With summer in full bloom, not many people are thinking about what’s going to happen to small businesses in the 4th Quarter of this year, on into the 1st Quarter of next year. But I am. And though I am not a fortune teller, I do believe that many businesses, both large and small, are not prepared for the possibility of a second plateau in sales and consumer spending, even though the economy is stronger than it was last year.
Here are some things we do know about today’s economy:
We know for certain that bad news travels fast, and everyone’s a little jumpy about more bad economic news. We’ve seen it several times when a job report, or an earnings report, comes out and if it’s not what the economists are predicting, the media starts focusing on this bad news. Unfortunately, this news might not have anything to do with your business or your community, but it doesn’t matter because people are still a little jumpy these days. Consequently, when good things do happen in your business, you must be prepared to retell the good news to your customers and the media, and to focus on those things that you CAN impact in your business (which I will remind you, is NOT the national news).
We also know for certain that this economic recovery is uneven. It’s not just that different areas of the country are improving or stagnating at different rates. Different businesses in the same marketplace and the same industries are unevenly improving. Go to your local chamber of commerce meeting and you will find business owners talking about how sales are fine or even good, and then, walk across the room and you will find someone saying that their revenue is horribly off. The net result of this uneven recovery is that there is not one thing that can correct everyone’s woes. So if you have grown accustomed to not looking for Big Brother to save your city or town, you will not be disappointed now; Big B is still not coming.
So what do I recommend? Here are a few thoughts:
I think that these summer months give all of us a great opportunity to look at the weaknesses in our businesses, start correcting them, and to start planning a comprehensive, multi-pronged marketing plan for the 4th and 1st Quarters that magnifies our true business differences, as compared to our competitors. Look at your overall business position and assume that consumer spending and customer traffic is going to decline in your marketplace, and decide right now how you’re going to capture those who have money to spend.
For many owners, their first inclination is to focus on tactical marketing steps, like using Facebook and other social networking tools, and to gear up their use. Well, there’s a downside of focusing primarily on business tactics.
Let me explain: During our Destination Business BootCamp, I work with business owners to help them magnify 24 different aspects of their business uniqueness. If owners work through those 24 points and find that their business is average or below average in the majority of the points, no matter how much you Facebook a customer or tweet them to death, if your strategic business differences are not superior in a consumer’s mind, your primary point of business difference will have to come down to price.
Let’s talk about price discounting for a second: I just read an article the other day that suggested that it’s a good idea to give happy hour discounts of 20%. That might sound really inviting to customers and it might even draw customer traffic to your business, but if your business doesn’t operate at a 20%+ profitability level to start with (or if the products you are discounting 20% don’t have an above average profit margin already), you as the owner are just slitting your throat using this tactic. Better to focus on magnifying your uniqueness and use discounts to reward customers who you’ve previously identified as being the most profitable.
With my prediction that the 1st and 4th Quarters could be a little rough, here’s one thing that you should NOT do right now: Now is NOT the time to clam up, quit communicating, go into a shell, get depressed, fear the future, and retreat into your own mind to single-handedly contemplate how to improve your business. Now IS the time to network with others, find out what works with others, learn from others, create strategic alliances, and start making changes to your business that will cause consumers to say: “That’s the place I’m spending money this coming holiday season.” That means, becoming a Destination business (a strategy that’s available to you if you are trying to attract consumers and you are a retail store, a restaurant, a service provider, or a professional practice.)
Just a reminder: one resource that all of you have at your disposal is our new Destination University Student Center. There are some amazing learning opportunities popping up inside those online walls! In the coming weeks and months, through the 4th Quarter of this year, through the 1st Quarter of the next, we’ll continue to fill the DU Student Center with more resources, Experts, and tools to help you get through this sputtering economy. Don’t underestimate what this tool can do for your business, all for the cost of less than one dollar a day.