Grading your customers is one way to improve your business.
Economists say the Great Recession – the longest and deepest since World War II – ended 18 months ago and that the U.S. economy is, in fact, growing again. But growth is relative. Even the rosiest economic forecasts for 2011 come in well under 3 percent growth. Unemployment is still high, and consumer spending is still sluggish.
"However optimistic you may be about your business, you need to let the overall economy temper your expectations," says Scott Shane, an economics professor at Case Western Reserve University and author of "The Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors and Policy Makers Live By." "You need to assume that the recovery is going to be tepid and plan accordingly."
That doesn't mean sit and wait for things to improve. Rather, retool for the economy that exists today, and will be lingering for many tomorrows. Here are 10 places to start.
1. Overhaul your business plan. In a climate as unforgiving as this, stasis is death. So dust off your business plan and scrub it of any assumptions you may have made three years ago. Roll up your sleeves, do the math and zero in on the best strategy to grab market share and win new business. Then start treating your business plan as if it's a work in progress. Create hard benchmarks and measure results often. That's how you improve performance, says Tim Berry, president and founder of Palo Alto Software Inc., developer of Business Plan Pro, a small-business software tool that creates plans and financial projections. "Planning means tracking how assumptions change and reviewing progress and plan versus actual results," he says. Rethinking your business plan also can help you spot new opportunities and point your company in the right direction. For step-by-step advice, check out the U.S. Small Business Administration's guide.
2. Double down on what works. Whatever paid off in 2010 is worth investing more time, money and resources next year. Ask yourself: What was your top-selling product or service, and how can you get your customers to buy more? What money-saving strategies went straight to the bottom line? What incentives or promotions got your customers' attention? Elyissia Wassung, CEO of 2 Chicks With Chocolate, a South River, N.J., chocolate maker, is doubling down on in-store demos, which have boosted sales. When she learned a chain retailer was planning to order exclusively from 2 Chicks for Christmas, she says, "We decided to double our demos with them this holiday season and blitz all of their stores on the same day. We are also giving away prizes to the top performing stores."
3. Experiment. The best time to try something new? When the old isn't working. It may feel safer to stay in your comfort zone, but sticking with the same old product, service or marketing strategy might actually be riskier.
The best new ideas often come from conversations with your customers, suppliers and, most of all, employees. "The unexpected can often be the obvious," says New York business and personal coach Carol Vinelli. Talk less, listen more and really tune in to ideas that could lead to breakthrough products and services. Need some inspiration? Check out Seth Godin's bestselling book Purple Cow about how to make your company remarkable.
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