Jared Reitzen is CEO of MobileStorm, a Los Angeles firm which provides digital marketing services. Jared posted this on his blog Tuesday and we thought our readers might find his tips useful.
As I sit here, the DOW dropped another 450 points even after the government approved the 87-billion-dollar bailout plan. Even before our market opened up, Japanís index was down 4.5% and Russiaís 15%. England has an 11-billion-dollar bailout plan for its banks, and France just admitted to an official recession.
We are witnessing economic crises of massive proportions. I donít claim to be a financial guru that understands the market complexities. Hell, I donít even remember the 1987 housing market crash, but I do know itís tough times out there and even though my industry, I believe, is somewhat recession proof, I am for the first time starting to see some of the effects.
As an entrepreneur, you need to stay in the game, so what should you do? The first thing to remember is that it is important not to panic. That is what people did in 1929, and we all know where that lead us. Of course, at the same time, you cannot completely ignore what is happening. You need a game plan and fast.
Here are six tips that can help your business through these challenging times:
1. Decrease Vendor Expenses: You would be surprised–a lot of vendors right now would be willing to lower your bill rather than lose your business completely. Remember how far life credit goes; read my post about that here. Ask them to give you a ďgood faithĒ discount, with the understanding that at some point your service cost will increase again. At the very least, some vendors might even be willing to defer payments. Getting into debt isnít great, but it sure beats going out of business. You have to stay in the game.
2. Thoroughly Review Your Staff: This is the hardest decision to make, but something that needs to be breached. Now is the time to make sure everyone on your team is earning his or her keep. I hate to say it, but nothing can decrease expenses faster than cutting salaries. As an employer, letting people go because of the economic situation is agonizing. An advisor once told me to rate employees as A, B, and C. The A employees you cannot afford to lose and the B employees you could afford to lose, but only if it was a matter of going out of business or staying alive. The C employees might contribute, but they are the types of employees that would not be hard to replace when you can afford to hire again. Also, Starbucks is doing something interesting these days. They are decreasing staff, but increasing the number of hours each staff member works. Currently, the employee who is working 21 hours is getting the same benefits as the person working 35 hours. They are going to save millions alone on payroll taxes, workers compensation, and benefits, plus they didnít have to close as many stores as they initially forecasted.
3. Merge With a Competitor: We have all heard of the expression, ďtogether we are stronger.Ē Some of your competitors might be in a very different situation today than they were just a month ago. It might make a lot of sense to share revenue and expenses. It doesnít hurt to reach out; you may be surprised. (Thanks to Ric for this advice.)
4. Look for Deals: Some industries are hit harder than others. Business needs to continue to do business so you might be surprised at what excellent deals are out there. Just like the housing market, if I only had more cash there are such amazing houses on the market that are hundreds of thousands of dollars less than just six months ago. However, you donít have to be cash rich to get deals–you just need to be smart about how you go about it. There is a website that we often like to advertise on which has had a number of their regular advertisers disappear. I saw the perfect opportunity to come in with a lower bid and, not surprisingly, it was accepted. Website traffic is not down, but ad spending is, so you can still reach your intended audience without paying a premium. When everyone is making money, why offer deals?
5. Cut Down on Travel: This always happens to be an expensive category in which businesses tend to go over budget. With Skype video conferencing, IM, and email, you really donít always have to travel to get the deal done. Think twice before you go anywhere and ask yourself if you absolutely need to be there. There have been a few tradeshows that we have decided to not ship our booth and exhibit to, but rather obtain a speaking gig to get some presence, and put a few reps on the floor to walk around and hand out businesses cards. It costs a lot less money to send a few employees than it does to exhibit and ship a thousand-pound booth. Also, if you have employees that fly into your headquarters, look into cutting their trips to two days and one night. Have them fly in early the first day and take the red eye the second day so you can get as much time in with them as possible.
6. Pay Attention to Your Credit Line: The banks are waiting for the first chance they get to close down your credit line. Check your D&B score and make sure you donít have any odd late payments. You would be surprised at what occurs. I have seen a magazine company send a subscription to a business and somehow renew it without the company knowing. The company never paid and the magazine company reported it to D&B. This is all the bank needs to legally shut down your line. Also, put your line repayment on auto pay. If you go 30 days late just once, they will shut down your line faster than you can say, ďPlease donít shut down my line,Ē Having a good rapport with the bank means nothing right now. Cash flow is king, and having a line can do wonders. Donít let it slip away!
I would love to hear what your company is doing to prepare or get through these tough times.
Jared Reitzin (www.jaredreitzin.com) is the chief executive officer and founder of Los Angeles-based mobileStorm, which has pioneered the concept of digital marketing allowing clients such as MGM Grand, Carlís Jr., Qantas Airlines and Ampíd Mobile to send multiple message type from a single system. Prior to that, he was CEO of Katalyst Music Group LLC, an independent record label and new media company where he directed the growth of the company as a promoter for musical acts, and marketing projects for the entertainment community. Mr. Reitzin began his career as a product manager for Interactive Light Ė a leading developer and provider of networked sports simulators for such companies as IBM, Sega, Microsoft, Sony and Intel.
Mr. Reitzin sits on the boards of RACER Mobile Inc., a mobile marketing start-up as well as Wantickets, an online ticketing company. He regularly speaks on panels and at conferences about digital marketing and new media technologies.