An Open Letter to Independent Business Owners Struggling During This Economy

I want to share with you some random thoughts I’ve had this month about the economy and the challenges all of you are facing: 

Every month, this economy throws another surprise at all of us. For all of you, this change in consumer buying is causing you to work harder and market smarter than you’ve ever done previously, and that is a challenge.  It’s tough to constantly try to operate you and your business at peak efficiency, not missing any sales opportunity with customers and constantly thinking about the parts of your business that need to be improved, changed, or abolished, all the while generating cash flow.

One retailer really hit the nail on the head when she told me:  “Panicking is a waste of energy.”  She’s right.  You have to stay focused on making the best use of your financial resources, using your time wisely, and deciding how to pull the best possible customers to your business, all the while understanding that luring them inside your doors is only half the battle.  Getting them to part with their money is the critical part.

This same retailer also came up with the new mantra for this economy:  “Doing OK is the new Great.”  Think about it.  With so many people pulling back on their spending, if you are writing a slight sales decrease or a slight customer count decrease, this is pretty good in some parts of the country.  Writing a small increase in customer count, individual average transaction (IAT), or if your online Internet sales are up, well, that’s a cause for celebration!  Yes, doing OK today is what doing Great used to be.

Focus on looking at your numbers.  You should know your breakeven analysis figure, and be able to analyze whether your customer traffic is down, or whether your customer individual average transaction (IAT) is down.  Now more than ever, you have to know where you stand.  We’re all passionate about our businesses, but this information has to be top-of-mind with all of us, and for too long, it’s been out of our awareness.

The good news is that I am receiving more emails and calls from many of you who are now looking more closely at your own business sales and customer traffic count numbers.  For example, many of you are now saying to me: “I am down 15% in IAT, but only 2% behind in customer count” (or whatever your specific situation is).  This is great!  It’s a little thing, but most of us have been satisfied to carry around an intuitive feeling about whether our customer count and IAT are up or down, but just having a feeling about your numbers is not good enough these days.  You have to know exactly where you are, and where you need to go, especially when it comes to customer traffic and the individual average transaction of customers as compared to last year.  Some of you have even begun your conversations with me by saying: “I knew you were going to ask, so I figured it out.”  That’s fantastic!  Congrats to those of you who are forcing yourself to look closely at your business numbers!

With that being said, there are businesses these days that are being hit hard by this economy, and many businesses are closing, and it’s important to understand something about a business closure.  Closing a business feels like failure, but not all closings are failures of the owner.  It’s not necessarily a failure of the owner when a major change in your marketplace hits a company.  Sometimes, when a major business was contributing the majority of your sales, or when a group of employees (like a group of auto workers in a factory), all are suddenly put out of work, and their spending stops, all of this is not a failure of the owner when a business closes.  Often, the sales revenue of a business and their impact on the success of the business just changes too drastically for business reinvention to occur.  Sometimes, a business just runs out of time to turn things around.

One last point:  Every business is going to have degrees of difficulty during this economy.  It’s important as an owner to not let these tough times wear you out emotionally, wear your down physically, or put you in such a negative mindset that all of your future decision-making is based on fear.  It’s important to still be the visionary for your business, to lead your team of employees with ideas and inspiration and to keep your company focused on moving through the difficulties, not bogging down and wallowing in them.  It’s tough to do, but in all your multiple roles as an owner, providing a positive future-picture for your business can only be done by you!  Only you can be the cheerleader, and no one else!

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