Wednessday Input

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RECESSION STRATEGY - PART 7: PROMOTION AND eCOMMERCE

PROMOTION

Don't strangle the marketing budget. Now is not the time to cut back on promoting your business. You may even have to increase promotion. Businesses that want to weather this downturn must seriously look at what it takes to stimulate demand. Reevaluate your promotion strategies and how you package your advertising. Analyze your advertising for cost versus results. Increase your advertising in key areas. Holding your own may be a plus. If you reduce your advertising, you might slip in market share or gross sales. Ask your sales team to give their input. What products are selling? What products need to be promoted to continue to sell?

Get closer to your customer. Ask them what they want.

eCOMMERCE

If you don't have a website, consider developing one. Use a web professional to craft the look of the website. Be savvy in hiring an e-professional. It can cost you hundreds of dollars and yield great results, or cost thousands and tank. Shop knowledgeably before you hire a specialist to develop your website. Don't spend money on a website unless your industry has a record of responding positively to e-commerce. Some of the best values and some of the best business opportunities are through the Internet. Seek the advice of your trade or professional association. What have other businesses like yours done regarding the Internet? Follow the technical guidelines for getting your website on the first page of a search engine. This practice is called "Search Engine Optimization." S. E. O. Internet business is an area that is either growing or reducing the effects of the recession. Consider how it can help your business during this downturn.

Mission Drift

Mission Drift - effectiveness.

OUR LOCAL TALENT

The Artisan and the Entrepreneur.

Sunday my wife and I attended the 27th annual Ceramic Showcase at the Convention Center. It is an event that is sponsored by the Oregon Potter's Association. This year it started on Friday, April 24th, and continued through the weekend. For the 2nd year the Guild of Oregon Woodworkers was there, cosponsored by Northwest Fine Woodworkers. Since we started attending five or six years ago, the Creative Metal Arts Guild and the Oregon Glass Guild have been presenting their wares as well.

I am kicking myself for not posting this event. I purposefully watch for it every year in the month of April. It is something I like to share with as many people as I can. Next year I will try to give several weeks lead time.

Each of these artisans or crafts persons is a small business owner as well. Not only are they artist and / or technician, they are the traditional owner, wearing many hats.

There is:
The Leader: This is the connector. The person that creates the social fabric in their field.
The Manager: The practical individual that does the books, makes the calls and schedules the events, just to name a few.
The Entrepreneur: The visionary that sees the possibilities. This is the person that experiments with their craft, senses the trends and the winds that buffet and blow their business-craft about.

Visit these organizations to see the work of some of Oregon's best artisans and crafts people. Look for events coming to your community.

http://www.cmaguild.org/
Creative Metal Arts Guild

Guild of Oregon Woodworkers
http://www.guildoforegonwoodworkers.com/

Northwest Fine Woodworkers
http://www.northwestfinewoodworkers.com/

Oregon Potters Association
http://www.oregonpotters.org/

Oregon Glass Guild
http://oregonglassguild.org/

RECESSION STRATEGY - Part 6: INVENTORY AND DISTRIBUTION

INVENTORY

Cut your inventory, but wisely. You don't have to continue stocking a product just because you have always stocked that product. Use the 20/80 rule. Trim inventory where it makes sense to do so. Examine your inventory and decide what twenty percent of your inventory produces eighty percent of your revenue. Define what "high end" product means to your business. Define the functionality of the products you stock. Look at your inventory by "functional" and "discretionary" categories. Examine recent sales of the high end products. Have your customers stopped buying these products? Do you see any patterns of purchases of functional or discretionary products? If you have an integrated analysis tool that allows you to calculate register sales and inventory, examine price point and functionality versus discretionary products. Review the trigger-points you created in your budget process and examine your drop in sales. Decide if you will continue stocking, drop or reduce products based on your sales triggers.

Think trimming and just-in-time ordering. Think cash-flow.

DISTRIBUTION

Not all businesses, especially small retail businesses, have multiple distribution points or distribution options. If you do, improve distribution when possible. If you can, increase yourf outlets. Regardless of the number of outlets, provide incentives for your sales staff.

