Business opportunities abound even in a recession

Dan Miller makes a great point in Whack-a-Mole:

When one business lags, another explodes. If your business is suffering, what is the counterpart that is thriving? Can you benefit from that? If appliances aren’t selling, then you can be sure appliance repair is up. If new car sales are in the tank, used cars are thriving.

Small business owners are certainly feeling the pinch of the recession. Consumers are holding on to their money more tightly; unemployment remains high. Those that are buying expect better deals.

Even in tough economic times, opportunities abound. They may not be as easy to spot or exploit, but they still exist. The trick is to spot them, and then act. It might mean expanding your product line to include budget products or offering a new service.

Rather than allow a competitor to capture the market when consumer tastes shift, identify what you can do to meet the new market demands. Business success doesn’t come easily, and sometimes it means finding hidden opportunities.

Pre-customer retention marketing

The power of retention marketing–marketing to past customers–is a well documented fact. It is far less expensive to retain a customer than to attract a new one. But what about pre-customer retention marketing?

Like its more popular cousin, pre-customer retention marketing involves staying in front of the consumer. It means reminding him what you have to offer and that you want his business.

Many consumers begin shopping for a product or service long before they are ready to buy. They want to learn about their options, the possible costs, and which companies might best meet their needs. The Internet has made this increasingly easy.

Let’s say that Bob plans to buy a new widget in about six months and hops on the Internet to do some research. He comes across your web site, finds your information useful, and intends to contact you when he is ready to buy. But will he? He could easily forget about your company in the meantime.

But what if you offered Bob a free report that provided Bob with an abundance of information about your product and company? And what if you then emailed him once a month with more useful information and tips. Do you think that he would forget about you when it comes time to buy?

Technology makes this very easy and inexpensive to do. In exchange for your free report Bob must give you his email address. You then use auto-responders to send him an email once a month. You can use a service like AWeber to automate the entire process. The result is that you are marketing to Bob before he has ever called you or bought from you.

This very targeted marketing. The low cost and ease of set up means that very few sales must result for it to be profitable. And that’s a good thing.

Collecting seed corn for your small business

I grew up in a rural area. Our nearest neighbor owned a working farm. The oldest boy was my age, so I frequented the farm to ride horses, feed the cows, and assorted other activities.

One day the farmer was taking the kernels off of a load of harvested corn. He had usually stored the corn without doing this, which he then fed to his animals. I asked about this activity. “This is my seed corn,” he said. I still didn’t understand. “Next spring I will need to plant another crop of corn. If I don’t save some of my harvest from this year, I won’t have anything to plant. These are the seeds for next year’s crop.”

So it is with a small business—if we don’t save some of today’s harvest, we won’t have any seed corn for next year. If we don’t save some of this year’s harvest, we cannot grow our business.

In the case of our business, cash is the seed corn. Cash allows us to advertise, to purchase and maintain equipment, to invest in training, to save for a rainy day. Cash allows us to invest in our business and provide benefits. Cash allows us to grow our business. Just as a farmer can’t grow a crop without his seed corn, a business can’t grow without cash.

The farmer gets his seed corn from today’s crop. The businessman gets his cash from today’s sales—but only if it is built into his price. If his price does not include seed corn the cash will not be available. If he does not anticipate tomorrow’s needs he will not be able to meet tomorrow’s expenses.

The farmer plants more corn than he needs today. The excess becomes his seed corn. The businessman must charge more than he needs for today’s expenses, and the excess becomes his seed corn.

I see many small business owners focus on their immediate income and expenses. This short-term approach denies them seed corn. For what will they do when equipment needs replacing? How will they advertise? How will they weather a temporary lull in business? Without seed corn, they can’t. As a result, they get locked into a vicious cycle of feast or famine.

Those who do not collect seed corn will have nothing with which to plant next year’s crop. And without a crop, there will be nothing to harvest come the fall.

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