Dear Professor Bruce: I am the owner of a small travel planning service and summer is typically our busiest season, but with the increase in gas prices I am concerned about a decrease in business. Are other small business owners feeling the financial stress due to the economic climate and what are they doing about it to keep their business afloat?
An overwhelming majority of small businesses are feeling the strain of high gas prices. A recent survey found that a majority of small business owners said that if gas prices continue to rise, it will negatively impact their business.
Other factors like hiring, healthcare and taxes can make it difficult for small businesses to grow and expand during these tough economic times.
According to Pamela Springer, President & CEO of Manta, small businesses need to find new ways to drive sales and visibility. Small businesses need to get creative and focus on factors they can control, including:
- Make customer service your competitive edge – Some small business owners wonder if they should cut prices in lean times because customers are spending less or looking for deals. While it makes it difficult to compete when other businesses start slashing prices, don’t follow suit. Maintain your standards when it comes to high quality goods and services, and you’ll be able to charge more than your competitor.
- Reduce don’t cut – Rather than cutting personnel or services, offer reduced hours or limited service on “slower” days.
- Stay engaged with your community – Technology makes this easier and more cost-effective than ever. Get involved in online communities like and market what your business has to offer. Keeping everyone aware of your business and ensuring they hear about the service you provide is crucial to competing. While customers tend to buy and spend less now, it doesn’t mean they won’t remember you down the road when they have more to spend.
- Cash flow is critical – Focus on addressing overdue accounts firmly and in a timely fashion. By allowing accounts to remain overdue for a long time, you not only hurt your cash flow but it makes collecting harder. One tip is to send invoices more frequently than you have in the past. In addition, keep your inventory to a minimum and put the extra money aside to deal with cash-flow issues.
For further information, please visit www.manta.com.
E-mail questions to Bruce@Smallbusinessprofessor.com.