When will the recession hit? Late 2019? Not until after the 2020 elections? Well into 2021? Nobody really knows, but it is a rare financial pundit who doesn’t agree, “We are overdue for a recession, and there will always be one.”
On the other hand, it doesn’t take a worldwide or even a USA-wide recession to produce a downturn in an industry (retail), a specific product category (bicycles), or a region (Detroit.) Moreover, individual companies within each of those groups are continuing to do well, while other companies hit major headwinds in even fantastic industries, categories, and regions.
Your door might be swinging, and your phone might be ringing the same or even more than last year. If so, you can take a bow for great marketing, customer service, product selection, or just plain management. For another subset of readers, you are seeing negative numbers in the revenue column, and you are asking a critical question: “What can I do right now to turn the numbers positive?”
First, here is what you should not be doing. It is natural to cut back on expenses that seem to be expendable. One of those that is commonly first to get cut is marketing and advertising. If you have marketing efforts or advertising in place that is getting customers in the door, and those customers are more than paying for the advertising expense, DON’T CUT THOSE EXPENSES!
Here is what you should do:
- Get on the phone with specific customers who are buying less or have stopped buying altogether. Find out why? You might find out that you have an individual who is giving horrible customer service. You might find out that a competitor has entered the field that you were not aware of. Or you might determine that there is a serious downturn in some of your customers’ overall business that you have no real control over.
- Talk to the reps of your suppliers or call the owners of some of your vendors. Are they seeing anything that might help you understand what’s going on. Is it just your company, or is there a larger issue?
- Assuming you determine that a downturn is likely to continue, cut employee overhead ASAP. You may have to work more hours, shift jobs around, and even pay a little overtime, but eliminate your least productive employees. Any sales employee who isn’t closing 50% or more should be the first to go. Then get rid of any staff or line employees who you are not happy with (the bottom 20-40% of performers.) You will be able to hire better folks to replace them when the time comes.
- Reduce inventory and build cash reserves. Run sales and promotions. If you can’t move old product through your normal channels using mark-downs or terms, try eBay or Craig’s List. Find creative methods to move every item off the floor that has any chance of becoming a museum piece. Remember that slow moving products lose value and cost resources every single day they are still in your inventory.
- Look for opportunities to buy fire-sale priced inventory of businesses that are closing, suppliers who are closing out lines, etc. Only buy items you are confident will sell easily, and that will boost your margins.
- Market the heck out of your services. Assuming you are marking up services at least three times your all-in labor cost, don’t hesitate to spend 10% or more of your projected increase in sales to get more service business in the door.
- Make sure your remaining staff is not just sitting around watching videos on their phones. Get them involved in projects that you may have been putting off. Start new community involvement efforts, classes, or clubs as an inexpensive way to get consumers into your store. Up your efforts on Facebook and other social media. If the public comes into your business, take advantage of this slow time to clean everything, update fixtures and marketing materials, and do anything else that will improve the customer experience when they are interacting with your company, whether in person or online.
- Have brainstorming sessions with the staff. What ideas do they have to make the business better, drive new business, or increase profits? These brainstorming sessions should be designed to get even the quietest person in your company to participate. Develop a set of questions in advance. Make sure everyone understands that there are no dumb answers and that phrases such as “we’ve tried that before,” or “nobody does it that way,” are not helpful.
- Dig deep into your old customer and prospect files. Have you lost customers or failed to win prospects in the past that may now be ready to come aboard. Buyers change, priorities change, finances change. Now is the time to get on the phone and see if they are ready to do business.
- Network, network, network. If you are a local small business owner, join local networking groups, go to mixers and local business shows, and take a booth where it seems there will be a good crowd. If you are more national in scope, join trade associations, write for the trade journals, and take a booth at trade shows.
- Create incentives and contests for your sales staff and for any other department who has a chance to add to your immediate sales improvement.
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