There is another shop shutting down in the high street in my own home town. It is a book shop this time. Whilst our town seems to have weathered the financial storm better than most, some recent events have conspired to make business very difficult. Another small business is going and so some more people are to be added to the jobless figures.
I have no knowledge of the problems that this particular business has faced although I have heard that turnover was 70% lower this month than in the same period last year. I’m sure that they have worked hard to try and keep going and to generate more customers and revenue but it’s closure has come as a surprise to me. I am a book buyer and have been an occasional customer and would have thought that I was within their target market but I have heard nothing until perhaps it was too late.
I’m certainly not trying to apportion any blame for their predicament on the current owners of the ill fated business but it has got me thinking about my own work. Am I and my team doing enough to make sure that our customers are aware of what we have to offer? Are we doing enough in these straightened times to maximise our possible revenues and not just concentrating on battening down our costs.
All businesses need to focus on developing sales as well as managing costs, after all every pound gained is a pound that doesn’t have to be saved. The most effective way for me to get growth is to sell more to our existing customer base but to do this assumes that we know who they are and the types of product they are buying. Perhaps, more importantly, we need to know what products they are not but could be buying. This knowledge can only come through the careful analysis of sales data and buying patterns, matching product or service purchases by customers or customer type.
But this isn’t all that needs to be considered. Sales growth by itself is fine, especially if it is achieved at acceptable margins but the real key to survival is by diversifying the business, by spreading the risk across differing customers, channels or product sets. Specialism is a good strategy in that it focuses resources and corporate effort but it can be the last step before extinction. Focussing on multiple opportunities and generalising to an extent can mean that one income stream can support the business while another stream is faltering. Again this requires an understanding of business flows which will only arrive through proper analysis.
Referring back to the shop that is going out of business in my home town, I repeat that I have no knowledge of the problems that it has been facing but I wonder if all of the avenues open to the business had been explored, all customers, all channels and all product sets. Had the business diversified enough, spread its risk to cover a drop in walk-in sales or increased competition. I guess I’ll never know but I’m going to double my efforts to make sure that my team and I understand these things in our own business.