Article | August 12, 2021
Starting a small business is challenging due to tough economic times in this pandemic. However, this time is both a blessing and a test to conquer.
The world economy has suffered significantly because of COVID-19. Additionally, the tough times exposed company owners to unforeseen and unfathomable difficulties and compelled them to devise novel business methods. As a result, starting a firm became more accessible, as new owners could enter the market with specific recession-savvy equipment and techniques.
Crucial obstacles to beginning a new small business during challenging economic times include:
A sluggish economic recovery.
Uncertain consumer spending.
Funding was becoming scarce due to tight credit markets.
According to The Wall Street Journal, numerous major financial institutions, including Bank of America, Chase, and Capital One, have tightened lending rules in response to the uncertain financial environment.
Despite the challenges mentioned earlier, a new small business can succeed with proper preparation and business strategy.
According to New Business Statistics, applications fell to slightly more than 1.1 million in the 4th quarter of 2020 before increasing to 1.37 million in the first quarter of 2021. Then the figure increased to 1.44million in the second quarter. More than 448,000 new company applications were lodged in June 2021 alone. Mentioned statistics show that launching a small business during this economic downturn is also possible, albeit with some caution.
This article will put forward a few tips to be considered when going for a new small business in tough economic times.
Create A Well-Researched Business Plan
2020 was one of the challenging economic times in history. The success of every firm is contingent upon its business plan; small business owners must have a well-researched business plan. Therefore, small business survival is heavily reliant on a sound and well-planned business strategy.
Since tough economic times have altered market demands significantly, you should build your company plan accordingly. Work on many business factors such as marketing costs and tactics, budget planning, pricing strategy, sales strategy, personnel capacity, and needed infrastructure, among others.
Difficult economic times may work to your advantage as well since fewer competitors mean less competition and lower overhead expenses.
Consider all the obstacles associated with the pandemic's time and tailor your business plan accordingly. If you intend to pitch your firm to investors, your business plan does not have to be complex.
Securitize Capital for Investment
The economy received a significant blow due to COVID-19, and many financial lenders tightened their lending requirements by demanding a higher credit score and income verification.
Numerous financing alternatives exist, including personal savings, personal or small business credit cards, bank loans, venture capital, crowdsourcing, and angel investors. Before considering pursuing any of the mentioned options, consider having your business plan examined by expert advisers, close friends, or a loan officer.
With a well-planned company strategy, it is feasible to securitize funds for investment. However, before getting funding, ensure that you have a financial backup plan in place for both your business and personal affairs. Then, budget carefully to ensure that you can afford the other critical payments.
Credit cards are the most often used form of financing amid tough economic times.
Enlightened Market Savvy
Evaluate your redesigned company plan and develop game-changing new marketing components that include innovation. By narrowing your focus, you increase your chances of success.
Keep a careful watch on your competitors to develop an intelligent marketing and promotion strategy and budget for marketing. Competitive assessments educate you about your competitors' strategies and advertising tactics. In addition, competitive analyses can provide you with the vision necessary to develop polished and intelligent marketing strategies.
You need to make a list of what you're giving. For example, what is the nature of your product/service? Who is your target audience for your business? Which social media platform would you utilize to promote your business?
By segmenting your clients, you may increase the effectiveness of your marketing. For instance, if your firm sells sports items, you should target young clients interested in pursuing a career in sports. This will ensure that your marketing approach is highly effective.
Utilize Cutting-Edge Technologies
Cutting-edge technology in businesses is the newest trend in reaching out to customers in a tough economic time. By leveraging contemporary technology, you may automate several areas of corporate operations, resulting in cost savings.
Utilize cutting-edge digital technologies such as cloud-based apps and software to streamline company processes while being cost-effective.
Online marketing, namely online advertising, may help you reach out to the relevant audience and offer your products and services.
Several advantages of contemporary technology include the following:
Increased brand visibility.
Additional payment options.
Easy remote operation.
More in-depth market research.
