Transcript
Greg Corombos: Welcome to BizFilings Expert Insights. Hi, I'm Greg Corombos. Our guest in this edition of Expert Insights is Melinda Emerson. She is also known as the "Small Biz Lady". She can be found online at smallbizlady.com and on Twitter @smallbizlady. She's also the author of Become Your Own Boss in 12 Months and Fix Your Business. She is host of the SmallBizChat podcast as well. For many small business owners, just surviving the pandemic was very difficult. But then, just as things started to get close to normal, inflation and supply chain problems burst onto the scene. So what are the best ways to navigate these latest challenges? That's what we'll discuss today. And Melinda, it's always good to have you with us. Thank you.
Melinda Emerson: Oh, I'm so happy to be back with you.
GC: It's great to have you again. And you know, you've been doing this for a long time with your own business and helping other business owners. We've certainly seen difficult economic stretches in the economy before. The 2008 financial crisis certainly comes to mind.
ME: Oh yeah. I was telling someone about that just the other day. I said, you know, as bad as things are, they were way worse. And '08 '09. For people to imagine that but like, Oh, no.
GC: Have you ever seen, though, a two or three year stretch with more different challenges...just the number of challenges we've seen right now?
ME: No, I haven't. I mean, when you think about, you know, the pandemic happened, right. Then we had economic shutdown, then we had supply chain. Now, as things are back on the upswing, now, we're dealing with incredible inflation. There's still supply chain issues. And now we've got gas at $5 a gallon, which is crazy town. I can remember being in Europe in the early 90s, when I did my international internship in college, and I remember gas being around $5 a gallon in Britain and being like, it'll never be $5 a gallon in America. Americans wouldn't stand for it. Well, I live long enough to eat those words. It's really scary.
GC: Well, we're not happy about it, that's for sure. And of course, depending on the business that you're in, the cost of fuel to transport goods is a major factor in inflation in and of itself. And so let's start, of these two particular issues, inflation and supply chain challenges. Let's start on inflation. When did you first realize how big of a problem this was going to be, whether it's for yourself or some of the other business owners you assist?
ME: Well, I sell most of my products and services online. So there's, you know, every now and again, we have to ship some books to people. But I don't have a lot of shipping or supply chain challenges. But I tell you what, though, we actually wanted to get a new book printed and found out that there is actually a paper shortage in America that, you know, the printer was like, Look, I can't promise you you're gonna get that new publication when you want it because there is literally a paper shortage in America. And so that's how I felt the supply chain issues. Now, in terms of inflation, I don't care who you are. Putting $5 a gallon in your tank hurts. But I think when it comes to small businesses, you know, we're not running charities. We are in business to make money. So one of the things that you have to do if you're a small business facing these challenges is you've got to raise your prices right away. I mean, it's just that simple. But it also might be an opportunity for you to survey the marketplace and see if you've been under pricing in the first place. And then you can correct it. Because sometimes you probably haven't changed your prices in four years. Well, it is time to change your prices. And everybody understands that because prices are going up across the board. At the grocery store, you know, we're paying more for less. And so it is...but it's also a potential marketing opportunity. You can always promote to your customers "last chance at this price before it's going up". And you could move some inventory, and you can get back on people's radar, you know. And make it urgent for them to take action and say due to the inflation, you're raising prices. But for two more weeks, it's going to be this, or for 48 hours, it's going to be this. So that's a potential marketing opportunity. I would say.
GC: That's a great marketing strategy. Because you're right, you are in a business to make money, you need to make a profit. And so if all the factors that go into what you produce go up and it eclipses, you know, what your sales price had been, you have to raise it. At the same time though, your customers are also paying more for everything else. And so whether or not they can continue being your customer could be an issue. So how do you balance those two things? You have to make money, and you also want to keep them as a customer?
ME: Well, I think if you communicate with your customers, I think that that is the way to do it. You don't want to necessarily surprise people with a rate increase. You want to let them know about the rate increase, and you want to let them know why. But I mean, you'd have to live under a rock to not know that inflation is going on in America. So I honestly think people are expecting for you to increase your prices. So you don't have to be sheepish about it. Go ahead and do it. Communicate that you're doing it. Give people a 48-hour or two-week window to take advantage of the old price, and keep it moving. Right? You know, I mean, you just don't, I don't think it's anything to be upset about. Remember, you are serving your clients. You're not manipulating them to do business with you. You're serving them, you're helping them solve a problem, and they need you. So that's how you should look at it.
