Get creative to survive when conditions sour
There are ways to resurrect your enterprise even if it looks like it's going off a cliff, writes Alexandra Cain.
Business is tough - especially in this market. But there are ways to resuscitate your enterprise even if it looks like it's about to flatline, as these business owners can attest.
Chris Le Roy is the managing director of One-on-One Professional Business Training. In 2011 his businesses got into hot water due to a failed venture into a car wash, the Brisbane floods and the Townsville cyclone.
"My training company operated training sites in both Brisbane and Townsville. In 2009 I had tried to take over a car wash and due to the unusual increase in rain in Townsville it didn't do as well as we hoped. I got out of that business venture but it left a huge financial burden on my training company," Le Roy says.
"Then in 2011 we got hit again with the floods, our site at Suncorp Stadium was shut down for four weeks and because essentially Brisbane came to a standstill because of the floods and our income dried up for about two months.
"Then a month later our Townsville office was hit by the cyclone and the company had literally no income for almost three months. In conjunction with our previous failed business and the Brisbane floods, we were in a desperate cash-flow position. Essentially we didn't have any."
Le Roy had learnt some lessons many years ago from a receiver on construction companies: "He had some simple principles I followed which worked."
He stopped buying on credit and instead bought everything with cash. And he looked at every expense.
"I found more than $200,000 of expenses that we just didn't realise we were paying including being overcharged for services that were out of contract."
Le Roy also reviewed the business' internet accounts and phone bills. "We found more than $15,000 a year in overcharging by the telcos because our phones and internet accounts had gone out of contract but they were charging prices that were more than two years old," he says.
Craig Reardon, managing director of digital marketing business The E Team, also had to put his business on life support.
"We had invested heavily in a growth strategy with a new partner. But fairly early on they reneged on the deal and left us holding the baby - and a large part of their financial commitment outstanding," he explains.
"We had already made purchases based on their part of the agreement, but we had no cash to finance them. What's more, time spent on the deal took time away from our normal business impacting our normal revenue streams.
"This all happened against a backdrop of a delayed impact of the financial crisis on our market - slow payments, decreased demand and greater competition."
So Reardon explained the situation to his creditors. "Most were understanding and co-operative but several weren't and made life even more difficult than it already was."
Since then he has continued open, regular communication with creditors, and his bank, slashed costs and taken more calculated risks than usual.
"You have to be creative and work out new ways of generating business and turning it around quickly. Put in long, hard hours, but look after your personal health and wellbeing. You can't do the extra work required unless you are healthy in mind and body."
Eugenie Pepper, who runs Plum, which sells baby and children's clothes, has also pulled her business back from the brink of failure.
The business was established by Pepper's husband's grandparents and for many years was run by her father-in-law.
"In September 2011 my husband and I took it over. It wasn't doing well at all and hadn't made a profit for several years. The business was in a rut, stuck doing things how they had always been done and not moving with the times. Sales had decreased, competition had become fierce and something major needed to be done urgently before it was too late," she says.
So the couple set about revitalising the business. "We had to do things differently and better. We developed new ranges, working closely with our retailers, such as baby sleep bags and swimwear. We implemented new marketing strategies, and engaged new agents in Australian as well as overseas and started doing international trade shows," Pepper says.
"We also revamped the look with new more current designs and packaging and a new website."
Establishing new markets and manufacturers with improved quality and terms and reliability was crucial.
"We have found ways to market the business without spending through social media such as Facebook, competitions, cross promotions and collaborations," she says.
The most satisfying new initiative was a partnership with the SIDS and Kids charity.
"We are already seeing the results - sales have doubled and we won the NSW Business Chamber's business leader award and we have been shortlisted for all major baby product awards."
According to Pepper there is still have a long way to go.
"But we're heading in the right direction. We're now selling in David Jones and all major chain stores that sell baby and toddler products as well as selling in the UK, USA, Middle East, Asia and New Zealand."
Quite a turnaround indeed.
Amanda Rose's revitalising tips
1. Perception is everything. Ensure your image does not reflect a struggling business; dress well, have an updated website and fresh business cards.
2. Plan ahead. Give yourself 12 months to "come back" and write a one-page plan on your goals. It helps to focus, otherwise you will only go backwards.
3. Reinvent yourself, specialise. It will streamline marketing and prevent wasting money on irrelevant activities.
4. Rekindle the love. Create a database of everyone you previously worked with and reconnect. Ask if there is anything you can help with.
5. Do not sell. In dire times the instinctive reaction is to sell and sell hard. But no one wants to be sold to. So rethink how to speak, write and communicate.
6. Build strategic relationships. Identify your target market. Research them, understand them, connect with them. Always connect by asking, "how can I help?" Don't list what you do.
7. Social media. The most cost-effective way to build and promote your business. But it takes time. Create a strategy on what you want to achieve and take steps to reach it. If your market is not on Twitter, don't invest in it.
8. Events. There are many cost-effective and free business-related events. Go to a chamber of commerce, try events in new areas for a fresh start.
9. Free for fee. Offer your services free at the right places and right time. Speak at an event, provide your products as a giveaway. It helps boost you as a brand and have people talking about you.
10. Hard work. A business will succeed if you are committed. Bringing back a struggling business means long days, long weeks until it is thriving. Nothing will work unless you give your all.