same person!)  As a result, the businesses that are really listening to their customers can bring useful products and services to market quicker.  We heard our customers tell us that they needed more than just equipment financing and now our capital and credit products giving us the ability to help our customers with virtually all their financing needs.

 What other components are included in your recession strategy?

Photo Credit: Tim Pearce