Wow! The Snowpocalypse in Texas was no joke!
This post is all about business but was inspired by actual events here in Texas over the last few days. Here in south Texas where temps rarely get below 30 degrees a couple of days a year, we got a real wake-up call. Three days of snow and ice, temps in the single digits, and no power or water for much of that time sent us into survival mode. The real blessing in all of this was a chance to test out our preparedness. Water: Check! We had plenty of drinking water stored up. Food: Check! We had several month’s worth of food available. Power: FAIL! No backup power source other than batteries. Heat: FAIL! No alternative heat source, we just don’t need it here...or so we thought. General readiness grade: C-
We found out that our plumbing is not ready for this kind of cold and we’ll likely have some broken pipes to fix in the coming days. Also, many other systems were stretched well past their abilities and will require shoring up for the future.
So why am I giving you this account of my personal drama? We’ll it’s likely that you and your business have suffered some similar tests over the last year or so. Covid was the first big blow, then civil unrest, lockdowns of different types, and now, a really tough winter.
All of this results in fewer customers, unpredictable revenue flow, and an uncertain future. So, what are some tactics that you can use in your business to weather these storms? Let’s look at a few ideas.
First, and probably most important, take care of yourself! Your business needs you to show up healthy, happy, and ready to tackle new challenges with enthusiasm and energy. Go for a walk in the morning, grab a quick yoga session or maybe steal away for a cup of coffee and some alone time. Do whatever you need to do to keep yourself mentally and physically fit.
Second, know your numbers! What is your overall actual net profit margin? What are your actual fixed and variable overhead costs? How much of your cash is tied up in inventory right this minute? How many “turns” of your inventory are optimal for your business? What profit margin do you need from the brands you sell?
The list goes on and your business is unique, so you may need to factor in seasonal trends, fluctuating labor costs, or any number of other special issues.
Once you dig into your numbers you can come up with ONE NUMBER that lets you know if your day was a win. This number is rarely the sales total at the end of the day but something that is a “leading indicator” in your sales process. Maybe you have set a quarterly goal of doubling the foot traffic in your store, your daily number may be the number of people who walk through your door on any given day. Set that goal and then do whatever it takes to hit it each day, the sales will naturally follow.
These numbers will also help you make good buying decisions and good spending decisions. You can now ask yourself if a brand’s wholesale margins are adequate for your business model. You can determine if you should or should not carry a product line, even if you love it, based on the numbers.
Understand that if a brand or a product is not moving as quickly as you need it to, it is tying up your cash and robbing you of better opportunities. Your numbers will tell you what you need to know.
Third, optimize your business for sales and profits. Every customer is critical to your business’s health and giving them plenty of great opportunities to buy is important. It is much more than just putting something on sale. Here are a few ideas.
Always have an upsell and a downsell ready for any of your key products. For example, if you sell unique sweaters, make sure you have a matching hat. This can serve as the upsell when someone buys the sweater and the downsell if they love the color but don’t buy the sweater. This works for any type of business, get creative.
Next, run promotions every 6-8 weeks. There are usually a couple of obvious promo’s you must do every year but don’t stop with the usual. Depending on your business model, run these promotions for 7-10 days, let the world know the promo is coming with vague teasers a week out and more specific ads and emails a couple of days out and during the promo period.
Always bundle products around your best sellers to create a high-value offer that your customers will love. For example, if you sell coffee and accessories, a pour-over coffee maker, a nice burr grinder with 2 mugs along with ½ a pound of one of your best-selling blends make a great bundle. Give that bundle, and only the bundle, a discount and then promote the savings in two ways, as a discount percentage and as a cash amount and you’ll have a great offer for your customer. These types of special will move more items, increase your average order value and increase your cash flow better than a flat percentage discount on your entire inventory.
Forth, keep an eye on every expense and overhead cost. Do an audit and the last three months of credit card statements and expenses. You may find outdated subscriptions that you no longer use or random charges that need to be challenged. Also, examine what each staff member does and if those tasks are actually needed. We all get into routines and those routines need to be broken up occasionally. With today’s technology, many tasks can be automated or semi-automated with very little cost. All of your vendor agreements and service agreements need to be shopped around occasionally, too.
You bring great value to your community and to your family, protect and grow what is working and trim what is not. One thing that is for sure, only the strong businesses will survive over the long haul. These recent blows to our economy have served as a great test of your business’s strengths and, hopefully, have exposed some weaknesses.
It is just as important to work ON your business as it is to work IN your business! Here’s to a great 2021!