Small Business Thread

Sager,

Thanks for starting this thread.  I'm interested to see how others are dealing with the current environment, and I may be able to offer some advice.

Most of you may know me as Chris' technical adviser and the person responsible for this website.  My primary job is running a small business called the Shimshock Group.  The purpose of our business is fairly straightforward -- we help small to mid-size business owners achieve success.  I have 15+ years experience in professional consulting, and the services we offer range from sales and marketing strategies, to operations plans and website development.

The current economy has offered both challenges and benefits for us.  Some larger clients have scaled back, but on the flip side there are more people approaching me everyday wanting advice on how to start a business.  As I wrote in this blog post, in some ways now is the perfect time to consider an entrepreneurial venture.  I know many people who have had fantastic business ideas and never acted on them for one reason or another.  The current economic situation can serve as the spark they need to get started.  Maybe they have been laid off and at are a crossroads in their career.  Or maybe they want a greater sense of self-sufficiency.  Or maybe yet, they feel as though what they do for a living is not their true passion, and these chaotic times are bringing that to clarity.  Whatever the reason may be, I try to encourage people to take advantage of those moments in life for the positive.

Just like any other small business, our strategies for success are approached from multiple directions.  First, we offer an introductory business coaching service.  A prospective client can sign up for a complimentary one-hour coaching session, or can try one of our 4-hour, 8-hour or 24-hour packages at a reduced cost.  This is a one-time offer, and only available to those who have not worked with us previously.  Second, we have an electronic newsletter sent out to clients and prospects.  This helps them to keep us on their minds, and possibly forwarding our posts to others.  Third, I am occasionally giving presentations at small business forums and meetings to bring about greater awareness of our business and services.  There are other strategies that we use beyond this, but gives you an idea of how the approach is multi-faceted.

As for advice, I think it's very important that you do not lower your rates.  This can give the perception of being a "discount" provider, when really what you want to do is just the opposite.  You may want to take a cue from what we've done and offer a special introductory offer, where people can try your service at a discounted rate.  This allows people to experience what you have to offer without the normal expense.  One question I have for you is what is the profile of a typical customer?  You mentioned geographical location which provides some ideas, but really understanding your customer is one of the best things you can do to formulate a strategy.

Feel free to respond or send me a PM to discuss more.

Ron

Wow - I'm looking forward to a consult.

We were doing six-figures in '07 and saw a big drop in sales last year but managed ok. This June is hitting our company hard now. When our internet company is under economic survival measures (and we have been there before) there are a few things we do different during jobless times and lower revenue. One is send out free articles of interest to places like magazines and newspapers to keep interest in our product going which I just started doing again. Another is try to find local people who want to do sales & installation.

And reading through my response above, sometimes I think I should follow my own advice and expand the products we offer but then I hit a mental wall. So . . I'm looking forward to the consult.  EGP

Hiya Sager;

With my husband's contracting business, things have been steady, though not without periodic adjustments in his business model over the past couple of years.  Two + years ago, it was all residential building . . .  He made the transition to remodelling (and a little commercial) about 1.75 years ago, and that has hummed along nicely . . . He's accumulated a number of sources of steady jobs, that are happy with his work, and loyal to him.  Occasionally, to fill in the gaps, he's done atypical work, using the skills and equipment that he's acquired, such as landscape construction and demolition.  He keeps no full time employees, and subs whatever he can't do himself within the allotted time frame.  All-in-all, he's had to be more flexible, and our income is down a bit, but there hasn't [yet] been a serious threat to our steady cash flow. 

Oddly, one of the projects that he's got in the pipeline is building a strip mall.  (Go figger!)  Needless to say, the contract will have biweekly payouts, or "no go".  The same goes for a 13,000 sq ft mansion on prime land that's also in his pipeline . . . Since it's a private party, rather than bank payouts, the client will have to agree to biweekly payouts.  In other words, we're not working as far out ahead of payday as we used to.  Likewise for materials . . . Clients are paying for those up front, with rare exceptions for trusted, long time clients.

I don't know whether this gives you any of the sort of information you were looking for, but there it is  . . .

Hi Sager,

glad you bumped this up ... I have a hard time keeping up with stuff unless it's on the first page ... my loss, but it's all the time I have.

We own a small business in Southern California - dh refinishes furniture. The past 3 months have been very busy - we have work again for an independent contractor who assists dh. A year ago that was not the case.

Our work is usually 50/50 commercial/residential. What is interesting about this upswing is that it's probably 90% commercial work. This means furniture that's been damaged during delivery to businesses or upgrades in buildings (doors, walls, staircases, etc.) The residential work (that is not coming in) are things like kitchen cabinet or front door refinishing.

All our work is word of mouth and since we've been around for almost 20 years, our client base is pretty loyal. However, one could consider this a "luxury" service. If times are tough you just live with the scratches in your dining table or kitchen cabinets. Commercial clients still need to keep *their* customers happy, so as long as they are selling and delivering furniture, we will have some work there. But when they slow down (which happened to the point of almost no work for several months last year) we are out of luck. 

About the only thing we can think of to expand is to use dh's specialty to make furniture look beautiful. He recently found some pieces that had been put on the curb because they were broken. With a little sweat equity and materials we already had, we are the proud owners of a fancy accent chair, secretary desk and a round table that dh had fun with and turned into a high end chess board. Something like this would easily sell for $2,000 in the right storefront. The problem is we don't own a storefront and don't know much about retail sales. The other problem is space - we have literally none so we have to get rid of what he's repaired before he can bring in new stuff to work on. 

