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Business during a Recession Requires a Special Hand
Doing business during a recession can be difficult, with worries piling up and less customers in your online store or local business. While many figure heads believe we are moving past the recession stage and into recovery, which will last at least another two years, we must still consider the effects of recession. Recession means less spending. Recovery means spending will be on the increase, but we are still affected by the lack of spending from certain quarters especially if you are looking to sell a business
A most important factor, especially as a new year draws near, is budget. Businesses must have a budget in place for the year to come regarding a number of business aspects like advertising, employee wages, inventory, and more. We are going to concentrate on the advertising budget considerations you might want to make for the current economic climate.
Your budget is most likely reduced based on the recession and economic issues. This means you may find television commercial, radio, metro ads, etc. are all too expensive for your budget. You also know there are different and less expensive ways to advertise.
Already experts doing studies have found in the last five years businesses have changed their advertising schemes. More and more companies are looking to the internet for their advertising and paring back on the commercial or radio ads. Even before the economic troubles began in earnest many corporations, medium businesses and small business were turning to the online world.
Online advertising can be found for less, as well as free. Search engine optimisation is free because you can find keyword lists to target, the audience to target, and SEO tools for no cost. Sites like Google have toolbars and keyword generators. If you are going to use certain styles of ads like pay per click ads you will have to pay a little for the advertising, yet it is less than a commercial.
How it works:
You generate a keyword list of the most important broad terms and long tail keywords. You bid on the words you want. If you are a large corporation your budget may allow you to bid on a word going for £5.00. A smaller company may look for £.01 to £2.50 for words. When you are awarded the word you use it on your ad, place your ad, and wait for someone to click. You will pay per month based on the clicks you received or the set plan you purchased. Depending on the number of clicks you obtain you could spend £5.01 on the ad or spend over a few hundred pounds.
It is not surprising to find businesses are heading towards this method of advertising when you consider one sports advertisement can cost you thousands of pounds. Doing business in a recession should be about cutting costs, without compromising your quality, as well as finding better methods for certain business processes like advertising online. There are other ways to advertise online such as the free methods you will need to check into like claiming your local business listing in Google Maps.
Small Businesses will Save Economy
The economic recession has been on everyone’s mind, whether they like it or not. The news continues to report about the economy, in some ways telling how the holiday season has helped with the downturn and also how the recession is ending. Recovery still means the economy is struggling to work its way back up to a stable force. In a show of optimism Lord Digby Jones of the Confederation of British Industry spoke about the current economy. He stated that it will be small businesses which will rescue the UK economy in the coming months.
He further stated that small businesses are the only ones that can create wealth which will help pay the taxes that will repay public debt. Jones has urged small businesses to move up in the supply chain. To do this they would need to have value, as well as innovative services and goods. The products must also be sold internationally. There are countries that have yet to see a decline in their economy such as the US and UK are going through. These countries are heading towards decline, but many products are still desired. Furthermore the US is on recovery, even though the dollar is not. This means shoppers are looking for items, and it could lead to better international sales.
US shoppers spend more when they buy UK products, which can mean better sales. China and India for example are two countries that can help rise the GDP right now. Both of these companies want out of the economic struggle they are in, and more to help their people.
Small businesses in the UK are still focusing on the local national market. They need to begin an international or global impression. This will help the companies compete and further their sales, thus helping to pay off the current debt by paying their taxes.
The truth is that small companies have more advantage in the international market than they believe. It is easy for any small company to get online and into a wider market. They just need to take the small risk and do so. Advertising, hosting, and SEO are all reasonable in the online world for small companies. Sometimes advertising is even more reasonable for small companies. They do not have a large budget, but long tail keywords are less expensive and more readily available. Corporations tend to take the broad terms that are more expensive.
There are plenty of options for the small business to increase their wealth and become saviours of the UK economy. Google and other search engines are making it even easier for these small companies to go global. It may take a little time and some rethinking within a business, but the options are almost unlimited.
