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Doing Business in a Recession
by Barbara Brabec
Whether youíre a self-employed professional who offers products and services to the business community, or a home business owner whose market is largely comprised of consumers, you have every reason to be concerned about where your next client, customer, order or contract is going to come from. If youíre currently thinking twice before you buy anything, you can bet that many of your existing and prospective customers or clients are thinking along the same lines.
Many . . . but not all.
When business is sluggish, and particularly in recessionary times, many sellers lower their prices in hopes of selling more products or services. But before you do this, stop and consider that a lowering of prices by 20 percent will mean that you have to bring in more than a 20 percent increase in sales just to offset your loss of revenue. It's tough to increase sales by 20 percent in a good year; in recessionary times, it's likely to be impossible.
There will always be some buyers with money to spend, but to reach those who have less than usual, you may need to employ some new marketing strategies. Try keeping your basic prices the same, but introduce new and less expensive variations of your stand-by products and services. Or try packaging one of them with some kind of freebie that wonít cost you much to deliver, but will make buyers feel they are really getting a good deal. (The old buy-one-get-one-free works for grocery stores; why not your home business?)
Tips for Service Sellers
If you offer a service, what kind of introductory offer or bonus could you offer to a prospective customer or client? For example, I received a telephone call recently from a chiropractor in my community who was trying to lure new patients by offering them a free X-ray, chiropractic treatment, and office visit. The benefits to both doctor and new patient are obvious.
A copywriter with an interested corporate client might offer to write one free news release; an editor might attract new clients with an offer of a free sample edit of a few pages; and a business consultant might offer a free ten-minute phone consult to acquaint clients with his/her voice and style of help.
Donít forget that your loyal customers or clients might use your service again if you nudge them gently with a special offer and a "thank you bonus" for doing so now. Service providers should also consider that companies that have been forced to lay off some of their employees still need to get work done, and they tend to hire independent contractors in hard economic times because this saves them all the overhead costs related to employees. So if you've lost your job, now may be the time to spiff up your resume and knock on a few business doors in your area, or search the Web for new freelance job opportunities. (Get involved in LinkedIn or other social networking groups to make new connections.)
Sales Strategies for Product Sellers
To maximize sales now, product sellers need to focus on the products in their line that are not only affordable to most buyers, but those that fill some kind of practical need or emotional want. Some products that always sell well in both good times and bad include functional items people can use in their daily lives, gift items that answer specific needs, collectibles and other nostalgic items, garments, jewelry and other inexpensive fashion accessories, and leisure interest items.
Not every product that falls into one of the above categories is going to sell, of course. One reason is that consumers do not merely buy things—they buy products and services that offer benefits. The real secret to sales success is, and always will be, having products or services that buyers want or need. Price is rarely the most important reason for lack of sales in good times or bad.
More often than not, the fault lies with the product or service itself and the fact that buyers just don't want or need it. In recessionary times, people donít stop buying, they just become more careful about how they spend the dollars they have. And some people will always have a lot more than others. As an Amazon Marketplace seller, I've been surprised to find that many of my sales in the past three years have been not only for some of the inexpensive books and CDs I've listed, but for those rare items I listed in the Collectibles category. I've made several book sales in the $75 to $295 price range.
IN 1982 AT THE HEIGHT OF THAT YEAR'S RECESSION, I was hired to present a series of five craft business workshops in rural areas of Michigan. Many sellers I met at that time believed their handcrafted products could not sell at higher prices, yet most had never tried to sell them at a higher price. They were instead basing their "pricing logic" on their own limited knowledge of what the local market would bear, and they had no conception of what tourists or buyers in larger cities might pay.
If the rest of the country was then in a recession, Michigan was in a depression. Yet, in Midland, Michigan, a craft shop owner told me that price was not the object when items were well made and in keeping with what buyers wanted to buy at that time. And a craftswoman who was then selling life-size cloth sculptures at $350-$400 told me that the economy was having no adverse effect on her sales. "If anything," she said, "the recession has helped sales because people need something to make them laugh, and my sculptures do just that."
A Time to Move Forward
Sometimes being forced to cope with a tough economic situation can spark new ideas we wouldnít have had if we didnít have to stretch ourselves a bit to keep our business on track. Believe me . . . if you have a business of your own, regardless of how small it may be, you have a kind of insurance salaried job holders will never have, and you should be thankful for that. I believe that now is a great time to move forward with new ideas, a time to try new things youíve never considered before, and a time to create new products and services that will meet the specific needs of todayís hurting consumers and businesses. I like what English playwright John Heywood once said:
And, according to the good advice I found recently in a fortune cookie, "Youíll accomplish more if you start now."