Small Business - Staying Competitive.
Rather than get into the weeds on the economy, here is the Reader’s Digest version…
Consumer confidence continued to edge up in August – that’s good news, but we’ll see how increasing gas prices in September will impact that…
Durable Goods. There are new orders and then there are shipments.
Orders were down ever so slightly: 0.2% to $272.7 billion. For the month.
Shipments – that would be getting the ordered goods to the buyer – were up 0.7% to $272.1 billion.
It’s the orders that I focus on and down isn’t good.
Cocktail party fact: There are 5000 surveys within 3,100 companies over 92 industry categories that make up this survey.
Pending home sales… care to guess? Down for the third consecutive month.
Year over year, purchase contract signings are down 24.2%. I guess that’s what a 6.7% 30-year loan rate will do to you.
A key thing for government surveys like the orders for durable goods is that they are not adjusted for inflation.
Things are definitely slowing down.
Oh, and by the way, lost in the news was the fact that the government voted to fund its bank account through December 16. Perhaps I’ll focus on that next week.
Small Business Innovation
How are you handling the current environment? Are you adapting or are you doing the same thing, hoping for a different result?
The Wall Street Journal recently profiled some innovative small business owners:
The plumbing company that can’t find experienced plumbers. The owner spent $700 for a camera system that her junior plumbers can use to livestream their work so that the owner can supervise them on the spot.
This allowed the 20-person company to take on more jobs.
Vistage reports:
60% of small business owners state that the inability to find employees is limiting their ability to operate at full capacity.
80% of small business owners say they have increased wages and compensation
60% have refined their recruiting strategies
46% have boosted employee benefits.
Boudreau Pipeline in Corona, California, as profiled in the Wall Street Journal, states:
It has boosted wages 22% over the past two years
Added three in-house recruiters
Offers hiring bonuses as high as $2500
Offers retention bonuses of $5000 if they stay a year
Referral bonuses of $1,500
A personal conversation with a business owner in the Inland Empire was enlightening.
Since a significant part of his business is with Hispanic business owners, he has outsourced two of his customer service folks to Columbia. The other three he outsourced to India.
I asked him if he was nervous about going overseas. He was.
When he talked to the fellow in India, the guy really knew his business; he demonstrated an expertise. The business owner was sold.
He now spends $4000 per month on 5 customer service people that are out of this country. That is a significant cost savings.
It would otherwise cost him $18,000 per month.
What things are you doing to stay competitive and keep costs down?
Bits and Pieces
FedEx to raise shipping rates by an average of 6.9% starting in January. I’m thinking you should factor in a 7% increase in your shipping costs for next year.
Not only is this fueled by inflation, but total packages shipped in Q3 dropped 11% from a year earlier.
Not surprisingly, so did their stock price.
European manufacturers are moving production to the US. Battered by skyrocketing gas prices, companies in Europe that make steel, fertilizer and other energy intensive products are shifting to the US due to its more stable energy prices and strong government support.
Well, I guess that rules out California.
Energy prices in Europe are requiring government intervention to bring them down.
Remember those wage and hour lawsuits your business is exposed to? Well, now you get to pay the plaintiff’s reasonable attorney’s fees.
I’d like to meet the person that gets to define ‘reasonable’.
It looks like Bed, Bath and Beyond has gotten a cash crunch reprieve.
A few weeks ago, it did not look good for the company, but new debt and a clearance of inventory have brought in much needed cash.
Getting a loan for operating expenses? Not a good sign.
If you have a BB&B gift card, I’d use it sooner than later.
Sales. It’s been a while since I discussed sales.
Do not get so caught up over what is happening around you to forget to keep looking for new customers and retain existing ones.
This past week, a tree service company was doing work at the end of the street. What made these guys different is that one of the fellows hit up every house with offers to trim their trees and vegetation.
They got two more jobs out of it.
Two out of nine is an excellent prospecting result.
Every business owner and sales rep would love to see that kind of result.
When you call on a customer or a prospect, are you knocking on the door of the businesses on either side of your meeting? Better yet, are you asking your customer if they know the business owner next door?
Make that part of your plan.
Third quarter, here we come!!
