Staying lean, especially during hard economic times, is important for any business. To help you keep your small business on track, try these tips from American Express:
1. Always Remember the 80/20 Rule
The 80/20 rule refers to when 80 percent of your marketing efforts are spent on customers or clients yielding 20 percent of annual revenue. Focusing on less time-consuming and more productive customers or clients will increase long-term growth potential, rather than those customers who are not producing desired results.
2. Do More With Less
The most complex or most expensive marketing strategies are not necessarily the most effective. A simplification of marketing strategies can produce better results for not only well established businesses, but also for emerging companies. How is this done? Think about cutting back on trade promotions, easing up on coupons, trimming new product launches and using traditional face-to-face meetings for maintaining customer and client relationships.
3. Become a Bootstrapper
Bootstrapping is the art of learning to do more with less. Many small business owners find that raising working capital can be difficult, so bootstrapping becomes a substitute for your capital-formation strategies. Entrepreneurs who understand that resources are scarce and cash should be cherished are usually operating from a bootstrap management mindset.
Today, many small businesses have learned to survive on a shortened budget by being creative and aggressive, while also monitoring their cash flow. Many companies die because they try to grow too big, too fast. Instead of focusing on how and where money can be raised, a bootstrapper will ask, according to American Express, “What would we actually do with the money, and is there an alternative to obtaining these resources?”
4. Be Smart About Your Daily Money Decisions
Here’s a list of best practices used by small-business owners who are committed to cutting costs, according to American Express:
- Learn to do more with less.
- Buy (or lease) what you need for today only.
- Find alternative ways to access what you would otherwise need to buy.
- Practice reducing your personal cost of living to help take the pressure off of salary and overhead costs.
- Understand and be able to recognize the difference between wants and needs.
- Focus on income-producing or market-expanding expenses.
- Remember, where there’s a will there’s a way. Your resourcefulness, creativity and determination are your only limits.
To read more great tips, visit the American Express blog.