SmallBizNews
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Succeeding in a Struggling Economy
by David Williams - October 5, 2008
Tips for Small Business Owners on
Surviving a Recession
To say we are experiencing tough
economic times is a serious
understatement. Businesses, both - brick
and mortar and online merchants,
are hemorrhaging and if we can't
effectively triage and treat the
country's bleeding economy ~ many
worthwhile businesses will undoubtedly
die needlessly.
I don't want to editorialize but: I, for
one, have had it! One news reporter
said, "When Wall Street coughs ~ the
world catches cold." Really!? Allegory
is not what we need!
Here are some tips to help
you survive & possibly even thrive in
tough economic times.
What are you going to do about your
payroll?
As a division 6 retail manager we
had very specific guidelines for our
controllable expenses yet, due to
unforeseen circumstances and an
inventory prep, my staff I were both
over-worked when I received a call
from our regional manager J.B.
J.B. ~ What are you going to do
about your payroll Dave?
Me ~ I can't do much of anything
about it right now.
J.B. ~ Do you understand your
responsibilities as a manager?
Me ~ Yes I do. And I am working
over 100 hours per week trying
to satisfy them.
J.B. ~ Glad to hear you
understand the gravity Dave. Let
me ask again, "What are you
going to do about your payroll?"
Me ~ Nothing...
J.B. ~ I think you better
explain.
Me ~ I'm not going to do
anything about payroll J. I'm
going to do something about our
sales. If I increase sales, my
payroll percent will come back
in line.
J.B. ~ "Son," (I later learned
that folks from the south called
me 'son' when they were about to
praise me) "that's the best
answer I have heard yet."
After completing the inventory & some
aggressive promotions; two weeks later
my sales had shown significant increase.
Sure enough, the payroll percent to
sales was back in an acceptable range.
Not only had I survived the storm - we
were thriving and enjoying increased
revenues. Why? Because we didn't focus
on circumstances we had no control over.
We focused our energy and skills on the
things we could have an impact on - our
sales.
Son... That's the best answer I have
heard yet.
Focus on the
things you
can change
Cut Payroll or Increase Sales
Nobody wants to lay off
employees yet many small businesses
are struggling. What's worse is that
many business owners just can't seem
to see the light at the end of the
tunnel. Factor in financial
bail-outs that include
off-shore rum production and
exclude the 'little guy' (small
business has been the single biggest
industry segment growth for some
time) and the future can look very
dim.
What do we do? Simple. We light a
torch to guide us to the end of the
tunnel. We do everything we can to
increase our sales and retain our
help.
The struggling economy and the
possibility that we're going to be
in a recession for some time are
worrisome subjects for
small-business owners.
How Can You Increase Sales When
Customers are Spending Less?
Better
Service Now is the time
to take customer service to a higher
level. Begin by focusing on your
current customers. All too often we
take them for granted; now is the
time to step up your appreciation
level.
Better
Pricing Make sure your
pricing is competitive in your
market. Take some markdowns if
necessary to increase your rate of
turn.
Better
Service Make sure your
service is exceptional and everyone
you encounter knows beyond a shadow
of a doubt how much you value them.
Rekindle
the Fire Review your
accounts to find customers whose
spending patterns have decreased and
engage them to learn what you can do
to help them. Sometimes it only
takes a quick follow-up to rekindle
the fire. Yet, other times it can
take effort on your part. Either
way, rekindling the fire is still
easier and less expensive than
finding new customers.
Take Care
of your Team You are
carrying a great burden trying to
keep your business afloat. You have
deep concerns that may make you feel
you are all alone. You're not alone.
Your employees are concerned as
well. There are stories on the news
every morning, noon and night about
more cut-backs and layoffs. Even if
you have never mentioned layoffs or
restructuring - your employees know.
And they may be in fear for their
jobs. You need to be sensitive to
their concerns as you map out the
future of your business.
Now is the time to speak to them; be
specific and engage them to take
ownership of the business in every
area of responsibility. Help them to
understand that you are doing
everything you can to protect their
job security. Invite them to be a
part of the solution. If you
communicate these things effectively
as a leader (not some faceless voice
from an ivory tower) ~ they will
follow you and work to defend what
you have together as a team.
Got a sandwich board? Use it.
Got end-caps? Feature some seasonal
items at a fair price.
Got Merchandise? Merchandise it!
Think outside the box and cross
merchandise.
Got Excess Inventory? Take some
markdowns and increase your rate of
turn.
