It's the Economy Stupid!*

November 18, 2008.

I hate to all rogue on everyone but let's get it straight - times are tough.  The retail sector is predicting this to be our worst Holiday Season in 30 years....that is a long time and it scares the bejeezes out of me.  The whole year has seen slower than usual, and then it became  abundantly obvious in late September that people were not spending.  In fact even the beginning of the year with rising gas prices we watched our shipping costs soar, and not in the right direction.  We also noticed our raw materials prices increase - not one , not two, but all of our materials increased. 

We really hunkered down and really made a conscious decision to watch the bottom line (we as in me myself and my company).  The year was okay, not one of our best but we were watching sales very close - let me re-phrase that, I was watching our sales very close.  This year you need to get creative, and do it fast.  A sale?  A promotion? An exclusive?  Do something....

Who Do You Get Your Advice From?

I come in contact with many different business owners, especially women entrepreneurs, artists and mothers that own their own business.  I have been following peeps on Twitter, I have subscribed to newsletters, joined groups - I know some female business owners.  And to state again, I have been a tad obsessed with economy so I read anything I could this year about running a business.  I know that in theory we should all think positive and it will all be okay, however I tend to go with the, "The first step to recovery is admitting you have a problem."  And, ladies and gentlemen this economy has a problem!   

The interesting thing to me though is quite a bit of advice out there tends to come from newbies, or people that are all together not in the retail sector.  No matter how many times I read on a chat forum, an email thread or an advice column that it is all good - it is not.   I also know that we need to be positive and we need to all think the best, but gosh darn it how can we really succeed in this day and age without admitting and acknowledging times are tough?  When times are tough (and they are) you need to be resourceful and smart and frugal.

I do think some business will survive and some even flourish in a down economy - but face it most don't.  If you have not already cut back, found other revenue streams or started pinching pennies, you may want to start now.  Here are few things I will not be doing in the near future:

Advertising

I am sorry to those people in this industry, you may want to advert your eyes right now.....but if you are a small business owner I would not recommend this now.  First of all you have no idea if it is worth it, or if the numbers that the publication guarantees are real.  Advertising can cost hundreds if not thousands of dollars.  Magazines are going out of business every week due to the number of readers declining steadily.  They need advertisers and if you are a new company do not do it.  Print is dead, everyone is on line - unless you have a huge unlimited amount of cash that you would like to throw away, I would not suggest it.

Placing an ad on a blog or a website or a newsletter may be a more affordable option for you.  However, check the readers first, or better yet check the click rate.  A newsletter with 5000 readers is different than 5000 customers.  Blogs, newsletters and websites pop up every day - which ones have people with money or just people with eyeballs?  I belong to many groups and read posts, boards etc.  everyone claims to have tons of readers....few can prove it.  If you are rolling your eyes and saying I don't know, just make sure and ask for proof of readers and of past advertisers.  Find out from them what the success rate of the champaign was. 

Local advertising in a newspaper might be a cheap route to go, or even a radio ad.  I still say both are risky.  Well established companies advertise - not small companies.  And an advertisement once won't do any good - it is repetition, so again how much money do you want to spend on a campaign?

Get a Publicist

Okay yes this is a good way to go to get your brand out there and I admit we have used them in the past.   However, you do not need to hire one.  I have read that some work on a case by case basis - if they get you press then you pay.  This sounds great to me, however you still have to pay for something you could do yourself.  And, if times are slow then do something productive.  Why not write a bunch of pitches now, or look at stories in the paper and twists them........pssst anything about the economy (good or bad, or how to help yourself or your customers could be golden) is a great way to get a journalist to listen to you.   

You can do it yourself, if you write well and are able to pitch a story about yourself or your company.  And if you don't write well - practice, re-write it and get some advice and then learn to write well.  Best press we ever got was from me doing my own publicity.   And now it is so much easier where you can get what editors and journalists are looking for sent to your email account not weekly but three times a day.  I mentioned this before - go to the HARO site (stands for Help A Reporter Out) and sign up - but pitch well.....or else.

One thing to think of before you go out there and reach for that publicity and kill yourself to get that press.  I may have heard from a very successful business owner and she said (and I quote),"All publicity does is feed the ego of the business owner - it does not change the business, sales change a business."

Hire a Life Coach of Sales Coach or Entrepreneur Coach

I have never done this, so I am just going with my gut now......really you are going to hire someone when sales are down?  This may be a good way to use your money, however maybe a better idea is to look at your product line and see what is selling and what is not.  Now is the time to expand on that line that sells and drop the one that does not.  You do not have the luxury of carrying an inventory on dead items - trust me I sure don't and neither do you.  If something is selling like crazy - make more of those.  And do not forget to send out an email to your existing customers to brag about how well they are selling.

