(When You Want To Thrive, Not Just Survive…)
Hey there, Catherine here, and welcome to today’s episode of the Productpreneur Success podcast!
As I record this episode, things around the world are feeling pretty crazy, scary and chaotic right now with this Coronavirus being labeled a Pandemic!
Schools are being closed, events are being cancelled, people are self-isolating, and anyone who works in industries like travel or events is going to find it really tough over the coming months.
And I know so many of you are fearful of how you’ll manage to survive in business in this sort of climate, so I wanted to create an episode for you to give you some ideas about how you can survive and hopefully thrive even if the economy does start to struggle in the coming months.
But by survive and thrive, I do not mean taking advantage of people who are afraid or panic-buying.
I heard a story just last week about a guy in the States who saw a commercial opportunity in this Coronavirus epidemic, and decided to drive around to lots of regional towns and buy up all the hand sanitiser and loo paper from all the little independent ma-and-pa run grocery stores.
He then proceeded to list them on Amazon and Ebay for up to $80 per bottle of sanitizer! Amazon and Ebay cottoned onto mercenary sellers like this and banned him from both platforms. And now he’s stuck with 17,500 bottles of sanitizer and no way to sell them. What an idiot… But you get what you deserve I think!
So, we’re not going to take advantage of people who are panic-buying. Instead, let’s talk about some strategies and ideas to manage your business through tougher economic times, whether it’s a full recession or just a downturn.
Firstly, I’m going to share some ideas stem from my own experience growing my first business during the 2008 global financial crisis.
I’d started my first business, Cushie Tushies, with a friend back in 2007. My desire to start a business was because I had 2 babies, one year apart, and my boss at the time in the ad agency I worked at, basically told me my job was full time or nothing. And full time hours in Sydney is not 9-5, it’s more like a minimum 8-6pm, which is just impossible when you have two babies. So I really wanted to create my own business so I could work flexible hours and from home.
I suppose it was somewhat lucky that the product we created was a reusable nappy, which provided significant financial savings for parents compared to disposable nappies, so that was a really big selling point at that point in time when families were needing to tighten their budgets due to the GFC.
But funding the business was difficult. Banks stopped lending for quite a while, so I only had two options open to me: invest my savings, and use a credit card. Which is what I did.
And then, because I had to bootstrap my business myself with a very lean budget to grow, I just had to get scrappy. I used all the marketing know-how I’d learned throughout my career in my corporate advertising career to forge a way ahead and grow at a time that many businesses were going backwards.
Secondly, I want to highlight the fact that all of you who are running Ecommerce businesses actually already have the ideal business model to take advantage of this Coronavirus situation.
Consumers will still need to buy – sure they may not be buying things like travel-related products and services or going to events, but more people will shop online in the coming months than normal because they either can’t or don’t want to leave the home!
So here goes…
Let’s go over 7 Tips To Growing Your Store In A Recession (When You Want To Thrive, Not Just Survive…)
1. Protect Your Cash Flow
Cash flow is the lifeblood of your business; to keep your small business healthy, cash needs to continue flowing through. Now no matter how tough times get, having cash flow out of your business will never be a problem.
As long as your business exists, you will have expenses. But the harder times get, the harder it can be to keep the cash flowing in. Recession-proof your business by implementing strategies to keep the cash flow moving – and I’ll talk more about how to generate those sales as consistently as possible a bit later.
One important task to work on is a cashflow forecast so that you can anticipate when you’ll have bills coming in or expenses due, and what your expected sales revenue will be.
If you’re not sure how to do this, head over to the Show Notes to download a free Cash-Flow template.
And then, when you do bring in some cash, don’t spend it all at once. Try to slowly build up a bit of a buffer in your bank account. Plus, I’m a big fan of keeping a separate bank account to set aside money for tax and to save for big inventory purchases.
2. Review Your Stock Control Practices
See what can be done to reduce inventory costs without sacrificing the quality of goods or inconveniencing customers. Are you ordering too many of particular items? Can an item be sourced somewhere else at a better price? Is there a drop-shipping alternative that will work for you, eliminating shipping and warehousing costs?
Just because you’ve always ordered something from a particular supplier or done things in a particular way doesn’t mean you have to keep doing them that way – especially when those other ways may save you money.
The other way to look at your inventory, is to figure out what your top sellers are and try to get more in of those items. It’s super important to focus on doing more of what’s working well at times like this!
3. Focus On What You Do Well
I have seen many articles on diversification as a strategy for small business success, and it can be really tempting during a downturn to branch out and try to reach a different market or try launch new and different products. But too often small business owners confuse the concept of “diversification” with “different”, and unfortunately if you go too hard down the track of trying to sell to new and different markets, you can end up losing your core audience along the way.
Just adding other products or services to your offerings is not diversification. At best, it’s a waste of time and money. Worse, it can damage your core business by taking your time and money away from what you do best and/or damaging your brand and reputation.
Drop the extras and focus on what you do best that is most profitable to recession-proof your business.
