What are you doing differently in 2009?

How Small Businesses can Fight the Economy

With an economic recession upon us, what strategies can an independent retailer do to help their viability and success?

This year should be a challenging one for many retailers across Canada. We seem be getting hit at both ends, credit is not as available as it once was and consumer confidence is down resulting in more price conscious customers. So what is a retailer to do?

Here are my top ten action items that retailers should consider this year:

1. Watch your pricing. Go through your inventory and find those 12-18 items in your mix that are really price-sensitive and known. Price those items to sell and announce it to the world with large signage in your store.
2. Guard your margins. Stay competitive on your price-sensitive items and your known-value products, but then make sure you get your margins on your uncommon offerings and unique products to help keep your overall margins.
3. Review your transportation costs. With the price of fuel going down in recent months, watch your shipping costs on inventory. Price your transportation around to at least three firms each time. You’ll find large differences in the fuel surcharges as some companies have reacted to the lower fuel costs quicker than others.
4. Look to reduce overall wage costs. I’m a firm believer that if you pay staff more, it helps you build a team of people who perform better and more efficient, thus reducing the overall number of people you need. Do the math, you may be able to pay more per person, hire less people and reduce overall costs.
5. Cut out the non-essentials. Look through all your expenses line by line and see what you can live without. Rule of thumb is that most of us can cut 20% of fat out of our controllable expenses if we can just see the forest from the trees. Take a fresh look and see where you can cut spending on those non-essentials. If an activity doesn’t make you money – cut it out.
6. Take chances on new business. This is the time you may want to go after new business, bring on a new product line, try a new promotion, etc. With most of your competition cutting back, it might be an ideal time to steal the limelight and promote something new that you believe in.
7. Refocus your team. Now is the time to refocus your entire team on generating new sales. Start tracking and announcing sales numbers. Start an incentive program with your staff, whatever it takes. Just get them involved and interested in raising that number.
8. Freshen up your store. Give your store a fresh new look in your merchandising. An easy way to do this is with paint. Paint is cheap, easy to use and by changing the colour of your back wall or shelves to a brighter, more trendy colour may give your entire store a much needed facelift in the eyes of your customers.
9. Negotiate deals with your vendors. With the economy the way it is, now is the time to consider whether you can negotiate special deals with any of yourvendors. Don’t pay list price for anything from a vendor, at least not without asking and begging for a discount first. While you’re at it, ask for longer terms as well. There are lots of deals to be had out there.
10. Cash is king! This is probably the most important one. When the going gets tough, she who holds the cash wins. Watch your cash and your cash conversion cycle. Get those receivables in quickly, try and extend your payable, clear out of old inventory, increase inventory turns, do whatever it takes to build the cash (or availability of cash) inside your business.

So what are YOU going to do differently to ensure success for your business this year?

Andy