Act with Consummate Customer Service
When you give outstanding customer service, you may build stronger customer relationships. Conversely, as is frequently stated, one negative review from a client may jeopardize your entire existing customer.
It is critical to provide timely and pleasant service to your consumers, especially in tough economic times. Excellent client relationships do not arise by accident; they require much effort.
You can give excellent customer service and keep your clients satisfied by following the below tips:
Make your consumers feel valued for their patronage.
Anticipate and resolve client issues before they become a significant issue for your organization.
Attend to their inquiries and respond. They are deserving of being heard and appreciated.
Provide an excellent support network and a diverse array of client resources.
Anticipate what services the consumer will require in advance.
Develop A Robust Networking Infrastructure
Networking is pivotal for reaching out to consumers during tough economic times to start a small business. Connect with other entrepreneurs, meet your competitors, visit your suppliers, and keep a contact list of everyone you know.
Expanding your network enables you to establish relationships with people; in exchange, they may suggest clients to you and vice versa, thus assisting in the growth of your organization.
You can join a local business networking organization, attend business seminars, or become a member of professional associations. Exchange business cards, exchange information about your product/service supplied and seek out their experience or perspectives, which they will share with other small business owners, assisting you in expanding your network.
Often, the small business owner's networking activities provide the most extensive returns in their firms.
How can you start a small business with tough times?
You may establish a small business during difficult economic times and succeed. The key to success is building a well-researched and solid business plan, getting adequate finance, designing an intelligent marketing strategy, and cultivating vital networking.
How do you deal with tough economic times?
While difficult economic circumstances can make any company owner anxious about making choices, it is critical to be mindful of the economy and cautious with long-term planning. Concentrate on rivals' methods and entice clients away from them. Try to learn from their successes and mistakes and provide your consumers with something more or different from what your competitors provide.
How can small businesses engage customers in tough economic times?
Provide your consumers with unique discounts on your products/services. Respond quickly to their questions or concerns, establish a customer loyalty program, and engage them on social media.
"name": "How can you start a small business with tough times?",
"text": "You may establish a small business during difficult economic times and succeed. The key to success is building a well-researched and solid business plan, getting adequate finance, designing an intelligent marketing strategy, and cultivating vital networking."
"name": "How do you deal with tough economic times?",
"text": "While difficult economic circumstances can make any company owner anxious about making choices, it is critical to be mindful of the economy and cautious with long-term planning. Concentrate on rivals' methods and entice clients away from them. Try to learn from their successes and mistakes and provide your consumers with something more or different from what your competitors provide."
"name": "How can small businesses engage customers in tough economic times?",
"text": "Provide your consumers with unique discounts on your products/services. Respond quickly to their questions or concerns, establish a customer loyalty program, and engage them on social media."
Article | August 18, 2021
The term "Horeca" is an abbreviation of "Hotel", "Restaurant" and "Café". It represents a very diverse sector, i.e. from star-restaurants to catering and canteens to brasseries up to small, local cafes. A small country like Belgium counted end 2017 almost 60.000 horeca-enterprises (7% of all Belgian enterprises), thus showing the importance of this sector. Furthermore with a total revenue (also end 2017) of over 15 billion EUR and more than 75.000 people employed in this sector, it remains an important economical actor for the Belgian economy.
It is undisputable that the Covid crisis has been a disaster for this sector. However, now that life gradually returns back to normal, it is likely that the trends which were already launched in the horeca sector before the crisis will be even enforced and accelerated.
With new habits come new customer needs related to the horeca. Think about the company canteens. With more people working from home, this sector will have to reinvent itself. Most likely they will start offering also prepared meals directly to consumers via supermarkets and other distribution channels. Obviously, this will force other actors in this market to reinvent themselves, thus launching a chain reaction.
Even more pronounced is the impact of take-away and delivery. While a large group of the population was still a bit hesitant to consume take-away, the Covid-confinements also forced this group to start exploring these new services. At the same time, restaurants which were not offering take-away services before were also forced to adapt. As a result, take-away and meal delivery services have known an exponential boost and this trend, although it will know a small set back when the pandemic is fully over, is here to stay.
