By: Raj Tulshan, Founder of Loan Mantra
There’s no doubt that the past few years have been tremendously disruptive for the restaurant industry. Now that your bar or restaurant has survived a global pandemic and its long-lasting, widespread ramifications – including labor and product shortages, supply chain disruptions, etc. – you’re also facing historic inflation and tremendous price hikes on the things you need to run your business. How can you face yet another challenge after all your business has already been through?
This is a great time to plan a business strategy, especially as you may be feeling financially insecure. The annual inflation rate in the US accelerated to 9.1% in June 2022, the highest it’s been since November 1981. Prices for things like energy, food, and rent have skyrocketed, while stocks plummeted. Now that inflation is at a 40-year high and economists are hinting at a possible recession later this year or in early 2023, what can business owners do now to survive?
The first half of 2022 was challenging, with soaring inflation, the biggest selloff of bonds in 40 years, a huge decline stocks, and the implosion of crypto. The challenging economic situation includes supply chain disruptions and the Russian/Ukrainian conflict. According to July National Federation of Independent Businesses (NFIB) Research, 34% of business owners report that inflation is the most important pressing business issue. And 61% of owners do not expecting business conditions to improve.
While the volatile economy can be nerve-wracking for business owners nationwide, there are concrete things you can do to get a handle on your company’s finances. For instance, get an annual financial checkup. This means assessing how your business is doing, determining what’s going well, identifying what needs improvement and setting concrete financial goals for the coming year. The experts at Loan Mantra are helping companies boost their financial health, making the process simple, transparent and effective.
Here Are Some Tips to Get Started
Review Records: Recognize there are certain things you can’t control (such as whether the U.S. tips into a recession), and certain things that you can. Make a proactive effort to get your finances under control. Update your business plans, pull your current credit report, and talk to an expert about your financial health, including your money goals. Organize and file your paperwork, ideally in a secure, online system, like Loan Mantra’s vault, so you’re able to access necessary financial information instantly and easily whenever you need it.
Think Through: Be strong and remember this, too, shall pass. On average, recessions last 11 months. The shortest one on record was in 2020, when the pandemic spurred a recession that lasted only three months. And while stocks are currently low, they’ve historically bounced back after recessions. This is a good time to talk to a financial advisor about how (and where) to invest so you can take advantage of the eventual recovery. Your business has gotten through a few difficult years – stay strong, flexible, and resilient, and you’ll get through the heightened inflation, as well.
Audit Your Business: Businesses should regularly audit their spending, but this exercise is especially important during tough economic times like these. Consider whether there are any services or resources that you can reduce or eliminate. Comparison shop for any products that you use regularly to try and get a better price. Consider switching suppliers to get better deals.
Borrow Smart: Pay off credit card balances and other debts as soon as possible. With interest rates rising and a possible recession coming, this becomes even more critical. Get a low-interest business loan or consolidate debt. You’ll pay off your credit card debt much faster if you transfer high-interest debt to a credit card with a 0 percent rate. If you don’t qualify for a 0 percent credit card, call your current credit card company, and request an interest rate reduction. Ask a financial expert for advice on the best and fastest ways to pay down your debts.
Invest for Returns: Acquiring a new customer costs, on average, five times more than retaining an existing customer. The cost of recruiting new customers is even more costly and difficult during a recession, when people are trying to minimize their spending and are, therefore, less likely to buy new products or services. Your current customers already know how great your organization is, but during tough times, you’ll need to maintain (or increase) standards to keep them happy, satisfied, and loyal. Consider adding (or enhancing) customer loyalty programs, offer incentives or discounts for loyal customers, hold an industry night where you give a percentage off the bill for first responders, teachers, healthcare workers, etc. Donate gift cards or sponsorships to worthy charity events in your community to generate awareness and goodwill. And, of course, hold yourself (and your employees) to the highest quality and safety standards to keep customers coming back.
