20 Tips to Get Your Business Through this Economic Downturn

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Services for Real Estate Pros
https://activerain.com/droplet/5mKz

Whether you own or manage a business here are some tips and suggestions to help your North Idaho business survive the slowing economy

Okay, I know there’s a lot of BS between here and the info you want to know. So, if you are like me in college, just scroll down until you get to the info you need/want. I know you’ve already thought about a lot of this stuff. C’mon, you’ve been a successful business owner for a while now. But this is a good guide to keep you on track. My info is below, and I have offered my services free to help if I can. Scroll and read. Get the info and be successful, because without you, North Idaho is a lesser place.

We’ve gone through this before. The great Recession ten years ago. Then there was demise of rail, lumber, and mining 30+ years ago. Go way back and Humbird Lumber Co. employed over 1,300 men here, but by 1938 the last of the mills closed. Hell, how many owners has Schweitzer gone through? It happened then and will happen again.

 

In fact ten years ago this month unemployment in Bonner County was at a 25-year high, Idahoans were leaving the rural parts of the state in record numbers, and in the summer of 2010, the question wasn’t if we would have restaurants closing, it was how many. We had bright spots with new businesses such as Super 1 Foods, and the following year Kochava opened. In 2010 LItehouse, Thorne Research, and Laughing Dog were expanding. These days Litehouse is still growing, Laughing Dog sold and is not in an expansion phase, and Thorne Research moved to South Carolina.

Even reviewing the last thirty years our local Bonner County economy was far from rosy. As you can see from the numbers, unemployment that fell during summer months was often over 10% in the winter.

There probably isn’t anyone who would dispute unemployment in North Idaho is about to spike. The most recent chamber list on unemployment figures was put together in 2007 and the Bonner County and state figures put out in April 2019 quote (right on the page) from 2008. When I hosted the North Idaho Business Radio show for over ten years, I started keeping my own numbers (see unemployment rates below) because the digits from the government were so inaccurate. Litehouse is one of our largest employers and just a year and a half ago they reported at their annual shareholder meeting in Sandpoint had 425 local employee-owners. Currently it is not likely to see many layoffs there given the food buying frenzy we’ve seen in the media. LPOSD has 550 employees. The teachers are still getting a paycheck, but all the associated employees are not.

 

Schweitzer employed almost 700 this year, but that doesn’t count around another 100-125 that work in real estate, Selkirk Powder, other F&B, and Selkirk Recreation, fire department, etc., etc. that serve Schweitzer exclusively. This makes the enterprise easily the largest employer in the county, no matter the metrics used. They are now all essentially unemployed.

To not realize how bad it was here in the winter prior to Schweitzer is to not acknowledge we had one of the highest starvation rates in the country. To be honest, summers, though better, were still often lean times.  This summer may be one of the worst the region has ever seen. For almost 100 years unemployment in Bonner and Boundary counties was routinely 10-20% or higher.

Unemployment is about to go up, and though we’ve had a good run, it is something our community has gone through before.

How did people make it in the past? Rents reflected the local economy. This has not been the case in Sandpoint for almost twenty years. Often the rates per square foot were as high as Seattle. Back in he day people hunted and fished and worked when and how they could, with the help and generosity of neighbors, family, and friends. With all the new folks moving to North Idaho, I sure hope we can find a bit of our past to remind us that we live in the best place in the world: North Idaho.

 

We’ve had other businesses come and go. The closing of Coldwater Creek was a real shock to our system, and many thought our town would not soon recover from that devastating loss. Yet we did with the addition of companies such as Kochava and Quest Aircraft. Most people don’t realize that Sandpoint is a manufacturing town, and at one point was the largest employment sector. The truth is over the last few decades, we’ve had literally hundreds of businesses come and go. We’ve had population trends that people didn’t realize were happening. From 2000  – 2007 our population growth was similar to the last decade. Then the economy slowed and we had the big snow years of 2007 and 2008. At the end of the decade Sandpoint had only gained a handful over 500 people. A lot of people came and went in those years.

