Residential Lighting: Is this a good time to run a small business?
Brian Moran: There’s no bad time or good time to run a small business. The economy is the economy. People don’t say, “It’s a bad economy. I’m not going to start a business.” Instead, it’s about aspirations. In residential lighting, the entrepreneur says, “I’ve got one store now. I want to have three next year, five the year after and 10 the next.”
RL: Which gets in the way the most: operations, marketing or finance?
BM: Finance. A lot of owners try to manage their expenses, because it’s money out of their pockets. They miss opportunities. They might think, “I don’t want to put money into this opportunity, because if it fails I’m out the money.” But opportunity requires an investment.
What they’re doing is managing around the revenue. At the same time, quite a few business owners don’t have a contingency plan. When the recession hit, their lines of credit got cut by the banks and their loans were called. Some lost access to capital by 30 to 40 percent, which meant they had very little “fuel” to run their businesses and very little room for error. As soon as an adverse event happened, they went out of business.
RL: How do we avoid that?
BM: By having a 2014 plan. You say, “I did $1 million in revenue in 2013. Now I’d like to do $1.3 million by growing 30 percent.” Then you figure out how to get there. An operational plan is like having GPS. You set a goal for 2015 and for five years out and take the 20,000-foot view. Then you can say, “Let’s go find those customers.”
RL: How can you tell a good plan?
BM: By stress-testing your business. You create ”what-if” scenarios. They help determine whether you’re ready should a disaster strike. So one Friday morning, meet with your key stakeholders — your top salesman, your operations person, your lawyer, your accountant — and say, “What should we be looking out for? What obstacles will be put in front of us this year that we need to address? Does any one customer represent a large portion of our total revenue? How well do we know them? Are we taking care of them? How does our insurance look? What if somebody stole all of our computers? Are we backing up data to the cloud?”
RL: Give us some good advice on how to use social media.
BM: Social media for business is a means to an end — a tool to help you achieve your goals. You need to ask your customers, “Do you use social media to talk about lighting? Twitter? Facebook? Would you like to hear from us on these platforms?” Many of your customers probably already use review sites like Yelp and Yahoo Local Listings. They do reviews. They use Instagram to take pictures of lights in your showroom and ask their friends, “What do you think? How would this light fixture look in my house?” Your existing customers and potential customers are all online, and they’re talking about your business, your competitors’ businesses and lighting in general. Why wouldn’t you want to interject?
RL: How can we beat Internet retailers and big-box stores?
BM: They’re based on price. So you need to come back with customer service. In the end, some customers will pay a little more because they love the people in the showroom. You can sit and talk to them for hours. They offer great advice and great tips. I say you’ll lose your business on price. But you’ll win it on customer service.