Everyone is talking about the interest rate hike that is to be announced by our dear Governor, Tito Mboweni at this Thursday’s MPC meeting. The general consensus is that interest rates will go up, but by how much is the million Dollar (oops Rand) question.
Coming from a small business background myself, I only have one question to ask of you: What part of your business is recession proof?
In an economic downturn, smart, proactive companies make every effort to increase their market share. There is no doubt that we are currently experiencing an economic downturn. Just think about how many of your friends or family in small businesses or even your competitors have thought about retrenching or have retrenched already. How many of you have seen that your sales figures have already dropped dramatically?
Unfortunately when interest rates are on the increase there seems to be a knee-jerk reaction in the response of small businesses - they tend to run for cover. Please don't get me wrong - I’m not saying that you should not be aware and take full cognisance of what is happening around you but, at the same time you should also ensure that the parts of your business that can be recession proof are actually recession proof.
Over the past 3 weeks I have been chatting to some of my clients and I have asked them what they are doing to be more recession proof. Most have come up with the same or similar answers below (in no particular order):
- Reduce their advertising spend in newspapers and on radio;
- Reduce the variable & fixed costs in their business;
- Increase their turnover (most say this is difficult but are saying they will offer freebies or greater discounts);
- Invest in cheaper less expensive forms of marketing such as newsletters and email marketing;
- Re-do or upgrade their websites and divert prospective clients so as to save on the expense of printing new brochures / pamphlets; and
- A few clients have even considered entering into joint ventures with others in allied industries so as to share or even reduce costs. I have been told that this has not been done much in South Africa yet but that it has been used successfully in the USA.
A few of my current and potential clients really blew me away with some of their outrageous ideas. My only wish is that they work for them.
Whilst I cannot speak for or on behalf of others and I am fully aware and respect that everyone has different ideas, needs and requirements for their businesses, I do know what is working for my business. I try to direct and refer everyone to my newsletter and my website - it's the best and most efficient ROI that I have found.
The most important thing is to stay focused. Nothing will be more damaging to your business than losing focus.
