RE:THINK

The Sydney Morning Herald is even making us RE:THINK!

Christine Long wrote this article today, which completely captures some of the concepts we will speak about on the 16/12

NOT every small business owner needs convincing there is money to be made out of downturn.

Witness the creativity behind the likes of Boredom Busters, a business that allows you to put entertainment on lay-by, or the playfully named Dirty Weekend, an online operator that suspects the quick recharge of a weekend away will still be a priority when finances are stretched.

Owners Online is another example: a real estate business built on an expectation the property market will hit uncertain times and the day of the suburban real estate agency is over.

Launched three years ago by Andrew and Lee Egan, it operated on a shoestring from their Narrabeen home for 18 months. They took out office space (across the road) only when their files took over the house.

By keeping their structure lean - their agents are paid commission only and mostly work from home, accessing online databases and tools - they have been able to offer something different in the real estate market without skimping on service.

Because their vendors have the option of running their own inspections and they get involved only in marketing and negotiating, their rates are just 1.1% to 1.5%.

Marketing director Lee Egan says the sleek structure of Owners Online allows it to work with a greater number of properties and still remain profitable. The results speak for themselves: in the past year the firm has added 12 agents to its team and moved into property management, with a $2000 a week executive rental its latest coup.

Adrian McFedries, managing director of DC Strategy, says the advantage of a well-run small business is it can be nimble in rapidly changing markets.

He says the difficult economic conditions will be “the catalyst to [some small groups] actually breaking out to another level of performance, another size and possibly even getting into interstate markets that they weren’t able to get into very easily”.

But that means being well-positioned for growth: having the right people in the business, paying attention to working capital and ensuring the business is generating profit rather than just revenue.

Now is the time for small and medium businesses to identify their main sources of profit and let go of products and even customers that are draining profits.

Tempting though it can be, McFedries discourages discounting.

“Even a 5% or 10% drop in price can have as much as a 10% to 20% impact on your profits because a lot of small businesses are fixed-cost businesses,” he says.

Cosying up to customers is an integral part of thriving in challenging times. Given the right amount of prompting, enthusiastic customers can be an important source of referrals as well as someone who will be prepared to open the wallet a little wider.

The co-owner of Vivo Cafe, Angela Vithoulkas, is a terrific example of someone who understands her customers and is finding innovative ways to keep them coming back for their regular caffeine fix (see story, right).

The managing partner of Idea Garden, Phil Smith, says email, SMS and social networking offer myriad ways for businesses to get closer to customers. He says retailers, for instance, can use the immediacy of SMS to “reinforce the fact that there’s a gift with a purchase if you come in today
or tomorrow or there’s 10 per cent off for members if you come in and show the SMS”.

And in service-based businesses it can be a reminder of an appointment or used to thank customers, he says.

Simple polls on the home page of your website and site metrics can help you to learn more about your customers while blogs can create a two-way conversation.

“If customers become participators it enriches and strengthens the relationship,” Smith says.

But it need not be all about technology. A business coach at Action Coach, Christine Beard, says: “Many business owners don’t ask customers to recommend them to people that they know. They don’t ask for testimonials. They don’t do enough around up-selling or cross-selling or simply
doing enough to make the customer feel special.”

Beard also suggests addressing barriers to business upfront through a guarantee. A plumber, for instance, only needs to offer a guarantee of punctuality to generate a stampede of customers.

Still feel unsure of your next step? Business mentors are a low-cost way to get some guidance. Vanessa van Wyk, a director at Binarix, is a facilitator for the NSW Department of State and Regional Development mentoring programs. She says mentors are often willing to share not only their
experience but also their strategic alliances and networks with the businesses they assist.

Finally, work at maintaining a positive outlook and use this time to refocus your business. Then, says Beard, when the good times return the business will be “stronger and more vibrant” than ever.

CUSTOMER LOYALTY

WHAT do you do when your customers start disappearing because corporates are wiping whole floors of people from their payroll? If you are Angela Vithoulkas, co-owner of Vivo Cafe, you start dreaming up ways to keep your customers coming back.

Vithoulkas, who with her brother has been in the cafe business for 25 years, realised if their three CBD cafes were to continue thriving they not only had to keep their customers but had to swipe a few from the competition.

“You really have to try and present something that is as innovative as possible in an industry where we basically make toast and coffee,” she says.

Enter the Vivo electronic card. Now customers who load money on their prepaid card automatically receive a 20 per cent discount on food and drink purchases. Although the cards are expensive to make, Vithoulkas says her image-conscious customers would not use an everyday cardboard
loyalty card. Fortunately, the card is already paying off.

“We’ve actually seen an increase in the spend of the customer,” she says.

An experiment with two-for-one offers in recent months has inspired another innovation. When that move seemed to be successful in encouraging customers to bring their colleagues into the cafe, Vithoulkas took the step of creating a Vivo book of vouchers.

Like the popular Entertainment Book, the Vivo version involves a flat-fee outlay ($25) in exchange for $300 worth of savings. Her cause is helped by roping in the support of nearby businesses and 10 per cent of the proceeds from the book go to charity.

But the cafe owner is also turning her attention to other ways of keeping customers and staff happy.

The cafe’s flagship outlet will be gutted and redesigned next month.

“If customers are getting something to-go I have seconds to make an impression,” she says.

It’s a move that should give customers one less reason to go elsewhere for their caffeine fix.

Move ahead

Adrian McFedries, managing director, DC Strategy

Manage your working capital and your cash flow.

Work out from where your profit actually comes.

Get the right people working for you in your business.

Phil Smith, managing partner, Idea Garden

Understand who your customers are and what they do with your business.

Encourage them to become more frequent users of your products and services.

Once they become entangled don’t forget them.

Vanessa van Wyk, director, Binarix

Make sure your staff are happy. If they are not you are losing the potential to value-add to your customers.

Understand your books.

Tell prospective clients that you want to work with them.

Christine Beard, business coach, ActionCOACH

Look for ways to get more dollars back from the effort you are putting in to making your customers happy.

Trade on your uniqueness - the more exciting you are to your target market the more likely people will talk about you.

Have a guarantee that will make you stand out from your competitors.

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