Over the last few articles, we have been going through nine ways to V-curve your business. How can we bounce back during this COVID recession?
The first three are to revisit your vision, a lead generation strategy, and financial rigor.
The next three are a weekly cash flow review, hiring and delegating, and a sales and marketing focus.
See below for the final three:
7. Recurring Revenue
In the book, The Automatic Customer, the author discusses the importance of building a recurring revenue stream. If you bill your customers regularly, it will increase the value of your business. The more services and value you can provide will make it harder for them to switch away from you. Many different types of industries can use this model from software, professional services, consumables, maintenance, and education. A recurring model business will allow you to show your current customers new products and services, which is a more affordable way to increase revenue.
Acquiring and retaining customers can be very expensive. Companies spend many hours and marketing dollars to keep the business going and growing. If you can add a recurring revenue element to your business, it will ultimately decrease these acquisition costs and consistently give you higher operating margins.
8. Prune if you haven’t
In nature, it is helpful to prune your bushes and trees so they will come back stronger. In your business, it is important to prune business expenses that are not necessary. Review your expenses regularly compared to budget and last year to ensure you are staying on track. Look at the percentage of expenses compared to revenue. Are the expenses providing value? Costs such as insurance, software, credit card fees, travel expenses, and recurring expenses can start to creep up. It never hurts to assess the value of your employees and contractors. In any professional services business, you rely on people to provide the services. It is important to understand client or job profitability so that you not only price future jobs correctly, but you look for ways to build efficiency. Sometimes the pruning needs to be specific tasks or the time spent in areas that are no longer relevant or important.
9. Mindset Matters. Don’t have a COVID Crutch
I must admit that it can get overwhelming to figure out how to grow when there are so many challenges. It can seem like everything just takes longer and is harder than it used to be. I don’t blame business owners for getting frustrated. Don’t get into the trap of blaming everything on COVID. We have to learn to pivot and try new things. We have to invest in our business within reason so we can grow and look for opportunities. Have an empowering mindset that asks questions like the following:
What does this make possible?
How can I add more value in less time?
What is one thing I can do to make the most significant impact today or this week?
Bonus – Get as much cash as you can.
I decided to provide one more bonus idea to be ready to bounce back quickly. The best thing to do right now is to have cash. The more cash you have, the longer you can last, and the more you can invest in people and marketing to grow and even take on market share. I would never suggest getting cash without proper financial controls and reporting. Right now, in the US, small businesses can get the Paycheck Protection Program grant, which is about 2.5 months of the last 12 months of payroll. You also can get an Economic Injury Disaster Loan (EIDL), which is capped at $150,000 at the time of this article. Businesses can also work with the bank to get a Line of Credit. Right now, you need cash, and you need to spend wisely. When the economy picks up, or you find a niche or service that is selling well, you want to have the firepower to grow to the next level.
The last few months have been quite challenging, but I know small businesses can survive. Some industries were hit harder, so I can’t say following all these steps are foolproof. If you can do all that was mentioned in these nine (actually 10 steps), you increase your odds of survival and growth significantly. I will take those odds instead of just waiting and hoping.