By the myBusiness techblog team
Singapore’s GDP grew by 10 percent for the first quarter this year, a 1.6 percent year-on-year growth. Despite the growth, the Ministry of Trade and Industry (MTI) is keeping 2012 growth forecasts conservative at 1.0 to 3.0 percent, attributed to the unstable Eurozone, sluggish U.S recovery and the China slowdown.
Even as our little island grows domestically, our open-economy is always vulnerable to after-shocks from leading global economies. It is therefore important for local businesses, especially those just starting out, to cushion themselves to ride out whatever storm is possibly coming our way. Here are some basic tips on surviving economic downturns:
Keep a closer eye on your balance sheets:
Finances are the fuel to your company’s fire, especially during rougher times, when budgets are tight and business is slow. Having just started out, it is good practice to religiously monitor your company’s finances in the following ways:
- Cashflow – If you took a loan to start your business, ensure that you don’t go into the red, and think about refinancing if the terms are in your favour.
- Inventory / assets – You must be pragmatic about the amount of inventory that you keep in stock, particularly if your business is still budding. Being optimistic about demand for your business’ products is fine, but overestimate your demand, and you risk spending too much money on inventory that is just sitting around.
- Liquidity – Liquidity is a business’ ability to pay its short-term debt obligations. You need to ensure that you are able to pay your suppliers, taxes and employee wages. A good way to test your liquidity is by using a simple formula called a Quick Ratio. You can read more about how you can accomplish this here.There are many tools that can help you keep track of your company’s financial health, available both online and offline. Some examples are: PulseApp, Quickbooks and MYOB.
- Multiply staff capabilities:
You should be conservative when it comes to increasing headcounts during economic downturns. Aim to cross-train your employees, increasing their skillsets and capabilities. The skills and lessons your employees will gain during this period will ensure that your company is more than capable to handle the influx of business after riding out the storm.
Tweak your sales and marketing campaign:
During the downturn, you can think about adopting a fresh new outlook for marketing your products and services, such as:
- Making use digital media: If you have not used online marketing such as social media, blogs and email, this might be a good time to try it out. Social media is a prime example that promotes two-way communication between your business and your customers, and best of all; it’s very affordable, if not free.
- Build and optimise landing pages. A relevant landing page on your website is the single most effective way to turn a click into a prospect. Use Google AdWords, banners, sponsorships, or email campaigns, point your potential customers to pages that cater to their needs, to ensure higher customer conversions.
- Appeal to the nervous buyer. An economic downturn means more risk-adverse buyers, so you need to do more to reassure and build trust with your customers. As a starting business, it pays to include as many customer references, reviews, expert opinions, awards, and other forms of validation to appeal to your customers.
- Maximise the value of each lead: When you first identify a new prospect, you need to nurture these leads and develop relationships with them to maximise value from them. Implementing even a simple automated lead nurturing program can yield dramatic improvement in the conversion of qualified prospects into sales. Some good lead generation tips can be found in the following articles here (using LinkedIn), and here (social CRM).
An economic downturn can be discouraging and a huge source of frustration, especially if you’re just beginning your business journey. However, simple strategies such as the ones shared above can help ease the strain felt from an economic slowdown. Think positive, and the next time Singapore announces its growth forecast, you will find that you will be in the positive percentage of the statistics.