At any rate,  we are in a busy period, but since I immerse myself in (what my kids call) we'reallscrewed.com sites, I keep alert for signs that current customers with outstanding invoices are having difficulties. Unlike you, we are not paid in advance and some clients take 60 days or longer. Our current *big* job is a bank ... wish us luck. Maybe I should check to see if its on that list of troubled banks  ;-)

My elderst son moved here to South Carolina because the business climate is not good for residential remodelling down on the FL Space Coast. He is starting a business here. He jsut finished his first big job and has another one lined up. However, his younger brother is starting abusiness in the same comoutity - a lot like yours, Sager.

I will be watching this thread with great interest.

It's interesting how a small businessperson's life can be so dominated by the tenor of how the business is doing at the current time.  I am the owner of a small- 5 employee, $1.3M/yr- business.  Been at it for 25 years.  Kauai Marine & Mower sells boating accessories, outboards, generators, chainsaws, lawnmowers, etc.  Service department as well.  I'm a better mechanic than business manager, so I just turn the books over to the CPA and judge the state of things by the checkbook balance and what's in my head- I know, "lame", but it's worked for 25 years and we're still here.....I mainly concentrate on taking care of customers day at a time and figger if I do that well the rest will fall into place.  It always has.....

Business slowed some in '09.  And was slow in '10 as well.  Probably down about 15-20%.  Cash reserves are about half of what I usually like to have available.  Business usually starts to pick up in January after a slow 4th quarter.  We'll see.  What causes me grief these days is related to the timing and posibility of future events and their relation to my business decisions.  Should I order a years worth of stuff now while the price is still stable and the stuff is available, or order small quantities in case TSHTF tomorrow, and no one will be able to afford to buy it anyway.  Much of what we sell is "tool-type" stuff so would probably continue to we valuable no matter what the economic condition- as long as fuel is available.  I've many times wondered if gas was rationed, would people spend their allotment on driving a few miles in their 4X4, or mowing the lawn, cutting firewood, or tilling the garden with the rototiller....

I've thought several times about starting a new niche within the business- carrying some "preparedness" stuff and more basic quality tools and such.  So much stuff is available on line and with "magic brown truck" delivery though, I don't know if it would be worth it.  I'm sometimes amazed a the number of customers that seem to be cognizant of the pending "interesting times"- often people I wouldn't think would be the "type" to be knowledgeable about such as we discuss here- my bias,,,,,,but heartening. 

I'm 58 and when I'm in my dream state I like to think about retiring some time soon-ish, but economics dictate that I'll probably finally leave the shop feet first (not soon, hopefully)....In some ways I think that may not be so bad- being a established businessperson with a decent reputation hopefully will have value in the coming interesting times.  It does seem to have certain benefits now.  It's nice to get to know everybody....

That being said, I do think that Kauai may be a somewhat unique place.  Local population I think has been very financially conservative- a positive remnant of the plantaion days.  There is a certain % of the population that is extremely wealthy and pump in a certain amount of $$ into the economy to maintain their estates....Largest military base in the world (sq. miles, I think- mainly underwater) means steady employment for many.  Let's not forget the GMO seed companies that operate on the south side....don't get me started....

All-in-all, I'm still counting my blessings.  After all, my sweetheart still adores me (go figger...)  Aloha, Steve.

I've got a buddy who bought a small vending machine route for his wife to run. It brought a pretty good return for the investment of time/money so he started expanding. It takes a knack to scout out new locations, but he picks up used machines on the cheap and in a couple of years he's tripled the size of his biz. She fills the machines and collects the money three times a week, takes about three to four hours each run. They love it.

Another buddy (I have lots of friends) owns two self-storage properties. One is across the street from the Lawrence Welk Resort outside Escondido. It's always full with pretty regular payers. The other is in a not so nice area and is much more problematic-higher vacancy rate and chronic late payers. He's really happy with the one. The other? Not so much. It all depends on the property.

A few months ago, someone posted information on an aquaponics type business (with links, I think) on one of the business related threads.

I've been trying to find that post, and since I cannot find "forum search", I'm hoping somebody can point me in the right direction.

Thanks to all for the great information on these forums.

Here in California's central valley  we are surrounded by farms.  Most farming operations are capital intensive on two fronts:  land and  equipment.  The only individuals that perform both tasks have either inherited the land or married into it. 

From the investors perspective, many purchase the land and the old home that comes with it.   Our area has lots of individuals who are blessed with both equimment and knowledge, and they will farm this land.  The owner of the land pays for the taxes and water (very cheap here) and the farmer provides all the equipment, chemicals, and processing.  Typical splits are 70% (farmer) and landowner (30%).  The owner gets the tax benefits.  The only headache is renting the old farmhouse.  All my interactions with "my" farmer are based on a handshake - wouldn't have it any other way.  They (2 brothers and 1 son) farm many parcels and have the ability to do nuts (almonds and walnuts), beans, corn, and oats.

We double crop on our parcel - mixed grain (basically oats for hay) for cattle / horses in the winter and dried beans in the summer.  I sold my 30% share of the beans last week.  I can take delivery of my portion or simply sell it.  Two tons of beans is too much for the pantry.

I view land as "stationary gold."  It doesn't pay much NOW.  I would rather have land than gold, but getting the right parcel (location, soil quality, neighbors, farmers) takes several years.   I'm 2.5 years into looking for another parcel, bid (and lost) one and am seriously considering a foreclosure down the street. 

I too am racking my brain in ways to generate a cash flow for the future.  Beef animals or bee hives (almonds are bee pollinated, walnuts wind pollinated) are also local considerations.  Firewood (I hauled a bunch this weekend) is for the young.   I am "farmer smart", but a mechanical moron.  Not the total package.  Remember community - few true renaissance types out there.

I think Sager has started a great thread that needs much more input from this community.  Not many of us will sit out the trouble ahead eating stored food.  We are doers and thinkers and want to make a difference. 

Nate

Sevenmmm,

Thanks for taking the time and energy to post. 

Nate