Jones and other experts have been mentioning throughout the last few months that small businesses are where focus should be. It has less to do with the corporations trying to offer low priced, and lesser quality items, and more about the value at the right price.
Getting Business Advice from a Mentor
The economy has given businesses a rough ride for the last year or so. It might be a good idea for you to find a mentor that has more experience in the business world to help you weather this economic storm. It has never been more important to businesses to cut unnecessary spending. If you have a wise mentor they have probably gone through tough times in their business life so they will have invaluable advice to give you. Should you not know a mentor, you could ask a trusted business associate for a name or use your network of colleagues to find one.
The definition of a mentor is someone with more experience or wisdom that will share their knowledge with a younger less experienced individual. If you have a great idea but lack the entrepreneurial skills to bring it to fruition, seeking the help of a mentor is something you should do. They can guide you so that the business has a good chance of being successful and profitable.
You can find many instances of mentoring in action if you look at successful people. Most of the time, they are more than willing to give credit to a mentor that helped them get started. A case in point is the billionaire, Richard Branson; he made his fortune in the airline and entertainment industry. Freddie Laker, a British entrepreneur was his mentor to success.
A mentor isn’t an employee although they can work very closely with you in the beginning. The mentor will be there to offer guidance when a big decision needs to made, you need support from someone whose judgement you trust, or your business needs to be improved. All of these things are ways in which a mentor can help you.
In many instances you can find a mentor that has retired from the same industry that you are getting into. These people are ripe for mentoring because they can bring you a vast array of knowledge. They not only have the skills; they are experts and have years of experience. Every business can use the information that a mentor can bring to the table.
The amount of mentoring you have will depend on your approach to mentoring. Some mentors will meet once a week, others will converse daily. You could have an arrangement that you will only contact your mentor if a problem arises that you want their help with. You could have a meeting with the mentor, use an email for contact, phone each other or use all of the techniques.
If you aren’t familiar with your mentor you may wish to use a more formal approach. You could set goals, discuss issues or any agenda that applies with a monthly meeting. You may know the mentor very well and prefer an informal approach so you could meet for lunch or dinner to discuss matters. Even if you don’t think of someone as a mentor you may be surprised to find out that they have been one any way.
Gaining Business Financing in a Tough Economy
Financing your business has become a trial with the economic crisis, but there is help out there. The UK government has begun to adopt a number of plans to entice small businesses to expand in the next few years into the international market. A recent study looked at how businesses approach their need for financing. This study from Close Invoice Finance showed 42 percent of small businesses are looking to their accountant for advice on which banks or lending companies to trust. 30 percent of businesses stated they would ask their bank manager for support, which is 20 percent more than last year.
Currently 1 in 4 small businesses will seek a bank manager for advice. These small businesses are categorised as having at most 50 people in their employ. 42 percent of the 101 to 250 employee sized businesses will seek advice from banks about the type of loans they require. Even with the advice of an accountant or bank manager these small businesses are still being turned away. It seems while the government wants to lend a hand the banks are still largely unresponsive.
This information can help you find the financing you need in looking at what other businesses have tried. Advice is not really helping the businesses gain the funding and it is perhaps more because of where the business sits.
Banks will not take high risks right now. Any small business or business looking for a loan has a better chance than most individuals seeking a personal mortgage, but that again does not mean a lot when considering how the banks have changed their parameters. For a business to receive funding they must be able to prove there is a market for growth in their industry, as well as having the proper business plan, statistics, and application.
The advice that can be offered here is look to your company. Examine the strengths and weaknesses you see inside your business. Are there areas of improvement? Can you save on employee wages, yet retain quality customer service? Can you find a new vendor offering lower prices for the goods you sell? Do you have a service business that is needed in the current economy? Debt management and advice is a hot business right now, but there are also others out there individuals cannot do without.
Re-evaluate your current target audience to see if you can reach a larger audience or a different audience. It might be time to market to the audience that is spending their income rather than a niche market that is lacking in sales. By giving your business a stronger foundation to find potential growth a bank or lender is more willing.
