1. Decreasing Your Investment in Marketing
This, according to some, is one of the most foolish mistakes a business leader can make during recession. With unemployment rising, investments dwindling, and demand for many goods seeming to diminish, it’s wise and often recommended that businessmen take time to analyze operation costs and cut back where possible, but the absolute worst place to do that is in marketing. In fact, in the midst of a recession, a good work at home businessman will do completely the opposite, funneling more money into marketing for the simple fact that getting your name before more potential clients is vital to weathering an economic crunch. And it’s wise to do this in as many ways as possible, including simple and cheap tactics like advertising on the side of your car or having a newspaper article written about your business. The more stage time you get, the better.
2. Mis-pricing You Goods/Services
This is dangerous in a recession for the simple reason that money is tight for everyone. If you leave your prices as high as they’ve always been, you’re sure to lose business, but if you drop prices too low, you won’t make any profit, and in either of those situations, your bottom line and your business will suffer. The key is to find a place of balance between the extremes, and there are at least two ways to do that. One way is to give big price cuts to a handful of your biggest clients. For example, the Vehicle Tracking Solutions franchisee, who sells vehicle GPS equipment to corporate clients, can offer a client with a car fleet of 400 vehicles a whopping discount to ensure that that source of income keeps up while leaving his smaller clients at a more standard rate. Another alternative plan for this work from home businessman is to decrease all his prices by 15%, a moderate cut that will encourage business without costing him a great deal. Either way, maintaining cash flow is key.
3. Assuming the Demand for All Products Will Drop
It’s tempting to believe that all products and services in all industries see a decreased rate of purchase in a recession, but that’s a naïve thought. In reality, there are many products and industries that are either unaffected by economic downturn, like the home improvement industry, or are actually counter-cyclical, like pasta, which tends to do better when people feel no longer able to afford more expensive foods at the grocery store. A good example of this is DVDNow, a vending franchise that makes its profit from vending DVDs from an automated machine that is much more convenient and inexpensive than any rental store. Since the US is not about to give up its movie-watching privileges, this cheaper and easier way to rent will certainly see more business than its walk-in store counterparts. If your business sells some specific product or service that has the propensity to soar during economic decline, use that advantage to its fullest, pouring more or your finances into that product. And if you’re in the market for a business for sale right now, look into those that have a counter-cyclical or constant demand.
4. Putting up with Overpriced Supplier Costs
In the midst of economic decline, it’s vital to remember that as much as you are supplying goods and services to others who demand lower prices, you too are being supplied goods and services by other businesses who are responsible to decrease their prices to fairer levels for you too. The Vendstar candy-vending franchisee, for instance, whose suppliers have not dropped their candy prices has every right to request lower prices or look elsewhere for their merchandise when the recession begins to take a toll on his sales, if it does. If, for fear of angering an associate or losing a business deal, you do not negotiate an appropriate discount from your suppliers, it could be more costly than you think.
5. Doing What’s Nice for Employees, Not What’s Best for Business
Everyone wants to treat their employees well, but sometimes even good employees have to go if the business is to survive. It is the responsibility of business owners to do what’s in the best interest of their franchises, not simply what is nicest for the people they’ve hired. If, during a recession, the owner of a WSI Internet web marketing consultancy is faced with a decision of saving the money spent on one employee’s salary or allowing the whole business to suffer and potentially collapse, there is only one responsible choice to make. Never be afraid to let individual people go as necessary, or it may eventually cost everybody.
Business opportunities, as all other gifts in life, take a good deal of wisdom to adequately manage and cultivate, particularly when times are hard. It’s never easy to own a franchise, but by keeping aware of the common mistakes made by others, your odds of success become a good deal greater. Learn everything you can and apply everything that’s prudent to your new home based business franchise.
Find more home based business franchises including vending franchises and computer and internet franchises at Home Based Business Opportunities