Some months ago I spoke about business conditions being Recessionary. Data released this week confirmed this predicament . Average business growth for the year has come in at 1% with inflation ranging 2.75-3.0%. Small business face an ongoing struggle. The stress began with the 2008 GFC .
Business conditions failed to magically correct and inspire spending leading-up or during the 2010-11 Christmas – New Year period. Retail revenue is extremely elusive. The continued reluctance of consumers to spend has confounded the expert retailers – Myer, David Jones and Harvey Norman. Current economic conditions are destroying smaller operators. Consumer sentiment is low and fickle. A difficult task for marketeers and sales staff to convert into sales income. Business now exist in the “perfect storm”.
So what causes are responsible. What strategy need to be adopted. Customers aren’t spending and cost of business continues to rise. The reasons – Fear of interest rate rises, contentious Carbon Tax, long-term job security, international wars, Sovereign Debts turmoil.
Here are some Strategies and focus to counteract the stress and perfect storm conditions.
Marketing Message -Business tell lies; Yes that’s right. So many marketing messages are misleading and down-right incorrect. Even the sign advertising “Open 8am- 5pm”. Have you arrived at 4.45pm only to find the business closed. How does that make you feel? Business that market “we are the biggest, we are the cheapest, we are the only, we are blah, blah…..” is vague and often inaccurate promotion. I bet with a little research some other operator will be cheaper, bigger or better or beat any offer by 10%. What about the “Closing Down Liquidation Sale, Everything must go this week”. A carpet seller has been closing down for 5 years!! Where is the truth for customers in these messages?
Discounting– the disease that kills. If business continuously discount to survive, your marketing message and more importantly your Unique Selling Proposition requires a serious makeover. If you don’t know what makes your business so special – why should you expect your customers to know the difference between you and the competition. Myer and DJ’s have fallen into the discount trap post GFC and have not had the courage or ability to climb out of it. Discounting is not a once a year sale that is seen as special and unique, a call to quick action to buy. Discounting is the geneses of thought that something is wrong. Customers read this as your business model is flawed, previous pricing was too high, that business is on the slide. Customers will in-time turn off a discount offer and perceive the product as low value. The task of raising prices in the future will be impossible .
Business is cyclical and seasonal. To achieve success Business must adhere to proven conventions, know their financial position, exercise entrepreneurial passion and engage new innovations. Businesses selling lipstick, chocolate and exclusivity grow in Recessions. However the rest better be prepared for survival during these stressful Perfect Storm conditions.
BEC Redland Brisbane Bayside
Business Enterprise Centre
A Not for Profit Business Service providing services that maximize small business economic development, growth potential, prosperity and sustainability
www.becredlandbrisbane.org.au ph 07 38 20 88 00