An update on the economy plus realistic next steps for your wellness business.
While we originally wrote this article around 2007 in response to the collapse of the labor, housing and consumer credit markets in the U.S., the lessons for wellness businesses are timeless.
Middle class consumers will continue to feel the pinch as real income stays flat or even declines when inflation’s taken into account.
Here’s how to build a strong financial foundation for your wellness business:
1) Confirm your credit Ts&Cs
Check the terms and conditions on your bank line of credit, loans, and personal credit cards and home equity loans. Your bank or lender probably has the right to unilaterally reduce your credit line, so you don’t want to count on that full line of credit if it’s not going to be there. We’ve also heard from clients who have had multiple credit line reductions despite generally good payment histories.
And your lender’s willingness to cut you slack on even slight payment delays may be nonexistent, especially for non-collateralized loans. You’ll quickly find yourself with a lower credit line, paying a higher rate and/or higher fees.
2) Protect your emergency fund
One of our customers has been devastated by the recent market crash. They gave us permission to share their experience in the hope of helping others.
Their revenues are seasonal, so they maintain a cash reserve to keep them going during their normal off-peak months. They invested nearly $100,000 of this reserve in mutual funds which are now worth about $50,000. It’s too soon to tell whether they’ll be able to line up alternative financing and
The lesson: protect your principal. Cash reserves shouldn’t be susceptible to the whims of Wall Street. A federally-insured interest-bearing account, CD, or similar strategy that protects the full amount of your original deposit would have been much smarter. And the same advice applies to your personal rainy-day fund.
3) Too much of a good thing
When times are hard, most of us tend to cut back on big expenditures while treating our businesses and ourselves to smaller, more affordable luxuries.
That’s not a bad idea – just remember that saving $5,000 on big-ticket items won’t improve cash flow if you nickel-and-dime yourself to death on a long list of smaller items. So upgrade to Starbucks coffee for customers and employees – but make the holiday party a potluck.
4) Share fishbowls
Turbocharge the time and money your business spends on marketing by partnering wth related businesses. Your marketing dollars will go twice as far and you’ll have access to twice as many potential customers.
Look for opportunities to co-brand or co-sponsor programs, services, activities, and events. For example, perhaps someone from your staff can lead a seminar for their customers and vice-versa.
If nothing else, at least share fishbowls for business cards!
5) Stay on top of customer payments
Does your business quickly resolve every single bounced check, credit card dispute, and credit card decline? Every month? Are you sure?
We routinely find that both big and small health and wellness businesses do a lousy job of making sure they’re really getting paid.
And please — stop doing business with the customers who don’t pay promptly and reliably.
6) Educate, educate, educate
One of the most cost-effective and successful marketing techniques for health and wellness businesses is to offer free education and information to potential and current customers. It attracts potential customers and enhances your relationship with existing customers.
Examples include webinars and in-person seminars (a great opportunity to partner with another firm, right?), white paper downloads, videos and podcasts.
7) Automate the follow-up process with prospects
Failure to follow up is a common cause of sales inefficiency. In this economy, you absolutely can’t afford to let prospective clients fall through the cracks.
Fix the problem by using drip marketing, including email autoresponders, to automate your follow-up process.
8) Narrow your focus
Is your wellness business trying to sell to multiple customer segments – consumer AND corporate? Or through multiple sales channels – direct to customers AND via distributors? Or wholesale AND retail? Or online AND in a storefront?
Your business cannot be all things to all people. Trying to do everything usually chews through time and money while achieving mediocre results in all areas.
Analyze which segment of your business builds on your organization’s unique capabilities and strengths. Focus all of your efforts there. Don’t make the common mistake of simply reducing the budgets in weaker areas. Instead, kill those efforts entirely.
9) QC your touchpoints
Quality-check all the interactions your business has with customers – the “touchpoints.” Talk to customers about where your processes fall short, and fix them. Look at everything from lead generation to sales to providing products and services, all the way through to billing and responding to your customer’s continuing needs after the initial sale.
10) Positive networking ONLY
Good: networking groups with other business leaders who are full of positive energy and anticipate a bright future. Look for folks who are constructive and practical and look for opportunity even in the face of difficulty.
Bad: huddles of negativity. Some networking groups are clusters of downbeat, depressing and fatalistic attitudes. Those attitudes will rub off on you – and you certainly won’t get anything useful from your participation.
11) Fix lingering employee issues
OK, you’ve tolerated Joe The Jerk, Laura The Late, Sam The Slacker and Greta The Griper long enough. Cut ’em loose.
12) Streamline processes
Saving time is as good as saving money. We’re switching from separate email and survey providers to a single integrated provider. It costs about the same, but it’s much simpler to use and lets us offer new features to our subscribers.
13) Offer “runway” services
Is the price for your services relatively high? Offer an introductory product at a lower price to introduce skittish buyers to your business concept. Many businesses and consumers still have money to spend. They’re simply very, very cautious about where they invest it.
14) Arm-wrestle vendors
Obviously, if you’ve been a good customer you should negotiate for better terms that improve your cash flow, like 60-day payment terms.
Often overlooked: make sure vendors promptly refund money that they owe you. Don’t let credits sit on your account – request a check. And make sure they actually go ahead and send it.
15) Recession relief publicity
Spread the word to your media contacts that your business is offering free 10-minute massages Monday to the first 10 people with foreclosure or layoff notices. Tweak as appropriate for your specific health and wellness business.