4. Develop and Implement Strategies to Win the Competition’s Customers
If your small business is going to prosper in tough times, you need to continue to expand your customer base – and that means drawing in customers from the competition.
How can you do this? By offering something more or something different than the competition does. Research your competition and see what you can offer to entice their customers into becoming your customers.
Providing better customer service can be one of the easiest ways to outdistance the competition. This was something that worked really well for me in my first business.
In that business, we sold a product that was sometimes a bit tricky to use, or certainly trickier than the disposable alternatives. So we really buckled down on our customer service and made it REALLY easy for customers to get help.
What happened was, we started getting customers from other brands contacting us to troubleshoot their problems because they’d heard we could fix everything! And by being helpful and approachable, we ended up winning those customers over to us.
5. Sell More To Your Current Customers
Hopefully we’ve all heard the saying that it’s easier to sell to your existing customers than to win new ones. And those repeat sales are not just easier to win, they’re also more profitable than a first sale because they don’t incur the costs of finding a new customer, such as paying for advertising.
And that’s something you really need to take advantage of during a downturn.
Even if you do need to use tactics like incentives, coupons, free shipping or bundle offers, it’s worth keeping those existing customers buying from you rather than giving them the chance to feel like they can get a better deal elsewhere…
When it does come to trying to win those repeat sales from your existing customers, it’s worth remembering that there are a few different distinct types of buyer within your audience:
- The ‘I want what’s new’ buyer – this is your spontaneous buyer who will generally snap up whatever latest products you get in, just because they always want to have the latest and stay in front of trends.
- The ‘big spender’ is your efficient shopper. I confess I’m one of these. I don’t actually shop very often, but when I do I basically buy everything I need for several months. So I’m the sort of buyer who is influenced by volume incentives or bundles, or even free shipping thresholds.
- The ‘discount’ shopper is the one we all know about, and we will always have a portion of these in our database. It’s definitely OK to share discounts and incentives sometimes, just don’t stick to discounts as your only marketing offer because then 100% of your database will be taken up by discount shoppers.
6. Don’t Cut Back on Marketing
In tough economic times, many small businesses make the mistake of cutting their marketing budget to the bone or even eliminating it entirely. But lean times are exactly the times your small business most needs marketing.
Consumers are restless and looking to make changes in their buying decisions. You need to help them find your products and choose to buy with you rather than your competitors, by getting your name out there. So don’t quit marketing. In fact, if possible, step up your marketing efforts.
But, here are two things I want you all to keep in mind with your marketing right now:
- With more and more of us in isolation while this Coronavirus spreads around the world, I expect more people will be spending a lot more time on social media.
This presents us with a golden opportunity to create great content for social media, to collaborate with other brands or retailers or influencers on social media, and definitely to spend money on paid advertising on the platforms.
If ever there was a time to take advantage of a direct marketing strategy like paid Facebook or Instagram ads, now would be it! It’s the sort of advertising that offers you fairly immediate results and you can clearly see what’s working to drive traffic and win new and repeat sales.
- Use email marketing! Email marketing has THE highest ROI of any digital marketing strategy available, at 3800% (and that’s a recent 2020 statistic specific for Ecommerce).
So definitely spend some money driving traffic to your website, but don’t just rely on ads to convert sales. Get those visitors onto your email list and make sure you’re emailing at least weekly, with content and offers designed to appeal to those three different types of buyer who are likely to be on your list.
7. Keep Personal Credit in Good Shape
Hard times make it harder to borrow and small business loans are often among the first to disappear. As I said earlier, that was my own experience with my first business.
But with good personal credit, you’ll stand a much better chance of being able to borrow the money needed to keep your business afloat if you need to, perhaps using non-bank online-only lenders like Moula.
To recession-proof your business, keep tabs on your personal credit rating as well as your business one and do what’s necessary to keep your credit ratings in good shape. That means, pay your own bills on time, and keep your personal credit card spending in check.
There’s absolutely nothing that will make your small business one hundred percent recession-proof. But implementing the strategies I’ve shared in this episode to recession-proof your business will help ensure your online store survives the tough times and might even be able to thrive, grow and profit!
That’s it for today’s episode. I hope this has helped you to feel a little calmer about heading into the unknown over the coming months.
Stay tuned for next week’s episode where I’ll be sharing 12 ways you can boost your sales fast, which might also give you confidence that you can handle whatever’s coming with a slowing economy!
Before we go, don’t forget that we also have a free Facebook group to support this podcast, which is called Rockstar Productpreneur.
I’ll link to it in the show notes, and encourage you to join if you haven’t already.
It’s a group of experts and like-minded peeps who totally understand your dreams!
People who can answer questions, give feedback and provide support.
People who are here to talk you off the ledge if you feel like giving up.
And most importantly, this group is for Productpreneurs who are hell-bent on commercialising their brilliant idea and building up a lucrative, profitable business to sell it to the world!
Last but not least – if YOU have a burning question that you’d love to have answered on this Podcast, please email us at firstname.lastname@example.org with the subject line ‘PODCAST QUESTION’.