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Business Tougher Nowadays? Publish Date : 1/11/2006 4:36:06 PM Source : Hank Castello
Business Tougher Nowadays? This article has the cure, guaranteed! I was talking to the owner of a computer store yesterday. They’ve been in business eight years in a large metropolitan area. “Things are tougher today than when we first started, and I’m thinking of leaving the business.” – that was the theme of our discussion. It brought to mind other businesses where I’d heard that line in the past. The consumer finance industry back in the seventies – even before Federal Regulation ‘Z’ (which put a cap on interest rates), the oldtimers constantly lamented that things were tougher. Big companies bought out little ones and for the first time, computers (not desktops) came onto the scene while losses mounted even in Louisiana where the interest rates where higher than any other place in the galaxy.. While all this upheaval went on, one company, Coburn Finance, made "obscene" profits. How’d they do that? Well, since the “oldtimers” were all saying that business was terrible, in Louisiana, they turned out the experienced, disallusioned crews and hired young people who didn’t yet know that profits couldn’t be made. Within twelve months, there was a dramatic turnaround. I have a lot of experience with the used car industry. The common thread there is that someone will start up a new business with little money. They buy cheaper, “work cars” and deal with working class people. They make money. Several years go by and they “upgrade” their stock, and carry newer cars with a smaller profit margin. Also, their initial enthusiasm wanes. Talk to them now and they’ll tell you that “business is tougher nowadays..”. When I sold life insurance, back in ’69 & ’70, I read numerous accounts of people having made millions during the depression while most businesses languished and died. How did they do that? Same economic conditions, same industry, yet some succeeded while most failed. I hear you saying, “But this is different. Now we have CompUSA, Best Buy, and the online discounters to contend with.” Yes, you’re right, this IS different. The conditions you’re working in are no where near as bad as the Depression of the thirties. Working in a localized area, you have countless opportunities to promote your business that the mega-stores can’t begin to take advantage of. You could offer free computer courses one evening or weekend afternoon each week. You could give talks to your local Chamber of Commerce to business people on how to best keep up with computer issues, upgrades, etc. You could publish a monthly or quarterly newsletter on all the local computer goings on in your area and throw in some "how-to tips". You could do a weekly radio show (local radio stations are often looking for interesting content). Offer a free spy-ware checking service one day each month. The ideas are limitless. Oh, but you don’t want to invest the time to give a “free” one-hour class each week? Or to do “free” spy-ware checking once a month, etc.? When I was in the business, I figured it cost me around twelve dollars to bring each new customer into my store. That was based on the $800/week I spent on advertising in my Dallas/Fort Worth marketing area. Consider that many newspapers will publish “free” services at no cost to you. Consider that maybe only twenty people take advantage of your free offer each time. Then you just got “paid” $240 for giving your “free” service based on the cost of $12 per new customer. OK, now you’ve got them in your store and you’re doing your best to win their loyalty, etc. But how do you sell a widget for five bucks when MegaGigaComp sells the same thing for fifty cents? Answer, you don’t even try. Carry the widget for convenience sake, but at a reasonable price. If possible, carry a deluxe version that 'MegaGigaComp' doesn’t carry. You can’t compare apples to oranges! But you’re going to always be fighting an uphill battle if your bread and butter has to be made selling those widgets. The solution? Do what you can do best and MegaGigaComp does worst or not at all. As a small business owner, you can provide service that runs rings around the ‘Big Boys’. You can offer to accept trade-ins, the Big Boys aren’t likely to do that. You can offer to sell used computers WITH (optional) one year warranty. You can offer to sell used computer components with thirty day warranty. And you can offer Same Day Service – in by ten, out by four or no service fee! Try THAT, CompuUSA and Best Buy! Since you make several times the markup on services and used goods that you’d make on new stuff, why not leave those slim pickings to the Big Boys? After all, they’ve got to eat too. Sure, you still want to offer new computers. How do you compete against the advertised low, low prices of the Big Boys? You have two options which can even be combined. Offer custom-built, deluxe, super-fast computers and/or advertise prices with trade-in figured in. Example - I just checked one of the online Big Boys. They’re offering an “Extreme Bundle” of a 3GHz system for $799. Now let’s say that it costs you $740 to build that same system. You could advertise the exact same system like this: Extreme Bundle, just $699* or less! (w/trade-in) * Trade-in must be a complete, computer system of at least Xspeed cpu or better. Trade-in value may even exceed advertised amount and lower your purchase price even more. All trade-ins subject to approval by our technicians. Trade-ins do not necessarily have to be running or working computers. Now tell me, how do the Big Boys compete against THAT? That used PC you get for $100 or so will bring you $250 or more, and a profit of $210, plus you net two customers, accessory sales, etc.! And I haven’t even started to add in the benefit of word-of-mouth advertising you’ll get by offering trade-ins and selling used computers. As for the Same Day Service - Look, it takes an average of from half an hour to two hours to do most computer repairs. All I’m saying is why “age” them on the shelf for a day or two? Jump on them when they come in. Yep, its a pain. Yeah, it might add a bit of stress from time to time. You think you’ll lose money on the few that you, for whatever reason, can’t finish by four? OK, you do forfeit the service fee. And you’d better be sure to contact your customer to let him know that it won’t be ready on time. But you still make the parts profit if it needs parts. And, more importantly, you still benefit by all the impact and free advertising you’ll get out of your “Same Day” guarantee. I’ll bet there’ll be plenty of times customers drive past several of your competitors’ stores just to get their “baby” back out of repair quicker. Now, what is THAT worth? In other words, “Yes, things are tougher nowadays” – but only for those people who don’t want to do those “extras”; only for people who lack enthusiasm; only for people who aren’t always looking for new ways to make their customers happier and new ways to get the word out about their exciting, fantastic business. But then, things have always been tougher for those people. The trick is to learn not to become one of them! (Reprinted from www.RS-Kit.com) - Hank Castello, SmBizHosting.com CompuSolver.com OKVideoGuy.com About the Author Former owner of several computer stores, now doing web development, web hosting and video production. |
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