 

There are two kinds of costs in running a business: fixed and variable. The highest variable cost is labor, the killer of all businesses. Now honestly, labor is a semi-variable cost, but as many of you know, if your business is to survive, you’ve had to lay off a significant number of employees. Some of you had managers running your shops and businesses. For many of you, if you want your business to survive, you need to take over the reigns and operate the trade yourself. It is wise to keep the most capable employee(s). I know the temptation if to keep the long-term ones who have grown to be friends, but if you are smart, you will keep the ones that can do the jobs of two or three. It’s just simple math.

So, the old way of thinking is to try and tackle the variable costs. After, fixed costs are fixed. They don’t change. That is a faulty way of thinking.

In Silver Valley there has long been a problem with drugs and unemployment was often the highest in the state. They had what seemed to be a harder time recovering from the mining/lumber/rail decline than Bonner or Kootenai counties. In Kootenai and Bonner counties manufacturing and tourism blossomed, and the close proximity of CdA to Spokane turned that area into a bedroom community to the larger city.

Businesses in Wallace suffered. Yes, they have some tourism, but not enough to sustain some businesses. For years Wallace had many downtown storefronts shuttered. Buildings went into foreclosure and to tax sales. What was left behind was bought by other investors, and the rents went down. In slower communities, the only way to lease space is to offer the footage at rates small local businesses can afford. Today, Wallace has businesses in every nook and corner of downtown. Sandpoint is not so lucky. The rates per square foot there can often compare to Seattle. In Priest River the rates are low, but the occupancy is still dismal. Bonners Ferry also has lower rates, and they have higher occupancy.

That leads to some ideas you can implement as a business owner.

 Renegotiate/Reduce your monthly Lease/Rent

  •        If you don’t feel comfortable doing this yourself, use a Realtor.
  •        If you can’t negotiate a better rate, consider moving.
  •        Be more efficient with space. If you have more space than you need, consider moving into a smaller space with better rates, or lease some of your extra space to another business/individual.
  •        Call your landlord and negotiate a lower monthly rent. Sign a longer-term lease in exchange for the lower rent if you must. Your landlord is running a business too, and they would rather have you stay at a lower rent, than to have the space be vacant for months. Point out that it’s better for both of you if they lower your rent.

Get a discount on utilities

  •        Consider all your utilities like water, power, Internet, and phones. Call your vendors’ competitors and ask what kind of deal they can offer a small business looking to save money on their utilities. Let them know you’re willing to switch vendors if they can give you a big discount (even if it’s just for the first year). The frontline sales reps will often have unadvertised discounts they can offer new customers. All you have to do is ask for them. Once you know how much you can save by switching, call your current vendors. Get them to match the offer so you don’t actually have to go through the trouble of switching.

Cut wasteful discretionary spending.

  •        These are the newspaper and magazine subscriptions that were a nice perk during the high-revenue years, but now nibble away at your bottom line. However, this does not mean cutting cheap but morale-boosting expenses like cake for birthdays. Right now you need your employees to rally around the company’s survival, and a cake a month to keep morale up is well worth it. In the same vein, productivity boosting expenses like the coffee machine or a well-stocked soda fridge are relatively small expenses where the benefits in employee productivity far outweigh the costs.

Try something new

  •        Litehouse is a great example of this idea. They were a family restaurant who sold salad dressing on the side. Eventually that side business made the restaurant irrelevant
  •        I was talking to a friend who owns a food bus. She has the ability to make meals for a family and deliver a week’s worth of food to their door. In this time that people can’t go out as much, this would be a great service. She is considering offering five meals for a family of four for $200-250. All done in advance. All you do is heat it up.

 

 Lay off non-essential employees/Reduce hours

  •        Improve productivity
  •        Reduce hours before reducing salaries. If you cut someone’s salary by 10% but ask them to work the same number of hours, they will resent their lower hourly wage and will (subconsciously or otherwise) reduce their productivity by the same amount or more. A better idea is to cut hours. You’ll save the same amount of cash, but have a better chance of retaining the same level of productivity from your employees. Overtime pay is a good place to start — you’re paying 1.5x or 2x for those hours. Cutting your store hours (closing 30 minutes earlier) is another option that could mean one less employee you have to layoff. Customers may not even notice your new hours.
  •        Let’s use Litehouse as an example again. They used family and friends who became family to survive lean years. So did Ivano’s, one of the longest lasting restaurants in our history.

