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veddatorial Topical Depression By Dan Vedda Like so many small businesses today, we’ve tried to pare our inventory, contain payroll and cut expenditures wherever we reasonably can do so. Even though our customers are still buying—we ran the thinnest of increases for 2009, albeit thanks to some strong departments rather than overall vigor—we know we, like many, are likely to be on the proverbial thin ice if anything changes. That was illustrated forcefully just before the banking laws changed, as financial institutions ran numbers and put spending habits, credit limits and interest rates under the microscope for America’s small business community. I’ve not only heard the stories, I’m one of them. The old joke—that the difference between a road kill skunk and a road kill banker is that there are skid marks in front of the skunk—is making the rounds again. Granted, lawyers used to be featured in this one, but outside of GC, NAMM and a few other industry litigation victims, bankers have claimed the spotlight. Not that our current belttightening is that bad, of course. As “great” as this depression is supposed to be, and despite all the tales of woe from pundits, economists and media outlets, I don’t think we as a society are as bad off as the folks who lived through the Great Depression of the 1930s. My parents did and, even allowing for colorful memories, it was grimmer in many ways. One reason was the relatively low standard of living as compared to today. Food quality—the availability of varied, fresh foods—was an issue in good times, without freezers, global sourcing and quality standards. My mom learned plenty of ways to “save” substandard meat, and a “convenience food” was an apple, because it would keep for months. (I heard someone complain about the price of mangoes recently. Really.) Modern conveniences— phones, TV and even cars—were rare or nonexistent. What that meant was that there was no fat in the lifestyle, so fewer dollars meant fewer meals, not “We need a cheaper cable package.” The impact was immediately felt. Certainly, there are many people in dire straits in America today, but, during the Depression, it was endemic. Some of the rich lamented about “letting the help go,” but there wasn’t the large Audi-drivin’, latte-sippin’, bigscreen middle class cutting back on vacations and dining out—it was a huge population wondering how they’d get food and keep a roof over their heads. So, although many of us are hurting and there are those who won’t be around for Christmas 2010, for more of us, it’s about adapting. Now, if you can’t or won’t adapt—or if your adaptation isn’t successful—perhaps there’s no hope. But at least there are other options to try before you throw in the towel. Although cutting payroll is quick and substantial, if you lay off good, productive employees, it’s the equivalent of losing muscle instead of fat. This is when you see the quality of your workforce. Do you have people ready to take on additional tasks, look for prospects and payments, and help eliminate waste, or are you saddled with salespeople who refuse to do clerical work or run the vacuum? I’ve had both, willing and unwilling, and I’ve made payroll cuts appropriately. Although it’s wrenching to lay anyone off, removing an employee who has made it obvious that your business survival isn’t a priority has a lot less sting. Two years ago, I really didn’t think an eBay store was a good fit for us, even though we’ve been eBay members since 1999. We’ve always been local and community-based, and not “knowing” my customers had less appeal for me. But I changed my mind when we had to unload dead stock from franchises we’ve walked away from. It worked, and the momentum propelled us into a store that actually acts as an extension of our brick-and-mortar presence. I stand corrected; it’s at least helping, with minimal additional investment other than time. One thing I’ve tried to discipline myself to do is choose my battles. We have to serve our customers profitably, and it’s tough to turn down a repair that a regular patron needs. But when it costs more in productivity than you could charge without being accused of gouging, it might be better to walk away and let the competition “gouge” them or take the hit to their productivity. At the same time, if we have to special order an item and spend an extra $100 on other merchandise to meet a minimum or justify the freight, our cash flow might not support it. An hour of research finding a product that we make $3 on might not be a good time investment. There isn’t a categorical answer to this, because intangibles like customer loyalty and future sales—particularly of products that would be good additions to the mix—factor in. But the analysis has to be done. No matter what you manage to cut, though, you can’t stop promoting and advertising. With traditional advertising in a tailspin, new and creative options surround you. Perhaps the digital haiku of a 144-character tweet isn’t for you (I can’t imagine most of the piano teachers who we see following us on Twitter, for example), but it’s time to explore other avenues. Viral advertising, YouTube and social networking are all successful in some measure, depending on the diligence and passion of those who adopt them. The eBay lesson showed me that I need to try—really try, not just putz around—anything low cost before dismissing it. Finally, the outreach you do now is exponentially more important: people are looking for signs of fear and the stench of death in the same way they slow down for auto accidents to rubberneck. They can’t help themselves. But when we held our Mardi Gras party recently, several moms thanked me for still offering it “despite the times.” Everyone’s watching, and a clear eye and a strong presence—and a regularly vacuumed floor—send a message of confidence and strength as valuable as anything. Dan Vedda is the owner of Skyline <strong>Music</strong> in Westlake, Ohio. <strong>Music</strong> & <strong>Sound</strong> <strong>Retailer</strong> 47
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