The Sustainable Business Approach
As we look for signs of recovery from the global recession, Mark Warren of Lister Trade Frames takes a surprisingly holistic view of business survival.
We’re reading that the green shoots of recovery have begun to push through. So the recession’s over, right? Wrong. As the world economy recovers we’re likely to see yet more business failures as the financial damage incurred in the slump starts to reap its toll.
When it became clear that a recession was approaching, a great many companies responded by cutting back. That’s a sound response, provided it doesn’t reduce the company’s ability to make money. Strangely though, this seems to be the essential element that so many people miss. They cut back on sales and marketing, they reduce their production capacity; frequently they also reduce their prices. They appear to survive, but they’ve actually entered a spiral dive from which they’ll never recover. A business can run for a surprisingly long time while making losses, but once the cash runs out, it’s all over.
I won’t pretend Listers are immune to the effects of the recession. We’ve had a tough time and we’ve had to make a few tough decisions. But we’ve stayed a profitable business, and we’re continuing to succeed through a slump that’s wiped out some of the big names in our industry. Maybe we’re just lucky, or maybe it’s something we’re doing right. Obviously I think it’s the latter – but there’s no one thing that you could point to and say “that’s Listers’ secret ingredient”. There’s no secret to what we’re doing; it’s just that we do a whole lot of things, all the time.
This article sets out some of our thoughts; they work for us, and they could do the same for you.
Understanding Business Support
We depend completely on our customers. We don’t operate our own trade installers and, other than a small number of DIY items, we don’t sell direct to the general public. So unless the installers are doing well, our business can’t possibly succeed. Sustainability is the base on which Listers is built. There’s no point driving our products into the installers if they can’t sell them profitably to their own customers. It’s easy to promise a great installer support package, but empty promises can only win a few short-term sales. Long-term growth can’t happen unless you deliver.
So when the recession forced us to look even more closely at our budgets, it was clear that installer support was an absolute essential. Instead of cutting back we upped the ante. We’ve built a, free to use, on-line quoting system to help them calculate and manage their pricing – if installers aren’t making a profit, nor can we. We’ve also put more investment into marketing support – we actually spend more on marketing our customers’ businesses than we do on our own. The package includes heavily subsidised, personalised Websites and vehicle liveries, sales DVDs, brochures, advertising design and a hundred other activities to help them attract new business.
Our customer support is not simply about products though. As if times weren’t difficult enough, the volume of new regulations flowing out of the EU every day could easily swamp a small business. HR and H&S laws are so complex that employing anyone is becoming a horrendously risky undertaking. We realised some time ago that some of our customers were finding it incredibly difficult cope with these rules and regulations, so we decided to help. Clearly, the employment law burden can’t be borne by someone who also needs to sell, install and service his customers in order to survive. So we asked Derrith Turner, our head of Human Resources, to set up a dedicated HR and H&S service division specifically to take that load off our trade customer’s shoulders. We now work on a daily basis with our customers and other businesses to resolve any of their employment problems and – even more importantly – to help them to avoid potential pitfalls.
Our relationship with our customers is as all encompassing as needed. It’s a question of balance: we continue to make profit as long as our customers continue to make profit. To do that they need to be able to satisfy their customers, not just with good products and price, but with efficiency and professionalism.
Who Wants What?
It’s worth taking a moment at this point to consider what all the players in this selling chain actually want.
The end-user wants to buy an attractive, high quality product from an installer who does a first-class job at the right price. The installation should be as fast as possible to reduce upheaval. Any problems get in the way of these aims, though the impact can be minimised by swift and efficient correction. The installer wants to provide exactly the product that the customer wants to buy. He wants to sell it profitably and install it quickly and simply. Any return to site to fix problems is as unwelcome to the installer as it is to the customer.
Listers want their installers to sell a lot of product, because that means they buy a lot of product. Anything that gets in the way of them doing that is bad for us, bad for the installer and bad for the end user.
These are the three elements that drive virtually everything we do. When we look at a new initiative we apply them as criteria, and the answer usually becomes immediately clear. For a successful and recession proofed business you need to provide excellent products, service and support all the way through to the consumer. This is easy to say, but takes a lot of effort to achieve. Dropping your prices is a whole lot easier to do. I don’t recommend it.
Anyone who’s seriously intending to recession-proof their business would do well to think through their own business support systems.