The last couple of months have been some of the hardest for the small business owners and entrepreneurs I work with. Most are in financial difficulty and struggling to stay afloat through these unprecedented times. I have seen over a dozen businesses close in Brixton alone due to significantly higher cost of operations as well as a drop in sales because most of us just have less to spend.
It really feels like it’s never been this hard.
Some days I can get close to tears or feel like I’m not far off having a complete breakdown. My friends and family do not hear from me for weeks, I avoid picking up my phone because it often feels like we are stuck between a rock and a hard place. Not a week goes by where I don’t consider quitting and doing something completely different.
But there are days like today, where I feel optimistic.
I feel grateful that at least I am doing what I love. I remind myself that this too shall pass, and I can and will overcome this difficult period. All I have to do is believe, and try to remember that at the end of the day, the stress, the challenges, ups and downs are what make this journey so interesting and so rewarding.
There’s no denying it’s hard, and it’s easy to get overwhelmed thinking about the challenges we’re currently facing. Instead of worrying about things that you can’t control – rising costs, the rate of inflation – focus instead on the things that you can affect.
The last few months, I’ve poured my energy into making some changes that are helping my business to navigate these tough times. I share them with you in the hope that they might work for you, too.
REDUCING MY COSTS BY ABOUT 30%
As a business owner without a CFO or a dedicated finance team, it can be easy to throw the budget out of the window, spending money on the fly to keep your dream alive. I’ve been doing this for years, but in these difficult times I’ve realised that this is not an option anymore.
It is absolutely vital to create a monthly budget and use it religiously. There are plenty of tools out there that can help you, from Xero to Quickbooks and many more. And if you use Monzo, it also has a budget tool built into the app.
Take the time to categorise all your spending so that you can see exactly where every penny is going. We always think that we can’t cut cost, but when you put all your finances into a budget it can offer you the insight you need to cut costs in the right places.
I have managed to reduce my operating costs by 30% just by having honest conversations with my suppliers. I’ve been very real about the fact that if I can’t cut my costs, my business will fold, which means I’ll no longer be able to use them. Most of them have been really understanding, and have worked with me to find a solution. Even my bookkeeper said she would work for free on one of my accounts for a few months. So check the budget, and ask the question. You have nothing to lose.
DEVELOPING NEW PRODUCTS AND SERVICES
When times are hard, customers will cut back on everything they don’t absolutely need. So it’s vital now to think about what your customer really values – and how you can package this into something they think is worth spending their money on. Now is actually the perfect time to innovate and test the market, because most of your competitors will be standing still, sticking to what they’re doing as they attempt to ride out the storm.
And how do you innovate? You think different or think bigger.
When you really look at what you’re doing, you might discover that you’re operating at the wrong scale, with the wrong strategy, or simply under the wrong assumptions of what your customers really want.
An old business guru once said to me that you can spend all of your time perfectly optimising the wrong thing. We can get stuck in the same old mindset and refuse to see what’s in front of us because we have become an “industry expert”.
Often a new perspective is needed to see the new picture. Things are changing so we must change our view. In order to do this we have to spend more time talking to those trying to buy from us. Call them and ask them broad questions. How did they hear about you? What did they google to find you? What is the problem they’re turning to you to solve?
Usually a follow-up call involves you pitching the product your customer is thinking about buying. But by not talking about your product and instead listening to what your customer needs, you could learn how you need to think differently. You may be presented with a new problem to solve. And that’s when it’s time to talk to experts, read blogs, scour books and watch YouTube videos to find out how other companies are disrupting your space. That’s how you’ll learn how to fit into the landscape with a brand new offering.
SERVING MORE AND DIFFERENT CUSTOMERS
This is something I’ve spent the past figuring out how to do with my own business.
At Impact Brixton, our services were entirely geared towards serving a small group of customers who paid a significant percentage of our revenue. As times have become more turbulent, I’ve pivoted our strategy to serving more customers who pay us a smaller amount.
Why? It’s better to spread the risk over many customers than risking your entire businesses on a small group of customers.
Do not put all your eggs in one basket. What new customers can you serve at a lower cost? Try to serve customers from different industries and locations so that you are not impacted if one industry experiences a slump.
And finally, always remind yourself that although financially this seems impossible, this project is your baby. Although it’s challenging, hopefully at its core you still love the creative work. The alternative might be something that pays you more money, but doesn’t bring you the same joy. The grass is not always greener on the other side. It’s time to dig deep and do the hard work.
You can do it.