Small business forced to change, or die
Now, more than ever, it’s imperative for small businesses to be flexible and make radical changes to survive.
Just ask Ed Brown, owner of Manhattan’s “81.” He says he’s seen a decline in the number of customers at his high-end restaurant. There are fewer Wall Street workers taking out clients and others are less willing to lay down their credit cards for a fancy meal.
The decline in traffic has been hard to watch, Brown said, especially since restaurants like his are more used to turning people away than trying to draw them in. But popular spots like Brown’s now are looking for ways to cope by radically changing their business strategies —offering cheap eats, even free food, to fill their tables.
Another New York restaurant owner, Todd English, a colleague of Brown’s, says he too can no longer rely on the expense account crowd that once filled his restaurant.
“This economic crisis has forced me to take a second look,” he said, adding that he’s trying to figure out how to keep his business alive in the current environment.
“I have to look into it and change it and get it better,” he said.
English opened his restaurant, Olives, twenty years ago, and today, once a week he’s offering a special menu for his 2009 customers set at 1989 prices.
He calls the idea “Throwback Tuesdays.”
“I love the fact that we’re going back, looking at the business. I think we’re becoming better businesspeople again,” English said.
It’s a similar story in Orange County, Calif. Late last year, as the national and local economy slid downward, Sherry and Tim Panttaja, owners of high-end bike shop “Switchback Cyclery,” faced the worst crisis of their 11 years in business.
“If we hadn’t made these changes we would have closed for sure,” Sherry said.
“The numbers just weren’t panning out. The overhead was too high to keep it going the way we were,” added Tim.
As the economy decelerated, the Panttaja’s customers stopped buying expensive products and the business struggled to compete with cheaper prices on the Internet.
“Nobody was buying anything,” said Sherry. “I can’t make people buy expensive products. Customers came in with stuff that they printed off the Internet and they would say, ‘This is what I want and this is the price I can get it over here.’ That price was very difficult to compete with.”
By Nov. 8, 2008, the Panttajas decided that their only option was to close their doors. That’s when their business came to the point of “live or die.” They just couldn’t let go of their dream. They wanted to keep the company alive but they realized that it would require making drastic changes.
“We decided we were going to give it one more try,” Sherry said. “We’re not going to be so retail based. We’re going to have to be more service based.”
There was an enormous outpouring of customer support for their plan, and they decided to reorganize their store and give it one last try.
“We shrunk up our retail space by about half and extended the floor space for repairs.” Sherry noted.
“We concentrated on labor which obviously has a bigger profit margin than selling bikes and now things are working out better,” added Tim.
The Panttajas’ business is now flourishing even as the economy continues to struggle. They say that even when things turn around they have no plans to shift back to their original retail model.
“It’s hard to change until it’s forced on you,” Sherry said. “And then you do it and you think, ‘Why didn’t I do this sooner?’”
In Los Angeles, event planner Carolyn Arthur says the downturn in the economy has meant a nose-dive in her business planning fancy parties and weddings.
“When the economy started to go downhill, people really started to hold back on their extra spending,” she said.
“If their event went from say, a $60,000 wedding to a $30,000 wedding, that means I make half the pay as well,” she said. “I had to really figure out what I was going to do, and also how I was going to reformat my business in order to survive.”
Her “ah-ha” moment came when a professional magician approached her for help managing his bookings. He was often hired to perform by Arthur’s company “All About Events” and he thought she’d be good at keeping track of his bookings or negotiating his fees.
“A lot of times you’ll find out that artists aren’t as organized as business-minded people. I’ve done both and so he asked me if I would help him with follow-up, with contracts and negotiating higher fees.” Arthur said.
“After I started helping him out, he was doing so well that he told another performer who was a dancer about me. And so I brought her on and then I brought on a singer and now my latest is a voice-over artist,” she said.
While talent management is helping her company survive, she says she hopes to be able to keep her primary focus on her first love — event planning.