There is no doubt that the recession is hitting everyone and as a result there are not many businesses that have not been affected so far. This is the time for the “Survival of the Fittest” and if you want to survive the recession you need to take action.

Most businesses are stuck with the idea that the only way to increase profits is to increase prices and some think that the only other way is to increase their customer numbers. Both of these two actions will increase your business profits if they are done in the right way, however, they are by no means the only ways in which to grow your business. In fact I have listed that there are actually 7 Ways to Grow Your Business.

When I have spoken to most business owners they usually say “We can’t possibly increase our prices!” “We will lose our customers!”. So this is out of the question as a way to improve cash flow and business profitability. Also, in the present climate businesses might be finding it difficult to obtain banking finance or business loans to help with cash flow, not only because of the banks reluctance to lend, but also the rates are not that favourable right now, despite the lowest bank base rate the country has ever seen!

Some businesses are put into a ‘Catch-22′ situation whereby they feel they cannot increase their prices for fear of losing their clients and they lack the funds to pay for the advertising necessary to get more customers. In a recession though, it is even more important to continue to advertise your services and products. However, to increase your sales and your profits, advertising is not the only way to do this…more of that later. What all businesses must do and in particular in a recession, is to make sure the advertising they are doing is working.

Is your advertising working?

So what do I mean by this? What you can measure you can manage, so for example, if you take out an advert in your local news paper, you need to train your staff to ask when enquiries come in, where the enquirer got your company details from. If your new advert is not working (as confirmed from the data gathered from your incoming phone calls), this could mean one of two things; either that the advertising medium is the wrong one for your type of business; or that the advert copy needs to be changed. If however, you are not monitoring your telephone calls, how will you know whether your advertising spend is working or not?

Let me take this opportunity to tell you about three of the 7 Ways to Grow Your Business and to introduce you to Profit Increase Software. Profit Increase Software has been designed on the basis that there are seven ways to grow your business – these seven ways do include price increases and increased customers. However, what is worth noting here is that some of the 7 Ways to Grow Your Business do not have to cost the earth to do – three of these seven ways are:

1. Increase the number of customers of the type you want to have – This is quite an obvious statement and it is not rocket science. We all know that the more customers we serve the more money we make, subject to those customers being profitable customers. “Customers of the type you want to have” means that we don’t have to take on all customers, as no business wants to deal with troublesome people or people that cost more in time than in what they spend at your business.

Well let me explain to you that increasing client numbers is not always the only way to increase profitability and in a well thought out change you can actually achieve higher profits in your business with fewer clients.

2. Increase the prices charged on your products – not always a good thing to do and especially not good in the middle of a recession. We see so many companies and mostly retailers having to apply heavy discounts to their products just to stay alive. I am not therefore suggesting at this point that you should necessarily increase your prices, however, it is worth reading my article about how I tripled my prices and made my business more profitable.

3. Increase the number of times customers come back – A must for all businesses is to capitalise on your greatest asset – “Your existing customers!”. If you maintain a customer database you can use this database to your advantage, by writing to your customers on a regular basis to entice them back to buy from you. you can use this client contact to tell them about any special offers or new products or services you have. Most business owners forget about their existing customers and try to attract more and more new ones. Let me tell you it is many times more expensive to market to potential customers than it is to people that have already purchased from you and are already a customer, assuming that their experience with your business was a good one.

There are in fact, four other ways to grow your business and these can be discovered in the manual that accompanies the Profit Increase Software. This software is easy to use and it has been written using Microsoft Excel. You will therefore require Microsoft Excel to run the software, but you only need a very basic knowledge of Excel to work it.

This software has been designed so that you can quite quickly and easily discover what you can do to increase your business profits. As an example, this software was used in a meeting with a client who was adamant that he could not extract any more profits from his business, but after three hours of
pouring over figures, using this software and brain storming ideas – we added £50,000 to his bottom line! Well, the software helped us to target where the extra profit was, which led the client on to think about how to achieve that extra profit. To date this same client is still operating the idea and making the extra profit, so his pay-back is probably in the region of £350,000, as this exercise was done back in 2002!

What is even more impressive about this profit increase is that it cost the business absolutely nothing to implement the change (well it cost them my fees) and did not involve any costly advertising or marketing. The idea was sitting right under the client’s nose, it took using this software to find it and to force the thought process required to realise that there was a very simple and straight forward way to increase profits.

As another example, this system was once used for a bakery which was having cash flow problems and they had gone to the bank for a loan to alleviate the problem. However, before they went to the bank they approached their accountant – who had luckily just purchased this system. The company was asking for help in putting business plans and cash flow forecasts together. However, the accountant spent a few hours with the client pawing over figures from the business and utilising this program. Within a short space of time worked out that they could quite easily remove the cash flow problem without the aid of a bank loan.