Unfortunately the horeca sector was already a sector with a lot of difficulties before the crisis. The sector historically copes with one of the highest percentages of businesses bankruptcies , especially when looking at the first 5 years following the establishment of the business. This is often caused by the fact that many people consider the horeca as an easy way to entrepreneurship, founding their businesses with a poor of even no business plan. At the same time there is of course the strong dependency on labor. As this sector is very labor intensive, margins are low due to the high labor costs. Furthermore with hard work and irregular and long working hours, horeca businesses have more and more difficulties to find motivated and qualified personnel. Additionally the sector, being so fragmented, often lacks professionalism, not really for the horeca-activity (i.e. the preparation and serving of food and drinks) itself, but rather for the supporting activities like financial management, supply chain management (like good stock management), procurement… This makes that many restaurants have a poor view on the breakdown of their costs and revenues, thus losing a lot of money in inefficiencies like expired stocks due to too large ordering, certain dishes which are not sold at the right price, employees being paid too much expensive overhours, bad negotiations with suppliers…
Apart from the above very obvious trends, there are still a lot of other trends. These map perfectly with the 8 universal trends, I described in my earlier blog "Universal trends - Common over all industries?" - https://bankloch.blogspot.com/2021/01/universal-trends-common-over-all.html, i.e.
Pressure on margins: margins are historically already low in the horeca sector, but are becoming even more under pressure, due to new forms of competition, like meal boxes (like HelloFresh or Foodbag), prepared meal services (like Mealhero), sharing platforms (like Thuisafgehaald or Menu Next Door), virtual restaurants (also called Dark Kitchens, i.e. restaurants without a physical location, but only serving online delivery platforms), living room and concept restaurants… This forces restaurants to work more professionally and efficiently and find a specific niche (of clientele willing to pay extra for specific product or experience). These efficiency gains can be achieved via digitalization (with regards to personnel management, cash register, stock management…) and new technologies (like 3D printers or cocktail machines like "Tenderone", "Bottletender"…), but also by being more selective on opening hours/days (especially for weekends and holidays), putting less (more specialized) choice on the menu card, making dishes less complex by investing more in the quality of the ingredients, by pushing more self-service (e.g. let the customer cut the food for the whole table, which has as a welcome benefit that it increase the customer experience).
Trustworthiness: clients must have confidence (trust) in a horeca place they are visiting. Obviously, the customers must have the feeling of being treated fairly and respectfully (e.g. via a transparent and correct pricing), but they also want to be able to trust the product they are consuming (eating or drinking). This means providing more transparency, like providing more info about each dish and more its ingredients (important for specific diets and allergies), nutritional value and origin of the product (i.e. farm-to-table).
Frictionless experience: the customer experience should be at pleasant as possible, meaning any friction should be removed where possible. This consists of frictionless ordering processes, via digital menu cards (providing details of each dish and allowing easy filtering) and direct ordering (directly to the kitchen), all the way to a frictionless checkout, consisting of digitally receiving and paying the bill. A multitude of solutions are available here, like full ERP solutions for horeca businesses (like Apicbase, Horeko, Square for restaurants, HorecaMakers, Growzer…), digital menu card solutions (like Kimeru, Digital Wizards, Futuresto, EasyButler…), ordering terminals and apps (like Futuresto, EasyButler, MyOrder, QCard, PayMyTable…), cash registers (like Lightspeed, RestoMax, Gastrofix, HorecaMakers…).
