Friday, October 12, 2007

A couple of days ago, I was asked if there wasn't a way to increase sales locally. (good question, jeff.)

The short answer is; yes.

The long answer is; no, at least not in a sustainable and cost effective way.

There are two reasons for this. One practical, and one philosophical.

The Philosophical reason first.

I believe that business happens in cycles and rhythm. That there are waves. That you are best off riding the wave, adapting to the cycles, and falling into the rhythm. Accepting the level of business you are given.

This goes against the go-getter, hard-charging perception of American capitalism.

To break it down further, I believe there are salesmen/dealmakers....and then there are shopkeepers. And they aren't the same thing.

I've gotten to be a damn good salesman after all these years. But I don't utilize those skills with every customer. I want each customer to get what he wants and needs, not what I want him to want and need. When I'm on, I can get people to buy stuff they don't really want, or more than they want.

Like a bartender, I don't want to sell too much potency to a single customer at a single sitting. I want him to come back, day after day, getting a moderate dose. I don't want him to have a buying hangover, a buyer's remorse.

Like triage, I try to use my skills where they are most needed. I size up the customer and try to figure out if they are casual, hardcore, or just looking. Sure, I might by dent of sheer skill and effort, be able to sell something to that guy just looking, or sell more to the casual customer than they expected to buy, and so on. But that is very short term thinking.

I can't tell you the number of store owners (dealmakers, actually) I talked to over the years that were proud of getting an extra 5.00 out of a customer in a trade. (I don't trade anymore at all, by the way, because it's a 'service' that seems to lead to bad feelings way too often.)

"Were they a regular customer?"

"Yes."

"Then why would you burn them over 5.00?"

It's why you sell your last item to a regular, even though you know you could get more on ebay. It's why you sell your own copy to a regular, even if you wanted it yourself. It's why you don't buy 'hot' product to the exclusion of mid-list product that your regulars want. It's why you don't jump on every customer who walks in the door and aggressively try to sell them something. And so on.

I've reached deadlines before where I need to scratch up some cash, and I've found that if I really put a full court press on everyone that walks in the door, including dealmaking and sales, I can often come up with the cash.

But I would face burn-out very quickly if I tried that every day. Burn out both personally, and burn out of customer good will.

So you get the rhythm down and go with it.

The second reason is more practical. For the past 3 to 5 years I've been adding inventory; new product lines, fuller product lines. Over the last 3 years I've probably been buying several thousand dollars worth of material a month, and trying to break even on it. (If I buy 5k extra, retail, and sell 3k of it at 40% margins, I don't lose money.)

I've been fine with that. It has helped sales, established new lines, evened out the level of sales.

As long as I had money in the bank and could cover short-term cash flow, it made sense to do it.

Until this summer.

I don't have another inch to spare.

Anything I buy extra would have to take the place of something I've already bought, which wouldn't be very cost effective.

It had to happen eventually.

But of course if I'm not getting an extra 5k of product every month, my sales are going to decline. It almost has to. But my profits should actually be a bit better.

So, I'm watching the cycle, the rhythm, looking for another wave to ride.

5 comments:

Anonymous said...

It's been almost 20 years since Paul Hawken wrote "Growing a Business." It remains quite successful.

Perhaps it's time for a follow up, written by none other than Duncan McGreary. Just compile this blog's relevant entries and use the best ones for your raw outline. Maybe the theme can be: "how to turn your hobby/passion/interest into a successful small business." As prolific as Duncan is, I bet something interesting could be churned out within 6 months.

Duncan McGeary said...

I suspect no one would want to read a book about running a business for 27 years at little better than minimum wage....

Besides, blogs are off the top of my head. A book, that would be work!

Anonymous said...

Oh come on . . . I even thought of a title:

"How to Succeed in Business While Really Trying"

Duncan McGeary said...

How to Survive in Business while Really, Really Trying.

Anonymous said...

Years ago there was a book called "The lazy mans guide to riches"

I think it sold quite well.

I somehow doubt that a book "How to start a business, work your ass off, and make next to nothing". The truth doesn't sell.

Bend is a basically a service town, provide a service to people with money, who are too lazy to do the service themselves. Enjoy the ride while their money lasts.

Write a book called "How to get rich doing what you love", now try and figure out how to do it?

The secret of business and success is being in the right place at the right time, today isn't the right time. Years ago Marz did very well before Merenda came, thus the girl running Marz sold. It's very few businesses that are successful forever, and smart people know when to shut them down.

People like duncan run a business for lifestyle, being their own boss, master of their life and time. Nobody to blame things on but themselves.

My favorite book on Business is from years ago called "What ever happened to the wooly mammoth". A story about the demise of small business in America, written in the 1960's. Very good book with useful info, I think modern books are more for middle managers at large companys.

Today the wooly mammoth is pretty much extinct.

Generally with a collapse of an economy, and lack of jobs people create new business, and become self employed out of lack of options. Perhaps in your new bend-bust cycle we'll see new entrepreneurs?