10 Rules for Surviving a Recession
1. Protect Cash Flow
Cash Flow is the lifeblood of your business; to keep your small business healthy, cash needs to continue flowing through. Now no matter how tough times get, having cash flow out of your business will never be a problem.
2. Ensure Everyone is Vested in the Company’s Success
This is a time to make sure your team is “all-in” and it’s also a time to build a better team. When a recession hits, it’s imperative that everyone is working at full capacity. Be sure to encourage, train, and show your appreciation for their extra efforts.
3. Manage Invoicing and Collections Properly
When companies anticipate a recession, they usually start paying their vendors slowly. 30 days become 45. 45 days become 60.
Collecting invoices is one of the most important functions of any business and even more so in a slow economy.
The phrase, “the squeaky wheel gets the grease”, needs to be applied more now than ever. Consider changing your receivable practice now before the recession officially hits. Note: When applying grease, be gentle!
4. Review Inventory Management Practices
See what can be done to reduce inventory costs without sacrificing the quality of goods or inconveniencing customers. Are you ordering too many of a particular item? Can an item be sourced somewhere else at a better price?
Just because you’ve always ordered something from a particular supplier or done things in a particular way doesn’t mean you have to keep doing them that way – especially when those other ways may save you money.
5. Focus on Core Competencies
Drop the extras and focus on what you do best that is most profitable to recession-proof your business.
Consider hard before adding other products or services to your offerings. At best, it’s a waste of time and money. Worse, it can damage your core business by taking your time and money away from what you do best and/or damaging your brand and reputation.
6. Develop and Implement Strategies to Win the Competition’s Customers
If your small business is going to prosper in tough times, you need to continue to expand your customer/client base – and that means drawing in customers from the competition.
How can you do this? By offering something more or something different than the competition does. Increasing your customer service and promoting it is one of the easiest ways to outdistance your competition.
7. Hang on to your Current Customers and Clients
We’ve all heard the adage that a bird in the hand is worth two in the bush. The bird in the hand is your customer or client, and he or she is an opportunity to make more sales without incurring the costs of finding a new customer.
Even better, he or she might be a loyal customer, giving you many more sales opportunities. If you want to recession-proof your business, you can’t afford to ignore the potential profits of shifting your sales focus to include established customers.
8. Don’t Cut Back on Marketing
In lean times, many small businesses make the mistake of cutting their marketing budget to the bone or even eliminating it entirely. But lean times are exactly the times your small business most needs marketing.
Consumers are restless and looking to make changes in their buying decisions. You need to help them find your products and services and choose them rather than others by getting your name out there. Don’t quit advertising! If possible, step up your marketing efforts.
9. Keep Personal Credit in Good Shape
Hard times make it harder to borrow and small business loans are often among the first to disappear. With good personal credit, you’ll stand a much better chance of being able to borrow the money needed to keep your business afloat if you need to.
10. Drop Unprofitable Products/Services
Work with your finance department (or CPA) to determine if you have unprofitable products/services. Unprofitable products or services should be cut.
The only exceptions to this rule are products/services that you consider “strategic.” These items are sales that generate additional sales from other products/services to compensate for the loss.
Economic Challenges – Are you Prepared?
Economic challenge or recession; are they one in the same? The true definition of a recession is “a period of temporary ‘economic decline’ during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters”.
The official arbiter of U.S. recessions, the U.S. National Bureau of Economic Research, states the last recession in the U.S. began in December 2007 and ended in June 2009, lasting over eighteen months.
While the talk of the next recession has been going on for over a year, it has been greatly enhanced over the last 4 weeks due to coronavirus (COVID-19), the pending U.S. election, and now the oil dispute between Saudi Arabia and Russia.
If and when the U.S. goes into a certified recession remains to be seen. But if so, are you prepared?
One of the first things businesses tend to do is slash or even eliminate their advertising and marketing. The big question is…is this a wise business move or a mistake?
Study after study conducted after the past 5 major recessions suggests that companies that continued to advertise during the recession outperformed those that didn’t by major proportions. McGraw-Hill Research conducted a study from 1981-85. Out of the 600 business-to-business companies analyzed, the ones who continued to advertise during the 1981-1982 recession hit a 256% growth by 1985 over their competitors that eliminated or decreased spending.