Focus on Favorites: As you take an honest assessment of your organization’s finances, consider whether you’re still offering products that are no longer performing well. It’s wise to eliminate anything on your menu that is underperforming and no longer generating high sales or profits. Consider reducing your menu to focus on fewer, beloved, high profit items, and eliminate any complicated or overly expensive dishes. Spotlight a few signature drinks instead of a huge array of alcoholic offerings. Use last night’s leftovers to create intriguing specials for tonight’s dinner menu. Trimming underperforming areas can help you focus on the more profitable ones. This will allow you to put time, money, and energy into your top sellers and innovate promising new offerings.
Be Authentic: As a business leader, your team is looking to you for guidance during economic uncertainty. Transparency is the best way to give that to them. While it may be tempting to be overly positive, your team craves honesty and authenticity. Your employees don’t want to see their leaders presenting a fake facade that everything’s fine when it’s not. They want to see that the people in charge can lead confidently and strategically, particularly during difficult times. Be honest and your team will respect you for it.
Stay Out There: While your company might be looking for areas to reduce spending, marketing shouldn’t be one of them. With a turbulent economy – and a recession looming – do whatever you can to stay top-of-mind among customers and prospects to boost sales. As consumers become more careful with their spending, remind them why your bar or restaurant is still an essential part of their lives. While other companies may reduce or eliminate marketing efforts to cut costs, you should do the opposite. If you maintain (or even increase) your marketing spend, you’ll stand out in the marketplace and reach a wider audience. While this may not pay off immediately, it will be beneficial over the long-term, as people start spending more in the post-recession months and years to come. Look for cost-effective tactics, like social marketing efforts and online advertising, to expand your reach without breaking the bank.
Think Local: Invest (or re-invest) in local infrastructures that support your own communities and encourage these local businesses to support your company, as well. Support local farms, bakeries, wineries, etc. Invest locally to strengthen your community’s business ecosystem. When you support local, those vendors will be loyal to you and send more business your way.
Co-Promote: Some common adages are true in our current economic climate. There is strength in numbers, and we’re all in this together. It’s wise to network and find like-minded business owners to share ideas and best practices. Support one another. Cross-promote your goods and services whenever possible. Hold joint promotions – such as dinner and a movie deals with a local theater. Serve and sell local wines and have the local winery offer discount cards to drive their customers to your bar.
Strive for the Long Haul: In any economic environment, it’s smart to hope for the best but prepare for the worst. If the past two years have taught us anything, it’s that life can be unpredictable. Therefore, it’s important to plan for the unexpected. While it may be unpleasant to consider, have a succession plan in place in case your owners or managers are injured, incapacitated, or even die. Decide who will fill these roles temporarily or permanently in an emergency. Prepare top performers for future leadership roles. Ensure they have plenty of training, mentoring, and experiences so they can successfully grow upward in your organization. Consider how you’d handle a variety of crisis scenarios to ensure your business remains successful, seamless, and uninterrupted.
Working with a financial expert, restructuring debt, becoming agile, analyzing your business processes and reducing expenses can help your business succeed and become more financially stable. Not sure if your business is fiscally fit? Take our test today!
About the Author
Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative, and transparent platform. Clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human—even friendly—way.
About Loan Mantra
Loan Mantra is a one-stop FinTech business portal that democratizes the loan process by providing corporate sized services and access to new entrepreneurs, small and medium sized businesses. Loanmantra.com provides access to numerous loans and lenders, government programs and small business services all through one easy application process and upload of business information ONE time. Business accounts are free and secure. But most of all you won’t be served by a blog of bots after you sign up. Service is provided by friendly, responsive agents that will answer the phone and listen respectfully while serving accounts through one of three locations in the US. And as a minority-owned business, we understand the challenges of underserved groups and we encourage diverse businesses to apply. We speak English, Spanish, Hindi, Bengal and many industry lingos, but if we don’t speak your language we’ll learn, so connect with us today at www.loanmantra.com or call 1.855. 700.BLUE (2583).