There are also some banks willing to lend more than others. Research the bank, as they are researching you. Check what the financial state of the bank is. Will your bank be filing for bankruptcy or are they on a good strong path? The bank that is financially strong is more likely to offer funding.
Franchises a Better Bet in Hard Times
If you have been hit by the recession and lost your job it may be time to put all of your business skills to work and become self employed. Many people have found it hard to get a new job so they are looking for ways to start their own companies. Franchises offer a way to start a business using a reputable company to begin a new career. There are many advantages to opening a franchise and the success rate is a little higher when you do this. Of course, if you like to be in total control of every aspect of your business then a franchise may not be for you.
A franchise will have a price that you pay to use the business name, marketing and training. You will be fully trained in the ways of the company that you choose. The advertising that the company uses worldwide or nationwide will benefit your business too. They give you an area where you won’t have any competition from the same store. You will have the store design, uniforms and products so you won’t have to be spending time with development of merchandise or decorating. You will have vendors that the company uses for your products and clothing. The costs can be less than having to start an unknown business.
With a franchise you have a tried and true model for success. They have worked all the problems so you don’t have to. You can open more franchises if you find success. Many people have great financial success with a franchise and they are more likely to survive than a non franchise store.
You will find that you have to conform to the rules, marketing and products of the franchise. Even if you have a great idea you won’t be able to implement it. Besides the cost of the franchise you will also be giving the parent company a percentage of the profits monthly. You may have a quota that you must meet, but that will depend on the franchise that you ultimately choose.
If you have an area of expertise you should be able to find a franchise. There is a wide range of food franchises to choose from so if you excel in a restaurant atmosphere you will have many choices. Accounting, child care, automotive, cleaning, coffee, computer, courier, and dating franchises are just some of the opportunities available in the UK.
Didn’t see anything that appeals to you in the aforementioned paragraph? Then try education, fitness, gardening, golf, health, beauty, home improvement, home services, internet, merchandising, mortgage, pest control, photography and print or sign franchises. There truly is a franchise for everyone. You don’t even have to have experience in the franchise field that appeals to you. Since they train you according to their own practices you don’t need any background in it.
Always get the advice of a professional before getting into any business, whether it is a franchise or other self employment opportunity.
Ecommerce versus Brick and Mortar Business
More and more businesses are becoming involved with ecommerce business. They can incorporate it into an existing store front or just run a business on the internet. It doesn’t matter which type of business you have. They both have some of the same elements, although you may find that you need less capital for an ecommerce business if you can pay for the merchandise only after it is sold. Financing will still be a part of either business though. Marketing and advertising are components that each business must have. Employees could be a vastly different aspect of an ecommerce business as opposed to a brick and mortar store.
If you are starting an online business you could handle the business without employees for a while. If you have a store front you will generally need at least one employee, although some stores are just run by the owner. Accounting practices can be handled by computer programmes in both businesses. There are software packages that can be incorporated in both instances. However, if you are using an ecommerce web host that has a dedicated managed server you will have the administration side of the business handled for you.
The ecommerce business will have a shopping cart, drop down menus, text, images and shipping and handling information. Most systems track the inventory, back orders and partial shipments. All you have to concentrate on is selecting merchandise, keeping your website current and shipping the product. Your business is open twenty four hours a day 365 days a year with or without you.
With a brick and mortar store front you must open the store at specific times, sell the merchandise, ship the merchandise, inventory the merchandise and change the displays frequently. There is more physical work to be done with a store front, but you are the one in charge of everything that relates to your business. When you have an ecommerce business you are at the mercy of the web host and its server. Should something happen to cause the system to go down your web site will shut down or crash. If it takes a while to find the cause you will be offline until it is fixed.
You will need to have a business plan of action whether you have an ecommerce business or store front. This can be used to design your ecommerce store and get financing just as it is for a store front business. The rate of a business to succeed or fail is not determined on which type of business you have, online or store front. They offer equal opportunities for both to happen.
