Few understand the importance of responding to change better than the owners of small businesses. New competitors... changing consumer tastes... and the endless ups and downs of the economy can cause a small company’s profits to disappear almost overnight. Unlike General Motors, mom-and-pop companies can’t count on a government bailout when things go wrong.
Veteran business journalist and corporate historian Robert Spector took a close look at dozens of successful small businesses to find out how they continued to survive and even thrive in the face of potentially ruinous changes. He discovered that what works for small-business owners often can work more broadly in people’s professional lives -- and even in their personal lives...
Team up with others. Bill Furst, owner of Furst the Florist in Dayton, faced a potentially ruinous change in the 1980s. Flower suppliers were increasingly ignoring his store’s needs in favor of larger clients. One Mother’s Day, Furst’s shop did not receive any shipments because larger clients bought up all of the distributors’ flowers.
Furst realized that if he was having trouble with his suppliers, other small flower shops must be having the same problem. He launched a wholesale flower distribution business to serve small florists and solve his own shop’s supply problem in the process. Furst’s wholesale division is now large enough to import flowers directly from South America, a sure sign of success in the flower industry.
Lesson: If you feel powerless to stop a change that’s working against you, either organize other victims of the change into a group... or, better yet, start a business to serve other victims’ needs. Together the group might be powerful enough to flex some muscle. If nothing else, speaking with others who share your problem can be a source of ideas and moral support.
Cultivate connections. It seems like a new coffeehouse opens every day in Seattle. Lora Lewis, owner of Hotwire Online Coffeehouse, found a way to keep her customers loyal despite this competitive environment. Lewis’s employees are instructed to get to know as many customers as possible, then greet them by name each time they walk through the door. Their greetings are loud enough that other employees hear the customers’ names and learn them, too. Being known by name fosters a sense of belonging that customers cannot find at other coffeehouses.
Lesson: Build as large a circle of acquaintances as possible. This starts with remembering people’s names and greeting them as friends each time you meet. People who feel a personal bond with you are likely to remain loyal to you and support you.
Stand out from the crowd. A decade ago, it seemed that demographic and economic changes would doom Galco’s Old World Grocery, a century-old family business. Galco’s was a traditional Italian corner grocery store in a Los Angeles suburb that no longer had many Italians. The shop couldn’t compete with the low prices offered by supermarkets and big-box discounters that had moved into the area.
Galco’s owner, John Nese, realized that the only way to overcome this price disadvantage was to offer products that the supermarkets and discounters did not stock. If he could find a product so distinctive that it was not available anywhere else in the region, the demographic changes in his neighborhood wouldn’t matter -- customers would go out of their way to find him.
Inspired by the success of microbrew beers, Nese began stocking a wide variety of sodas -- more than 450 from small independent bottlers -- and changed his store’s name to Galco’s Soda Pop Stop. This distinctive product line led to strong customer loyalty and national media attention, and Galco’s soon returned to profitability.
Lesson: Following the pack is not the safe course when a change is working against the pack. Better to be known as the only one who does something special. This distinctive status provides a degree of immunity from change.
Reduce debts and expenses. Few businesses are more vulnerable to change than restaurants. Customers stop eating out whenever the economy lags. And today’s hot restaurant often becomes tomorrow’s old news.
Sanford Restaurant in Milwaukee has survived for two decades, in part because it has minimal debt and low fixed costs. Owners Sandy and Angie D’Amato opened the restaurant in a vacant building owned by their family, and they lived upstairs, so they had no rent or mortgage payments. In the early days, they ran the entire restaurant by themselves, when necessary, so they didn’t have to pay salaries on slow nights.
Lesson: Debts and expenses that seem affordable when times are good can become anchors that pull us under when our finances or the economy takes a turn for the worse. Those with little debt and low expenses find it much easier to stay afloat.
Develop a reputation for exceptional quality. London hatters James Lock & Co. have stayed in business since 1676 -- quite a feat for a company in the fashion industry, where styles change every season. The family-owned business keeps up with the latest hat styles, but the key to its long-term success is something that hasn’t changed in more than 300 years -- Lock’s reputation for providing top-quality head wear. A customer who couldn’t recall Lock’s name or address once mailed his order to "The best hatters in the world, London." The postcard reached its destination. From Admiral Lord Nelson to hip-hop star André Benjamin, Lock’s customers patronize the store rather than trendier competitors because they can be confident that they are buying the best.
Lesson: No matter what changes, exceptional quality always is in demand.
Posted by: Best3Chronicles