Got more than one employee? Involve
your associates and motivate them.
Got a website? Tune it to get
traffic and keep it up to date.
Remember ~
New business doesn't have to come
from New customers. Take
care of your customer base and they will take
care of you.
Continue to
Market Yourself
Continue
your marketing efforts We
cannot afford to stop marketing even
if it seems like a good way to cut
controllable expenses. Would you
call the phone company and ask them
to remove your business listing? Of
course not. Would you instruct an
employee to remove all of your
signage? No!
Then why
would you cut your marketing budget?
If you follow the steps above; you
will earn referrals and good viral
marketing (word of mouth
advertising) - for FREE!
The next
level regardless of
economic conditions, continue to
market yourself to recapture the
attention of former customers and
introduce yourself to new customers.
Re-examine
your USP (Unique Selling
Proposition) Determine
what sets your business apart from
the competition and capitalize on
your competitive advantages by
marketing them with determination.
Update your website and your core
message, product and service
offerings, send out post cards, put
out a new sign in front of your
store. Light your torch!
Offer How
To DIY Clinics Pay
attention to what products your
customers (and competitor's
customers) are buying. Think 'special
events' and develop a
plan to show customers how to better
use those products and cross-related
products.
For
Example:
Do you sell paint? Do you see a
peak for interior painting
around early spring and late
fall? Create a special event.
Normally, Mr. Smith asks an
associate to mix 2 gallons of
paint, walks to the checkout and
pays for the paint and leaves
your business. If Mr. Smith
isn't a professional painter you
just lost a significant amount
of revenue. Thinks about the
steps involved to paint just one
room. I would bet that over 50%
of the time and materials
involved would be used to
prep the room for the two
gallons of paint you just sold
him.
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Move & Cover Furniture
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Drop covers for floor
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Removing old nails and
picture hangers
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Cleaning the walls
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Patching damaged areas
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Sanding the patches
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Cleaning the dust
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Taping or masking
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Removing old switch
covers, outlet covers &
any fixtures
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Priming
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Cleanup
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All of these steps are required
before Mr. Smith even opens the
two gallons of paint you sold
him.
Then he needs to cut in the
room.
Did he need brushes, rollers,
pads, paint pans?
Did you help Mr. Smith? I'm
thinking the two gallon paint
sale may have left Mr. Smith ill
prepared for the tasks ahead.
Go one step further
Create a special event - an
interior painting clinic
to show people some basic steps
for interior painting using the
products you sell that will make
their job easier.
Focus on the
things you
can control
We know that payroll is our largest
controllable expense. I hope we have
already successfully addressed that
topic.
Other
Variables to Consider
Cash Flow
Manage your cash flow and limit
unnecessary spending. Remaining
liquid in tough economic times can
make or break a small business.
Debt
Some would say now is the time to
increase your spending. I would have
to disagree with that line of logic
~ no more than ever, we should do
what we can to reduce our debt.
First, it is always a wise course of
action. Second, No one knows for
sure how long these hard times will
last... in the event you need to
borrow or increase credit lines to
survive the downturn - it will be
much easier to negotiate from a
position showing good stewardship
than a history of over extending
yourself.
Vendors
Do your very best to remain current
with all of your suppliers. They are
likely struggling too and they are
probably receiving countless
requests for extensions and better
terms. Again, in the event you need
to ask for either; it will be much
easier to state your case from a
position of strength.
Receivables
Look through your accounts
receivable files and make courteous
yet firm follow ups. Yes, we need to
be sensitive to others who are
likely in the same boat of 'tough
times' but we need to keep our eye
on fellow passengers so we can avoid
sinking alongside a drowning victim.
Petty Cash
Now is a good time to delve into the
books and watch where the money is
going ~ dozens of small payments add
up very rapidly and those
discretionary spending items can
consume working capital faster than
hungry teenagers can consume
leftovers. Look for trends in 'small
payouts' so you can recognize where
your money is going and address it
before your money is gone. Look at
everything with a keen eye and do
some simple math ~ even $100.00 a
week for mileage reimbursements
extrapolated out one year means
$5,200.00 of working capital is
gone.
No Hype, No Ads, No Sales Pitch ~ just No Nonsense
Advice. Here's
wishing you the very best in 2009!
Dave Williams
Be sure to check out
previous issues of
SmallBizNews for other Internet
Marketing ideas as well. We invite your
ideas, comments and suggestions. |
