Lessons we do not learn from economists

Looking at opportunities through different glasses

A variation of a Mark Twain quote is, “A man who has had a cat by the tail knows a lot more than the man who has read about it.” This explains the reasoning that economists should not give guidance to small business owners.

If you look at the economy since 2000, and the many changes, you will find we have an economy that is challenging and changing. From the perspective of a small business owner, let’s look at some pro-active ideas.

What if you invested time in reading business books instead of investing in the media?

• Look at those listening to the news, fearing an impending downturn. Instead of seeing businesses as wise for their “hunkering down”, what if we were to look at what they are doing as an opportunity to take business away from them?
  
  The competition cuts staff, inventory, advertising, hours, services and anything else they can. Within these, are they providing opportunities for your business to grow?
  
  
• When we advertise, we spend money and work hard to attract new customers. Often this is done by discounting or “item and price” advertising. Unfortunately, many of us spend little time and effort working to keep the customers we have. The adage of, “it is easier to keep a customer than it is to get a new customer”, has a lot of truth to it.
  
  
• We should advertise because it has a great return regarding sales for the investment we make. If you are not seeing measurable results, it is time to try a different media or different message to get the results.
  
  With the Internet we frequently hear it is price that is the driving factor. The problem with joining the price game, is we abandon the customers we have had for many years. The price game is a one-way street; he who becomes a commodity last is the winner.
  
  
• Luck has nothing to do with your business; you get the glory for successes and take the responsibility and learn from the failures. Businesses that “ride out” the challenging economy are generally on the path to failure. Think of Sears, Borders, Sports Authority, Gander Mountain, Radio Shack and many more; They lost their relevancy to their target audiences.
  
  
• Sometimes we wait to see if a situation is going to get better; it could be an employee that is not quite working out right and it could be a product line, or brand that we had initially had high hopes for.
  
  
• With either case, the adage of “time is money” rings true. Employees that do not “get” the focus of your business are costing sales as well as dragging down the overall quality of your staff. Product that is not moving is like money that is stuffed under a mattress.
  
  
• How did you decide go to into the business? How did you decide to take the job you currently have? While you may have weighed a lot of factors, at some point it came down to your “gut feeling”.
  
  It is an amazing talent that has served many people well. Unfortunately, too many people put that talent on a shelf.
  
  What do you need to change? Add? Get rid of? What are your employees telling you they are hearing from your customers? History is full of businesses that succeeded because someone listened to their “gut feeling” and moved forward.
  
  
• Every expense is either a fixed dollar amount or a variable amount. Every expense is either a controllable expense (not essential) or an uncontrollable expense (essential). Look first at those that are uncontrollable fixed expenses. By your definition there is nothing you can do about that expense. All of the others are open for your review and consideration.
  
  
• We look at reports that deal in percentages. What counts is dollars! Hopefully you learned that “profit” and “cash on hand” do not have a direct relationship to each other.
  
  It is your responsibility to understand financials; to create a budget and a projectionary cashflow plan. Bottom line is you can hire an accountant or a manager, but you cannot hire an owner.
  
  Doing so, means your business is best positioned for a great year. And with that, don’t forget to ignore that economist.

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