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Surviving in the economy

Help! How can we survive this economy? Every day the news is worse. Our business is slightly ahead of last year but we do not know if we can hold on to the increase long term.
First of all, let me congratulate you on your success. I do not know how long the economic situation will last. Actually, I can’t find any two financial experts who can shed any credible light on the subject either. When the economy takes a wrong turn, I have one philosophy, get back to the basics. Review your financial reports carefully. Look for areas that can be trimmed. Evaluate every program. Check your insurance programs to see that you have adequate coverage and that your premiums are competitive. Long-term programs that have not been checked for competitiveness can take a chunk out of your bottom line. Check your utility usage and challenge any unusual statement charges. Do the same with your telephone bill and your Internet service. Don’t forget to review your charge card processing program. “Price creep” is a normal practice and you may find that you are getting a great initial rate but paying hidden charges that make your rate quite high.
Whenever you find that a program is not competitive, you should strongly consider making a change. However, do not change just for the sake of saving a few pennies. You must “compare apples to apples.” Once you are satisfied that a new program is in order, make the change (after you have completed your homework on the new plan)! Many times changes are not made because the paperwork takes too much time and no one wants to sit down and do the fine tuning. This expense analysis new application processing may be the difference between you succeeding or closing your doors.
After you have completed a detailed analysis of your expenses, look at the image you are presenting to the customer. This type of analysis includes reviewing your employees, employee programs, policy manuals, and other tools that you use to convince your customers that your establishment is the place to shop. Evaluate your marketing and advertising programs. Now is not the time to eliminate them. You may not have the dollars to increase your budget, but eliminating your exposure to the customer may deal you a fatal blow as customers respond to other businesses who do advertise. Fine tune your program and keep your name out there!
Walk through your shop as a customer. Do you have old merchandise? Do you have “shop-worn” samples on display? If so, get out your scalpel and mark those goods down. Turn any slow selling or worn merchandise into cash. Check your stock room carefully. Is all of your merchandise on display?  If you find leftover seasonal merchandise, mark it down and get rid of it.
If you are not a good negotiator, it is time that you correct that weakness. When you attend markets or work with sales reps in your shop, remember this rule: “If you don’t ask, you don’t get.” The most important thing to remember is that if you have any doubts about the salability of an item, category, or product line, move on to something else. If you find that some vendors are not flexible, seek out those who are. In order to succeed in this economic climate you have to be a fighter. I am not suggesting that you treat vendors unfairly. I am advising that you work closely with all vendors of interest to find a “win-win” solution to each obstacle you encounter.
Our country has weathered many economic downturns. I agree that this current downturn is at an intensity most of us have not experienced. However, I am confident that we will see a turnaround and we will move into positive territory once again. I just can’t predict when that turnaround will begin. That is why I suggest going back to the basics. There are many companies who share a long history of being in business. They succeeded by staying on top of their business, meeting their completion “head-on,” and treating their employees as valued members of the business.
These are the major areas that I would concentrate on as I analyzed my business. You may have to make some difficult decisions as you uncover various challenges. If you do, do not postpone making such decisions. Now is not the time for procrastination, hoping that things will improve. Getting “lean and mean” will put you in a stronger position to grow once the economy turns back to being positive.
The information that I just shared with you is found in a well-constructed business plan. If you do not have a plan, I strongly suggest that you create one. I do not believe that any business should function (or attempt to function) without a business plan. Once you have created your plan, work it! I have met with many people who have developed wonderful plans that have been enthusiastically received by their management and their bank officials. Then, after the initial fanfare has died down, the plans are put on a shelf, never to be looked at again. This is usually because someone on the management team is either threatened by the plan or he or she does not know how to work with a plan. You should review your plan every 30 days and adjust it according to the performance it is revealing.

Help! I want to put large sale signs in our display windows to advertise our “Spring Clean-up Sale.” My partners disagree and say that we should go with an “elegant approach.” They claim the customer will respond to seeing the elegant merchandise beautifully displayed and offered at deep discounts. What do you think?
I think you should purchase some newspapers from around the country and show your partners what is happening with the economy. Then, hang your signs in the window.  

Michael Russo is president of the Gift Association of America. He gives numerous seminars on retail operations annually. He can be reached at Gift Association of America, 115 Rolling Hills Rd., Johnstown, PA 19505-5225; 814/288-1348; e-mail info@giftassn.com.

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