GC: Yeah, honesty and communication is obviously a huge part of it. I know you consult with many different small business owners, Melinda. When you talk to them, is inflation the first thing they talk to you about?
ME: Oh, 100%. I mean, people are dealing with shipping costs, people are dealing with supply chain for my folks that are retailers and online sellers of product. But the other thing people are talking a lot about is just talent. And now talent [has] a lot of options. You know, when you got Amazon down the street paying $16 an hour for, you know, frontline workers, it's kind of hard for you to still stay at $12 an hour. So I think that's the other issue that's impacting people. Is there still a war for talent out here? Even [for] frontline, entry-level talent, people are having to pay more and provide better benefits. And because people just have more options.
GC: Yeah, and for smaller businesses, with just a few people on staff, that can be an especially challenging problem to fight for that talent. In terms of the bottom line, Melinda, you know, in addition to raising prices, of course, there might be places to trim overhead and other costs. What strategies do you have for that?
ME: Well, I think you've got to refine your business operations, you know. This high inflation environment has really made small business owners have to really reevaluate every dollar that they spend. So you've got to really consider whether, you know, it's time to expand or add another line of goods or services. You really have to think through, you know, frankly, if the juice is worth the squeeze on that, you know. If you're thinking about moving into a warehouse facility and things like that, you might want to hold off three or six more months, because we're just not sure when inflation is going to let up. So you do not want to take on more expenses right now. In fact, you want to be more strategic. You want to look at what your best sellers are, and stock more of them. Now might not be the time to expand on something new.
GC: Another big challenge related to inflation, Melinda, of course, is we don't really know how long this is going to last or how bad it's going to get. There are some people who believe it'll be relatively short term. Others believe it could last a year or maybe two. That, they just don't know. So how do you strategize when you have that uncertainty staring at you?
ME: Well, I think it's all about trying to tighten up your costs. I mean, you probably want to start negotiating your pricing with your manufacturers. Maybe you want to take on a new manufacturer that might give you better terms. You know, you just gotta have backup plans for the backup plan. And definitely, if you are someone who always makes your money in fourth quarter, I would start ordering inventory now. I would not wait. Because you really, I mean, I have people all the time who tell me they ordered things in March that are just arriving. So you do not want to wait. You want to make sure that you're able to provide everything you need for people for back to school and then for holiday.
GC: There are so many businesses that didn't make it in the pandemic, and there are some that barely made it, and now they're facing this. If they're right on that line of staying open or or staying closed, is the outlook good? In your estimation, is there a way forward? Or is this going to be a really tough stretch for those that are really right on the margin?
ME: Well, I think if you do not have something about your business that is not easily duplicatable by the competition, you are still in trouble. If you're buying a purse at Marshalls and reselling them on Amazon, anybody can do that. So I really think right now it's about differentiation. It's about how can you stand out in the marketplace. How can you really add value that is unique and special and really adds to your customer experience? Right? Sometimes small things can be worth a million dollars to the right customer. So how are you communicating with your existing customers? How are you loving on them? Do you have a private Facebook page where they get to interact with you? Right? You've got to figure out more than any time ever. You got to keep your customers. [It] does not make sense go out and chase new customers. It makes a whole lot of sense to focus on your customer retention strategies. And really, that's where everyone needs to be looking.
GC: That's an excellent point. And it brings me back to the point you made earlier about creative marketing. Hey, look, the facts are the facts, we're going to have to raise prices. I hope you all can understand that with the conditions we're facing right now. But for these next two weeks, we're going to keep things at the old prices. And so you can take advantage of that deal. Any other creative strategies that the folks you talked to, or you thought of on your own, stand out right now as a way to really build up that engagement, even though it's a tough time?
ME: Well, certainly online marketing strategies, you can never go wrong with that. Because no matter what you sell, you better be selling online. Now might be a great time to retool your website to work on, you know, a new lead magnet to build your email list, to develop a new sales funnel. These are all things that are worthy of your time, because again, you want to keep your customers, you want to attract new ones, and you want to upsell your existing customers. And the best way to do that, frankly, is through email and upsells. And so you want to make sure that you're doing that. And actually, I developed some courses to help people do that. And since the pandemic, I've created Small Biz Lady University. And I developed three courses in particular, to help people get a lot more effective with selling online. So the first course is how to sell and market online. And that's for product-based businesses and B2B businesses. I have a course called social media selling, which walks through the seven biggest social media sites right now. And also, I have a course on the ultimate guide to email marketing. So we built these courses because we saw what took people down in the pandemic. It was people didn't know how to sell online. And so I've built these courses to give people those really important skills so that they can build customers for life.
