At year end 2009 much was made about our “new normal” economic conditions. I read several musings of why some small businesses failed and why some succeeded. I read many statistics on what consumers were buying and what they were willing to pay for the products and services they purchase. It all put me to thinking about the decades of 1950s and 60s which was a boon for small business development. So what were small businesses like back then?
Some well known big businesses got their real start in the 1950 and 60s. McDonald’s Hamburgers, Baskin-Robbins Ice Cream are well known, The Schwan Food
I grew up and entered into business in this era and recall some key elements of small businesses then that should lead to success in our “new normal” environment.
Focus on the customer. This is an all-encompassing principle, not limited to being polite when you are in contact with your customer. Whatever business idea you have, you are not in business until you have a paying customer. Therefore, your business idea must come from customers. When inspiration strikes, when you have that Ah ha moment, make sure it is generated by the wants and needs of people who are willing to pay you for it. Modern technology makes customer focus a little easier because of open access to information and ease of communication. Continually engage your customer, look to them for new product and service inspiration. Build a knowledge based relationship. One thing no competitor can take from you is your knowledge of your customers. Provide those services that assist in selling your products and make your customers life easier.
Control Costs, Minimize Risk. Sales come first so, only incur those costs necessary to complete the sales you expect to make and realize your expectations are often too high. Be frugal and track the money that flows through your business like water in the
Become as involved in your community as you are in your business. All business is inherently local. Buy local, employ local, sell local and contribute local whenever you can. Your customers live in the community in which you do business. It is your responsibility to contribute to their vitality so they can buy your products and services. Join local service and economic clubs; be active in your local church, synagogue or mosque. I once had a customer say to me; “Dillon, I came in here because of you but, I will be back because of them” (pointing to my employees), which brings me to the human component.
Your employees are not employees, they are co-workers; they are partners in your business. Co-workers deserve to know and understand how important they are and what their contribution means to your business. Train then well, cross train them as back-ups for other co-workers and share relevant company information so they understand and appreciate their contribution or lack thereof. Also, pay for performance. Adopt a bonus structure relevant to each class of co-worker. Remember, your co-workers are members of your community and are ambassadors for your business.
Sales and Marketing Strategy. Face it, not everyone is a potential customer. Concentrate your sales and marketing on those who are most likely to buy. Know your demographics and psychographics. Track everything you do, if it can’t be tracked, don’t do it. Adopt a consistent brand strategy and reach out to potential customers in direct ways. Utilize technology; website, landing pages, blogs, newsletters, social media, etc. DO NOT DISCOUNT, you will end up discounting your brand reputation. Encourage loyalty and show them the value of loyalty. Think about providing customer financing if you are in a big ticket enterprise, be creative, but not stupid.
Financing Your Business. In the new normal, as in the 50s – 60s, credit may be hard to get and at any rate it is expensive. Borrowers are selling you money and that has a cost that adds to your expenses, avoid it when possible. Write a business plan that makes sense to a disinterested third party hand take it to all your friends and relatives for investment. Look for potential partners who have skills that will enhance the business. Consider forming a workers coop if appropriate. Seek partners in businesses that are key to your success such as suppliers, service providers, etc. Make sure your pricing strategy provides capital for growth. Do not launch until you have 2x the capital available to meet your expectations. Your expectations will be wrong.
I could go on, but I am only trying to provide basics. Details change depending on the particular situation. The basic principle is to build a sustainable business model that is lean, green, and profitable and an asset to your community.
