Heading into year-end and the busy holiday shopping season, how are small business owners feeling? Very optimistic, according to the Q3 LegalZoom/Kauffman Startup Confidence Index. A whopping 86 percent of entrepreneurs polled are “very confident” their companies will be more profitable next year than this year—up slightly from last quarter, and the highest level since the survey began in the first quarter of 2012.
Younger entrepreneurs are even more optimistic than the average, with 95 percent of 18-30-year-olds and 94 percent of 31-40-year-olds feeling very confident their companies will be more profitable next year.
Apparently, business owners feel more confident about their own prospects than they do about the economy as a whole. Just 70 percent believe the economy will improve or stay the same in the next 12 months, down by 4 percent from the second-quarter survey, while nearly one-third think it will deteriorate or significantly deteriorate. In addition, only 42 percent expect consumer demand to increase moderately to significantly in the next 12 months, down 7 percent from the previous survey. Thirty-six percent think it will stay the same.
When the economy is uncertain and consumer demand more so, what are some tactics you can use to feel as confident of success as the business owners in this survey? Here are 4 smart moves to make.
- Market more. Marketing is sometimes seen as an expense, but in tough times it’s actually a wise investment. Maintaining your marketing and advertising efforts instead of cutting back keeps you top-of-mind when your prospects do decide to spend. In contrast, cutting back can actually lead customers to think your business is struggling financially, making them less willing to do business with you.
- Reach out to existing customers. It’s easier (and less expensive) to sell more to an existing customer than to attract a new one, so don’t forget to follow up with your current clients on a regular basis. Use holidays, anniversaries and other events as an occasion to touch base and send them special offers or discounts to encourage them to buy again. Develop packages of products or services so you can upsell customers who buy one item by suggesting related items or services that complement what they’ve bought.
- Cut costs. Don’t get complacent about your cash flow. Keep a close eye on ongoing expenses such as utilities, insurance and professional memberships. Regularly audit these costs to see where you can cut back and make sure you aren’t wasting money. Little things like subscriptions and office supplies can add up fast. In particular, watch for expenses that are billed to your credit card automatically—it’s easy to forget about these until they hit you all at once.
- Run lean and mean. Most business owners in the LegalZoom/Kauffman survey aren’t planning to hire in the next 12 months. It’s possible to grow with a lean staff if you know how to outsource wisely. Using temporary workers, independent contractors or freelancers to handle overflow work when you’re busy enables you to avoid taking on additional overhead and eliminates the hassles of employee-related taxes, insurance and benefits.
Another smart move would be to consult with a SCORE mentor. You can get the help you need, and it won’t cost you a dime.
In the spirit of the holidays, many businesses want to show appreciation for their customers via special communications or gifts. But often these actions either get lost in the holiday hustle bustle, or misinterpreted as marketing gimmicks. Here are a few tips to make your efforts truly express your thanks:
- Look for ways to get out of the noise and mail piles. From now until year-end, marketers are filling inboxes and mailboxes with advertisements and offers. Consider sending your appreciation notes at a less noisy time, such as January or Spring.
- Be as personal as possible. A hand written note, a personal call from a staff member or even a heart-felt email customized to that customer all make the difference. Even companies like Zappos with many, many customers find ways to connect on a very personal level. Empower your customer-facing staff to be able to spend the time, care and personalization needed to truly “serve” customers. (My favorite local Italian restaurant always brings my teens and me our favorite beverages, even before our order. That care and personal touch keep me coming back more than any coupon or free dessert offer.)
- Be unexpected and surprising. Research on the psychology of rewards shows that reward when expected and stated up front (like “refer a friend and get a discount”) are processed as “payments” or expected “tit for tat”. Rewards given at unexpected times and not tied to an action (like a purchase) are instead processed with delight and surprise and feel more like a true gift.
- Tie gifts to your value. Rather than a straight discount or generic holiday basket, think of ways your gift will serve as a reminder of the value of your relationship. One firm I know delivers a beautiful plant to their customers with the note “Here is to our continued growth in the New Year.” Other companies give contributions to related or local non-profits in the name of their clients.
And here is a great free eBook from HelpScout: 25 Ways to Thank Your Customers.