I read this week that chef Monica Galetti is closing her apparently successful central London restaurant. The press has linked the closure to the increase in minimum wage. She’s not the only high-profile chef to close their well rated establishments in recent months.
It’s not just the hospitality industry that is struggling. Many businesses are faced with challenges. Dragon’s Den star Sara Davies’ primary business is also said to be struggling financially. And the Princess of Wales’ parents have lost their business Party Pieces in recent times.
Increasing costs are putting our prices and profits under pressure. Wars in Europe and the Middle East as well as key elections are creating an air of uncertainty for our customers. Whilst the cost-of-living increases may have eased a little, many households are still struggling to make ends meet. Changes in working patterns have changed people’s behaviour. More people are questioning the amount of stuff they have or need and therefore are buying less or taking longer to reach a buying decision. Many customers think that AI can deliver what they previously paid a person to do.
Some reports suggest that there will be record business closures in 2024. Other surveys have a much more optimistic outlook.
So how can we ensure our businesses are sustainable in challenging times?
Some of the most successful businesses have been established in times of recession. It is said that, if you can succeed when times are hard, you will probably thrive in better times.
But what can happen in good times is that we allow too much fat to creep in. We may spend more than we need to because we have the cash. That can include recruiting more people than we really need or buying things that are nice to have rather than what is essential.
So here are some things to look at if your business’ sustainability is in question…
Spending…
- Do you have subscriptions that you are not using or could manage without e.g. software, memberships, supplies?
- Are you buying at the best price? When did you last do price comparisons for you regular supplies? Could you secure a discount by bulk buying with another business in your network? Could you get a better deal from your existing suppliers (you might have to threaten to quit!)
- Do you have a budget for expenditure and are you sticking to it?
Marketing and sales…
- How regularly are you communicating with your existing and previous customers? Do they know about everything you sell (telling them once does not mean they know!)? Are you offering any rewards for introductions to their contacts who subsequently buy?
- Most businesses are reporting that customers are taking longer to reach a buying decision are you staying in touch often enough whilst they continue to prevaricate? If you don’t stay front of mind you will probably lose out to a competitor who is contacting your lead more frequently.
- Are your customers comparing apples with apples? Given that many customers are more price sensitive than they were you need to make sure that their price comparisons are fair. If you’re selling a premium product and your customer is comparing your pricing with a value range product it’s like they are comparing apples with pears or even bananas. Make sure your sales and marketing make it really clear what you are offering and why you are more expensive.
- Do you have a product ladder? How can people experience what it’s like to work with you before committing to a major expense?
Many business consultants will offer something like a free webinar on the bottom rung, a paid group programme as the next step and then a series of one-to-one packages as they lead customers to the biggest investment at the top of the ladder.
Event caterers often invite people to try a range of dishes before they commit to a booking for a major event.
A travel consultant might charge a research fee ahead of a booking for a big trip, they may or may not knock the price of the consultancy fee off the final price if the client goes on to book.
- Are you having the sales conversations? Many of us shy away from asking for the sale because we don’t want to be seen as pushy. Without the conversations we can’t flush out the reasons why someone is hesitating and if we don’t know what those are we can’t address them.
- If a sales conversation doesn’t lead to a yes or no decision find out why. Ask what the customer is unsure about? Is there someone else involved in making the decision? What can you do to help that person decide in your favour? Is there a critical path at play where something else has to happen before your lead will be in a position to make a decision? Agree a date when you will follow up and make sure you do. In the meantime, stay in touch via newsletters, and ‘I saw this and thought of you’ type emails etc.
- When did you last review your customer buying journey? Have you got the right things in place at every step in that journey? Is your messaging right for today?
- Above all keep marketing.
Is it time for some diversification?
- If selling your regular product or service feels like pushing water uphill, could you introduce a new offer.
- What knowledge, skills and experience do you have in your business? How could you use them in different ways? Could you offer training and consultancy for example? This might be to new entrants into your industry perhaps via a college or apprenticeship scheme. Are you losing out to people ‘doing it themselves’? Perhaps you could show them how to save time or money (for a fee).
- Should you be offering bespoke products at a higher price or off the shelf at a lower price?
- It may be time for some creative thinking to see how you can keep the cash coming in.
Surround yourself with support.
Running a business can be lonely at the best of times. It can be hugely stressful in the worst of times. That’s why it helps to have a network of people who understand at least some of the challenges. The Fabulous Networking community is here support you. Why not check us out. Visitors can attend three of our events before making a decision about joining. In person meetings are currently £10 to cover refreshments. Our regular online events are free of charge. Find details here.
