As many of my clients begin to feel the pinch of reduced or flat revenues and higher costs, they are beginning to look for ways to improve their bottom lines.  Understandably, many are taking a hard look at their marketing expenditures, specifically the dollars spent on advertising. 

While I whole-heartedly agree that our marketing expenses should be reviewed regularly and assessed for effectiveness, I place a word of caution out that we should not haphazardly reduce and eliminate marketing efforts and spending while chasing profitability.  Assuming we are in business for the long haul, this is exactly the time to continue with marketing plans and advertising programs that keep us in the forefront of our customers' minds.

So, what can we do to ensure that our marketing dollars are being spent wisely during the crunch times?  Well, perhaps this is not the best time to reconfigure your entire brand, requiring new marketing collateral and programs to develop an entirely new brand.  That might be money better spent at another time.  We should, however, keep spending in the more tactical areas of our marketing plans such as targeted direct mail campaigns, coupons, use of e-newsletters, staying in touch with current and previous customers and referral networking.  Look for niches in your product line, services or customer base that can grow during these tighter times and go after those specifically.  And, finally, use the Internet.  The Internet is a great, cost-effective way to get clients to your door via your website.  Use Google ads and SEO techniques to get your name in front of potential customers.  Make sure your landing page has a call to action and effectively communicates your message.

There's lots we can do to ensure that we are effectively marketing and advertising during these difficult times.  Don't be afraid to try something new.  This is your opportunity to gain market share as your competitors act from fear and pull their advertising and reduce their marketing efforts.  Your Thoughts? 

Many of my small business owner clients are finding their accounts receivables to be increasing this year.  Their customers and clients are experiencing some cash flow crunches and delaying their payments, in turn causing some cash flow crunches for my clients.

While most small business owners are not surprised by their increasing receivables balances, I am concerned that many of them are not reacting quickly enough to the situation.  In addition, to communicating with current clients with overdue invoices, it's important for business owners to be sure that policies, procedures, systems and measurements are in place to ensure that future credit sales are more profitable. 

Policies and procedures -  Prior to even making the sale, we must be sure to have credit policies in place - who do we extend credit to and how do we assess credit worthiness.  Also, we must have established payment terms in place.

A System to manage receivables - Once, credit has been extended, the business needs a system to track outstanding receivables with established steps to handle overdue accounts based upon age.

Measurement tools -  Take the guess work out of knowing how well you are doing with your receivables.  Use financial ratios and statistics to track your progress versus historical performance.  One simple financial ratio is the Accounts Receivable Collection Rate (in days) which is the accounts receivable balance times 365 divided by total credit sales.  Many other statistics are available as well, some being industry related.  Be sure to view your receivables in terms of your credit sales revenue since a higher receivables balance in and of itself may not be all bad - if your sales are increasing as well!

Your accounts receivables are costing you real money.  That's uncollected cash that could be used to grow your business, pay off debt or make payroll.  It's an opportunity cost that we want to minimize in order to maximize our cash flow.  Your Thoughts?  

From talking with many of my clients, I am happy to report that they tend to think that the difficulties in the economy are overly exaggerated.  Many of the business owners that I know are continuing to grow their top line or, at worst, holding steady.  However, they are getting squeezed on the expense side with the rising cost of raw materials and utilities.

One way to offset this squeeze on margins is to increase prices.  But before you run off and increase your prices to offset your increased costs, I suggest you pause and reflect strategically:

1)  First, how do you wish to position your products or services?  Are you competing in the lower end of the market where volume is king or at the higher end where service is.  Your pricing should reflect where you wish to participate in the market.

2)  Were your prices positioned correctly before your costs began to skyrocket?  Do you have some backpedaling just to get where you should have been all along?

3)  What role does branding and marketing play in your strategy?  Maintaining marketing and advertising during turbulent times is often vital to success.

4)  And, finally, consider the entire picture.  Look at the margins both gross margins and profit margins on all of your products and services.  Don't just arbitrarily raise prices to cover costs.  Think about repositioning some products, adding services, increasing advertising, changing marketing tactics and, then finally, how does all of that affect the pricing of each product and service individually and as a whole?

As a final note, think about the long term - where do you want your business to be positioned once we are past this blip in the economy?  I'll bet you want to be financial sound and well positioned with your customers.  Keep that long term perspective in mind and think strategically about pricing.  Your Thoughts?