Learn How Small Businesses Succeed in a Down Economy


We have watched our friends and family members lose jobs. We have witnessed failing banks, businesses, and bailouts. Has your business been affected? Yes. You’ve felt the pain as well. You know it, and I know it.

Remote Expectation

The fact is, barring remote exceptions, all businesses have seen a decline in revenues and profits in their “core” business over the past few years (I use the word “core” to define the part of your business that has traditionally been well established, secure, and/or healthy prior to the economic meltdown). If you’re a car dealer, you’re selling less cars and you’re selling them for less. If you’re a hotel owner, you’re selling less rooms and you’re selling them cheaper. And yes, if you’re an artist or photographer, you’re selling less art, and the art you’re selling is reduced in price from your norm. It’s unfortunate. I agree. But that’s about the last iota of negativity and woe-is-me attitude I’m going to lend humor to now that we’re two years into this recession. Why? Because the recession already happened. It doesn’t matter now whether you were prepared for it or not. It’s happened and we’re in it right now. And if you haven’t already reinvented yourself as a business to respond to recessive business activity in your core – in other words, if you’ve been “waiting for a recovery”, “surviving”, and essentially staying the same course – then you’re on a very dangerous course that needs immediate correction.

Reinvention

So how does a small business succeed in a down economy like the one we are experiencing? Reinvention. Im not saying that you just go do the same things differently. Reinvention means that you do new things. You already know that your core business has declined or is in decline. It’s not your fault, and it doesn’t mean you are necessarily doing anything wrong in that particular market. So don’t throw more money or time trying to find a silver bullet marketing tactic to grow your core market. What you need is a new market. Not a new market that is outside of your core competencies, but a new market that can harness them. Why? Because while your core market is declining, your new market is all growth (even if the new market itself is itself in decline). The revenues and profits from your new market will offset your losses and lead you into growth. Is it that simple? Yes it is.

Take a look at some of the American automobile manufacturers. What have they done to reinvent themselves while the car business has been anemic? Nothing. If they did, I certainly haven’t heard about it. It certainly hasn’t had an impact. The cost of not reinventing themselves led their businesses to the point where many would be bankrupt if not for the government safety net. Then there’s Apple. What did Apple do just a year before the economic collapse? They got into the phone business. And the phone business then brought them the “app” store business. And what prepared their road to success in the phone and the app business? The iPod, which was a reinvention of the company from its traditional roots in personal computers and software. Many thought the iPod, which was set to compete with the Sony Discman (or Walkman) market, was an unintelligent, radical departure from Apple’s core business. The same detractors sounded the alarms again when Apple announced it was going into the phone business. They were all wrong. Why? Because Apple’s core competency is in personal computers and software. And what was the original iPod? It was a computer with software. The iphone? You guessed it, a computer with software. Apple was smart enough to see that once personal cell phones became more like personal computers than phones, they got in the game….In fact, the typical knock on the iphone is that it’s a “terrible phone, but an incredible computer”. Apple took their core competency and attacked new markets where all the growth they realized was 100% new revenue and profit. They’ve reinvented themselves over and over and have thrived in times of both economic greatness and recession. Apple, through the process of reinvention, has made themselves immune to the normal swings of the economy. And this here folks is the lesson of the session.

So what could the car companies do, you ask? I don’t know because I’m not a car expert. We’d have to look at every car company on an individual basis. What I do know is they make great engines and hardware. If you’re a car company and your plan to fight back in this recession is to make the same cars with different names and different colors, clearly you don’t get it. Ford isn’t going to do anything by releasing the new Mustang. However, if you’re a car company and you’re looking at all the ways to leverage your core competencies, you should consider higher end models or lower end models. Or, if you’re in sports cars consider launching an SUV. Or, if you think you’ve done everything, consider entering the motorcycle market, the motor-home market, the forklift market, etc. or any other market that could benefit from your ability to make great engines and hardware.

Art Market

Bringing this all back to home, let’s discuss what artists and photographers can do to succeed in this down economy. Again, I’m not an artist or a photographer by trade but I can think of some suggestions to get the ball rolling. If all you do is sell originals, you could start selling limited editions and even some open editions at lower price points. These items sell in different galleries, to consumers in different socio-economic brackets, and therefore open a whole new market for you. As an artist you could offer your services as a commissioned artist for hire, teach courses on art/painting, pursue art publishers with open edition opportunities. As a photographer you can expand your services offering to weddings, portraits, events or any other area you don’t already serve. Or from a printmaking perspective, if all you do is offer glossy photo prints or fine art paper prints to your customers, get into canvas and other unique substrates that will expand your opportunities. If you only print fine art, get into decorative art and photos. If you only serve businesses, look for a way to serve consumers directly.

Now – you may already be doing these things. I don’t know your business, and I’m certainly not an expert on art and photography businesses. But what I am urging is that you think about how you can leverage your core competencies and get into a new market immediately. Think about it, plan it prudently, and then let the reinvention begin. Testing a new market should never cost you a lot of money, if any at all. In fact, if you find that it’s going to cost a lot of money to pursue a new market, odds are you’re diverting too far from your core competencies. Don’t go there. If you cant decide on a new market to attack, just go out there and test a couple. You’ll know it when you find it.

Nearly three years ago, when the economy began to decline, Breathing Color recognized that we needed a new market. Our traditional strength was in the fine art reproduction market which was already showing its signs of decline. We decided that the photography market was the perfect new market for us. Why? First, we could leverage our current product line which at the time only consisted of the Chromata White Canvas, Elegance Velvet Fine Art Paper, and our Glamour II giclee varnish. Second, a decent amount of printmaking photographers had already found us and were buying our products regularly. Third, this market would not require that we make large investments in new areas outside of our core competencies. Breathing Color’s main core competency is that we develop incredible inkjet receptive coatings for the highest quality imaging. Our secondary core competency is our manufacturer-direct model. Do these core competencies sound like they are a good fit with the photography market? Absolutely. Photographers have always demanded high quality imaging. And, everyone appreciates saving money and getting premium support from a manufacturer-direct model like ours. As a result the photo market has been very successful for us thus far.

Only after proving to ourselves that we belonged in the photography market did we make further investments in it. First we launched Optica One, which with hard data measured up to be the best smooth fine art paper on the market. Since then we have launched Vibrance Luster and 30MS. Coming soon, we have Vibrance Rag and Crystalline Canvas (available in gloss or satin for aqueous inks). Again, its important to note that the photo market itself is in decline as well. However, for Breathing Color, it’s all new revenue and growth.

So while the economy has been struggling, Breathing Color has managed to continue growing only because we have reinvented ourselves with a new market. This is exactly what we want you to do. So it’s time to sit down, analyze your core competencies, and look for the opportunities that are already tapping you on the shoulder. They’re right there, you just have to see them.

An Article From:

Nick Friend
President
Breathing Color

  • Anonymous

    Nick, this is a very well presented article that is a great read for any entrepreneur especially in the current economic climate. I have had several conversations with business owners about this blog post, all of whom really appreciate you taking the time to offer your knowledge and advice citing examples from your own decisions and experience with Breathing Color.