Hi Brad, I own a retail business in New York state, just outside of The City. As I’m sure you know, the US government instituted some austerity measures recently, including the repeal of the payroll tax cut. This concerns me for a number of reasons. First I’m concerned with how it will affect my employees and my payroll. But more importantly, I’m concerned with a study that says people will spend less because they will be losing about $200 per paycheck and that $200 might be what they spend in my store. What can I do to ensure my bottom line doesn’t diminish but, in fact, grows?
The idea of austerity versus growth in tough times has been debated for generations. Business owners, like economists and politicians, have differing opinions. Business owners on one side believe that in tough times they should continue to market and invest in their business while the other side believes you can’t spend what you don’t have and you need to cut expenditures in all areas to get through tough times.
Global economic theories aside, when it comes to your business the answer is simple, you have to always be looking for ways to grow. In fact, companies that are able to grow in tough times often find themselves far ahead of the competition when the economic cycle moves from winter to summer.
For someone in a retail business like yourself, that doesn’t necessarily mean you need to build more locations, hire new team members or even raise your prices.
What it does mean is you have to be smart in your investments and build a structure that will allow you to generate more customers, while keeping your expenses and overhead in line with where they have been.
Think about it this way, if your fear is that many of your customers won’t have the money to spend with you, should you lower your prices, or find more customers that can afford your existing prices? Lowering your prices will only lower your profitability and move you closer to closing your doors, while finding more customers can take your business to another level despite the economic times.
So how can you add value to your customers’ experience with you? Why would they buy from you and why would they tell your friends about your business?
If you can answer these questions you’ll be able to bring in more customers, customers who already have a good opinion about your business because their friends have told them about you. This is a great way to save money on advertising and bring in quality customers who will buy from you time and again.
The first step is to figure out who your best, existing customers are and create referral programs that will keep them coming back, and bringing friends.
If you’re spending resources in advertising without knowing the return in profit you’re getting from those activities, your shooting in the dark and most likely wasting money. This is one area where you can start to see immediate returns. Start testing different marketing campaigns and measuring all your results right away.
You can’t improve what you don’t measure. Start thinking of your marketing as an investment, not as an expense.
In addition to only doing advertising that has good measurable returns, profitability can be grown in a slow economy by systematizing your operations and becoming more efficient. Figure out what works well … and what doesn’t, and you will be positioned well for the boom economy when it arrives.
All the best,