Economic downturns will happen over the course of your journey owning and operating a business.
Although there’s nothing you can do about the state of the economy, there are plenty of things you can do to ensure your business survives—and even thrives—in spite of it.
Here are five ideas to help you prepare for and succeed in a down economy.
1. Take Massive Action NOW
A simple formula for success a promoter once taught me is massive action equals massive results. The key word in this equation is “massive.” One such massive action is a relentless, aggressive marketing campaign that takes a lot of energy to make happen.
Many operators are, quite frankly, unaware of the outgoing marketing activity that’s required to keep a constant flow of customers spending money in their businesses. There’s no other solution than to put everything you have into aggressively getting your name out there. To get customers in the door, you need to start with giving the public a compelling reason to come to your business, and then communicate that message to the world utilizing all forms of media. This includes social media, direct mail, publicity, radio, telemarketing, fax blasting, email and even street promotions.
You need to be everywhere, all the time. Instead of shying away from marketing activity and investments, you must aggressively spend energy and capital in this area. It takes a ton of effort and energy but the only way you’ll sustain a natural loss in your present customer base (which will naturally happen during a down economy) is to constantly be on the hunt for new guests to replace them.
Jamal’s Thoughts on Marketing Activity
In a down market, the main thing is getting people in the door; you must have crazy offers. I opened my bar right when the recession started in Calgary, so I pretty much started in tough economic times that haven’t relented since. Despite this, I have thrived by offering crazy discounts and things people can’t say no to.
During the day, we have happy-hour specials. We also have a reverse happy hour at night. A reverse happy hour is basically before you close, maybe 9:00 or 10:00 p.m. to close, you offer heavily discounted items that bring in people. The margins aren’t as good as regular price, but this is an effective promotion in a down market. It got lots of new people in the door. The entire time people were here, we treated them well and focused on getting them back as regulars.
You must heavily market all the time. I spend a lot of money on marketing, and I’m actually spending more money on marketing than I would if the economy was good. Marketing expenses could be anything, as long as it produces leads. For example: I spend money on social media, Google ads, and Instagram ads. I also offer incentives for my staff to promote, bring down their friends, and go out to get new business. I have a good discount for my staff, so if they bring down their friends, I’ll discount their bill heavily to encourage them to do it again. I’m willing to spend money so long as it gets a new face in the door and the opportunity to win that new person as a repeat customer.
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You have to look at the long term when justifying these kinds of expenses. When you gain a new bar customer, their annual value could be anywhere from $1,000 to $2,000, depending on the frequency of their visits and average guest check value. So, when I see a new customer, I don’t see the average guest check value of $30 or $40, I see the value of their weekly or bi-weekly visits of $30 or $40 over the course of the year. If someone comes back 30 times in a year, for example, that’s worth $900 to $1,200 on the year. If they bring a friend and then become a repeat customer, that one relationship is now producing anywhere from $1,800 to $2,400 a year. With this type of perspective, you can see why I have always spent money on winning new customers, and I’ll continue to do so.
2. Be more Pro-Active
Many bar operators become paralyzed with fear when the economy takes a downturn, and they adopt a “wait it out” attitude. This is the wrong mindset—you gain nothing from waiting. To get through a down market, you must turn over every stone, check every opportunity, and do the best you can with what you have.
This means moving aggressively on every front. While marketing should occupy most of your day-to-day activities, it also helps to be proactive in looking for where you can cut costs, be more efficient, and operate more prudently. You can get through any kind of recession if you just stay active doing productive things.
I know of an operator who is quietly having record months right now, while everyone around him is struggling. When I asked him what he was doing to make it happen, he said “Everything.” He elaborated that there isn’t one magic bullet that has resulted in higher profits. Rather, it’s a cumulative effect of doing lots of little things at the same time. He’s constantly on the hunt for efficiencies within the business, as well as always hunting for bookings. He’s successful because he’s making himself busy—he’s not waiting around for anyone to give him permission to get out there and make things happen.
The lesson is: To see similar results in your business during an economic downturn, you must be proactive to improve every area of your business. It won’t happen without a lot of aggressive pushing on your part.
3. Work Your Way into an Abundance Mindset
Some people get so beaten down by bad economic news that they limit their possibilities just through their beliefs about the economy. To succeed in a down economy you must believe that there’s still business out there to be had. It does no good to focus on how little activity there is. While overall economic activity in your industry may be down and businesses may shutter, this also represents an opportunity to get more market share. I have experienced this myself, and I recently spoke with a colleague about how, despite recent economic woes, both our businesses had seen total revenues increase when compared to the year before.
But it didn’t happen by chance. A lot of hard work went into making this a reality.
