Make use of slow times to upgrade your business

   I had a mentor once who taught me a great deal about the slow times.
   His family had immigrated to Canada a couple of generations ago from Scotland and gradually ended up in the Pacific Northwest.
   He had struggled through a retail appliance business that ultimately failed and ended up starting from the ground up a wholesale plumbing and heating businesses catering to hardware stores and contractors. This business did very well. I joined his company after working in retail building materials.
   He had some simple rules —notably persistence and consistency.
   I was in charge of a lot of the marketing efforts of the company, and what he said about pricing, for instance, has stayed with me ever since.
   The object of pricing, he said, was to find the right price, and then not to worry about the competition. If your competitors’ prices are higher than yours, they run the risk of an image as a gouger. If your competitors’ prices are much lower, they will have to sell many more units to make up for the loss in profit. Although his prices tended to be a bit higher than some other sources, he avoided being labeled a gouger by offering great customer service.
   The persistence part was really the key to his success. He started a sales route into an area of coastal Northern California.
   The first few weeks and months, buyers in the stores would politely, or sometimes not so politely, decline.
   But he kept stopping in with his brochures and clipboard, week after week. Sooner or later, a buyer needed something and would order. More importantly, the buyers began to anticipate his route, they knew he would be stopping in every other Thursday or Tuesday or whichever day he had established. Working in this way, he built up a steady and growing business in a competitive market.
   Consistency was the other vital component. He published a catalogue out of the office with a copy machine and preprinted binders. Prices and items were listed with a list price and discount code. The customer always knew what his price was and what discounts were available. And then he made sure that he always had adequate stock on hand to minimize back orders and outages. In this way, he built a reliable and extensive customer base of retailers and contractors who came back reliably, week after week, year after year.
   Which gets me back to slow times. One of the more astonishing things he did was his reaction to the recessions of the ’80s.
   When most business people I knew were hunkering down for the winter, cutting back on expenditures, laying off workers, this guy was educating his work force.
   He told everyone hard times were approaching, but that he had no intention of laying anyone off. Certain types of buying would be curtailed, but when times became slow, he took the opportunity to buy training manuals and require employees to study them to increase their knowledge of the trade, regulatory issues, etc.
   He also embarked on modernizing the office procedures by buying one of the first commercially available computers on the market, a CPM machine that would later be taken over by one William Gates and turned into MS-DOS.
   He reasoned there was no better time to radically change your inventory methods than when things were slow and you needed to keep people working.
   The other bold thing he did that winter was to go shopping for real estate in another part of Northern California, where there was good market potential and a depressed real estate market.
   He found a site for a good price, bought an old metal building for a great price, and put some of the underworked employees to work assembling it and getting ready for business in the new locale. When things turned around in the economy, he was perfectly placed to make the most of it.
   Of course, there can be heavy consequences to taking risks. All of his decisions required a bold and confident vision, but I think it also took a toll on his health that he may not have foreseen. He died in his 60s, but he left behind a very successful, multi-branch business in his wake.
   I have tried in my businesses to employ the same values of consistency, persistence, and customer service. So when it gets rainy, the holidays hit, and sales slow down, it’s time for us to sharpen our pencils and get out the books.

Humphrey Blackburn is the owner of Blue Future Filters Inc. in Bellingham.

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