where did they all go?

in the current economic climate, i have a lot of clients asking me where all their customers have gone. it's a good question.

i have a better one.

where did all of your profit go?

for a lot of small business owners, the customers are still there. they always have been, and they aren't really going anywhere. but what has changed are our profit margins. this is what is causing the difference in success of many business types, and one of the main reasons a lot of us are feeling the crunch of the economic crisis.

as i look at my clients' and my own past economic year, i see two main thrusts that are causing our pain and loss of profit. late payments and higher costs.

late payments, while they seem easy to fix, are a bit part of the problem. they result from the banking crisis and banks being less willing to extend the lines of credit so many of us need to order inventory, deal with emergencies and pay our bills on time. this causes a domino effect from business to business resulting in some business owners being more than 30 or 60 days out on bills. for those on the receiving end, this can be disastrous.

higher costs are also a result of the banking crisis but also come from increases in oil and gas prices. shipping costs, food prices and other general rises in operational costs have been quite dramatic over the last year. even if you still have the same customer base and pricing that you had a year ago, odds are you aren't seeing the profit you once did.

so how do we solve this?

well, there is no one, simple solution.... and if there is i will leave it to the economists to instruct us on. my expertise is in marketing and the small business, so here's what i can offer:

- be consciously aware of your costs: know what inventory, shipping, staffing and other costs to run your business are. be smart but frugal. don't cut off your nose to spite your face (in other words, don't stop doing anything that costs money just to save it, especially marketing), but be aware and try to think about where your business can and should afford to put spending.

- be responsible about spending: don't spend what you don't have or can't secure a line of credit to afford. in the long run, this will hurt your business more than it will help it.

- don't neglect your bills: if you can't pay up, tell your suppliers. we're all in this crunch together and more than likely they will understand. they will certainly be more understanding if you communicate directly to them about it.

- keep marketing, responsibly: you need a constant influx of customers to ensure that your bottom line doesn't drop further. this means you MUST continue to market your business in the most successful manners you can. look at your history and use strategies that have performed well in the past. in addition, set aside test budgets to try new ideas responsibly, so that you can tap into new markets and generate new leads.

the companies that weather this economic storm and come out well will be the ones that continue to aggressively pursue business opportunities through strategically sound marketing initiatives. they are the ones that don't give up.

be one of those.