Growing Your Business in a Screwed Up Economy

I don’t know about you, but I am SOOOOO tired of hearing about the screwed up economy. I see it on TV shows and in movies. I hear about it on the radio and in casual conversations. I even read about it in books, newspapers and on blogs. Everyone – no matter where they are in the world – seems to be freaking out about the worst economy that has happened in nearly a century.  This panic seems to lead to more panic until finally, all I can think is, “How is the economy going to recover if no one is looking at it in a positive light?” 

About two years ago, at this time of year, there was a day in publishing called “Black Wednesday.” Black Wednesday was the day that a large part of the publishing industry cut as much as 25% of their workforce, even going so far as to releasing published writers from their book contracts. As you can imagine, it caused a widespread panic in the publishing industry.

And yet, over the following year, many of the publishers reported an increase in profits.

Why? It’s simple. In fact, any bookkeeper can explain it. It is a process I like to call, “Cutting the Chaff.”

The reason many of the publishing companies increased profits was because they stopped spending their cash reserves frivolously. They reduced their employee expenses (and all expenses associated with employees like taxes, pensions, worker’s comp, etc.), and they chose to invest their money in products they knew they could they sell (ie, books by authors that had proven their sales book after book).

Once that was done, the publishers began thinking outside of the box. They slashed their marketing budgets, choosing to throw money only behind their bestselling authors. For their other less-popular authors, they taught them strategies to market themselves on a limited or non-existent budget. They changed their return policies, limiting the number of returns they would allow a bookstore to send back. They also began focusing their publishing efforts more on ebooks than ever before (which cut production costs considerably) and even put some authors’ backlists into ebook formats. Finally, more recently, some publishers even went so far as to band together against Amazon (which I read sells as much as 90% of the world’s ebooks) and demand to be allowed to create their own pricing strategy on their ebooks instead of allowing Amazon to price all ebooks at a flat $9.99 rate.

How to Thrive in a Screwed Up Economy

The point of this example is simple. If you want to survive in a sucky economy, you have to “cut the chaff” and “think outside the box.” Here are a few ways:

1. Inventory: You have to take a long hard look at your inventory and decide what is and isn’t selling. The items customers buy – put them front and center in your store, website, newsletter, etc. The items customers do not buy, send them back to the vendors, clearance them out, or sell off what you can on websites like eBay. Don’t waste your shelf space on things you can’t move. If you feel you absolutely must have a particular item in your inventory, cut back to the bare minimum and instead, order them as you sell them. (Much like Barnes and Noble does with books they do not keep on their shelves.)

2. Operating Hours: If you have times during the day where customers are not coming in, send employees home and even consider closing for a while. Customers will soon get used to the new hours of operation, and they will adjust their schedules accordingly.

3. Cut Hours or Jobs, if Necessary: While this is the least favorable option for a lot of small businesses, the fact is – business is business. If your business is struggling, you need to do what you can to keep it afloat. Any jobs that aren’t helping the company’s bottom line should be cut back on, or cut altogether. If you don’t want to close up shop, then run the business on a skeleton crew. Reducing people’s hours often gives companies a chance to cut back on employee benefits like health insurance (which I don’t recommend since it can be detrimental to employee morale). By laying off employees that aren’t satisfying the customers or helping the company’s bottom line, you will be better able to take care of the employees you keep on.

Of course, there are many other places you can cut expenses, but these three are often the easiest to do, and will create the most immediate results on a profit margin.

Start Thinking Outside the Box

While all of the above ideas are largely common ways to cut expenses, in a down economy, companies need to think “outside the box” in order to increase profits. In order to do this, there is one thing every business needs to remember:

The Customer is the Key...

Small Business Owners and managers continually forget this when it comes to business, and yet without customers, there is no business. And yet, putting the customer first is one of the easiest things to do. Here are a few ideas to get you started:

(When you think about customers, just think about “getting some T.A.I.L.”...Pardon the expression, but it was a beloved comment my father used to make.)

1. Train. Customer service training is very important for any business. In fact, the larger the company is, the more often they have a customer service training program in place. When I worked at Sears, JCPenneys and Carls Jr. as a very young woman, I went through three different training programs, yet they all had very similar principles. “The customer is always right.” “Greet a customer within three minutes.” “Suggest complementary products.” During the week, I will go more into some of these principles in detail, but for now, realize that an improvement in customer service, and a little bit of customer service training can go a long way in increasing sales and profits.

2. Ask. If you don’t know what your customers want, then why not ask them. Put out a suggestion box for some of the more vociferous customers. Leave out surveys at your business so people can give their honest opinion. Sometimes, just showing interest is enough.

3. Implement. As people begin to speak up, analyze the ideas the customers are suggesting and see if they are affordable viable solutions. You don’t have to go “hog wild” and order a dozen of a desired product. Often, only one or two products may fit the bill and give you a chance to see if other customers want it as well. If the customers wants a particular service (like free WiFi), a $50 a month fee can be a big draw for a lot of future customers, which means more sales in the long run. As long as the item is affordable, it won’t kill your business to test a product or service out and see if it actually makes a difference.

4. Listen. Believe it or not, customers will often tell you what they want to buy, if you will just listen. They tell you by asking if you sell a particular product, or offer a certain freebie. They tell you when they make a complaint about a product, or give a glowing review about something else. They even tell you when they leave a tip behind. So, pay attention. If a certain product is constantly being returned, cut it from your inventory. If an employee receives multiple complaints, it may be time to let them go. Because in all honesty, if you aren’t listening to them, your competitor will.

That’s it. To make your business grow in a down economy, you need to ditch what isn’t working, add in what is, and entice your customers by providing the things they want.

But whatever you do, don’t let the economy be the reason you close your doors. Use it as an impetus instead of an excuse.

Originally posted 2010-11-23 11:50:17. Republished by Blog Post Promoter