02/ 11/ 2008
by Lena Basha
How to come out on top when it feels like you've hit bottom
Marcus Muniz and Brian Chapman still remember the sinking feeling they got when their top salesman turned in his notice more than a year ago to take a new job. Business was booming, but the owners of Orlando, Fla.-based Boxes Etc. knew that losing him was going to hurt their growing company. "He was great at what he did, so we gave him a lot of freedom," Muniz says. "But as a result, our customers had a relationship with him, not our company. They loved him--not necessarily the boxes he was selling. So we knew that when he left, so might they. In one way, it's great to have someone you can completely trust, but when they leave they take so much with them."
Quick action minimized the damage caused by the salesman's departure, but it certainly taught the partners a lasting lesson: What goes up must come down … but in business, how far down is up to you.
Act, Don't React
Muniz and Chapman didn't plan it this way, but by the time their star salesman turned in his notice, two new salesmen had been on the job and learning the ropes for three months. "It was good timing," Muniz says, "And we were definitely lucky. There was no downtime."
Once the sinking feeling passed, Muniz and his sales team got to work, calling and visiting customers to notify them of the change and assure them that they would continue to receive the same level of great service. The partners also put two salesmen exclusively on the accounts that had been serviced by the departing salesman. This limited the amount of new business the company was able to bring in, but Muniz says they would have lost some of their existing clients otherwise. "There are so many competitors out there, that there's nothing stopping them from going elsewhere to find a better price," Muniz says. "Even though we were shorthanded, we knew it was important to stay in front of them and continue giving them the service they expected."
The worst reaction you can have when the unexpected happens is to panic. Instead, Muniz says, use that energy more productively by working toward a solution.
John Wilson, owner of Super Foods Supermarkets in south-central Alabama, used to feel stress every time he heard that new competition was coming to town, but he finally decided that his time was better spent planning the fight than staying up all night worrying.
In 1980, when grocery chain Winn-Dixie announced its plans to build a store across the street from Wilson's full-service location in Greenville, Ala., Wilson immediately sat down with his staff and created a game plan.
"Every time it's the same routine," Wilson says. "We get the initial panic, then we regroup and get to work and figure out what we need to do to beat the competition."
Five months before the chain store opened, Wilson and his staff researched the company and visited several of its locations to identify its strengths (flashy displays and low prices) and weaknesses (customer service). "We looked at their displays and pricing programs," he says. "Then we did what they did--but better. When they opened, we had a slight decrease in sales, but then we bounced back."
Wilson says when a competitor or other daunting problem comes out of the blue it's natural to have that initial reaction of "What's going to happen to my business?" But then a cooler head should prevail.
"You have to be proactive, not reactive," Wilson says. "Take time and think out the process and possible solutions and outcomes. Ask yourself, 'What's going to be the end result if I do X, Y and Z?' " Then implement the solution that has the best possible outcome, he says.
Size up Your Fight
Gail Lindley had just lost her grandfather when the unimaginable happened at her family-owned bookbinding business in Denver. Lindley's grandfather, who had ran the Denver Bookbinding Company for more than 26 years, left the business to her and her mother. But it was 1972, and women-owned businesses weren't that widespread--which is why the company lost one of its biggest clients within days of Lindley's grandfather's death.
"The client just walked in and told us that a woman-owned business would never make it, which is why he was taking his business elsewhere," Lindley recalls. "One-third of our annual revenue walked out the door in one day."
But the mother-daughter team didn't try to lure the business back. "We just got that gut feeling that we shouldn't be doing business with someone who didn't want to do business with us," she says. "We weren't going to waste time luring the client back only to have him leave again for another reason." Instead, Lindley and her mother put their efforts into servicing their other customers and making new business contacts to compensate for the slump in sales.
Trusting her instincts proved to be the right move again in 1997. Lindley's business was the smallest of five subcontractors on a massive binding project for a university library that had suffered widespread fire damage. Lindley even invested in an expensive piece of equipment to help get the library out of its crisis and was counting on the revenue generated by the project to help pay for it. But before the project was finished, the Denver Bookbinding Company was released from the contract and received no compensation. "We didn't do anything wrong," she says. "I knew it wasn't fair and I got that gut feeling that made me say, 'No, I'm not going to stand for this,' " she says. So she sued--and won. "I knew that it was a fight worth taking on--and one I could win," she says.
Since then, Lindley has added new revenue streams to help get through cash flow crunches. In addition to fulfilling high-volume orders, the Denver Bookbinding Company can also cost-effectively bind a single book, opening the door to self-publishers. The company also sells self-bookbinding kits through its online store.
Seize the Day
When faced with the unexpected, Super Foods' Wilson doesn't just see the challenge, he also recognizes the opportunity. Remodeling and updating his store had always been on his wish list, but he could never justify the expense--until Wal-Mart announced it was putting in a super center just a few miles away.
"It was a gamble--and a huge expense--to remodel the store," he says. "But I knew it would be an even bigger gamble not to do it, so we bit the bullet and had our grand re-opening a month before Wal-Mart's."
Wilson also used newspaper advertisements to remind customers how Super Foods would be different from Super Wal-Mart. "Every store has green beans on the shelf, so you have to let them know what differentiates you from your competitors," he says. "For us, that was customer service." Wal-Mart could offer lower prices, but Wilson's store could offer a full-service experience.
At Super Foods' other location, ditching the full-service model has actually helped increase sales. For years, Wilson watched his profits dwindle as he saw customers turning to Dollar General and other discount stores for their groceries, so he changed formats to a no-frills discount store in 2005.
"It was hard for us to make that decision because we had always prided ourselves on servicing our customers," he says. "But it's what we had to do to compete.
"As a small-business owner, you have the upper hand in your ability to quickly change and adapt to meet your customers' needs," Wilson says. "You'd be crazy not to take advantage of that."
Disaster-proof your business
Foster business growth with help from employees and customers
Boxes Etc. can grow even when the growing gets tough because of the culture Muniz and Chapman have created among employees. New employees at Boxes Etc., no matter what their jobs, are exposed to every aspect of the business operation, from the warehouse to customer service to sales.
"When everybody knows a little something about everything we do, we're able to continue to operate no matter what happens," Muniz says.
The partners also provide flexible schedules and generous benefits in the hopes that employees will be willing to step up to the plate when a challenge arises. They also apply that philosophy when dealing with customers: "When there's something we need for the business and one of our customers sells it, we go to them instead of the big discount stores," he says. "We scratch each others' backs."
Watch the trends with an eagle eye to project sales changes
Gail Lindley's business is a lot different from the one her grandfather ran. It's still a full-service bindery, but the Denver Bookbinding Company also sells self-publishing kits and has recently started offering classes on do-it-yourself bookbinding. Lindley admits that it's a small segment of her business now, but she thinks that will change. We're adapting to a changing market," she says. "I've been watching the trends, and this is where it's headed."
Always have access to capital
John Wilson is a big believer in spending money to make money. But he could never have remodeled his grocery store in preparation for Super Wal-Mart's arrival without a sound financial record, which gave him quick access to the cash he needed. Consider opening a business line of credit before disaster strikes so that there's no downtime in a cash crunch.
NFIB.com
Learn more about preparing for the unexpected in the "Growth and Planning" section of www.NFIB.com/toolsandtips.