This rule doesn’t only apply to the most recent recessions. During the 1920s, Post Cereal leading their category. During the “Great Depression”, Post significantly cut back on its advertising while rival Kellogg’s doubled its advertising spend by investing heavily in radio and introduced a new cereal called Rice Krispies. Kellogg’s profits soared by 30% and they became the new category leader and held that position for decades.
Perhaps the best quote about advertising during a recession came from Walmart founder, Sam Walton. When asked, “what do you think about a recession?”, he replied, “I thought about it and decided not to participate.”
Preparing in advance of a recession is the first rule in managing your business for if and when it arrives. Rule #6 is Develop and Implement Strategies to Win the Competition’s Customers.
Big Returns on Little Things
In today’s business economy you need referrals and repeat business more than ever! Nothing impacts the way your customers feel about your business more than the way you and your people treat them.
Ensuring that your people create a positive customer experience every time is no easy matter, and often it’s the “little things” that delight or annoy your customers.
Bruce Barton, author, congressman, and founder of Betty Crocker, said, “Sometimes when I consider what tremendous consequences come from little things, I am tempted to think there are no little things.”
It’s oftentimes the little things that proved the biggest rewards!
People, not businesses, nor products, create the customer experience, and it’s that experience that will dictate your referral and repeat rates.
Little Thing #10 from our 10 Little Things for Big Paybacks is, Everything Rolls Downhill. The way you treat your staff is the way they will treat their jobs and your customers! Respecting your staff also reduces absenteeism and internal theft rates. To create a culture where your employees are more apt to do the little things makes the job fun. Celebrate successes, have staff-only events and offer employee pricing to them and their families.
To see all 10 Little Things For Big Paybacks, click here.
Three Ways to Grow a Business
As owners or managers of a business, it’s our responsibility to not only figure out how to keep our business functioning properly and effectively, but also how to GROW our business. Staying level or going backward are not options. Profit and growth are key! So how do you grow a business? It’s more complicated than just increasing sales. If you’re trying to grow your business, start by understanding that there are only three ways to grow a business.
1.) Sell more of what you are currently selling.
2.) Sell what you are currently selling for more money.
3.) Add additional product(s) or service(s) to what you are currently selling.
Regardless of how you slice this, nearly everything you can come up with to grow a business will fall under one of these three headings. While discounting and sales events can help grow a business, lowering your profits is not the fastest or the most efficient way to grow.
In our Eight Critical Profit Factors, factor number two is, “Have an up-sell, cross-sell or add-on sales plan”. Include a staff incentive with every promotion and train your staff to up-sell, but not hard-sell, every customer.
Attracting a customer and getting them to open their wallets can be a difficult and costly process. But once they’re in your showroom and have their wallets open, an accompanying up-sell is relatively easy. Once the customer has chosen a bed, selling the matching nightstands can make the difference between profits or break-even.
SoundADvice is designed to offer you meaningful and helpful tips to help you run your business more smoothly. This week’s issue will help you increase your sales at a profit. Click here if you would like to see all 8 Critical Profit Factors to improve your bottom line.
Does your business name say what you do, or does it leave the public guessing?
In a perfect world, the name of business clearly says what they do or sell…names like Valvoline Instant Oil Change or Lawn and Snow Company instantly “says” what the company does.
If your business name doesn’t say what you do, we’re not suggesting that you change the name, but, it’s not too late to develop and promote a slogan that can be every bit as strong for your identity as the name itself.
Strong slogans not only say “what you do” but more importantly describe “what” you want your business to be “known” for.
GEICO’S “Fifteen minutes could save you fifteen percent on your insurance” is a prime example of a slogan that tells the prospect “what” they want you to remember about them. They will save you time and money!
A local example for Sturdevant’s Auto Parts is, “Start with Sturdevant’s”! The slogan explains their strategy… they want people to call Sturdevant’s first because they will have the parts you want or need.
If your business name says what you do but you don’t have a strong slogan, a good, strong advertising campaign can cure some of these ills. Today, there are simply too many names, too many competitors, and too much fragmentation for you to be remembered for your name alone.
A strong slogan, used consistently over time, will differentiate you in your prospects’ minds and give you a competitive advantage.
