Thriving And Surviving In Tough Economic Times

I’ve done three talks in the last 45 days on this very subject: Surviving in tough economic times. So I decided if people were interested in this message I’d better share it with you folks.

I thought my consulting business and requests for training and doing talks would slow down like everything else with our current economy. It hasn’t. The phone keeps ringing and I keep jumping on airplanes winging my way to all the regions in our great USA. And yes, I’m finding business slow and tough almost everywhere I go.

Here’s what I’m seeing:

Sales down. Ranging from 5% to 50% (I know - it’s a huge spread).

Margins down. There’s the same number of players, but less business to be had - so too many folks are cutting their prices to try and fill up the sales pipeline. I absolutely disagree with this approach. Are you rendering less value, less service, lower quality? I don’t think so. So knock it off! Instead of cutting prices, add a point or two to the margin because you now have time to give better value, service and quality.

Expenses are down. This is to be expected. My concern is that too many people drag their feet too long before making the necessary cuts in expenses. We salespeople are optimistic. We didn’t believe the economy would dip as far as it has and we didn’t believe it would last as long as it has. Too many of you were/are too slow in reacting to the facts.

Lots of concern, even a little panic. Concern and awareness are good - panic is not. If you run a well-managed business (more on this shortly) you’ll be responding and reacting in a timely manner and panic should not be present.

Re-evaluating the business. A number of people are stepping back to look at their business. They’re incorporating new products and services. This is a very good way of helping to slow the bleeding and to put you in a position to be even stronger when business starts to improve. And it will!

Management issues. The continued lack of good management continues to drive me nuts! Times were good for so long that many of you didn’t feel the need to incorporate good business management skills. Well, here we are - times are tough and you still haven’t taken this part of your business seriously. Further into this article I’ll list the things you need to do to become better run businesses.

Negativity. Finally, I’m seeing too darn much pessimism. There’s too much negative talk and thinking. Yes, the whole run up to the elections (2+ years) will wear you out! Yes, the economy and financial situation is a concern. Yes, this is the worst downturn I’ve witnessed in my 40-year professional career. But this too shall pass! “Things” will improve albeit in a slower and longer recovery. If you do some smart things now, you’ll be stronger and better when that recovery does happen. The long run of good times caused too many of you to become complacent in how your business is run.

We need more happy talk! A character named Bloody Mary sang a song in the Broadway musical South Pacific called “Happy Talk.” If you don’t know the words, then Google it. Start talking optimistic and positive - it’s contagious, I promise!

There is a lot of good news out there. We just have to concentrate on the positives and try harder to eliminate the negatives. First, it’s projected that kitchens and baths will continue to be the most important rooms in the home for the next 25+ years. Second, all predictions point to the fact that luxury kitchen and bath products will not only continue to grow, but will be in high demand not only by the very high-end buyer, but by middle class clients as well. Will you be ready for this demand?

Following is a list of things you need to do to become better business managers:

Develop a vision and strategy for your showroom business. Where do you want it to be in 5-10 years? What will it look like? What products and services will you offer? What will make you unique and better than your competition?

Create a 3- to 5-year business plan that tells where you are today, where you want to go and how you’re going to get there.

Do an annual showroom budget. Every year!

Treat the showroom business as a profit center. The only way you can do this is by having monthly financial statements, a profit and loss statement, a balance sheet and cash flow statement. You won’t have a clue how well or poorly your showroom business is performing without these important reports.

Have written job descriptions for every showroom position. Everyone deserves to know what’s expected of them in their daily jobs.

Do a semi-annual job performance evaluation with each and every showroom employee. Everyone deserves/wants to know how they are performing in their positions. And, it’s the supervisor’s opportunity to mentor and coach employees.

Have a written policy and procedures manual for the showroom. It should spell out in detail how the showroom operates.

Develop a list of written showroom best practices that will encourage all showroom teammates to walk and talk and run the showroom in a positive, consistent manner.

Write a formal training manual that starts with day one and is never ending. It should include product knowledge, selling skills, technology and company policies and procedures.

Everyone wants to grow their sales. Well, there’s only three ways to do this:

Likewise, there are only three ways to grow your showroom bottom line:

Doing some of all three of these is the best of all worlds.

I mentioned that too many of you are allowing margins to slip. And everyone blames it on the competition. Bunk! I don’t buy it. If you’re letting your margins slip, STOP RIGHT NOW! Start selling your value package. Here is what I mean:

All sales consultants have to learn to sell their own individual value points. They need to learn to “brag” about themselves. Certainly this needs to be done in an appropriate way with the appropriate timing. But every prospect should be told how lucky they were to get you as their salesperson.

Next, sales consultants have to “brag” about their company. They need to recite the many value points about the business - why you’re better, more unique and different from all your competitors.

Finally, salespeople have to “brag” about their vendor partners and their products. This has to include pointing out the many features and benefits that their products have.

The point of all this value talk is that when you sell value and benefits you make price become less important.

I cover this in much more detail in the workbook I wrote for the American Supply Association titled “Essentials of Profitable Showroom Sales - Mastering the Art of the Consultative Sale.” ASA also has me doing an 8-hour workshop on the subject. Call them at 312-464-0090 or visit www.asa.net - get the workbook and sign up for a workshop. Remember, yours is a selling business. Nothing - I mean nothing - happens until you sell something. So wouldn’t it be in the best interests of both you and your company to try and become the very best salesperson possible?

Following is a list of things you can (must) do to tighten your showroom business belt:

Know what your numbers are. Know for sure whether you’re making money or losing money. If you’re losing money, do everything you must to stop that loss.

Generate the monthly financial statements I mentioned earlier and respond and react to them.

People costs are almost always the biggest number in the expense column. Your total people costs should be in the 55-60% of total expense range. If they’re higher than that, do something about it!

Fixed costs (rent, utilities, insurance etc.) are harder to adjust - but don’t be afraid to ask your landlord for some short-term help and don’t be afraid to “shop” your insurance package. You might just get a couple of pleasant, expense-reducing surprises.

Be sure that sales consultants’ productivity (monthly sales and GP numbers) are where they should be. I urge at least $50,000 a month in sales at a minimum of 35% GP.

Don’t cut your marketing expenditures. Just be sure you’re getting the “biggest bang for your buck”!

Manage your two main assets - inventory and accounts receivable - prudently.

Dare to be different! Offer new and different products and services. Try new and different advertising, promotions and public relations. Tom Peters, the well-known author and lecturer, recently made the statement, “Be distinct…or be extinct!”

Finally, “things” will get better - I promise!

A friend of mine recently said he’s advising his clients to “get lighter, get tighter and get brighter!” Good advice! Please feel free to e-mail or call me if I can be of service in any way.