When we set Best Years up almost 20 years ago we had already worked in retail for over 15 years so we assumed that we had pretty much seen all there was to see and we were well prepared for the next stage in our retail journey.
Not 5 years later we dropped in to the worst recession for 100 years and we discovered a whole new world which we knew nothing about. We were so close to going broke our accountant gave us an official warning, and let me tell you that is not a good feeling.
However we made it and here we are 10 years later ready and prepared for the next recession.
The big difference this time is that we have some experience to fall back on.
We are a toy wholesaler and not a business consultancy so this is a personal view but this is what we are doing to prepare
Bailing Out.
Cut back all expenditure where at all possible. False hope is a marvellous thing and back in 2008 we had some half baked idea about things recovering in 6 months or so. We therefore continued with business as usual with the expectation that sales would come back before too long. This obviously didn’t happen but in the meantime we continued to pay out £000s for goods and services which we could do without. They weren’t strictly unnecessary but they were luxuries we couldn’t afford in the climate we were operating in. This time round we have already cancelled or given notice on every contract we could including our telephone answering service and the live chat on our website. They are both very useful and have definitely brought us business and in the last year, but they are not strictly necessary for the running of our business.
So our first piece of advice is to have a look at everything you have spent money on over the last 6 months and stop as many as you can. If you have money in the bank you may think this is can be delayed until you start to run short, but trust us it’s better to start now and keep the money in your own bank account as long as possible. This includes your big bills to people such as HMRC. If you have to continue to pay then ask for a payment schedule. Everything you spend money on should be challenged in light of your new circumstances, but remember when doing this that if you need somebody/something after this lock down ends then not paying them is a short sighted strategy! The bills you should keep paying are those to people smaller and/or needier than you, and those which you absolutely need to run your business. As a toy wholesaler we need our team, our website, we need a warehouse and we need suppliers, so we make sure they are all paid in full. The luxuries of marketing, PR and other such services will have to go until another day.
Start Rowing.
Target where to get your next sales. When you are in business you tend to follow the stream of sales where ever it takes you. If you are a wholesaler you pick up sales through trade shows or word of mouth or reputation and end up with a portfolio of customers. If you are a retailer you pick up customers via walk ins, recommendations and word of mouth. Back in 2008 we mainly supplied multiple high street retailers. We picked up Next through a cold call (unusual but true!) and that led us being approached by people such as New Look.
So we had a customer base that other wholesalers would aspire to but one that deserted us pretty quickly when we couldn’t/wouldn’t discount our goods or agree to extended payment terms.
We therefore had to go out and find a customer base that would better suit our business and one where we were more equal partners. These days we mainly supply Independent retailers and museums and our business is a lot healthier. If you are anything like us then your business has dropped off significantly at the moment. It will come back but when and how much is very much up in the air. If your business is to survive and thrive its not enough to cut costs, you also have to increase sales. So while things are quiet now is a good time to have a look at potential customers who will still want your goods after the crisis is over. It may feel that this is an overwhelmingly bad situation but there are people who are doing well and a lot of people who are still receiving a regular pay check. The research coming out at the moment says that it is the young who will be hardest hit so if this is your target customer can you pivot your offering to appeal to a different customer, one who will be more secure? Would it be possible to introduce or continue with home delivery? When we get through this some sectors will bounce back quickest, and the good news is that babies will still be born, toddlers will still have birthdays, kids will still grow out of their clothes. We have a market which will still be growing so now is the time to think how best to access it. You don’t want to start approaching customers yet but you can use your downtime to look at who you want to be doing business with at Xmas and prepare your website, ranges and social media to point towards them. And if you don’t have a website yet now is a VERY good time to get one! They take time before they start attracting customers but they are definitely something most businesses should have.
How are you different?
One thing which we had to change significantly during the last recession was our product offering. We sold traditional plush soft toys and so did a lot of other people. Bigger toy wholesalers simply found cheaper factories to work with and reduced their prices to survive in the challenging conditions. We were both unable and unwilling just to buy cheap so we went the other way and started working with fair trade organisations. We also took our one very popular toy, the knitted t rex, and turned it in to a full range. We have had many imitators since then, and a few straight copies, but no one has been able to come close to our design and quality and the range has thrived. Selling cheap products in volume is addictive but also risky. People will change after this lock down so how can you change your ranges to suit the new buying patterns? Now is a great time to look at how you ensure that you can be different from other businesses.
Steer your own path.
Don’t let this experience scare you. Probably the most unexpected and far reaching consequence of trading through a recession is how it hovers over all subsequent decisions you make. Failure came so close to us we could still smell its stinky breath years after and we allowed this to dominate our business for much longer than we should.
This recession was not caused by you, your business is not struggling because you did anything wrong, you do not need to continue to prepare for Armageddon. Obviously you can use the experience to examine whether your business is as solid as you need it to be (top tip, don’t rely on multiple retailers as they are the least loyal of any customers) but then you need to shrug off the hard times and look forward again. This too shall pass as they say