Having a strong Top of Mind Awareness (TOMA) is even more important in the age of electronic media. Studies suggest that 70% of people will click on the first business they are aware of or have a preference for, rather than clicking on the first name revealed at the top of the search engine page.
In the new electronic era, radio and the internet are the perfect combinations. Having strong TOMA (Top of Mind Awareness) is always the best SEO (search engine optimization).
Location – Location – Location
In the pre-internet world, it was said that the three keys to success were location, location, location.
Your location had to be easy to find and convenient to access.
In the internet age, all businesses are easy to find and convenient to access online and via mobile devices. A search for what you sell will invariably reveal a long list of your competitors who are all in the race to be near the top of a search.
While there are tricks to the trade of being found online, the only sure way your business will be found online is if your customers search for you by name.
Therefore, the most important location for your business is in the minds of your prospects and customers. Your business needs to establish a pre-need, pre-search preference and Top-Of-Mind Awareness in order for your prospects to search for your business by name.
Click here to read the magic formulas to capturing Top-Of-Mind Awareness and more internet searches
The Hidden Benefits of Advertising
Regardless of the advertising vehicle, you choose to use, you have a preconceived expectation about what your investment should yield. You refer to it as ROI, Return on Investment.
When you invest money in advertising, depending upon what you are trying to accomplish, the results may vary. If you are running a special event, you should expect that your advertising will drive potential customers towards your products or service immediately. If you are running a Branding Campaign, the results are spread out over time and you may not see or feel the immediate impact.
However, businesses that advertise, especially on traditional intrusive media like TV, radio, and billboards will have a unique and distinct advantage over businesses that do not advertise, and it has nothing to do with customers calling or coming through your doors. There are “Hidden Benefits” to advertising that are rarely taken into consideration when calculating your ROI.
Hidden Benefit #1 is Improved Closing Ratio. It’s much easier for your salespeople to sell a product which has created a pre-need awareness and preference. If you were selling vacuum cleaners door to door or even on-line, would you rather try to sell a well-known brand like Hoover or a brand that no one has ever heard of?
Hidden Benefit #7 is Recruit Higher Quality People. The best quality people prefer and aspire to work for a business that they have heard of and trust and has created a well-known name through advertising.
Smart business owners understand the hidden benefits of advertising. This, along with knowing your non-advertising competitors don’t have this advantage, can set you well on your way to owning your category.
Sales Meeting or Training Meeting?
Before we get into what we should call them, let’s start with, are you actually conducting regular meetings? If you are, congratulations, and if you’re not… START!
Let’s be honest, nobody likes sales meetings, including the person responsible for putting the meetings together. Creating good, productive meetings, especially on a regular basis, is not easy.
While regular meetings are not a must to running a profitable business, most successful business owners will tell you, without them, you’ll never be as successful as you can be! If you have three or four employees, you should be having some sort of structured meetings to keep your team informed and improving.
Now, onto what you should call them, Sales Meetings or Training Meetings?
Training meetings is the preferred verbiage for two reasons; One, the word “training” symbolizes that you are getting better. As owners/managers/coaches, it’s part of your job to help your team get better EVERY DAY and that very much includes training EVERY WEEK!
Secondly, I have never met anyone that honestly admits to liking “sales meetings”. In a survey of over 540 media reps conducted by ENS Media, it was revealed that 89% of the reps felt sales meetings were a WASTE OF TIME! I am going to go out on a limb to say, all things equal, if those same meetings would have been called “training meetings” the results would have been a bit more positive. This is simply because the reps might have felt that someone was trying to HELP them rather than just sitting in on a “sales meeting”.
Training meetings create a positive vibe within a business, and employees appreciate being part of a “nurturing” culture. So, not only will you have a better trained and informed team, you’ll have a more positive team, and everyone knows what that can do for a business.
If you would like help in either starting regular training meetings or improving on your current meetings, click here for a list of the “10 Do’s & Don’ts for Effective Meetings”.
Frequency: How Much is Too Much?
One of the most indisputable truths of marketing is that repetition, also called “frequency”, improves sales.
Frequency is the glue that brands or welds the message in the consumer’s mind. Over time, frequency helps build trust, improves your odds of being front and center close to the time of purchase, and helps make your brand and message more memorable.