If you have the kind of business that invites quantity purchases, offer discounts for larger orders. Give discounts for advanced (committed) orders.

Maintain your cash flow. Identify and promote low margin but high volume products. Examine what you can do to develop marginal accounts or marginal territories.

Don't compartmentalize your thinking or actions. Remember, inventory and distribution are an integral part of the rest of your business. Continue to think of your business as a whole. Understand what effect your inventory and distribution decisions will have on the rest of your business.

Taxation and Large Business helping Small Business

Best and Worst States for Small-Business Taxation

Just as you recover from tax day, the Small Business & Entrepreneurship Council offers its analysis of the best and worst states when it comes to taxes.

The “Business Tax Index 2009: Best to Worst State Tax Systems for Entrepreneurship and Small Business,” ranks the 50 states and District of Columbia according to the costs of their tax systems for entrepreneurship and small business. The index pulls together 16 different tax measures and combines those into one overall tax score. Among the taxes included are income, property, death/inheritance, unemployment, and consumption-based taxes like gas and diesel levies.

Large companies launching initiatives to help smaller customers succeed

Some large companies, including Sam’s Club and Verizon, are reaching out to help their smaller customers save money and become more efficient in today’s challenging economy.

This week, Verizon launched a new online Small Business Center as a one-stop portal to help business owners increase their productivity.

Visitors to the site can set up a profile for networking; find discounts on products and services; and access news and information. Businesses also can pay $24.99 a month (or less depending on the number of users) to use the site’s Verizon Collaboration Center, which provides voice and Web conferencing to act like a company Intranet.

Verizon also will offer free bi-weekly Webinars with small business experts talking about topics ranging from managing a Twitter account to increasing productivity. The first one on April 21 will feature Shankar Iyer, senior director of business communities for Cisco Systems Inc., discussing how technology can help small businesses work better, faster and cheaper.

RECESSION STRATEGY - Part 5: PRICING & PURCHASING

PRICING

Maintain your gross revenue. Lower the price of your products or services only when necessary.

Give quantity discounts to customers if it is appropriate in your industry. Consider a rebate or coupon strategy for your customers. Discuss the effectiveness of discounts or coupons with your wholesaler/supplier and with your employees. With sales revenue dropping, competitors may increase their prices. Holding your price steady is an effective "reduction" and may be an effective means to maintain customer loyalty. In the grocery industry, some manufacturers are reducing the size of the container or the amount in a container as a means of increasing unit price. The consumer is not fooled by this, but it does not seem to have a negative influence with regard to brand loyalty. Increase your prices only when you have to and understand what effect this has on consumer demand, your gross margin, and profit.

PURCHASING

Don't tie up cash for a long time. Buy products and supplies wisely. Reduce or stop purchasing slow moving or low profit products.

Suppliers need buyers. This can be a time to re-negotiate contracts for lower prices or better terms. Review your current purchase contracts. Review return policies with vendors and negotiate favorable changes. Can any of your current purchase agreements be canceled or modified?

Examine your supply channels. Consider other sources. If you buy in advance, be cautious and realistic. Always consider cash flow in your purchasing strategy.

Use your supplier's network. Ask them about ways to reduce costs. What do they hear from other retailers?

Effective pricing and purchasing strategies can help you to maintain positive cash flow, adequate margins and profits during a recession.

How to Recession-Proof a Retail Business

Recession-Proof Your Retail Business

E - How has a six step process to help your retail business weather this recession.


Visit E-How for other useful tips and information.

An Important Seminar for Tough Economic Times

Navigating your Business Through an Economic Downturn

The Small Business Development Center through Mt. Hood Community College is offering an important seminar at 4 to 6 p.m. on Wednesday, April 22, 2009. The seminar is free and will be held at the Conference Room, Gresham City Hall.
1333 NW Eastman Pkwy, Gresham 97030

The seminar speaker is: Robert Sherk, Mt Hood Faculty and Small Business Advisor.

To RSVP call: 503-491-7658

Don't miss this opportunity to learn valuable information on operating your business through this economic downturn.