Consider employees working remotely or at home

  •        Do you have a business that is mostly commission? Yes, paying a salary is an incentive, but not to sell.
  •        They'll waste less time commuting.
  •        They'll be more productive.
  •        They'll be happier.
  •        It's easier than ever. We can show you how.
  •        You won't have to pay for office space.
  •        You won't have to pay for office supplies.

Run the business yourself

  •        From personal experience, paying a manager when you can do the work is throwing money away.

Negotiate better fixed cost for your telephone/fax

  •        Do not buy. You want to lease things that depreciate and own things that appreciate.
  •        You end up with better equipment that is more functional and increases productivity.
  •        Yes, this is one of the things our company does, and we partner with Intermax.
  •        A dedicated fax line is a necessity for some businesses. For instance, some courts and medical businesses require fax. Encrypted Efax can save some businesses thousands.

 

Negotiate better fixed cost for your copier

  •        Do not buy. You want to lease things that depreciate and own things that appreciate.
  •        Copiers is one area that people are really ignorant about. Beware of discount companies. It seems like a simple thing, but having quality machines and output at your fingertips is an art, and there aren’t many companies that do well at this task.
  •        You can absolutely lower your print costs.

Negotiate better fixed cost for your mail

  •        This is an area that having a professional can really pay off. Do not buy. You want to lease things that depreciate and own things that appreciate.
  •        There are actual discounts for mail costs that you just don’t realize.
  •        Mail is making a comeback as a marketing tool. Gone are the days of overwhelming mail to every American. People are actually opening their mail again. Emails not so much.

Negotiate better fixed cost for your internet

  •        Okay, I get it. We have limited choices. Still, what does it hurt to explore the choices?

Negotiate better costs for your office/business equipment

  •        We do this every single day in our business. Imagine the church that was paying $429 a month for printing costs, $109 for telephone, and had no security cameras? We put in all new equipment with cyber security for a total cost of $389 per month. The church saved $149 a month and had newer, better, easier to use equipment and the service improved from days to hours. Plus, while you’d never think a church would be vandalized, they had been hit five times in seven years. Since the cameras went in four years ago, not one break in. The costs of the vandalisms were over $7,000. You do the math.

Shop insurance rates

  •        When we owned Walker Donuts (17 years across the street from the post office) we shopped our rates and went with Steve Smith and save over $1,100 per year with a major carrier with better coverage.

Buy things secondhand or Lease rather than buy. (Or buy used.)

  •        There is the most simple formula in business. You want to own things that appreciate, and lease things that depreciate. In office equipment, this is easy. Manufacturers have discovered that they don’t need to make replacement parts for equipment/computers/tech that is older than seven years. So, if you buy a car, and it is a 1998 Corsair, you might be able to find a replacement part for it. At some point, your stuff is just obsolete. Leasing costs are very similar to owning. For instance, Coldwater Creek never owned the buildings it was housed in. Few companies do. The leases are amortized and written off and the company rarely has to suffer losses because of bad/poor purchases.
  •        Need a new computer or office furniture? Lease it instead of buying. You will end up paying more in the long run, but in a down market, it’s all about cash flow. If your business runs out of cash in 6 months, it won’t matter that you paid less for that desk by paying the full amount up front. When survival is the issue at hand, you unfortunately won’t have the luxury of doing things the “optimal” way. It might also be worth the effort to find more options of getting your equipment and further. In this economy, there may be plenty of used gear from recently closed businesses.

Consider software or upgrades that can save the business money

  •        Use software tools to ‘do it yourself’.
  •        Track all expenses with software.
  •        This will help to Improve productivity.

Cut your advertising/Use social media

  •        Move away from traditional marketing.
  •        This is an area that you might consider using professionals. Now that doesn’t mean you have to hire a social media company. It could mean just hiring someone for a couple of hours a week to do your campaign online. There are a ton of places to advertise your wares and services such as Instagram, Facebook, and Twitter.

