Sick to death of hearing all this bad economic news? Right now you probably feel like Howard Beale, the newscaster from the 1976 movie Network who said, “Go to your windows, open them and stick your head out and yell, ‘I'm as mad as hell and I'm not going to take this anymore!' Things have got to change.”
You obviously must do much more than just get angry about the economic conditions. But it's a start. And it's a heck of a lot more productive than doing the business equivalent of curling up in the fetal position, pulling the covers over your head and waiting for the recession to blow over. Here are some ideas that can help you continue building your business during this downturn.
We have been this way before. While this recession will be longer and deeper than anything we have experienced in recent years, the survival strategies you need to get through it haven't changed much. At the recent annual conference of the National Association of Wholesaler-Distributors (NAW), held in late January in Washington, D.C., Alan Beaulieu, principal, Institute for Trend Research, Concord, N.H., outlined a proactive but painful set of time-tested strategies that distributors can use to weather the storm:
Fire unprofitable customers. You can't afford to carry money-losing accounts in this economy.
Whenever possible, renegotiate your vendor contracts and leases for buildings.
Invest in technology to reduce labor costs.
Reestablish your relationships with your credit providers, and build new ones with other banks if the current terms are no longer workable.
Terminate your “C” employees — you can't afford to keep carrying them any longer. Keep your “A” employees and continue grooming your “B” players with the potential to be all-stars.
Cash is king. Do whatever you can to improve cash flow.
Fix, close or sell unprofitable operations.
Put yourself in the customer's place
Dick Noel, electrical industry sage and eternal entrepreneur, recently reminded me of the question he has always asked himself when he has started up a new business or wanted to evaluate the products or services he is marketing. Says Noel, “I always ask myself, ‘Would I buy from myself? Is what I am selling really what the customer needs?'”
Differentiate your company with service
In troubled economic times, always go back to the basics. There's nothing more basic — or more important — than making sure your company offers a bigger and better package of value-added services than competitors. “50 Ways to Add Value,” an excerpt from the soon-to-be-republished The Electrical Marketer's Survival Guide (page 28), summarizes the basic value-added services distributors should offer and suggests a four-step strategy they can use to differentiate themselves from competitors.
Manage for profit
So simple to say, but so tough to do. In “Tuning Up Your Operations” on page 38, Electrical Wholesaling Contributing Writers Allen Ray and David Gordon give you lots of food for thought and practical ideas on how you can maximize your profits in a tough economic climate.
Keep reading Electrical Wholesaling
We will help you get through this. Over the next few months, Electrical Wholesaling's editors are bulking up the magazine's feature well with articles from experts in inventory management, pricing strategies, copper pricing, and running a lean business. You will see several notable additions to the magazine's stable of contributing writers in next month's issue.
Keep it positive
In times like these, it's particularly easy to get on a negative jag. As I always tell my kids, we all only have a certain amount of energy and hours in the day, and it's our choice to focus this energy and the time we have either negatively or positively. Like good Jedi knights, let's always choose to use our powers for good and not evil. Don't dwell on the negative. Draw energy from the things that are going well and do your darndest to improve the things that aren't.