laTeST - Music & Sound Retailer

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
Music in Westlake, Ohio.
Music & Sound Retailer 47