Sunday, May 25, 2008

What Does Survival Mean to You?

The current economy has put many small business people, including artrepreneurs, in a survivor frame of mind. Some businesses have shut down. Those of us who are still in business want to survive, with the hopes of thriving when times are good. The e-mail lists that keep members up to date with funding and grant opportunities have been reflecting the hard times. Less money is available to support the arts. News reports tell us that people are spending more on energy and food, and paychecks are flat. It is any surprise that people are spending less on art and craft?

So, what does survival mean to you?

Does it mean hunkering down, and not spending a dime unless your life depends upon it? Does it mean looking for ways to cut down on your expenses? Are you doing more shows in the hopes of generating more income? Taking a second, or heaven forbid, a third job?

On one discussion board there is a lot of discussion about spending money on advertising. Should I or shouldn't I types of discussions. There is also regular discussions about how bad business is right now.

I find myself going against the grain in many respects. I don't know that I have this figured out for anyone but myself.....and I am not even so sure I have it figured out for myself, but I will share with you some of my thinking, and strategy. Rather than copying exactly what I am doing, I hope that it just provides you another way to think about your own business, and what is working or not working for you. How can you make it through this time, and do even better in the future?

1. Shows. Do more shows and you will make more money. The thinking is that even if you are making less money than you used to at a show, you will make up the difference in volume.

This could be dangerous thinking. It is the same type of logic used when someone claims they covered their "booth fee" at a show. Anyone who does a show knows there are many other expenses related to doing a show beyond the booth fee. Mileage would be right near the top these days, even for a fairly local show. An hour commute each way may not make sense at $4.00 per gallon. But then you may have a few hundred dollars for three or four nights in a hotel, plus meals. Did you have to pay extra for electricity? What other expenses do you have when you do a show? Flowers for your booth? Time out of your studio? Or at the very least, the cost of the goods you sell at the show.

Does it make sense to do more shows, if the bottom line is already very thin? Are the shows you are adding going to be better than the ones you already have on your schedule, or will they just make the bottom line even more strained? In the end, more shows may just mean more wear and tear on you, your work, and your displays, without doing anything to increase the bottom line.

My own strategy this year was to eliminate retail shows. It just was not profitable enough over all for me to continue to pour more money into doing retail shows. I have not completely ruled them out, but for now, there are none on my schedule. In spite of this, my sales are up a few percent, and my bottom line is significantly better than a year ago. If you are doing retail shows, recognize this is a tough economic climate, and it will not take much for a marginally acceptable show to move into financial drain.

2. Advertising. One strategy that many small businesses have in tough times is to cut back on the advertising. Artists in particular it seems, struggle with advertising dollars. It is hard to spend money on advertising when you are not seeing the direct and immediate result of your expenditure. When you do a show, you can immediately see if the investment paid off.
Advertising is much more slippery.

First, you have an endless pool of choices as to where you will advertise. You need to figure out where the best fit for your dollar lies. If you have not thought about who your customer is, and how to best reach them, you could be throwing good money down the drain.

Secondly, advertising is expense that has to be considered an investment. I am using business school jargon here to make a point. Let's dissect it. Expenses are things that you spend money on to keep the business running. They include materials, rent, show fees, jury fees, etc. Investments are often made for a longer time horizon. It is the money we spend on capital equipment, or assets we purchase for the long term growth of the company. That camera to take better photos of your work. The spot welder to make you more efficient welding jump rings. The new kiln that is more energy efficient. Even though advertising is classified as an expense when it comes to our taxes, we really need to think of it as an investment in the long term growth of our business.

The money I have spent over the last two and a half years on advertising has not been spent without a lot of angst. But, it seems to be making a difference. The orders are trickling in. I am not swamped, but I have had a steady stream of orders since the beginning of the year. Orders from ACRE are planned for delivery right into the fall. I know I will have income to take me through the summer, and into the busier fall months.

What if I cut off the advertising to save money? I suspect I would also cut off the flow of orders. Out of sight and out of mind. And when the economy got better and I decided to spend on advertising again, I would be rebuilding. Looking at it another way, if more people are cutting back now, any advertising I do in this environment will have greater impact because there is lesser competition for the eyes of the buyers. I will be the first to tell you this is a hard spent dollar, but I have also seen the fruits of the steady investment in a targeted advertising program.

3. New Work. I have beat this drum before. If you are not continually offering a fresh take on your work, then you may find that your sales will suffer. This does not mean complete reinvention, unless you are so inspired, but rather continual innovation. In terms of the toothpaste model, what is new and improved with your work? Nothing seems to capture the imagination of buyers of art and craft as much as the new. Something they have not seen or imagined before. Keep them surprised, and you will be more likely to keep them as customers.

I have also found, nothing keeps me as excited about my work and the direction it is taking as that continual exploration of the new. If I am excited about my work, buyers will be more likely to connect with me and my work.

4. Cutting costs. Yes, cutting costs is important. Where can you spend less? Are there shows that you would be better off not doing? Is there a more efficient and cost effective way to put together a catalog? Is there a way to find multiple uses for one marketing tool? This year I have started using my postcards as the color images for my catalogs. It gives me a high quality image, a lower overall cost, and more flexibility.

Are you being as efficient as possible in your energy use? Are you running partial loads in a kiln, or curing? Is your equipment energy efficient? If not, how much would it cost to upgrade, versus how much you would save?

Are you taking advantage of bulk discounts? Sometimes when money is tight we hesitate to buy anymore of an item than we need right now? What if you bought enough for six months to a year? How much would you save in quantity discounts?

5. Are you out looking for new customers? Are you waiting for customers to come to you? Or, are you doing everything you can to try and find a few new customers?

When you are doing a show, are you making sure you are reaching out to your mailing list before the show to maximize your chance of success? Have you followed up on leads? How do you stay in touch with your current buyers if you sell wholesale or through galleries? There are many options; phone calls, postcards, newsletters, perhaps a combination of these.

If you have come up with some new work, what are you doing to publicize that work? Press releases, submitting images to magazines related to your media, entering contests. Right now if you have more time than money, it is important to get creative about how to create some "free advertising" for your work.

These are just a few things that I have been considering as I try and navigate these difficult times. I have heard a few say that the problems are because of people saying times are bad. If the media wasn't reporting so much bad news, things would not be so bad. I would call this ostrich thinking. Others are so focused on the bad news they can't think straight. Burying themselves in the reality of the bad news.

Once again, I find myself trying to carve a path somewhere up the middle; recognizing the challenges, but trying to optimize my chances for success as I make my way forward. It means holding two opposite points realities simultaneously; the economy is bad, and we can succeed. It is almost like patting your head, and rubbing your belly. Difficult, but with practice, we get better at it.

Here is wishing you success in spite of.... In honor of the Phoenix landing on Mars successfully, imagine your business as the phoenix rising from the ashes of a tattered economy. Going against the tide.

1 comment:

Dianne Poinski said...

Excellent post!

I have done a little bit of almost everything you wrote about.

My attitude is really what I have been working on. When I am at a show and sales are slow I practice keeping a positive attitude and it seems to help. I have had a few good sales at the very end of some shows.

Things are tough right now but we still have to be out there and doing our best. People may not be able to buy something right now but I know things will turn around eventually and I hope to be ready.

Patience may just be the key this year.

Thanks again,