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A Bigger Bang for Your Buck |
What do books and jewelery have in common? The Great Depression.
During the Depression, Bixler Jewelers, an American company founded in 1785, was not surprisingly experiencing a drop in customer traffic. The business had some extra space in the back of the store, so it opened a lending library to attract more consumers into the shop. Eventually the increased traffic helped sales start to rebound little by little and the company was able to stay in business. Bixler operated the library until 2002 when it was closed to make room for more retail space.
The principle this anecdote illustrates is one that can help your company survive and even grow during an economic slump: Get more out of the resources you've already invested in.
Look around your business and see what it has that is not being used to its fullest potential and could bring in extra business and add to its bottom line. Enterprises willing to incorporate flexibility and creativity into their operations may be better prepared to weather an economic storm than their competitors.
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Some Different Approaches
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There are many ways to bolster your business's income during a slump. Here are a few examples:
- A woman who owns a dress shop started a promotion where you can buy a prom dress for $50. The dresses are on consignment, so the store gets half and the rest goes to the person who consigned it. Meantime, consumer traffic attracted by the promotion brings in more potential customers for the new clothing she sells. The woman also teamed up with a local florist and a local hair stylist who offer discounts to anyone who bought a prom dress from the shop.
- A furniture retailer launched a monthly raffle in which customers were entered. The winners are refunded the cost of their purchase. News of the prizes were promoted, customers started flocking in and sales rose.
- An art gallery added a gift shop and a small cafe. Browsers may not buy any art until the economy rebounds, but they often take the chance to take a break with a cup of mocha and a pastry in an artful setting. And sometimes, while looking at a piece of art as the sip that drink, they actually decide to buy.
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No matter how good your product is, consider offering an advisory service to go with it. Would the product be more useful with a short training session? The would give your customers more bang for their buck and help ensure not only their continued business but referrals to their friends and business colleagues. Remember, your best customers can also be your best source of new business. Offer them discounts or cash payments for leads. | Here are a few examples that might work for your company or spark ideas that will help enhance your business's financial performance:
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Put Unused Space to Work
for Someone Else |
Typically, managers respond to tough times by trying to increase sales. That makes sense, but cutting operating expenses is often the quickest route to profitability. And renting out unused space can be one of the easiest ways to augment your business's income.
For example, many businesses lease or own commercial property but don't use it all. That unused room is the real estate equivalent of an airliner sitting on the tarmac or a taxi cab parked in a garage. Your company is losing money because it's maintaining an asset that doesn't generating income.
Consider renting out a room or two to another business. Who knows, your unused space may be the perfect location and size for a small art gallery, candy shop or start-up business. Even a hole in an exterior wall could be rented out for an ATM.
Keep in mind that the market value of your idle space jumps dramatically if you can throw in some add-ons. A law firm with an unused office could rent it out for, say, $500 a month. But if it adds access to its law library, a receptionist and the use of office equipment, all of which are part of fixed costs, the rental price could double or triple.
If part of your warehouse isn't being utilized, lease it to an enterprise that needs space for a small amount of inventory. Look for local amateur athletic leagues that need a place to store sports equipment off season. Alternatively, rent out space for a flea market on weekends.
Be sure you keep enough room available for your business's own needs when the economy rebounds and your company starts to rebuild inventory.
Take a look at your parking lot. Is it partly empty? Some companies boost their income by renting unused spaces to other businesses or to people looking for a place to park vans, boats and recreational vehicles when they aren't being used. You may even get double duty: rent to one business during the day and another enterprise at night, say a local theater or restaurant that doesn't have its own parking facilities.
Unused acreage can also generate income. If you own land that is laying empty but covered with grass or herbage -- and depending on local zoning laws -- consider leasing it as grazing land for horses or cows. You could also rent the land to a farmer who needs more space for crops. In some cases you might be able to rent out parts of it to local residents who want to plant vegetable gardens. Talk to your accountant to see if any uses of your vacant land might come with tax breaks.
There are also opportunities to rent out parts of your business when they are idle. For example, one new car dealer doesn't have enough business to keep his service department open on Saturdays and Sundays, so he rents out his service bays during those times – along with a mechanic -- to businesses who need their fleets serviced during off hours. This not only boosts the car dealer's revenues, it also lets him forge relationships with companies that will eventually be looking to buy new vehicles.
Even if you can't rent out empty space, you may find a profitable use for it yourself. One luggage distributor with excess warehouse space opens it up on weekends to sell old inventory at discount prices.
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Evaluate and Sell Skill Sets |
Owning and running a business certainly requires skills that can be re-purposed to augment income.
One commercial-property manager acts as the receiver for properties that are in foreclosure. Using receivership skills he had developed years ago and combining them with property management skills keeps grounds and interiors in good shape during the long foreclosure process so that tenants don't leave.
Restaurants have added catering services and cooking classes to increase income, taking advantage of people's tendency during this economic slump to entertain more at home. Eateries can even provide help planning events, suggesting menus and teaching people how to get the most out of the food they buy.
A boat dealer came up with the idea of teaching his mechanics a new skill that helps boost income. When warranties are running out and customers come in for repairs, the mechanics offer them in-house extended warranties. If a sale is made, the mechanic gets a bonus.
Another idea: Use your skilled management team to hold seminars -- for a fee -- and sell recorded versions of it. You boost income and position your company as an expert in your field.
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Avoid Layoffs -- Lend Out Your Employees |
If your business is facing the prospect of layoffs, or it has seasonal workers, you can lend employees to another company for a set period of time and get them back when you need them.
As the primary employer you would generally continue to pay at least a part of the employees' salaries and benefits, but the borrowing company would reimburse your business for the wages and pay a certain additional percentage to cover overhead and benefits. Be sure that the contract with the borrowing company includes a clause barring it from offering the employees a permanent job or you may lose a critical knowledge base. Discuss the implications for Workers' Compensation with your financial advisor.
A spin-off of this idea is to pay employees a percentage of their salaries, benefits and stock option awards while they work for a period of time with not-for-profit organization whose cause appeals to your company.
If you have exceptional managers, why not consider hiring them out to other enterprises to run exercises in team-building and management skills. Again, be sure you draw up a contract that prevents the other company from stealing your best managers.
Your business might also consider holding seminars – for a fee – and sell recorded versions. You will augment your business income while branding your enterprise as an expert in its field.
There may be many ways to boost your company's bottom line that can make a meaningful difference to your organization. It's not unusual that, when you go to the same place of business year in and year out and perform duties that become routine, you may become blinded to these opportunities. To uncover them, try using the services of your business advisor who may be able to see the possibilities with 20-20 vision.
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