If you have a store front business already you could enhance your bottom line with a new revenue stream by opening an ecommerce store. Since more and more people are using the internet to shop these days it would make sense to explore the possibilities. You can offer sales, discounts and coupons just as you would in a brick and mortar store.
Changing Vendors for Business Savings
The most successful businesses get that way from a combination of business services. They have great products, great services and they know how to save money without harming their businesses. One way that this can be done is to compare vendors pricing. If you have been using the same vendors for years it could be time to find out if they are still giving you the best prices. Chances are that they are, but if they don’t have any competition you may find out differently.
A vendor that has been servicing the same business for years most likely won’t want to lose that business customer. If you find a vendor that supplies the same products in the same manner for less it would be in your business’ best interest to start using them. Your old vendor may match what a new company will offer just to keep your business. Then you have saved money and kept the vendor that has provided you with good service for many years.
If you have a vendor that isn’t providing you with a quality product or has stopped carrying a particular manufacturer you may have to change vendors. Your business could rely heavily on that merchandise so it could suffer if it is no longer available to you. This can happen if the vendor loses the contract from the manufacturer. You shouldn’t wait for this to happen to you. A good business owner always knows where to get the best service and pricing from its vendors.
Because you are already in business finding another vendor shouldn’t present too many obstacles. There are trade marts to visit throughout the year that can open the door for a new vendor. You could also do some networking with other business people to get the names of new vendors.
Many new business owners have been in the work force prior to opening their own shops so this is another source for you to tap into for vendors. Since they would know you from your pervious job you can feel comfortable in working with them. They also know you and could be willing to work with you on a good price.
It is best to get at least three vendors to give you a price. If you have more than this it could get confusing, and only using two doesn’t give you a real chance to compare pricing. Look at the prices then get to work comparing the services to see if they are the same. You may find a vendor for a cheaper price that doesn’t deliver as often as you need them to. So while you would be saving money it might hurt your business if you run out of products before the next delivery.
Only you will be able to determine if you should change a vendor to save money. However, you need to check out the prices of vendors at least once a year so you can educate yourself on the changing prices especially if the economy changes.
Chancellor to Help Small Businesses
With numerous talks regarding the recession and economic crisis, a lot is being said about small businesses. Experts like Lord Digby Jones are trying to get small businesses into the global market. Darling, the chancellor has also made an effort to offer help and support for small businesses. Before getting into some advice to help out small businesses we will look at what the Chancellor is hoping to accomplish.
Alistair Darling announced in a pre- budget report he will be allotting £500 million for capital growth for small businesses. This money is to help finance small business operations and any extensions of small businesses that might be required. Since the government experts feel recovery is possible through small businesses it makes sense to offer a budget of loans to get small businesses to expand, especially into the global market.
The first thing the Chancellor announced was delaying the 1 percent increase on taxes. This increase is only delayed for those making less than £300,000. He is also going to extend the property rate relief and continue the “time to pay” scheme. This scheme allows the companies to spread their tax payments out over a longer period to help in other areas. The VAT tax will be increased to 17.5 percent over the 15 percent it is now. Small business individuals would like this tax to remain at 15 percent, but the other breaks will at least help.
The advice being offered here is to take advantage of the options the Chancellor is giving small businesses as well as to expand in the online international and local markets. For small businesses afraid to go into the international market, they need to take the jump even if it is just online. Offer products on the web that can be shipped to countries more interested in purchasing these objects. The US, China, and India are all looking to stimulate the economy. While the US would like this to be internal, you can still find customers looking for better value products that they cannot find in their own country.
Furthermore, on the tax front take a look at the “time to pay” scheme. You may discover you can save a great deal by paying out over time, rather than paying on the due date. This is an option you must opt- in for and be qualified to take advantage of. If you are then your small business may be able to expand. Increase inventory or advertising to place your company in a more stable position.
Not all of what the government is doing will help, but at least there is being support offered that you can consider. Even if these schemes do not work for you, it gets you thinking about what could. With the numerous tools, information, and more available to you it is really imperative to grab what you can. Think outside of the box a little bit regarding your small business and see where you can grow your revenues in the next year.