There was also a good story by Brian Tracy that explained that a company he was consulting with decided to double all their salespeople’s required time engaged in talking to new people about selling. Despite all the complaining about the extra work required to spend that extra hour or two in front of new prospects, this simple increase in face time resulted in an increase in sales of approximately 30 percent over their best year, in the middle of a recession.
This just goes to show that although there are a lot of things that will negatively affect your business, the only thing you can really control is how many people you talk to about coming to your business to spend money. If you push to talk to 100 new people every week about coming to your business, you’ll find that a certain percentage of them will respond positively. This will be true despite any state the economy is in. But if you talk to zero new people per week, which is what most people do, then zero new people will come in.
One of my smart clients followed up with several business cards they had just accumulated over time, after I urged them to do so. Over two days, they overcame their fears, came up with a simple script, and phoned every person they hadn’t seen in a while. They caught up and then he asked if their companies had booked Christmas parties yet. Following this process, they reported booking seven parties over Christmas that wouldn’t have been there if the calls hadn’t been made.
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Imagine what kind of sales this type of activity could produce over the year if, every week, aggressive phone blitzes were made to everyone you had met over the years to see if there was a need you could fill. Remember, everyone that gives you a business card works for a company, and every company books a Christmas party every year. That contact you made is your ticket to booking a big party, if you can find the right person to talk to at that company. Additionally, behind every business card you have is a person with a birthday every year. They’re going to a restaurant or a bar for their birthday. The question is, will your bar be front and center when the time comes to book? The only way you’ll know for sure is if you utilize their contact information, reach out to them, and offer an experience at your business.
Question to Ponder
What would your business look like if you followed up with every contact that came through your doors two weeks before their birthday, called them to wish them a happy birthday, and offered them a birthday package?
The truth is, there’s always a ton of business out there to be gained, but you have to work your butt off to get it. You must hustle constantly, talking to new people about spending money at your business. This activity will automatically get you out of a sales slump and back into an abundance mindset. Please note, level of activity and level of abundance are interlinked—it doesn’t happen without work!
4. Surround Yourself with Winners
Your attitude is largely determined by who you surround yourself with on a regular basis. If you’re always hanging around with people who are buying into all the doom and gloom, have no idea about what marketing is, and are basically just employees working for hourly wages or a salary, you’ll never have the mindset required to do all the things required to get through a down economy.
While I understand civilian life, I’m not a fan of it. Most average people go to a job they despise, come home tired and depressed, watch TV, go to bed, then wake up and repeat every day. These are the same people who are heavily in consumer debt, seldom read any kind of self-improvement books, and are never striving to reach any goals in life. Keeping company like this does nothing to stimulate your mind to find solutions.
Instead, if you keep as company entrepreneurs who are positive and constantly hustling, trying new things, taking risks, and getting ahead, every conversation is energizing and inspiring. We all become like those with whom we surround ourselves. If our peer group is comprised of entrepreneurs with a positive mindset and similar goals as ours, it becomes a support network instead of a hinderance. And support is vital during economic down times. Sometimes businesses will require capital, knowledge and advice. The key is having this support network in place before bad things happen so you already have someone to call for help.
5. Protect Your Mind from Negative News
If you focus your attention on all the media reports about the economy and how bad things are, you’ll never be able to focus on the things that will change your business for the better. Ask yourself what keeping up with all that garbage does for your life.
What would it do instead if you focused that time on reading positive material that can help your business? It’s important to have a strategy to protect your mind from negative news, because today if you don’t take steps to guard your attention from it, negative news will get to you somehow. One of the best ways to protect your mind from negative news is to always keep inspirational audio in your car so you’re constantly listening to educational material while driving.
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Instead of listening to music or talk radio, try listening to lectures from Dan Kennedy, Brian Tracy, Sandler sales training, and the late Gary Halbert. If you practice the habit of flooding your mind with marketing and sales training during downtime or tasks that require less focus throughout the day, your mind becomes virtually immune to any kind of negative economic news because all you see are solutions.
Kevin is a Sculpture Hospitality franchisee with over a decade of experience working directly with bar, restaurant and nightclub owners on all points of the spectrum. From family-owned single bar operations to large companies with locations on an international scale, Kevin works with them all and understands the unique challenges each kind of company faces.
He is the author of a book titled Night Club Marketing Systems – How to Get Customers for Your Bar. He is also a regular writer for Bar & Restaurant and publisher of a Newsletter called the No B.S. Inventory Control Letter, which is a series of how-to articles, industry-related rants, and “Random Thoughts About Weight Lifting”.
Jamal Afzaly is the owner of Lounge Eighteen in Calgary, Alberta, Canada. Additionally, he is a coach and mentor for bar owners, and through workshops teaches people how to avoid costly mistakes and “do things right the first time.” He is currently writing a book about how to build a successful bar from scratch, covering planning, financing, construction, marketing and operations.