GC: There's nothing you don't do, Melinda. It's fantastic to see how you fill that need and give people so many great ideas on how to keep their businesses afloat. And then to make them thrive after they get through this survival phase. We're talking to Melinda Emerson, she's the Small Biz Lady at smallbizlady.com, @smallbizlady on Twitter. Let's talk about supply chain issues. Now, Melinda, because as frustrating as inflation is, it's even harder to plan when you don't know when your supplies are going to come in. So what are you hearing from business owners about the unpredictable supply chain right now?
ME: I have several coaching clients who have reached out to me about this issue. And they're like, if we have half of what they ordered, should we ship it? Or should we wait for the other pieces to come in. And I'm like, listen, ship, what you have. We live in an instant gratification society. Nobody wants to wait. So ship what you have, and then create really high-end special packaging to send the rest of it. You know, so if you're selling furniture, for example, ship the furniture. But if there's some extra little special feature like the ottoman, make sure that it arrives with great fanfare. I have another client who built a custom caddy for hair supplies. Like you know, you probably don't know this, Greg, but as a woman, you tend to collect a lot of stuff -- hair bows, ribbons, brushes, makeup, makeup applicators, all this stuff. And she created a tool, like a caddy, that can sit on top of your dresser that can hold all these things. Well, her manufacturers are in China, and her stuff hasn't come. But she'd had some other smaller products that she could send instead. And I said, look, send those with a beautiful note on really nice high-end paper, apologizing but promising that it will come soon. And that you don't know what soon means, but that you're acknowledging them, at least by sending them something. And then, you know, and it's hard. And I feel so bad for my product-based entrepreneurs because they have no control. And it's not even like their manufacturer has any control about when it's going to get off a boat and get in a truck and get to you. Right. So it's a tough, tough, tough situation right now.
GC: Yeah, so showing appreciation to those customers. And I would assume most of them understand the fact that it's not your fault that those things haven't arrived, but they still haven't arrived. Again, most of them will probably understand. But in the end there are going to be some also that just get super frustrated about this. They've signed the deal. They've given you their money perhaps, and the stuff isn't there. So for the ones that have just run out of patience, how do you deal with them?
ME: You can always give people their money back, and you can always give them your apology, and that's the best you can do. Everybody knows what's going on. It's not a secret. It's affecting businesses big and small, supply chain issues. I mean, it does sound like a broken record a little bit, but all you can offer people is your empathy. You can listen and offer them their money back. That's the best you can do.
GC: Is this a time where you might want to shop around for different vendors, different suppliers, to see if it can be...
ME: Oh, definitely. Nobody should be beholden to one manufacturer or one vendor. You definitely should have two people that do everything. Even in my personal life, I've got two hairdressers, I've got two lawn cutters. I mean, I do not let one monkey stop my show ever. And I think you should have that same mentality in your business. You do want to make sure that you have other resources. And that, you know, you also might want to make sure that that you can use lines of credit and things like that. So if you're cashflow positive, you've been in business for at least two years, now could be a good time to go to the bank and try to apply for a line of credit so that you can float until stuff arrives as well. Because your next problem other than supply chain is going to be a cash-flow problem.
GC: Last question, Melinda, any other insights from yourself or other businesses of how they've dealt with this effectively, maybe in a way that we haven't touched on yet?
ME: No. I mean, it's a tough situation. I think that it's really about making sure that you communicate with your customers. Do everything you can to keep your existing customers and just keep figuring out ways that you can add value and not price. What can you do to help your customers that doesn't cost you that much but could mean the world to them. That's what you need to be thinking about so that you can build relationships. I always think that the best business relationships are built during hard times. And so you want to think about your customer could be going through a hard time, too. When is the last time you asked them what's going on with them and what's going on with their business and making sure you understand what pressure they're under? All of those things will help you figure out how to be of better service to them. And you can never go wrong doing that.
GC: Great insights as always, tons of helpful information. Melinda, thank you so much for your time today. We always appreciate it.
ME: Oh, it's my pleasure to be here.
GC: Melinda Emerson is the Small Biz Lady. You can find her at smallbizlady.com or smallbizladyuniversity.com. She's also the author of Become Your Own Boss in 12 Months, as well as Fix Your Business. And she hosts the SmallBizChat Podcast. I'm Greg Corombos reporting for Expert Insights. For more information on these topics, please visit bizfilings.com.
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