Recession Strategy - Part 4: Looking At The Numbers

The primary focus for a business in a recession are the numbers. The emphasis needs to be in the form of a financial action plan; with trigger points! Prepare your forecast using the best information available. Prepare an expected budget; an emergency budget, and a disaster budget. Note: the emergency budget and disaster budget may be one and the same.

Strengthen financial controls to maximize cash flow. Prepare a Cash flow Statement. Create a "Rolling Cash flow" form to stay informed of your cash position.

Reduce expenses that match your forecast. Watch carefully those internal expenses you have direct control over.

Be in "monitor mode." Think in terms of IF // THEN statements! IF my sales decline X% do I reduce my prices by Y%? THEN where are we at? (Reducing product prices may or may not be appropriate.)

What is going on with your business? Use your expected budget as a template. This will help you be prepared. Events or changes in the economy may happen fast. Anticipate and understand what you must do when those changes occur.

Examine inventories carefully. Use the 20/80 rule. Ask yourself: "What 20% of my inventory produces 80% of my gross revenue?" Examine low margin product lines and eliminate low profit product lines.

Review your Expected and Emergency budgets often. Be informed what is happening in the nation's economy; our state economy, and our local economy.

Assess employee expense. Justify salaries. If possible, move employees into direct revenue generating positions.

Do your homework with regard to credit. Though it is a tough credit environment, realistically examine your options. Is there any room to stretch your supplier credit or change the terms for a more favorable position? What is available to you through your bank? Make an appointment and have a conversation with your banker. Examine your Accounts Receivable policies.

If you are in "emergency mode" don't let lenders force you into selling products or goods at a loss to pay debts.

If possible, stay liquid. Have cash; use savings or CDs when appropriate.

Recession Strategy - Part 3: Ten Steps for Survival

What is different about this recession? It is global in nature. Though the Great Depression was global the perspective of America was not, the United States was much more nationally focused. Today we are more interconnected. The second facet that is markedly different is the aspirations of second and third world nations, especially India and China. Their actions have a pronounced influence on our economy, positive and negative. Their appetite for fossil fuels influences the world's energy markets; China's purchase of our Treasury Notes enhances our financial markets.

Instead of "riding it out" and passively absorbing the shocks, consider being proactive. The Forum Corp. (www.forum.com) has come up with ten steps in three areas of your business: 1) Financials; 2) People, and 3) The Organization/Climate. These steps can increase your chances of surviving the recession and positioning your business for recovery.

Finances

1 Reduce costs and control spending. Focus on a few critical priorities that will offer your organization a clear lead against your competitors.


2 Refrain from across-the-board cutbacks. Maintain products and services that customers value most. By cutting in all areas, organizations find that they cannot maintain strong service and deliverability to customers. Customer surveys can reveal a company’s most valuable products and services.


3 Consider alternatives to layoffs. Although downsizing may deliver a short-term boost to a company’s bottom line and stock price, it can create long-term negative effects. Before laying off workers, consider cutting management bonuses, freezing salaries and reducing compensation options. Remember to offer employees a clear explanation about the reasons for cutbacks.


4 Invest in opportunity. Bargains in assets and talent are often available during an economic downturn. Emphasize investments in research and development, marketing and customer-perceived quality.


People

5 Retain and develop top talent. Offer new challenges, training and valuable experiences to top performers. They are the most likely to be lured by a competitor when the economy is ailing.


6 Align the workforce around key goals. Performance suffers when team members are uncertain and hidden agendas emerge. Instead, frame an agenda, gain support and build commitment to goals and values.


7 Encourage questions and new ideas. Seek input from employees and offer a safe environment for them to share their feedback.


Climate

8 Squelch the temptation to make unilateral decisions. During tough times, leaders may be tempted to dictate solutions. However, this leadership style does not take advantage of a broad base of support and doesn’t allow challenges from others that could result in better decisions.


9 Communicate authentically. When strong leaders share their struggles, they build trust.


10 Create a positive vision and attitude that acknowledges reality. When leaders mobilize employees to respond to customers’ interests and values, they increase the chance that, when the downturn ends, they’ll come out on top.