Current economic conditions present some unique challenges for business. When the economy is booming, many small businesses can't keep up with the demand for their products or services, and their primary focus is on filling orders. Little time is left for taking a broad strategic view of the business.
When faced with slow conditions, it's not uncommon for owners and managers to fail to turn the negative into a positive. Here are some things to do now to help position your business for the economy's inevitable turnaround:
Get to know your customers better. When times are slow, management has more time to spend with customers to learn how they feel about your products or services so the appropriate improvements can be planned for the future.
Formal research, such as surveys or focus groups, or simple visits by senior management will provide a new perspective on the customer.
Conduct in-depth analyses to better understand your business. Many companies will forgo analyzing their operations when business is booming, while others simply have never developed an analytical culture in the organization. The result is years of operating based largely on reviewing sales and profit numbers. But many organizations do not know the relative profitability of all the items in the product line, the profitability per square foot of selling space for comparative items sold in a retail store; the turnover rates for various products in the store, the repeat purchase rates for products sold to customers, or the amount of "spillage" (i.e., lost product) they encounter in various departments.
We worked with one small department store that learned through an in-depth analysis, that the average customer made a purchase in fewer than two of the store's 14 departments. It forced the company to rethink the entire store merchandising and internal sales strategies to increase total sales-per-customer, a less expensive way to build the business than finding new customers.
Use slow periods to evaluate the viability of your product line. Many businesses carry products not worth the sales time or store space because they don't provide sufficient return to justify the cost. When business is slow, management can analyze the product line to justify eliminating the 10 percent to 20 percent of items that don't carry their weight and could be replaced by others that will produce a greater revenue.
When business is booming, the slow moving items tend to get lost in the shuffle, but when times are tough, they should be identified and eliminated.
This is also a good time to strategically re-evaluate your business to ensure that you have not lost sight of the big picture of your company. For example:
If you operate a men's clothing business, ask if your slow down reflects a change in the market to which you haven't responded.
If you operate a retail photo store, ascertain if you have taken appropriate steps to keep your customers as they change from film-based to digital equipment.
If you make accessory products for laptop computers, are you able to think about your company as a supplier of accessories for the mobile computing and communicating market that will replace laptops?
Implement staff training. To most organizations, training is defined as providing classroom instruction on new ideas or skills. Often this is put on the "back burner" when business is booming, as there is no time for learning when the entire organization needs to focus on the sales and marketing activities. However, the slow periods represent optimal times to implement real training - education and learning that goes beyond the classroom environment. For example, providing salespeople with an educational session on handling objections is very different from working with them in the field and demonstrating in front of a real customer how to deal with such objections as pricing, delivery problems or product quality. This can work for virtually all functions in a company, and the benefits of real hands-on training will pay major dividends in the future.
Finally, seek new markets. You may have a product or service that could easily provide significant revenue and profitability if effectively marketed, perhaps using a different distribution channel of distribution or new communications medium. Examples include using the Internet or specialty outlets such as gasoline station- based convenience stores, both of which are relatively new distribution systems. And you may have the opportunity to reach a new audience using a communications medium that you haven't tried or used effectively before, such as outdoor billboards, radio, Internet advertisements or the local newspaper. Each might represent a potential new way to reach your customers that could change the direction of your business.
In short, the sluggish economy provides the opportunity to stand back, take your organization's pulse, and do the thinking and analysis that does not get done when the boom hits. Take advantage of the current economy and think and plan for the future.