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At this stage, the long-term economic damage that will result from the new coronavirus is difficult to predict. Businesses around the globe are feeling an immediate, urgent pinch and looking to their bottom line for opportunities to get out of the red. Unemployment has soared to record numbers as businesses assume that the first step in viability depends on reducing expenses. There’s never a bad time to look into cutting waste out of your operating budget, but we’re going a little deeper today.
After witnessing market fluctuations over the decades, it’s clear that the best long-term solutions are not as simple as just cutting back expenses. Focusing instead on the long-term viability of your business versus desperately hacking away at your operating budget can save you tens of thousands each year. Here are some big-picture things for business owners to think about as they weigh their options.
“An ounce of prevention is worth a pound of cure”
As the adage suggests, the best time to prepare for a disaster is before it strikes. Many businesses were caught off-guard and left with little time to make a game plan once the COVID-19 news broke. But even the most prepared businesses are left considering how they can recover from the current setback.
Those that have implemented some of the following strategies are slightly ahead of the curve and will have an easier time getting back on their feet. So, what can you do today to emulate this success?
Where are you leaving money on the table now?
1. Actually focus on your eCommerce presence
Building out an intuitive eCommerce presence is the ultimate cost-cutting activity for a variety of reasons. Firstly, by developing detailed product descriptions you can create a vector for your sales process. This means you gain recurring revenue from a one-time investment of your time. This is the most cost-effective way to move inventory that you frequently have in stock or for your most requested services.
What many business owners don’t realize is that this doesn’t have to look like a $20,000 custom build. Online eCommerce platforms, like Magento, offer a free version of their software (often the most expensive part). Magento even offers built-in tools to help you rank on Google and integrates with some of the planet’s most popular accounting systems, like Quickbooks Online.
Unlike more introductory eCommerce platforms, like Shopify or BigCommerce, systems like Magento are designed to grow with you. The others top out at a certain level, leaving you in a position to stagnate or forcing you into a significant investment and cumbersome platform migration. What’s really cool is that as this channel grows, you can dip your toe into more sophisticated tools, like AI that recommends products based on the browser’s online history or the contents of a shopper’s cart.
The most important element of focusing on your digital presence is that online options create trust with your customers. Online interaction is already becoming less of a trend and more of an expectation by today’s consumers. Studies show that an online video testimonial holds 70% of the impact as a recommendation from a friend. Every business that still intends to operate in the next two years can better serve their clients and themselves by making the investment in an online presence.
If you want a real-world, risk-free quote on what this would cost, get on our calendar. We will help you build a roadmap for an online revenue model that makes sense for your business.
2. Diversify your sales channels
One of the biggest lessons to take from this public health crisis is the importance of offering a variety of purchase options for customers. This is perhaps the most underutilized solution (and we’re not just talking about your website).
Texas Governor Greg Abbott offered a perfect example of this in a speech on April 17, 2020. As a preliminary initiative to reactivate the economy in the wake of COVID-19, Abbott passed a measure to allow retail businesses a “retail to go” option beginning in May. This would allow customers to purchase retail goods while social distancing. Potential customers can place orders, pay online and schedule a pick-up at the local retail location. Then, business employees pack up their order and bring it out to the customer at the scheduled time, limiting exposure and necessary protective measures to those involved in the transaction.
This emulates the year-round model that many restaurants employ to generate significant income via GrubHub, UberEats. etc. But other business types showcase one major shortcoming to success here. You see, the key to unlocking this option is an online menu of products available for sale.
This is obvious. Just imagine trying to place an order at a new restaurant without a menu. For businesses like yours, a “menu” translates to: clear online product details, engaging online outreach (social media), and/or search engine relevance (SEO). Despite decades of proven success, many modern businesses have resisted implementing these tools. These are fundamental assets to realistically creating alternative revenue streams online. Once you build these assets, you can use them in other channels besides your own website.
Once you’ve got your “Menu” put together, here are your action steps: See what third-party online retailers specialize in your industry and how to get listed on their website. Try looking up their buyer(s) on Linkedin if you need to. If you can afford steep discounts, check out “daily deals” websites to see how you can get listed there. Look up the large, big box retailers (or even niche retailers with multiple locations). See what their terms are to carry your products in their store (and on their website). If you get stuck, see what your competitors are doing. Jot down some takeaways on what’s working and what’s not, then pivot accordingly.
If your mind was just blown, get in touch. We can help.
3. Be more intentional about your target audience
The biggest marketing mistake that businesses make is trying to be all things to all people. When it comes to your marketing audience, it’s important to consider quality over quantity. Try shifting your focus away from the end goal of simply reaching as many people as possible. Instead, try tailoring your messaging to targeted individuals who are likely to convert. Believe it or not, casting a smaller net often yields a larger return.