Personalization: the most important trend for the horeca is obviously the personalization. This results in products and services adapted to the specific needs and desires of every customer. Additionally horeca businesses are being converted more and more into "Experience" places (i.e. surprise your customers, by selling them moments and letting them escape from the stress of day-to-day life), i.e. ensure to give the customer a unique, unforgettable experience, not only via the food and service, but also via the texture and color of the dishes, the building, the interior design…
More in detail this trend means:
New types of restaurants, like living room restaurants (enforcing a more personal touch and home feeling), concept restaurants, food markets, pop-up restaurants…
Accommodating for different food and drink choices. Already around 20-25% of people have a specific food choice, meaning restaurants have to accomodate for people wanting to eat vegetarian, vegan, lactose-free, gluten-free, halal, kosher, paleo, biological… Additionally people want alternatives for the traditional wine-card like different types of water, mocktails, non-alcoholic wine, champagne and spirits (e.g. Seedlip), luxury soft drinks (e.g. Crodino, Finley, Pinky Rose, Fentimans & Fritz-Kola) or special types of tea to drink the meal.
Horeca places should become places to socialize, i.e. provide a home-feeling (i.e. a feeling of comfort, stability, trust, intimacy, warmth…), engage socializing between guests via guest tables, street food or sharing plates…
Allow customers to compose their dishes themselves, cfr. Subway, Hawaiian Poke Bowl…
Democratization: by working more efficiently, more automation and digitalization, it becomes possible to offer certain services and products in higher volumes and at lower costs and thus at a lower pricing. This means certain horeca products, which were before only available to the happy-few cannot be offered to a larger segment of the population. A good example are star-restaurants offering a standardized (simpler) version of their dishes via a take-out or catering service.
Authenticity: restaurants are focusing more and more on providing an authentic experience, e.g. by transforming old factories or churches to restaurants, integrating open kitchens where guests can see the cooks preparing the dishes, chefs finishing plates at the customer’s table… Additionally there is a trend towards pure, simple and honest, meaning natural, artisanal and/or high-quality products (ingredients), which are prepared and served in a simple way. A good example of this are also the traditional dishes in a more luxury fashion, e.g. new types of éclairs (Chez Claire), croques (RemorK), hamburgers (Ellis Gourmet burger), meat balls (Balls & Glory)…
ESG (Environment, Social and Corporate Governance): with customers being more sensitive about the environment and society, horeca places need to accommodate to this customer desire. Restaurants are working more and more with local, healthy (e.g. use of superfoods, use of less salt and fat…), biological/organic and Fairtrade products, but also with products with a lower ecological footprint, like e.g. replacing meat with insects, soya-based meat replacements or vegetables. Additionally horeca players need to avoid waste, via a no-waste kitchen concept (via e.g. smaller portions, trash cooking, creative usage of waste…), via anti-food-waste platforms (like Too Good To Go) and by reducing/avoiding packaging (e.g. avoiding plastic straws, cups…).
Partnerships: as many businesses, a horeca business is more and more integrated in a concept, like incorporated in a shop or combined with an experience (like a horeca place in a brewery). Additionally due to the digital revolution, horeca places need to partner more and more with online ordering and delivery services (like Deliveroo, TakeAway.com or UberEats, potentially integrated via Deliverect), social media (like Facebook and Instagram) and food review platforms (like Yelp, TripAdvisor, Zomato, Foursquare…), reservation platforms (like TheFork, Tablebooker, Resto.be…) ordering and payment apps (like Dorst.app or Yummy.app). Additionally new players are coming on the market to help horeca businesses with their typical problems, like procurement (e.g. Tippr or Horeca Direct Shop) or recruitment (e.g. Mise en Place).
It is clear that although the horeca sector is already centuries old, it is also undergoing major disruptions. In the end let us hope that all those evolutions can give us an even more enjoyable horeca experience.
Article | March 4, 2020
Most small businesses operate on tight budgets. They’ve got razor-thin margins, and with fluctuating markets and the need to reinvest money back into the business so that it can scale, it’s not surprising that most are constantly on the lookout for ways to save money. Unfortunately, too many businesses end up cutting “mission-critical” expenses that come back to bite them all too quickly. They aren’t sure where to save, and as a result, end up trying to reduce spending in crucial departments like marketing or customer service, which aren’t seen as important as sales or management. Fortunately, there are ways that you can save your small business money without taking a hit, but it all comes down to setting your team up for success and investing your existing budget into the right places. In this post, we’ll show you how to do exactly that by going over 7 surprising ways to save your small business money.