Redefining Business to Survive
The ever-changing economy, consistent gas price increases, natural catastrophes and other influences keep small businesses teetering on the edge. Many have to make decisions. Do we stay open, or close? Is the daily struggle worth the meager rewards? Or, can we give ourselves a makeover and beat out the competition?
Long-time business owners recognize that change is a constant so they often choose to weather out most storms in order to continue doing what they love best. However, when seasoned business owners begin to wobble, the public worries. Like the newcomer, long-term businesses often have to ask themselves, “What can we do to survive?”
Trite as the answer might seem, it is imperative that businesses constantly assess their results, regardless of the economy or world events: Is the profit margin increasing? How does the business compare to this time last year? Where is most of the owner’s time being spent – solving problems, knocking on doors, dealing with raising costs? Analysis keeps the business owner current and on top of operations. Without analysis, the business might not be able to forecast upcoming problems in time to make an adequate shift.
Next, businesses need to look at ways to redefine or perfect their overall operations. Take Tide, for example, ever notice how they are always, “new and improved?” Hmm, makes you wonder! Even though customers have been loyal for years, distance or convenience might seduce them away to a competitor. This does not mean that a business must constantly change everything they are doing, but they need to constantly be doing things better: better customer service, better sales, better products and prices. They need to stay on top of suppliers and styles (trends), just as much as area growth/ decline, demographics, and demands.
Sometimes, You Have to Adapt Rather than Perish
Conventional wisdom says that crisis is a powerful motivator for change. It was for a local Las Cruces, New Mexico, business owner who had to redefine her business in order to survive. The niche population population she has served, over the past 10 years, has been extremely loyal and supportive. However, during this past year’s economic upheaval, she noticed that sales were dropping (mostly because of the gas prices which kept her customers from traveling to her three locations) and some merchandise (gift and luxury items) had totally lost their appeal.
After analyzing her sales and expenses from all locations over the past full year, she made a tough but clever decision. She found someone to take over a lease at one location (a rural strip mall) which was a major achievement in itself. Then she moved all operations into her primary store, ran a huge sale on the items she decided to discontinue, and increased the merchandise that was selling well.
The results, of course, were cutting costs to a third and increasing sales by two thirds. She is doing well, maintaining a staff of nine people, and waiting until the economy improves before her next expansion (which will probably be a year to two down the road). Her business, which was primarily retail, has shifted toward entertainment. This location is central (on bus lines) and easy to reach. She has increased her marketing to target potential customers outside of her niche – featuring her new merchandise and services. Her current target market has more than doubled her previous niche (which she still serves) and she admits that, “things are looking up.”
Certainly these times could warrant redefining the business, but owners need to be careful not to make changes without doing research. Making too many changes too quickly could have a negative impact. Cutting costs, restructuring, reducing waste and unnecessary spending, moving excessive inventory (especially old or unpopular items), and applying sound financial management will help any business. If redefining is necessary, think outside the box, consult with reliable business advisors, take small steps, know the market and test the waters.
On the other hand, do not make huge, costly changes like taking out large loans or buying an expensive building (unless the business is doing extremely well and the analysis shows that to be a good move). Above all, know what the customer wants or needs.
Redefining can be a profitable change but it should first be a needed change to survive. Like anything else in business, change can be risky but it could also breathe new life into an otherwise dying business.