Marketing guru, Seth Godin, says “If you promote something twice to one-hundred people it will lead to more sales than if you promote it once to two-hundred people”.
Seth goes on to say, however, “The line between frequency and annoying is thin indeed. At some point, though, the frequency of repetition stops being helpful enthusiasm and starts being selfish.”
Even the most creative and profound messages run their course. Your ads need to be changed at certain intervals to avoid “commercial burnout”. Commercial burnout is described as using the same commercial with such frequency over an extended period of time that audiences literally ignore or become annoyed by it.
Delivering a consistent image or identity over time remains one of the pillars of successful advertising, but you have to deliver that message in meaningful and refreshing ways to avoid burnout.
The length of time you can run the same ad without risking tune out or burnout depends upon three key factors:
1.) How many time periods or different audiences your ads reach.
2.) How many days your campaign runs.
3.) How meaningful or interesting your campaign is.
Tradigital… It’s the new buzz word in the automotive advertising world and will soon transcend into the rest of the advertising world. It’s derived from a combination of traditional media, (Radio and TV) and digital media, meaning any advertising transmitted via the internet on computers, phones, tablets, etc.
Automobile dealers are taking P&G’s (Proctor & Gamble) lead in understanding that digital advertising, in most business categories, cannot and does not create demand for products or services. Digital media is primarily used at the end of the buying cycle, where they do their research and is the “How people buy”, whereas traditional media (Radio/TV) create the desire or emotional connection that creates the “Why people buy”.
Ryan Deiss has been called one of the world’s leading digital marketers. While speaking to a group of advertisers, he showed them the eight sequential things about online marketing.
“The first of the eight was Awareness”, he said. “No one in the room should be spending a penny online for awareness. The cost of creating awareness online is incredibly expensive compared to radio. You just need to maximize the online traffic that radio can easily drive to your website.”
By utilizing the tradigital philosophy you will follow your potential customers on their natural buying cycle. TV and Radio will connect with them on an emotional level long before they need your product or service, and when they do need you, they are more apt to search for you on one of the many digital platforms.
If you are all digital, the experts like P&G, Ryan Deiss, and experts in the automotive industry might suggest you get focused and become Tradigital!
To be better at both, click here to receive the Seven Fundamental Truths of driving successful online marketing.
Summertime – Fun Time!
Regardless of what part of the country you live in, North or South, East or West, for most, summertime is a fun time and a great time to launch and execute promotions for your business.
The next time you are planning a significant event or promotion, consider the power of live radio remotes.
Caution: If you’re not REALLY having an event or promotion, DO NOT have a live remote broadcast. Live remote broadcasts can be one of the most exciting and profitable traffic builders you can buy, if… you don’t expect your remote to be the event but, use it to promote your event.
All too often advertisers depend on and expect radio personalities, station vehicles, tents, swag (prizes) and the immediacy of live broadcasts to create a successful event. There is more to it than that!
Sure, a small percentage of people will show up simply for the “free stuff” and the excitement of having a radio station and personality at your business, but the goal of an event or promotion is really three-fold:
1) Drive immediate traffic
2) Increase sales for that specific event or promotion
3) Increase awareness to your business
…and a bonus is reason 4) Residual business. A well-executed event powered by a live remote broadcast can drive more traffic in the select days that follow the remote than it did the day of the remote.
The remote broadcast should not be about the radio station. It’s key that the majority of the focus be on the specials you have for this specific event. Giveaways and registrations are great and can add excitement, but make sure they play second fiddle to the business and the promotion.
Are Your Employees REALLY Working?
An old business owner joke goes like this; a reporter one day asked the CEO of a major company, “So, how many employees are working in your company?” The CEO replied, “approximately half of them”.
It’s funny, but the problem is, it’s not necessarily a joke! Today with the ever-expanding network of digital and social capabilities, the problem is getting worse, not better.
A fortune.com article stated that the average worker spends a full day of the workweek doing things other than, work! Paying an employee for 8 hours and getting only 6 hours of quality time is troubling, at the least.
According to an article posted by thebalancecareers.com, the most significant reasons why workers waste time were:
35% were not challenged enough
32% felt that there was no incentive to work harder
30% got no satisfaction from what they do, and
23% were just downright bored.
