If you own a business, you are most likely feeling the pinch from the low liquidity in the economy. Debtors are slow to pay, consumers are not spending much and businesses have tightened up on expenditure. A business owner told me last week that while seeking a short-term loan to cover an urgent expense, he was quoted an interest rate of 35% per month. This shows that cash is really tight and expensive.While discussing this issue with some colleagues, an entrepreneur who is into retailing electrical and electronic goods in Harare, said he was planning on setting up a number of flea market stalls in the downtown areas. These, he said, are a good source of daily cash income, unlike his high-value retail shop, which sometimes runs for weeks without a single item sold. The problem facing many business owners is how to survive, or even thrive, in this environment of tight liquidity and low economic activity. Below are tips that I have gathered from entrepreneurs who are thriving in this environment.
Carefully manage your cashThe most important thing to do when cash is tight is to carefully manage that money which you are making. Spending is the easiest thing in the world to do. And most of us Zimbabweans are still to get rid of the “spend now” mentality which we developed in the hyperinflationary era. Many business owners struggle with debts because of spending beyond their means.You need to know how much cash you are making and align your expenditures to your income. If you don’t have a good record-keeping and accounting system, get up and get help in setting up one immediately. Information is power. A good financial system will inform you about the money you have, how much you can spend and alert you to a pending cash crisis in advance, thus avoiding shocks and surprises that can bring down your business.
Drive customers to your best selling productsMany businesses with multiple product lines have one that sells the most and gives the highest margins. One fast-food restaurant owner found out that although burgers and chips were his primary products, milkshakes and smoothies, which had higher margins than the meals, were a hit among the younger customers. So he started promoting these products; soon he had many customers coming just for “the dessert”.So analyse your sales trends, find the cash cow and push that to generate more cash.
Step up your marketingTo get new high-value customers and replace bad ones who demand too much of your time and want to pay very little or don’t pay on time, you need to market effectively and continuously. Marketing experts recommend engaging in a marketing activity, at least for one hour a day. There are many marketing actions you can carry out daily in order to get more and better customers. For ideas, you can download the booklet 50 Marketing Tips to Grow Your Business from my website http://smebusinesslink.com.
Reward your loyal customersIn this age of intense competition, your customers can easily be lured by your rivals. Get your customers to stick with you through these tough times by making them feel appreciated and valuable. Thank them for the business they give you. In this age of mobile phones and internet, it is easier to text or email a thank you. But the human touch would be even more appreciated; so send a handwritten thank you note and meet a customer for lunch or a drink. Genuine interest in a customer, without seeming to be trying to sell something, builds up relationships and customer loyalty.Please share your feedback on the challenges you are facing in business and how you are coping. Others will really appreciate your advice, just send me an email.The “Building your business into a valuable asset” seminar is now set for June 14. Speakers will help entrepreneurs build their enterprises into high growth, passive income generating assets rather than small businesses that they have to keep on working in forever.
Phillip Chichoni is a strategic business planning and financial management consultant who works with entrepreneurs and SMEs. He may be contacted on email [email protected]
