Powering Through Lean Times
3 Comments Published November 10th, 2008 in UncategorizedTags: Business, entrepreneur, marketing.
What I am interested in is what small businesses can do to survive (and thrive!) in our dismal economy. In my little town it seems businesses are closing down all around. Circuit City backed out of its lease in the new shopping center. Sunglass Hut closed down. I just read on the Kona Times blog that Kona’s Dominos Pizza has now closed, after over 20 years. I was fortunate to attend a Rotary meeting last week and the guest speaker was Hazel Beck, a business consultant with experience worldwide consulting large multi-national corporations on business processes and marketing. She is now a Hawaii resident, and is providing her expertise on a small scale to local businesses. One of Hazel’s strategies is to consider making strategic temporary “partnerships” with competitors. While this seems counterintuitive, I recently saw this work. One of my clients was outbid for a large commercial project. My client knew the winning bidder would have to invest in equipment and labor to complete the job. My client had the equipment and labor on hand, and offered to take that part of the contract the competitor would have to tool-up for. They crunched the numbers and realized they could cooperate and both come out with more in their pockets. Hazel also suggested another counterintuitive measure – increase advertising. Her point is that while competitors are reducing their advertising, a void is created and market share can be grabbed by filling the void. Although the approach is a long-term one, in the short term, media are also reducing their costs to stay competitive in lean times, and the advertising dollar will go further and have a greater impact in the down times. Here are the other ideas Hazel presented:
Look At Yourself. Take Charge. Get the correct perspective. Lead our staff. Make time for planning. Re-evaluate everything! Set the tone in your company. Keep your focus on the long-term. Stay balanced. Do not isolate yourself.
Look At Your Marketplace. Analyze the market, current conditions, indicators and dynamics. Expanding or contracting? What is missing in your industry? Can you add value without adding cost? Evaluate your pricing strategy. Form a hui.
Look At Your Plan. Review your business plan. 6-month view, 1-year, 3-year. Seek input from key employees. Make data-based decisions. Communicate your plan to your staff as appropriate.
Look At Your Company. Examine your culture. Review your products/offerings. Accounts Receivable. Analyze/reduce your inventory. Increase your advertising! Analyze all leases and interest rates – renegotiate where possible. Keep talking with your banker. Technology vs. travel. Review your P & L statements monthly.
Look At Your People. Develop the ideal org chart. Are the right people in the right place? Rebalance/cross train staff. Include them in the planning. Keep training. Cut hours before heads. Hire for fit – train for skill. Open communication.
Look At Your Processes. Ask your staff for their help. Owners For A Day(TM). Streamline & standardize your procedures. Document your policies & procedures.
Look At Your Customers. More cost-effective to keep a customer than to find one. Review past customers. Reconnect with something of value. Solicit input from key customers. Use email when possible. Ask for testimonials & referrals.
Look At Your Suppliers. Re-negotiate terms if possible. Co-operative buying.
Look At Your Competitors. Identify the competition. Analyze their strengths and weaknesses. What makes you unique. Structure a temporary partnership.
(copyrighted material above from thebeckgroup, inc. used with permission. Hazel Beck can be reached at (808) 443-7776.)
It is hard to hear the advice about increasing advertising when things are getting tight. Seems every yellow page advertiser and a few others have contacted me lately, so things must be getting tight for them too.
I agree with Hazel that now is great time to fill competitive voids by advertising. I do think, however, a lot of businesses do not need to increase their advertising; reallocating resources is often just as effective.
For example, online searches for local information are now marginally preferred to using the yellow pages (http://www.marketwire.com/press-release/Tmp-Directional-Marketing-908381.html?source=blog08-10-27). If a company is spending thousands of dollars a year on yellow pages advertising and puts no effort into establishing a professional web presence (design function search engine optimization search engine marketing), it is missing a huge opportunity to reach customers searching online. In a place like Hawai’i Island, the benefit to being found online is even more important because many visitors and part-time residents only have the internet to find businesses.
Advertising is only part of the marketing mix and may not be the best way to promote your company. You need to look at your customer profile and determine the best way to reach them. Direct mail, web marketing, public relations or improved collateral such as new brochures may be a more effective way to spend your marketing dollars. Developing a strategy that integrates various media will have greater impact.
The important thing is to maintain and possibly increase your expenditures during a downturn in the economy. More than likely your competition is cutting back and so your efforts will have more impact.