Yaneek Page | Beware the pity purchase
ADVISORY COLUMN: SMALL BUSINESS
QUESTION: I need your help to solve a serious problem I’m having with my business. I love fashion and have always been been very creative so I experimented with various bracelets. Everywhere I went I got compliments, until I decided why not take orders.
My family and friends were my biggest supporters but it was really at church that I decided to make this a serious business. I even expanded into a line for men and children. To keep up with demand I took a small business loan so I could buy supplies and hire two people to work part time.
Unfortunately since January everything has slowed down drastically. I have had to let go my part time workers and I am struggling to pay back the loan. I had to borrow from my mother to meet February’s payment. I am worried and don’t know what to do. What would you do?
BUSINESSWISE: Unfortunately you suffered a false start.
The overwhelming support from friends, immediate family and then your church family lead you to believe there was real demand for your jewellery, which then caused you to invest in the rapid expansion of capacity without doing any strategic planning, research, business evaluation or financial projections.
Now that you have exhausted your supportive network and your sales have fallen flat, you realise that there may be no feasible market for your jewellery.
On the other hand, it is also possible that a market exists and you should be directing some resources towards finding and penetrating it, or that you can carve out a viable niche.
The only way for you to establish if this business can be viable is to start again, but this time at the beginning. There’s no way around doing a comprehensive evaluation and plan to chart the future of the business.
As you engage in the business planning process it may be necessary to renegotiate your loan terms to give you space to reorganise.
To cover your immediate, critical expenses, it will be necessary to do more aggressive direct selling. It is usually easier to start with customers who you’ve sold to before, so focus on your current client list. Offer specials and discounts, and try to bundle the pieces so you can move more volume.
You will need to simultaneously undertake planning for growth - a process which I outlined in the Businesswise column of January 27, 2012 titled ‘7 Essential Steps to Business Start-up', which can be found at http://jamaica-gleaner.com/gleaner/20130127/business/business6.html .
Finally and most important in this is your mindset.
Fear can cripple you and cloud your judgement if you focus only on the problems. Therefore I’m encouraging you to stay positive, put your best energy into moving forward, and remember that no failure is final unless you give up.
Yaneek Page is an entrepreneur and trainer, and creator/executive producer of The Innovators TV series.