It’s no surprise that motivated employees with clear expectations get more done than those that simply show up and do what they “think” should be done. The trick is, how do you keep them motivated?
ENS Media’s “10 Leadership Tactics to Inspire Performance” suggests it starts with hiring. Hire on attitude and effort, you can train them on the skills required. Task #4 suggests you have “clear expectations”. Most people appreciate clear direction and boundaries and will “respect only what you inspect”. Make sure they understand that doing non-work-related tasks are not tolerated, and you can bet the time wasted will be far less.
If you would like a copy of the “10 Leadership Tactics to Inspire Performance”, click here.
The Squeaky Wheel Gets the Grease
All of your suppliers have a vested interest in your success, and most of them have access to extraordinary marketing funds and resources beyond traditional co-op to help you sell more of their products.
The problem is, seldom does anyone ask for these funds! If you don’t access those funds, you are literally throwing money away, or worse yet, your competitors will scoop those funds and use them against you.
In our “How to Leverage Your Suppliers” Marketing Muscle, tactic number one is “Tender your Next Ad Campaign”. Present a written proposal for submissions for marketing support from all of your suppliers outlining your proposed advertising schedule and investment, along with any special displays, promotions, demonstrations or other exposure the winning bidder will receive.
Many business owners believe their hands are tied to rigid manufacturers’ restrictions if they use manufacturers’ co-op advertising funds, but seldom is this the case. The Squeaky Wheel, often times gets the grease!
If you are an appliance dealer, for example, and you sell GE and Whirlpool, your GE representative has a vested interest in you featuring GE versus Whirlpool in your ad.
If you make a presentation outlining the kind of campaign you propose to sell more GE without using the standard GE script or ad copy that the manufacturer supplies, it will generally be approved by their office because they don’t want your campaign to feature their competitor.
Still, other businesses opt not to leverage their suppliers’ marketing muscle because it takes time and effort. In today’s competitive environment you need to take advantage of every competitive edge you can.
SoundADvice is a co-production of this station and ENS Media USA to help local businesses increase their sales and their return on investment in advertising. Your SoundADvice marketing tips are emailed to you on our behalf from ENS Media USA.
ENS Media USA’s address is: 6523 S. Killarney Ct., Sioux Falls, South Dakota 57108
How to Leverage Your Suppliers’ Marketing Muscle
All of your suppliers have a vested interest in your success; the more you sell, the more they sell. And they all have marketing departments with the experience, expertise, and funds to help you create more successful advertising campaigns. Accessing this marketing muscle is a classic case of “Ask and ye shall receive”.
1.) Tender Your Next Ad Campaign. Present a written proposal for submissions, to all of your suppliers, outlining your proposed advertising schedule and investment, along with any special displays, promotions, demonstrations or other exposure the winning bidder will receive. Have a deadline for submissions and be prepared to make a commitment to buy from the winning supplier.
2.) Think Beyond Cash. Your suppliers have more to offer than cash, credits or discounts. They often have branded advertising specialties or prizes they can offer for your campaign. They might also offer their vehicle presence for “truckload sales” or arrange factory demos at your place of business.
3.) Leverage Your Suppliers’ Expertise. Ask your suppliers to participate in your sales training program. They often have trainers that can and will train your people how to sell their products at no cost to you.
4.) Ask for Exclusivity. Where applicable, ask to be the first in your market to introduce a new line, or ask for a period of exclusivity. In some cases, you may be able to persuade a supplier to “private brand” their product specifically for you. When you have a private label or period of exclusivity, you are able to capture larger margins because consumers can’t make direct product-to-product comparisons with your competitors.
5.) Participate in Your Suppliers’ Promo Calendar. Many suppliers have promotions like traveling road shows, demos, personality appearances and more. Ask to see their promotions calendar and negotiate. Try to make your location a player in their events.
6.) Capture the Co-op Due to You. Regional sales and marketing managers do not like to see co-op funds go unused. If you don’t use the budgeted funds by year-end, they’ll often roll them into another fund to be utilized by your competitors. Schedule some time to understand what co-op is available to you and get your fair share. Consider asking near year-end if there are unused funds you could capture.