When the accountant and their client first played with the figures on the worksheets, they were looking at additional profits of around £80,000. However, when they set to work, the actual profits in the first year were under this amount and somewhere around £50,000. But the company did not need a loan and the cash flow problem was solved and the client was more than happy with his accountant! The bank might not have been happy though!

So if you would like to buy the Profit Increase Software click this link and get to work on surviving the recession - their might well be some extra profits sitting right under your nose too. If however, you would like to purchase some of my time to help you in this process then email me at info@in-business.org. My consulting charges are not cheap, and start at £1,495, plus VAT for the day, but if you look at the results that can be achieved here, these soon pale into insignificance when those extra profits start to role in!

See also – Are there any businesses that are recession-proof?

and: What’s the price of a new customer?

and: Cash flow is king!

Mortgage providers have been dropping the cost of their home loans following the emergency cut in UK interest rates.

Halifax said it will be reducing its standard variable rate (SVR) from 7% to 6.5% from 1 November.

Lloyds TSB, which also lends under the Cheltenham & Gloucester brand, said it would cut its SVR by half a percentage point to 6.5% on the same date.

Woolwich will also cut its SVR, but experts say that house prices will fall despite the respite for homeowners.

First Direct, part of HSBC, Royal Bank of Scotland and NatWest all later announced they were going to cut their SVR by half a percentage point.

“All this decisive action augurs well for an improving market situation looking ahead, even though no one is pretending the tough times are over yet,” said Michael Coogan, director general of the Council of Mortgage Lenders (CML).

About 7% of mortgage holders have a SVR mortgage.

Cheaper deals

In a co-ordinated move with five other central banks, the Bank of England cut UK interest rates by half a percentage point to 4.5% on Wednesday.

This should help to start the process of rebuilding confidence but we suspect that more action will be necessary over the coming months

Simon Rubinsohn, RICS

The Bank rate cut will offer relief for a third of the 11.7 million UK households with a mortgage, as they are on existing tracker mortgages.

Louise Cuming, head of mortgages at moneysupermarket.com, estimated that a family with a typical £150,000 mortgage will be more than £40 a month better off, a saving of almost £500 a year.

But rates for savers are likely to be cut by some providers as a result of the latest news.

National Savings and Investments (NS&I) said it was cutting the returns paid on its ISA following the fall in the official cost of borrowing.

Government-backed NS&I said interest paid on its Direct ISA was being reduced from 5.3% to 4.8%.

‘Sobering’

Action taken on Wednesday, including the rescue plans for the banks, was likely to arrest the decline in the availability of mortgages, according to mortgage broker Ray Boulger.

The cut in the Bank rate came after falls in recent days in Libor – the rate at which banks lend to each other and key to mortgage costs.

But before the cut in interest rates, the cost of new deals was significantly higher than the last time the Bank rate was at 4.5% in July 2006, said David Black, principal consultant of banking for Defaqto.

“The average five-year base rate tracker mortgage is now 1.07% higher relative to the bank base rate than it was back in July 2006,” he said, describing the cost as “sobering”.

Adrian Coles, director general of the Building Societies Association, said that borrowers should not rest on their laurels.

“Although today’s news will clearly help those with repayment difficulties, borrowers who still think they might encounter problems repaying their mortgage should get in touch with their lender as soon as possible,” he said.

Unemployment threat

Mortgage payment problems are expected to become more commonplace if homeowners start to lose their jobs.

And the Royal Institution of Chartered Surveyors (RICS) has forecast that UK unemployment to rise above two million.

“The dramatic response from the authorities is an appropriate response to the chaos in financial markets over the past few weeks and the global economy’s slide into recession,” said RICS chief economist Simon Rubinsohn.

“This should help to start the process of rebuilding confidence but we suspect that more action will be necessary over the coming months.”

News reported by The BBC

As times are tough both for householders and businesses alike this is when it is important to make sure your business is operating to the optimum. Also, you may be having cash flow difficulties and be looking to raise some cash from the bank.

Now, I thought that it would be difficult to get a loan, however, I recently saw my bank manager (who is from Barclays as it happens) for one of my businesses and he said that they are encouraging lending to businesses. His comment was that Barclays had been a bit tight with their lending over recent years so they are looking to expand their lending book.

So if you are doing some cash flows and things are not looking so good and you have been listening to the news out there – things might not be as bad as they seem on the face of it. So speak with your bank manager and if he says no try Barclays or one of the other banks.

However, there is possibly a better way – if you take a look at “profit increase software” you might not actually need a loan afterall. This software, which uses Microsoft Excel to work will help you to identify ways to increase your profits and to make you focus on where your business can get increased income.

The most important thing to remember, and especially right now, is that your exisitng customers are your greatest asset, without which you would not have a business. Try thinking about what other products of services you could sell to your existing customers, instead of simply looking to attract new ones all of the time.

Look after what you have and not just look for new!