Send Out Mailers to Your Prospects

Hmmmm......well with postal prices soaring I would say um NO.   Printing costs, graphic design costs, mailing and getting a list together to see who your prospects are.  How do you know if this campaign was a success?  You don't.  You have no way of knowing if the people you tried to reach even looked at the mailer, postcard, catalog whatever you sent.  I have done this - it is not worth it.  The success rate is around 3% - that is not enough to keep your company afloat

Why not use a newsletter program and send out an email to prospects?  This can cost pennies and can look very professional and it won't get picked up by SPAM filters like Evite or other emails that have too many addresses (again I know what I am talking about).  It looks professional, they have templates you can use or you can create your own.  You can even send it to possible prospects.

Helping Each Other Out

Lastly I would like to say in a down economy it is good to look around see who you can help, and who can help you.  Reaching out to others and realizing that your are not alone and others can relate is key.  Don't just lock up your business and walk away, don't stay on that island - get out there and join groups, find support and reach out.  There is nothing that makes me feel better than helping others....I bet if you reached out you would feel the same.  So....anyone have any other suggestions for me?

*The quote, "It's the economy stupid" is from the 1992 presidential election that Bill Clinton used against the senior George Bush.

Comments

[Carol Matisak]

Hi, I recently found your blog and have read almost everyone of your posts! I'm always looking for "REAL" women entrepreneurs who are not afraid to tell it and share it like it is!!

I started a line of bridal party gifts two years ago and have stayed afloat by direct selling (mostly cold calls) and dropshipping for our customers. We added a line of monogrammed gifts (to complement our bridesmaid gifts) which we will introduce at Market in Atlanta. Yeah, I know, great time to start or add to a business and spend $4,000 to exhibit... I am very, very, very concerned about our ROI with the economy being like it is but thought the only way to introduce our line would be to exhibit at a trade show.

I know you're an expert at exhibiting at trade shows, would you mind sharing some tips and advice on how to make a trade show sucessful. I'm trying to maximize every one of those 4,000 hard-earned dollars (besides, my husband has kindly told me at $4,000 per show, I have very, very few chances...) My budget, as most starting businesses, is very limited. I am our designer, production manager, quality control, shipping department, marketer, bookkeeper, etc. One of my weaknesses is PR; I've never done it and have no clue how to go about getting press coverage for our products. Can you share some advice on this subject as well...

By the way, are you doing any trade shows this year? Atlanta?

Thank you so much!

[Melissa, Multitasking Mama]

I think all your tips are great for trying to stay afloat in these economic times. I feel fortunate to be a part of networking groups (free) on and offline that help keep referrals and sales coming, regardless of the time of year. Free advertising is the only way to go when the economy is such a big question mark!

[Stacie Dale - www.staciedaledesigns.com]

Hi All-

Agreed. Don't advertise. If you have an online business, the best ad money you can spend right now is for Google AdWords or Yahoo Marketing. It drives new customers to your site every day. Print ads have never gotten me anything. Also, as you said, verify some of these "newsletter" inclusions. Many just want you to place an ad in their newsletter that supposedly goes out to 5000 people. How do you know all 5000 are good email addresses? Truth is, you don't. Ask for proof of readership and how many unique visitors they get to their blog or website each day.
As for trade shows. I don't do them and think they are tough as a new guy on the block. If you're looking for new accounts, call or email your prospects a day or two before the show and ask them to make a point to stop and see you. Otherwise, you may as well not even attend. Buyers have limited time to write orders so you either need to have the best darn looking booth space and product known to man or you need to have made some prior contact to remind them to see your line while at the show. Trade shows are such a huge expense and from my experience, have not been worth the dollars I put out.
Lastly, batten down the hatches...it's going to be a bumpy ride for the next year or two. We all have to make cut backs and change with the times. It's just part of being a business owner. I do see though that as bad as I may think I have it, somebody out there has it worse, so be charitable at a time like this. If your hand is closed, then you can't receive. Don't be embarassed either if you have to sell off inventory at a discount or take on other work or a part time job until things pick up again. You wouldn't be a good business owner if you didn't do those things.

[Dara Blaker]

Awesome read. I feel that we, as mom entrepreneurs, are already getting this and the rest of corporate America is just learning it. Thanks for the info and for doing your part in helping us. How can I help you today?

[Susan Whitehead]

One thing I didn't see you mention in the advertising section of your post was online advertising. Using the internet is much more cost effective for small business owners and small budgets and the ROI is easily calculated. Offline print, radio or tv ads are difficult, if not impossible, to track and, therefore, impossible to know the value of.
I recommend to all of my clients this season not to back off their internet advertising. We're setting up more email and video marketing campaigns than ever. Being able to specifically target their customer base is making a difference in their profits this season.

[jessica - live beautiful]

Yes- Great advice! It's always good to be reminded and encouraged. I think this is an amazing time to GET CREATIVE. It's times like these when we are forced to think differently... and hopefully come out on top because of it!

[Sally]

I have been reading your blog all night (and now this morning). What a wealth of information and it is so good to hear it straight from a successful mom in business. Here's to another successful year in business for us all!