Small business owners face many challenges. Whether living paycheck to paycheck or attempting to qualify for a small business loan, it’s no wonder that some of us are struggling. We all probably have at some point or another. The most important thing is knowing how to cope if your business is struggling. We’d love to share with you a story about a client of our named Benjamin.
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Benjamin’s Story of Coping with Business Struggles
Benjamin is part of a dying breed. He runs an independent pharmacy here in New York City. In smaller cities, most independent pharmacies have long succumbed to the pressures of big chain drugs stores. In NYC, proximity matters, and big-box retailers struggle because their large store formats don’t translate well to the smaller retail spaces in the five boroughs. Because of that, independent pharmacies have hung on. However, it hasn’t been a picnic for owners like Benjamin. He’s faced added pressure, and not only because of needing to pay rent and wages. He’s also had to cope with new workers’ rights legislation such as paid sick time and family leave for part-time employees and other struggles that businesses face. Benjamin’s problems weren’t all due to regulations, but also because of changing customer expectations and needs.
While your business might not exactly mirror Benjamin’s, it’s possible you’ve had to deal with a major increase in both fixed and variable cost, possibly along with a drop-in demand. Whether this is you now or not, you may want to hear Ben’s story.
How to Handle It
In Benjamin’s case, he was struggling to deal with both a significant rent increase and raise in the minimum wage. One rise in payment he could manage, but two simultaneously was overwhelming. He struggled to pay the rent and payroll on time. Plus, on-demand prescriptions had started to take off in the city. It’s not huge now, but he could see it growing into a problem. Benjamin knew he needed help.
Deal with cash-flow problems first
Ben had some cash flow issues. Unfortunately, he had come to us a bit late and by then, his business credit had taken a hit. A commercial bank wasn’t an option. Since he needed the money quickly, neither was an SBA backed loan. We were able to secure a loan with an alternative lender. The rates weren’t great, but he had enough cash to give us enough time to right the ship.
Luckily in NYC, we have the Department of Small Business Services (SBS) that can help struggling businesses cope with their problems. If you’re not in NYC, your local city will likely have a similar program(s). However, like most government programs it is widely known. The SBS offers is a “commercial lease program connecting small business owners with free legal services with a dedicated attorney. The free legal services include help negotiating a lease, resolving landlord issues, responding to an eviction notice and negotiating a lease renewal.” We were able to connect Benjamin to SBS to help with renegotiating the rent.
Staying relevant to your customers
There were two areas where Benjamin needed to focus in order to remain relevant. First, he had to give his customers a reason to come to his store. It wasn’t enough to rely on only the prescription refills to drive them to the store. We need to create something ‘special’, which focused on a unique benefit that only his store could provide. In this case, we partnered with other local healthcare providers to create quarterly health fairs. Neighbors could stop by not only to get discounted/free health screens but also in-store discounts. These events helped increase traffic by 50% and sales by 25%.
Second, we needed to fix our delivery system. Expectations in NYC is that everything can be same day delivered. Benjamin could do that within his service region, but it wasn’t very efficient. Here, we partnered with a local delivery service, who could bundle deliveries to increase efficiency. Now, this is tricky for pharmacies. Since we are dealing with medications, there are several legal hoops we had to jump through to ensure compliance with the law and to avoid risks to patient safety. Our local delivery company was able to barcode and scan the products, which made this much easier.
Finally, Benjamin had put little effort into his website, so his e-commerce platform needed optimization. Some keeping up with marketing and technology trends was all that was needed. His customers wanted to refill online, and he was missing an opportunity to send them notifications and reminders to refill. They would have to call Benjamin directly, and sometimes he would call them himself. Both of which were inefficient and not what his customers wanted. By re-tooling his site, we were able to increase refills by 25% and new prescriptions by 10%.
While these fixes would help Benjamin in the short-term, he needed to upgrade his skills or the skills of his team to remain current. Here, we connected him again with SBS centers, which featured instruction in marketing, social media strategies, e-commerce and Web site fundamentals to help small businesses better market themselves in today’s economy. It isn’t going to fix every single problem that Benjamin’s business is struggling with, but it may help him cope with it all a little bit easier
Benjamin’s story isn’t that uncommon. We have all dealt with points in the life of our business when we need to keep up with rising costs and slowing demand. The first rule to remember is that profit is like food, while cash is like air. You can live without food for a while but not air. The first step is to put your air mask on, and then, deal with the issues of slowing demand.
At ProStrategix, we know you have concerns. We’re designed to help give you the business support you need so you can focus on doing what you love. If you would like to learn about how we might be able to help you, please contact us.