Q: Steve: In my small consulting business, an issue we continually face is what to do in-between those times when a contract ends and a new one begins. There is a lull there that is a little scary. I market a lot during those times, because I have time to. Marketing while I am in the middle of a contract is tough to do. —
A: That business, like life, has cycles probably shouldn’t be surprising, but I would wager that it still is to most of us. When things are going swimmingly and business is busy, we tend to think that this is the way things are and will stay. And they stay that way . . . until they don’t.
Former Labor Secretary Robert Reich puts it this way, “There will always be a business cycle, and white-collar workers will get hit in the next recession like they always do in recessions.”
That your business will change is a fact, and it changes for all sorts of reasons and not just recessions: Customers come and go; contracts begin and end; competitors move in or move away or go out of business; your industry changes; you get sued, etc.
The question therefore is not whether some outside force will affect your business (because it will); rather, what will you do about it?
And the answer is you need to even-out your business cycle so that when things inevitably do change, while you might not be totally ready, you are at least better prepared. Here then are the top three things that I think you can and should be doing right now:
1. Market your business more: My friend Barry Moltz calls it the double-helix trap. It goes like this: When business is up, you don’t have the time or need to market your business, so you don’t. Then, when things slow down and business goes down, you hop on the marketing bandwagon. And that’s how it goes – business up, marketing down, business down, marketing up.
The solution, of course, is to market your business a lot all of the time. Good times and bad. Up cycles and down.
One of my favorite maxims about being in business for yourself is that it is like being alone in a dark room – you know you are there, but no one else does. The only way to turn on the light – and keep it on – is to keep marketing your business.
2. Get more customers: Easier said than done, Steve? Yes, true. But that doesn’t mean it shouldn’t be done. It simply must be done if you are not only going to survive, but thrive, no matter what comes your way.
The marketing you will do above will drive more customers your way. That’s good. And if you really want to stay on top of the game, you will work to get bigger and better customers. Why? Because they have bigger and better budgets. More customers (or contracts or deals or what have you) means less volatility.
3. Diversify: In the investment world, it is a time-tested truism that you need to diversify your portfolio. You shouldn’t own just one stock, or shares in only one sector, because that stock or sector could go up or it could go down. There is too much exposure to invest that way. Diversifying your portfolio into many stocks in various industries reduces your risk.
The same is true for your business.
If you rely on just one big customer for example, you run the risk of taking a major hit if that customer moves on. Similarly, if your business focuses on a single product or service, you take similar risks when tastes or the economy changes.
Diversifying your small business portfolio means that you will find new, bigger and more customers. It means having a varied product and service line. Maybe it means having more than one location, or having an online store to compliment your physical store or creating a whole new division of your business. The important thing is that you have several profit centers going at once so you don’t rely on just one.
That’s how you beat the dreaded business cycle.
Steve Strauss, @Steve Strauss on Twitter, is a lawyer specializing in small business and entrepreneurship. E-mail him at firstname.lastname@example.org. His website isTheSelfEmployed.
This entry passed through the Full-Text RSS service – if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.
Powered by WPeMatico