A seven-step strategy for small business survival

in Money by Graham Hardy
(2 Ratings)
Small business survival

Hard on the heels of the news that Australia has fallen to 20th in the WEF Global Competitiveness Report1, our worst placing in 25 years, comes the news that Sydney has overtaken London2 in terms of cost of living.

A recent KPMG study3 similarly found that amongst developed countries, Australia was second only to Japan in terms of the cost of doing business. That’s some trifecta!

This provides clues as to why the economy has not responded to the 200 basis-point drop in interest rates. As a country we are exposed, and as small businesses we are right in the thick of it. We need to heed these warnings and address the root causes of our reduced competitiveness – rising costs and falling productivity.

As small business owners, we are being squeezed from all directions, including:

  • High taxes and an inefficient government.

  • Restrictive labour regulations.

  • The power and dominance of major firms, including the banks.

  • Customer resistance to pricing.

  • Falling demand.

  • An uncompetitive work ethic (cited in the detailed findings on Australia in the WEF report).

As small business owners, how should we respond to these cost pressures in a slowing economy? Let’s take a look at seven key checklists to tackle.

1.  Labour productivity

  • Set clear (and competitive) KPIs for all staff.

  • Address underperformance.

  • Challenge any example of a poor work ethic as it arises.

  • Rationalise headcount if possible.

  • Consider part-time or flexible work arrangements.

2.  Develop a high-performance work culture

  • Involve your staff in the process.

  • Share how things have changed and why your business needs to change as well.

  • Define together what high performance would look like and what each person needs to do to achieve it.

  • Consider a performance-based reward system.

3.  Technology / investments

  • Are there areas where you can invest to increase output?

  • Do a cost-benefit analysis and invest if there are gains.

  • Avoid getting stuck with outdated systems and software.

4.  Improve quality

  • Identify where poor quality is harming output and raising costs.

  • Systematically improve all work processes.

  • Identify and eliminate causes of rework.

  • Do not accept substandard work from any source.

5.  Improve your customer service

  • This results in a perceived improvement in value i.e. customers feel they are getting more for their money.

  • Develop a customer-centric focus in your business.

  • Strive to meet or beat customer expectations every time.

6.  Set improvement targets for suppliers

  • Set competitive SLAs for supplier performance.

  • Accept only top quality and service.

  • Consolidate suppliers in exchange for price/volume deals.

  • Resist uncompetitive requests or business terms.

7.  Innovate

  • Find new, better and more effective ways to do things.

  • Use all the skills available to you to find better solutions.

It’s essential to create additional output in order to respond to the cost pressures in our slowing economy. As the leader of your business, you are responsible. Look in the mirror and ask yourself this question: “If my business was publicly listed and I reported to a chairman and a board, would they keep me on as CEO?”

If you are concerned about declining performance and viability, don’t sit on your hands – you can and must take action. Your business depends on it. And productivity is the key.





This article represents the views of the author only and not those of American Express.

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Graham Hardy

Graham Hardy is a marketing and communications specialist and current managing director of DesignStreet. Prior to that, he was managing director of Audi Australia. Graham writes about marketing, strategy and entrepreneurship from the perspective of a small business owner, coupled with the insights he has gained from top management roles in the corporate world.

Poll Results

How many hours do you work on your business each week?

  • 20-30
  • 30-40
  • 40-50
  • 50-60

Poll Results

How many hours do you work on your business each week?

20-30: 18%
30-40: 18%
40-50: 23%
50-60: 41%