Action steps: Take a hard look at who your best customers are: those that keep coming back, those who know exactly what they want, or even just the ones that you love working with, who make your job easy. Get to understand what keeps them coming back for more, and double down on that.
Also, keep in mind that you can’t manage what you don’t measure. Successful marketing is a long-term strategy that generally requires a bit of tweaking until you really dial it in. Make sure that you are collecting enough data to really arm yourself with some actionable information. Keep records of everything you do, as well as the results, so you know what works and what doesn’t.
4. Do everything in your power to minimize returns
No matter how you shake it, you will almost always have people that come to you at some point wanting their money back. This isn’t a time to take things personally. Sometimes it just isn’t a good fit for their life, their pocketbook or their mindset at the time. Buyer’s remorse is real! What’s also real is that this costs you more than just lost revenue. Returns leave you to digest shipping costs, time spent processing the order and the logistics of getting products back to where they need to go.
Some businesses charge a restocking fee to recoup some of this expense. That being said, the best way to minimize returns is by being as transparent as possible upfront.
Action steps: Post photos and 3-D models of products so the customer knows exactly what they are getting. If you are a clothing brand, share accurate sizing charts. Additionally, be sure to survey customers about their reasons for returning items. You may notice a trend that you can correct or a step that you can add to the buying process to avoid returns in the future.
5. Negotiate with suppliers
If you sell physical products, it may be time to make some phone calls to your suppliers. This is especially true if you import your products. Ask them:
- Do they offer significant savings if you purchase bulk inventory?
- Can you negotiate a lowered or exempt shipping cost if you up your order?
- Are there alternative options to the products that you already buy?
- Do they have an updated wholesale catalog or new improved items?
- Do they offer discounts for invoices paid early or in another currency?
If you are a long-standing customer, starting this conversation is something you should especially consider. You may be surprised at what suppliers will do to show their appreciation for your business (and to keep you around!).
6. Upgrade your systems
What if we told you that you can actually reduce costs by cutting out stuff you hate doing? Automating tasks is a cost-cutting no-brainer for any business. We live in a world where digital transformation has revolutionized the way people accomplish things. Take a moment to consider: Do your systems communicate among themselves, or are YOU the connector?
Here are some common manual chores you may consider letting modern technology take off your plate.
- Accounting: Synchronizing inventory, invoices and tax rates saves duplicated manual data entry. It also promotes accuracy so you can spare yourself a few dirty looks from your accountant. Did you know it is possible to integrate your eCommerce platform with Quickbooks?
- Syncing customer profiles: Consider purchasing software that syncs customer, shipment and payment records so that you can focus more time on business-critical activities. You can also eliminate duplicate data entry between your eCommerce and Customer Relationship Management (CRM) systems.
- Handling recurring orders online: If you’re not ready to go full-scale eCommerce, that’s okay. There are still plenty of opportunities for retailers who have recurring orders from their customers. We can help you build a simple online interface, by importing your product data so customers can purchase your goods and services online at any time of day or night.
If you can’t rationalize the cost of some of these systems, consider how much more money you could make if these things were just “handled” instead. Then make that your baseline additional revenue goal once the changes are implemented.
This is an important step for any growing business. Unless you’re the really tech-savvy type, the idea of breaking into one of these projects makes you nervous. Everyone has an integration nightmare or experience. You also bear the huge fluctuations in market price for assistance with any of these upgrades, and an even larger gap in technical literacy when trying to choose the right partner to help.
Action steps: You don’t have to (and probably shouldn’t try to) go-it-alone. We can recommend some of the most robust systems and some of the most cost-effective solutions on the market. If you need the hands-on support, we’re happy to help with that, too. If you’ve already gotten a quote or would like to get a realistic idea of how much this should cost and what you should expect, let’s have a conversation.
Now is the time to abandon a survival mindset that fails to consider long-term business viability or to account for unforeseeable market threats (such as economic downturn due to a global pandemic).
Before this crisis, it was not unusual for business owners to avoid making an investment in channel diversification or other solutions like we’ve listed above. Cost was the number one objection. Upfront expenses and day-to-day management could potentially interrupt a model that is already working fine. And, who wants the hassle of managing it?
All of these objections make sense, but they shouldn’t be enough to halt the progress of your business. When times are good, it’s a very linear logic to believe that the most cost-effective business practice is staying the course. But we live in a global marketplace that is more susceptible to change than ever before. This comes with some threats but also with some massive opportunities.
For certain, these solutions don’t happen overnight and are worthy of some planning. Rolling out new revenue streams takes resources. Building an intuitive, functional eCommerce website is a significant investment of time, money and energy. Our focus is on helping businesses implement highly-configurable solutions and automation systems that grow with you. For a more in-depth conversation about how some of these opportunities might suit your business, reach out for a risk-free consultation.