“Hope for the best and be prepared for the worst.” Volatility and economic turbulence are never comfortable conditions for any business. Small and medium-sized operations are especially vulnerable since rising costs, tariffs, and fears of recession can be harmful on multiple levels. The same is true for consumers. When consumers feel pessimistic about the economy, they cut back on spending and ramp up their savings. Purchasing non-essential goods and completing large projects are typically postponed. The situation worsens for retailers without a plan to strengthen the company and support ongoing growth. Being proactive recognizes that the economic landscape will continually shift, and leaders must do everything possible to manage any adverse effects.
Prioritize the Most Important Problems
When businesses feel pressured, they try to tackle fifty things at once. Although everyone is busy, nothing of substance gets accomplished. It’s critical to focus on those issues that can unhinge the business if they are not resolved. To be successful, hardware stores need finances, the ability to buy goods, an online or physical space, and customers. In challenging times, disruptions occur in one or more of these areas. Owners need to identify the specific pain points to keep the business healthy and operating as a unit that can achieve maximum growth.
Assess Your Cash Flow
While understanding where the businesses’ money is going is always a sound business practice, monitoring your cash flow when times are unpredictable is even more critical. The ability to quickly assess potential problems and make the necessary adjustments enables the organization to remain financially resilient. Managing your cash flow requires:
- Track unpaid invoices and monitor when payment is due
- Stock sufficient inventory to meet customer demand
- Pursue options for debt reduction or restructuring
- Assess and adjust spending patterns when needed
Review Your Supplier Relationships
Store owners must ensure a continuous flow of goods and services to their customers. If tariffs are imposed on imported goods, the costs of raw materials will likely increase even more. Suppliers are evaluating how to absorb higher costs without eroding profitability. Large Manufacturers may be better positioned to weather an economic storm than new suppliers, who often have fewer financial resources. Retailers should assess whether their current suppliers are stable or if they should identify other suppliers to maintain inventory levels.
Wholesalers also play an essential role in keeping the supply chain operating smoothly. These organizations are also figuring out how to adapt to current circumstances. The health of the entire supply chain depends on the ability of each tier to develop mitigation strategies that move products to consumers despite challenging circumstances.
Actively Engage with Customers
Touching base with your loyal customers regularly reminds them that you are ready and willing to provide excellent service and quality products. Building loyalty requires time, and when customers monitor their spending closely, they become more selective about where they shop. It’s a good idea to remind your best customers of your existing relationship since competitors try to get their attention with enticing offers. Staff should be committed to offering exceptional service and demonstrating an ability to discuss the features and benefits of the products being sold.
Look for opportunities to get feedback from shoppers to identify areas for improvement or missed opportunities in your product assortments. Customers who feel good about shopping in a business are the store’s best advocates and will encourage more shoppers to visit. This action helps stabilize revenue and stimulate growth.
Outthink your competitors
Competition becomes more intense when consumers prefer to be cautious about spending money. Now is the time to evaluate your competitors’ weaknesses and leverage your strengths. Access all available data and utilize technology to give you a clear picture of competitors in your local marketplace. These steps will help you develop an effective plan of action to market your business. It’s critical to be highly visible and maintain a consistent presence to sustain awareness in the community. Use cost-effective channels and social media to personalize your message and establish a distinct identity among consumers.
Since it has limited control over these situations, every operation will take a different approach to resolving issues tied to the economy and tariffs. An action plan can help mitigate the effects of uncontrollable variables on your business and manage outcomes.
