by Richard Flynn
Learning to find the right balance is critical in virtually every aspect of the furnishings business. Whether you’re buying furnishings for your showroom or store, or advising customers on new items for their home, success is often about striking the right balance. Of course, balance isn’t easy. If you spot a trend, for example, and take on inventory to cash in on changing tastes, you can certainly get burned if you neglect your stock of must-have classics.
It’s easy to focus on one area at the expense of another, but the trick is to keep all critical factors in view. When it comes to running your business, there are three areas to keep in mind if you want to remain resilient in the midst of a challenging economy: relationships, time, and finances. These three areas are the essentials—neglect one, and you risk losing the balance that builds resilience. Following are tips designed to help you think in ways that will create the right balance for your business.
Strong relationships, strong business
Build on customer relationships. An important part of building a resilient business involves maintaining good relationships, and at the top of the list are relationships with existing customers. Finding new customers is a major priority for any company, but business development is time-consuming and expensive. To get the most out of the business development investments you’ve already made, look to existing customers, because selling to them is often easier and cheaper than finding new ones.
Review customer lists looking for customers who may need to update or buy new furnishings. Consider, for example, the family who bought nursery furniture almost two years ago. They may soon need to convert that nursery into a bedroom, or perhaps they’re even considering moving to a larger home because a second child is on the way. Once you’ve identified a few customers with potential, commit to getting in touch by phone or in writing to alert them to a relevant sale, or to let them know about your latest arrivals. Even if customers aren’t ready to make a move now, the extra contact will, at the very least, keep your relationship alive and healthy.
Provide employee incentives. When money is tight it takes solid teamwork to stay within budget. Help everyone on your team stay focused on costs and improve employee relationships with incentives that reward performance. You can also build efficiency and stronger employee morale just by asking for employees’ input. You might, for example, consider offering a reward for practical ideas that can save the company money or boost sales. After all, some employees may understand certain day-to-day aspects of your business better than you do, so take advantage of it.
Review vendor relationships. As your business grows and evolves, so should your relationships with vendors. Conduct an annual audit of the vendors you rely on and evaluate whether they’re still meeting your needs. Perhaps there’s a better option, or maybe it’s just a case of rethinking what you really want from current vendors. Use this opportunity to make sure you’re receiving the best discounts and payment terms, because longstanding relationships are often rewarded in a slow economy.
Time Is Money
Use downtime wisely. Small business owners and their employees usually have little time to spare, so if a slow economy has left you with downtime, use it wisely to regroup and tackle neglected projects. Does your Web site, for example, offer potential and existing customers the information they really need? If not, now is the perfect time to update it. You can also use downtime to do research that will help you gain a competitive edge. Learn more about what your competitors are doing, and stay better informed of decorating trends and furnishing innovations, through trade magazines and trusted industry sites.
Also take this time to think about long-term plans. While expansion may not be possible right now, keep in mind that when that moment comes, time is the one thing you’ll probably not have. Get the facts on where money might come from by researching equity options now, because being prepared can make all the difference. Many small businesses often turn to friends and family for funding. If you think this is a possibility, investigate the details. Friends and family can be a great source, but poor planning can jeopardize your business and your personal relationship with lenders. Learn what’s involved in limiting the risks for everyone with formalized agreements and appropriate legal counsel.
Angel investors are another route. These wealthy businesspeople are willing to lend money but also hope to have a hand in the business. If that sounds appealing, remember that finding the right person requires lots of time—which you may have now—for extensive networking and relationship building.
Another area to research is venture capital. If you think you might be willing to dole out a cut of your business in exchange for equity, use your downtime to learn more about the details of venture capital and familiarize yourself with firms that invest in businesses like yours.
Finances
Manage cash flow. A slow economy challenges nearly every business with cash flow concerns, but don’t accept poor cash flow as a reality of the times. Take an active approach by looking for ways you can accelerate cash inflows and delay outflows without paying late. Taking advantage of charge cards can help even out cash flow and control business spending and expenses. Another tool to improve cash flow is trade terms. Many vendors offer valued customers trade terms that reward early payment with a small discount and sometimes offer longer payment terms, so you can hold on to cash a little longer.
If you want the advantages of trade terms but without the negotiating, one option is the PlumCardSM, a financing tool from American Express OPEN that was designed specifically for furnishings retailers and other small business owners who bear large upfront expenses and can experience variable cash flow. Its flexible, trade-like terms allow small business owners to enjoy early-pay discounts and other advantages on virtually all purchases. You can get more information at www.plumcard.com.
Register your business. Building a strong track record and then keeping it to yourself won’t help build a strong business. In fact, when applying for credit, it can hurt you. Make it easy for card issuers and other businesses to confirm that you’re an established business. You can do so by registering with commercial credit bureaus like Dun & Bradstreet and the Small Business Financial Exchange.
Clean up financials. If you’ve worked hard to maintain good credit, make sure you’re actually reaping the rewards. To enjoy the benefits of good credit, all credit bureaus’ records must reflect your diligence, so verify that all information in your credit report is accurate and check your company profile for errors. If you do find mistakes or irregularities, be sure to address them immediately to maintain good standing.
As you continue to build your plan for resilience, keep in mind that it’s not all about weathering slow times. The discipline you gain today will undoubtedly serve you well when the economy picks up. For more tips on building a resilient business, visit openforum.com. OPENForum was created by American Express OPEN for furnishings retailers and other small business owners seeking community building opportunities, specialized small business content, and advice from business leaders.
Richard Flynn is senior vice president and general manager for American Express OPEN, the nation's leading issuer of card products for small business owners.