Strategies to win in a challenging economy
Ideas of how to win
Several years ago there was a public service announcement that had a closing line of, ‘a mind is a terrible thing to waste’. While we will not be seeing the theme repeat in another public service announcement, this is an appropriate message for owners of businesses within the industry.
A challenging economy is a terrible thing to waste. How can this be? Businesses have closed; many have downsized and most have been challenged to change their business practices in an effort to make it through the current year.
Yet, here is a message that says there is a wonderful opportunity for those who have figured out that the current economy is not like a rain storm or drought that has a start and an ending. This is a change for which no one can see if there is an ending.
If you are willing to step out, let me invite you to take a look at where there are some opportunities. Join me and I believe you will find your business, and yourself in a different position – a better position – before the year is out.
Let’s begin with what needs to first be changed; it’s your spare time. You likely begin your day with the morning news that you are getting through the television, radio, newspaper or the Internet. Think about the news you have been exposed to in the past year. How much of that news has done anything to help you grow your business or make you a better business owner?
Most likely the answer will be that none of it has helped. Our first change to suggest is that you remove these negative influences from your life. Instead, grab a book; not a novel but instead a book that you can teach you. There are hundreds of books directed toward small business owners.
What would you want to learn first? How about ideas of how to sell that you could share with your staff? What about a book that would help you develop the right strategy for business development? Could you use a book that would tell you about other stores that have been very creative in the way they have operated?
You likely will not find a book that is going to talk about a business that is just like yours. Instead, you have to be able to ‘translate’. A great book about how a bike shop operates (Try Reinventing the Wheel by Chris Zane) can share some great ideas that can easily be adapted to your business.
Great ideas often come ‘wrapped’ inside something; they do not frequently come fully developed and ready to use. Look at what impresses you about another business and then change it to fit yours.
The first ‘outside action’ is to notice how so many other businesses have retreated during this economy. They cut their hours, their product selection, depth of inventory, their staff, and even product categories. When this happens, you should look to see if there is intelligence behind their effort. Many simply retreat because they are scared.
Instead of a thought of, ‘Wow! The economy really is getting bad.”, try looking at what they have changed with the thought of, ‘I can’t believe my competition is going to give me a great gift like this by abandoning their business and allowing me to take their customers and sales.’
The next outward action is to look at your existing customers with a simple theme of, ‘Never forget a customer. Never let a customer forget you.’ A customer comes to your business and spends hundreds of dollars. We give good customer service, tell them thanks, and wait for them to return.
That strategy might have worked 20 years ago, but it does not work today. The customer that has said they prefer to do business with an independent needs to be reached for on a frequent basis; not by traditional advertising media but by multiple forms that say, ‘I remember you. I want to invite you back. I want to help you become a person that is addicted to enjoying the products and services that my business offers.’
You can use postcards, hand written notes, phone calls, Facebook, and any other creative way you can think of to make sure that customer remembers you.
Speaking of advertising, in a simple statement, ‘do not stop advertising’. Trying to save money by stopping your advertising is like trying to save time by taking your watch off. (Give credit to Henry Ford for that expression.)
Other businesses will stop advertising. Potential customers will forget these businesses and think they have closed. With fewer businesses advertising, it is easier for new potential customers to see you as an alternative to the box and chain stores.
Because of the media, many business owners have repeatedly heard how customers are cutting back on their budget and looking for cheaper products and services. So, some businesses begin to change their focus. They go looking for this penny pinching customer as their new target.
Yet, these businesses forget the many customers that have been with them for so many years. Did their customers change their shopping preferences? It is OK to add an additional category of products; you can add a value line of yard tools to go with the quality lines you have carried for years. Try this method as compared to abandoning your offering quality goods and services to go for discounting everything.
Luck has nothing to do with it. The harder you work, the more you can succeed. But work is not just about your putting in more hours on the sales floor and more hours in the business in general. Hard work is more about thinking of how to beat the competition and take advantage of the situation.
There was once a small town barber. He had been there for years; knew his customers by name. He charged $10 for a haircut. A new franchise shop came into town and put a banner that said haircuts were only $8. The people in town asked their local barber how he would survive against someone who was charging 20% less.
The new sign on the small barber’s shop said, ‘We fix $8 haircuts’. He was not lucky; he was smart and knew what his customers wanted.
If something has not been working for you during the challenging economy, it is not likely to start working now. This applies particularly to your staff. Do you have someone that is not giving 110% of their effort to your business? With an 8% unemployment rate, there are a lot of great people looking for work. It’s time for a change at your business.
Of course, some of that 8% are overqualified to be working in your business. They may eventually find a job in their traditional field of work and leave. That is always a possibility.
As an alternative, you can keep that underperforming person. Don’t worry about their leaving your business; nobody else wants them either.
Not to decide is to decide. Too many small business owners are paralyzed by the fear of making a wrong decision. My contention has been that the successful small business owners are much like Spiderman. They have a sixth sense that helps them. Look for your Spiderman instincts to help you make decisions. (Years ago, we referred to this as your ‘gut feeling’.)
The last point. It is all in the numbers. You cannot rely on your accountant to take care of the financials for you. You do have to understand how the financial statements are created. If the accountant cannot explain it to you, it is the accountants fault for their inability to put the information in a format that a layperson can understand. Tell the accountant to figure out how to make it understandable.
You have to create a budget. This is simply projecting the next 12 income statements. It is your plan for what will happen. It tells you how much inventory to have and how much to spend on payroll, advertising, and other various expenses.
With the budget, you then calculate the flow of money through your business. Making a profit each month does not guarantee there will be the necessary cash on hand to pay the bills each month. You know how seasonal this business is and how the need for cash is just as seasonal. There has to be a plan which outlines your expectation of the income and outflow of cash. Borrowing the title of another book recommendation, ‘Hope is not a strategy’.
There is that story about a person seeing a glass and whether that person sees the glass as half full or half empty. The truth is that the glass is completely full. Part of the glass contained a drink; the rest contained air. The glass is full.
Your business has a history of success; that is represented by the drink. The air represents the opportunity. It is there if you are looking for it.