In recent months, businesses have realized the importance of building up their cash reserves so they’re ready to weather unexpected events. While it’s wise to be budget-conscious, it can be hard to keep up with the competition when you’re watching your spending—especially if you’re the owner of a small business that already faces stiff competition from bigger rivals.
Fortunately, with careful planning, small-business owners can both save for a rainy day and keep sales coming in. Here, 14 members of Forbes Finance Council share some smart ways for small businesses to maintain a competitive edge without breaking the bank.
1. Become Laser-Focused
One way for a small business to become more competitive is to become laser-focused. When trying to scale, the vast majority of businesses try adding new items or services, but that eventually becomes a cost burden in scale. – Robert Patin, Patin & Associates
2. Get Clear On Your Everyday Costs
Business owners need an in-depth understanding of their financials—they need to know the exact dollar amount it costs them to “turn the lights on every day.” Knowing what their costs are every day allows business owners to make prudent decisions when it comes to making investments in other areas of their businesses, such as hiring, marketing and sales. – Matthew Meehan, Shield Advisory Group
3. Track Comprehensive Customer KPIs
Customer key performance indicators are a consistent, excellent source of insight to inform a company’s competitive edge. They can go far beyond knowing what your customer wants and expects—really good customer KPIs can shed a light on what your competitors are prioritizing (successfully or otherwise) and can help you to identify emerging trends that inform business strategy. – Omar Choucair, Trintech
4. Review Your Internal Processes
An often-overlooked way to retain cash reserves is to review your internal processes. A complete and thorough review of your processes provides streamlining opportunities. We recently did this in our finance department—we identified automation opportunities that resulted in a savings of 12 working days per month. This allows our team to focus on analytics instead of data entry, and we didn’t need to add a new person. – Cynthia Hemingway, Fourlane, Inc.
5. Sell And Then Lease Costly Assets
If money’s tight, it can be beneficial from a strategic perspective to sell some of your more expensive assets—such as vehicles, storage space and office space—and then lease them at a discount. This way, you’ll save a lot of money up front without sacrificing your competitive advantage. Plus, leasing provides much more flexibility in case you need to move locations. – Tyler Gallagher, Regal Assets
6. Study Your Market And Competitors To Discover Your Edge
Be keenly aware of your competitors and the markets in which you compete. Study why your customers like your products or services and why your close competitors are successful. Make sure you can communicate your value to customers and what differentiates your company from your competition. A low-cost way to get a competitive edge is to gain a reputation for a high level of customer-centric support. – Dave Sackett, Visibility Corporation
7. Budget Marketing As A Ratio Of Revenue
Sales and marketing are critical to keeping a competitive edge. Each industry has its own measures of successful marketing and its own ways to raise company and brand awareness. Budgeting its marketing expenditure as a ratio of revenue can result in a small business maintaining its competitive edge—manage your spend on a monthly, quarterly and annual basis based on distinct parameters. – Peter Goldstein, Exchange Listing LLC
8. Offer Discounts To Early Payers
If you want a way to hold additional cash but keep a competitive edge, you could always offer a discount to clients who pay early. This is very common with companies that have longer-cycle pay terms. Giving a discount for being paid in advance or earlier than normal can help you build a cash reserve, especially if debt isn’t a viable option. – Aaron Spool, Eventus Advisory Group, LLC
9. Explore Your Credit Options
Provide yourself with other funding options through varying lines of credit and credit cards as a backup. Use them only as needed, and give yourself some breathing room in case of an emergency. – Kelly Shores, GCubed, Inc.
10. Establish Financial Relationships When Times Are Good
You want to establish credit, credit lines and financing relationships when times are good. Utilizing financing in combination with good cash reserves is a great way to leverage your business to keep up with growth. Too many business owners wait until a downturn to apply for financing, which is the worst time. Secure those relationships when times are good. – Joe Camberato, National Business Capital
11. Rethink Your Marketing Spend
It’s time to rethink your marketing budget and how you are spending your marketing and growth dollars. Traditional events, trade shows and physical marketing opportunities have changed or have been canceled altogether. The question to ask yourself is, “Where are my customers now, and how do I reach them today?” It’s time to up your digital game and get creative in your outreach. Have fun and try new things. – Joseph Orseno, Tiltify
12. Develop A Comprehensive Marketing Plan
If you have a comprehensive marketing plan, you can become more efficient with your dollars, enabling you to surpass your competition. However, this means you must know the perfect persona of those you’re marketing to, have solidified KPIs to track your results and have a budget with expected profit margins. By having a plan in place, you can create a greater impact with less money. – Justin Goodbread, Heritage Investors
13. Perfect Your Customer Service
Improvements to service levels, client experience and response times are all virtually free. A client or customer does business with a company because they want a certain product or service. If the business makes the service unbelievably good and really impresses the client with the quality and speed of delivery, it will always make the company stand out above its competition and, inevitably, raise revenue too. – Jerry Fetta, Wealth DynamX
14. Leverage Social Media
Organic social posting on sites such as Facebook, LinkedIn and Twitter is completely free. Use extra time for organic posts and growth in these areas. – Jackie Meyer, Meyer Tax, The Concierge CPA Coach