New glasses for a new viewpoint
Looking at business in a new way
Welcome to a new year. And congratulations for having made it through the just finished year. Before you begin the celebration, the word of caution is that just because the calendar turns a page, it doesn’t mean that the challenges have all passed.
So that you will be a strong business at this same time next year, we would like to share with you 10 observations of what you can cut out from the past to be prepared for the future. And you will likely be surprised that the most of what we are cutting out is not expenses.
1. Avoid Excessive Media Influence
Diminishing the amount of time spent with the mass media, such as watching television, listening to radio and reading the newspaper, will mean you are cutting out a lot of negative news.
Although you may find it to be important to stay atop current affairs, we all have a tendency to take that information and apply it to our business. When we hear of big business’ making cut backs, we often think our small business should cut back. As compared to allowing the news of the world affect your business, consider allowing a different source to affect your thinking.
Why not take most of the time currently focused on the media and instead spend it reading books about how to grow and improve your business? Allow your attitude to guide your business more than the media.
If you are not one that has previously enjoyed reading books, you may want to start with something like ‘Purple Cow’ by Seth Godin. It is a quick and easy read that has a great message for you about your store.
2. Target Your Advertising
Your existing customers are the individuals in your community that have shown a preference for your store, and the products you sell. Traditional advertising puts your name and merchandise in front of everyone that sees the advertisement. Viewers and readers who do not dance, or have dancers close to them, will have little interest in what you sell.
You will get a much better response to your message if you can direct it specifically to existing patrons and their friends and family. There are many ways you can talk specifically to your existing customers. This requires you to begin with offering them a reason to share their name, address, phone number or email with you. With this information you can mail announcements of new products or send coupons and birthday cards. You can even call them to just say ‘hello’ or invite them to come see what is new in your store. Few customers can resist an invitation when you tell them you are thinking about them as you are looking at something new in your store.
For any advertising you do on a large scale, make sure that you have properly narrowed it to potential customers. Ask each of the media for the demographics of their target audience. You may find that they have different audiences on different days or different times of the day. Your advertising needs to specifically speak to those that are most likely to visit your shop. Especially if your store incorporates a lot more than dancewear, establish who your customers are as soon as possible. That is because you can easily have a mental picture of the customer and what they will purchase.
3. Don’t go looking for a new customer base
In a changing economy, there will definitely be a temptation to consider repositioning the store’s merchandise; perhaps you would consider dropping some of the more expensive lines of products and stocking only the basics or less expensive items. In doing this, you may have made a mistake. Think about how long you have been in business and the customers you have targeted for all those years. By shifting, you may find that you have instead abandoned your target customer.
A challenging economy such as the one we are having now, traditionally last for a period of months. The image you have developed with your customer has taken years to achieve. It does not make sense to throw away years of effort for something that is only going to last months, and then start again to rebuild what was thrown away.
4. Systematically plan your changes
In a challenging economy, many businesses approach the challenge with a ‘butter and toast’ strategy; they simply want to spread their cuts around. They do so much like a person spreads butter on a slice of toast; they want to spread it evenly over everything. And while this idea may make the toast taste better, it does not work for a business.
Some businesses will begin to cut their hours without any analysis of what their best hours are, and they may be closing when most of their customers are looking for them.
They may begin to cut their inventory levels and not realize they are eliminating some of their best selling merchandise. These stores may be decreasing the amount of basic and fashion merchandise without giving any consideration to what has been their best sellers. Doing so, they may be losing sales. Some will cut the amount of employees they have. In a store that is known for great customer service, they may be eliminating what has been their best selling point.
5. Be ready to step into the competition’s space
While the fifth suggestion may sound counter-intuitive, this challenging economy may be your best opportunity to expand your business. While you will follow the advise given in point number four in your business, you should take a careful look at your competition at this point and observe what they have been cutting back on.
When their cut backs defy logic as you observe the dance business in your community, you should take a serious look at adding these components to your business. This may be the opportunity to stock more basics or fashion clothing; add some hours to your weekly business schedule, or perhaps take a look at the great salesperson that has been working at the competition who now finds themselves only working part time.
6. Don’t cut out your ‘wild thinking’.
When you first opened your business, how many people told you it would never work? How about the people that told you not to move to your new location or that you should not add dance shoes to your product mix? Yet you did, and with each you have made it work profitably for you. These friends probably see you as somewhat of a ‘wild thinker’.
Challenging times require radical action. The economy caused most all business to reconsider how they operated during the holidays and will require them to continue to do so throughout the foreseeable future. In this situation, you need to not only make preparations for the challenges, but you also have to be able to make changes in how you do business. It is however, not time for you to change your thought pattern.
Here’s another book idea to charge the batteries of your wild thinking; a book titled, ‘The Big Moo’ by ‘The Group of 33’. Within the 33 chapters is one entitled, ‘They say I’m extreme’.
This one chapter represents the type of thinking that is necessary for businesses to be successful when things are rapidly changing with their community, customers, and industry. Your thinking style got you this far, it is not time to abandon it.
7. There are things to ‘give up’ on.
While the saying, ‘patience is a virtue’ may be a great saying, this is not the time to simply sit things out. What about the person working in your shop that you have been trying to teach how to sell, but has not achieved an acceptable level of performance? This could be the time to give up and look for a replacement. The same is true for a product line; you may have stocked a line of tights that sold well for someone you met at the trade show. However, the line is not doing well in your shop. It may be time for you to give up, clear out the merchandise, and look for another line. Right now, you need all of your money working as hard for you and your business as you are working. If it hasn’t worked yet, or they are working, get rid of it, or them, now and move on.
8. Enlist your staff
It takes a team effort to win in the challenging economy. You do want to be a cheerleader, letting your staff know that your business is going to be one of the winners in this situation. However, they do need to know they cannot be sideline spectators. For the store to succeed, each team member put forth their best effort. Their effort to engage a customer, complete the sale, and helping the customer to know they are especially invited to return, goes a long way toward developing that customer loyalty.
If there are fewer people spending fewer dollars, then the dollars spent by each customer should be welcomed more than ever.
9. Do logically cut out expenses.
Without question, this is a time to review expenses. But the examination should be done systematically. Take your year end profit and loss statement, and look at each row of expense. Make a notation as to whether the expense is a ‘fixed’ or ‘variable’ expense. A fixed expense is one that the dollar amount does not fluctuate from month to month. A variable expense does fluctuate.
The second step is to review all of these expenses again to see which are ‘controllable’ and ‘uncontrollable’. The uncontrollable expenses are those that cannot be stopped. A controllable expense is one that are not absolute ‘must happen’ expenses of the business.
As you look at the two notations with each expense, you can ignore the fixed-uncontrollable expenses. But with all of the others, there are amounts of those items that you can possibly do without. Reviewing your business in this manner makes it easier and removes most of the emotion of chopping expenses.
10. Don’t forget to understand the financials.
Whether you prepare the monthly financial statements or have an accountant that performs the task, as the owner of the business the responsibility of understanding the financial statements and make decisions about the future of your business based upon them is an essential component of good management.
In addition to the classes offered at the Dance Retailer Expo, you can also sign up for a class through a local community college. In doing so, make sure that you are taking more than just an accounting class, but that you are taking one that is designed to help a small business owner understand their financials. This can be one of the best investments you can make in your business.
Observe these ten points, and as the year progresses, you will find that your business will likely continue to be stronger and more profitable. We’ll look forward to seeing you soon in another issue as we profit together through the coming year.