 

Explore buying from other vendors

  •        Yes, relationships take a long time to build, but if the other guy is offering a better price, then don’t kill your business by ignoring the savings. If your relationship is that important to you, let your current vendor(s) know you are shopping price, and ask them to meet the competition. I would go one step further. If you have been a with a company for a while, ask for a better price than the competition is offering. It is in their best interest to keep you as a customer.

Lower inventory costs.

  •        How much cash is tied up in inventory? Do you really need to have 100 units of every product sitting on your shelves, waiting for the big order? You may be able to reduce the amount of inventory you’re holding, and free up much needed cash. Can you increase the frequency of deliveries (and lower the size of each shipment) from your supplier? That will allow you to stock fewer units on the shelves and keep more cash in your accounts. While you’re considering your inventory, maybe now is the time to liquidate the worst selling products.

 

Use tech to save on bills

  •        There are some excellent technology solutions to save money on utilities. Using programmable thermostats will help you save heating costs, and smart light bulbs can help you save on electricity costs.
  •        Small, consistent fixed costs like utilities are a great opportunity to save money long-term. They can also have the added benefit of making your business more eco-friendly.
  •        There are buying groups, buying apps that offer significant discounts, and so much more. You probably have more time now. Why not explore the possibilities.

If you are a small company, instead of benefits, have perks

  •        It can be cheaper and more effective to provide perks to employees instead of benefits. That’s because, when done right, perks can have a greater perceived value than the equivalent benefits. Often, the value is in the utility and perceived thoughtfulness.
  •        An example of this is free snacks or free Spotify accounts. These might come at minimal cost to the business, but make employees feel like they are appreciated even more than the equivalent pay-rise.

Saving money will grow your business quicker and help you recover faster once the economy starts picking up.

Cutting costs is an important part of running an effective business. But don’t see this only as an exercise in cutting back – many of these cost cutting ideas will have other positive effects. For example, using technology to reduce energy consumption will save money and have a positive impact on the environment. Imagine being able to advertise your company as friendly to the environment.

It can also be both easier and quicker to cut costs than to increase revenue. Developing a new product, or entering a new market takes decision-making and work, but calling a utility company to re-negotiate your contract can be done in less than an hour.

Cutting costs is key for business success. If you ignore it, you’re shooting yourself in the foot. It’s that simple. Be savvy and apply the ideas in this guide to cut costs and help grow your business.

You may ask where I get the knowledge to pass on to you. I hosted the North Idaho Business show for over ten years here in Bonner and Boundary counties, studied accounting in college, and have been a business advisor selling much of the tech/software that businesses use for almost ten years locally. I have also been a business owner/manager in Bonner and know what it takes to get the job done. My social media presence is the best in North Idaho, and have numerous YouTube videos, etc. I have also written extensively and am a published author through Hastings House and United Publishers Group. Plus, the company I work with is the largest in the Inland Northwest, and if it is in your office or business plan, Kelley Connect is a resource. We are the only tech company that offers IT for all of our product lines, including code writing for software integration plus security both physical cameras and cyber, mail management, copiers/printers/office equipment, furnishings and so much more.

In the past when I had my own server I provided free of charge almost 70 free websites to new businesses and while I can’t offer that gratis these days, I do offer my advice and services to any local company that needs help. For at least the near future, and as time permits, I promise to help you get through these hard times.

My email is garyplirette@gmail.com and my telephone is 208-610-8085. I am semi-retired and work with whom I want. I am a vet of two branches and have nothing left to prove. I promise if I have time, I will work with you. You can get through these tough times and prosper.

 

By Gary Lirette, Senior Business Development Manager for Kelley Connect

#saveyournorthidahobusiness #northidahobusinesstips&tricks #sandpointbusinessadvice #helpforyournorthidahobusiness

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Laura Filip
Laura Filip Broker , Opening doors for All Seasons of Life - Whitesboro, TX
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Thank you for sharing this with us. Very good information, one should consider all of the items and think it through as to which ones might help out. Have a blessed day. 

Mar 27, 2020 11:25 AM #1
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