The World Is Knackered – What About You?

February 1, 2009

Watching the world crash at your feet, doesn’t give you much incentive to get well, when you’re ill. While I’ve struggled to recover from this chest infection that knocked me down at the beginning of the year, I’ve watched many businesses close their doors, or lay people off. And it isn’t just small businesses who are knackered – everyone is suffering. Even long established businesses, like Woolworth’s UK have gone bust.

I must admit, although I’m usually the first person to tell folk not to panic, when everyone else seems to be losing it – lately, I’ve been asking myself – is the world completely knackered? And whilst I don’t think we’re completely doomed, things are changing a lot. So, what does that mean for small business owners, or those who want to start a small business?

Forget Everything You Know About Small Business

In good economic times, running a small business is relatively easy. You identify who your average customer is, show them that you can give them what they want and sell it to them. And so long as you keep doing that – you make a profit and your business grows. But as I discovered last year, when the economy is in the shit, that doesn’t work anymore. You’ve got to shift your thinking.

Charge Less

I’m not suggesting that you operate at a loss, but think in terms of breaking even, as opposed to making huge profits. In a booming economy, this is never something I would recommend. But in times like this, most people are watching every penny, because they’re worried about what may be around the corner.

Don’t Assume That Your Product Is So Great People Will Still Pay Premium Prices Anyway

If you do that – you’re liable to wind up in the shit long before you cut your prices. Do it while you’re still doing reasonably well and you’ll suffer less.

If you don’t think this is necessary, consider this: On TV a couple of nights ago, celebrity chef, Gordon Ramsey said that because of the state of the economy, he is charging around £11.50 for a two course set meal, in his new London restaurant. This is way cheaper than you’d normally expect to pay in London, particularly in one of Gordon’s establishments.

When the economy was booming, many of his restaurants were booked solid at the ninety day mark. I know this, as I’ve tried booking after the ninety day mark. So, if he needs to cut his prices, despite his popularity, chances are that you do too.

Take Advantage Of Weak Currency

If you live in a country where your currency has weakened in comparison to other currencies, take advantage of that by selling to folk overseas. For example, the pound has plummeted against the dollar and the euro, which puts folk from the UK selling to people in those countries at an advantage. Even if we drop our prices, chances are, we’ll still be making more from those sales than we did last year.

Eliminate The Risk If You Want Customers To Buy

Even in good economic times, smart businesses have encouraged customers to buy, by promising “risk free” purchases, often in the form of money back guarantees, or free trials.

But in this economy, you’ll need to go one step further. In addition to worrying about the risk of trusting you and your product, potential customers are now more worried than ever. You could go bust after they’ve made payment for their purchase. Or they could get laid off, right after they’ve bought.

The travel industry in particular, will suffer from these fears this year. So, if you’re in that industry, you’ll need to take extra steps to put your customers at ease. And the smaller your business, the more difficult it will be. For example, a lot of folk rent out villas privately. Most of them charge about 25% deposit upon booking and want the remainder of the cash 2 or 3 months ahead of checking in. This is a big risk for consumers and not one I would be prepared to take.

I was considering renting a villa this summer but I did a quick Google search on foreclosures in the community where I was hoping to rent and several of those vacation homes were in foreclosure. So, I decided that putting down a huge deposit for one of these rentals was a huge risk.

If you’re in the travel business, do as much as possible to eliminate risk for the customer. At the moment, I’m seeing things like low, refundable deposits, huge discounts for booking early. I also notice that one small airline is charging only a small deposit at the time of booking, as opposed to taking payment for the whole fare immediately.

Do you believe the world is knackered? What can businesses do, to encourage people to continue to buy from them?

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Comments

24 Responses to “The World Is Knackered – What About You?”

  1. James Chartrand - Men with Pens on February 1st, 2009 1:45 pm

    I believe that the world is knackered – and that gives me great hope. I think we live in a shitty, screwed up world and that we were all on a crash course for failure.

    I like to think that these changes and breakdowns are just the beginning to rebuilding a world that is better. I’m ready. Bring it on.

    James Chartrand – Men with Pens’s last blog post..Teaching People What They Never Learned in University

  2. Hunter Nuttall on February 1st, 2009 3:49 pm

    Now I just have to figure out the difference between “knackered” and “cream crackered!”

    I’m finding the job market to be much weaker than ever before–even weaker than when the tech bubble burst. But the economy will eventually correct, and when you combine that with Akemi’s 2012 theory, hopefully we’ll have a better world in a few years!

    Hunter Nuttall’s last blog post..Lightworkers, Darkworkers, And The Other Kind

  3. Alex Fayle | Someday Syndrome on February 1st, 2009 5:54 pm

    I’m with James on the rebuilding the world thing. I think it’s an awesome opportunity.

    Fortunately I have a wonderful backup plan of teaching English. No matter what the downturn, there will always be a need for native-language English teachers in a non-English country.

    Alex Fayle | Someday Syndrome’s last blog post..The choice of too much

  4. Lillie Ammann on February 1st, 2009 7:10 pm

    Cath,
    Hope you’re feeling better!Being sick this long is no fun.

    Lillie Ammann’s last blog post..By: An Eclectic Collection of Blogs «

  5. Ian Denny on February 1st, 2009 7:32 pm

    While I’m as nervous as everyone else, I am delighted the large corporates, greed, and particularly the banks will have to seriously change.

    We can never allow them to exist with proper and ethical governance ever again.

    Thankfully, we offer an outsourced IT service. So our retainer business is up by a third over the last 6 months. But complacency is a killer.

    And I for one will be loose with price to win a customer. And hopefully when things pick up, we’ll have gained some market share!

    Ian Denny’s last blog post..Have Your IT Challenges Fixed Faster Than Ever

  6. Betsy Wuebker on February 1st, 2009 8:38 pm

    Hi Cath – I was thinking about you this morning, and here you are. It’s good to see you back, and I hope you’re feeling better.

    Yes, the world seems upside down and crazy – is that what knackered means? :)

    Maybe I’m knackered along with it, though, because all I see are great opportunities. Pete and I just signed on to an exciting business venture that we think completely complements what we’re about. My franchise’s U.S. growth looks better than it has in months.

    It seems as though people are starting to accept the media ‘doom and gloom’ for what it is: emphasis on aspects of realities that sell newspapers. You’ve got to keep moving, and take responsibility for your own welfare and success. If you’ve left that to an employer, you’re in a tough spot, to be sure. But there is always opportunity for those who are willing to risk and work for success.

    Betsy Wuebker’s last blog post..BUILDING COMMUNITY – CAFE STYLE

  7. Robin on February 2nd, 2009 1:15 am

    Hi Cath – I just keep coming back to the idea that we are best off doing what we love creatively (which includes business creativity), and trust that the money will come. Then I am stepping outside of external economic woes.

    Robin’s last blog post..Guy Finley Followed By An Illustrated Meme.

  8. Robin on February 2nd, 2009 1:27 am

    Hi Cath – I just keep coming back to the idea that we are best off doing what we love creatively (which includes business creativity), and trust that the money will come. Then I am stepping outside of external economic woes.

    Robin’s last blog post..Guy Finley Followed By An Illustrated Meme.

  9. Stacey / Create a Balance on February 2nd, 2009 4:19 am

    I’m with James and Alex, at the darkest hour the world will rebuild and the light will shine again. Let’s all be ready to be part of that light.

    Stacey / Create a Balance’s last blog post..Celebrate Your Life Friday! 1.30.09 (winners, online retreat, and more)

  10. Barbara Swafford on February 2nd, 2009 6:59 am

    Hi Catherine – It’s so great to have you back. I certainly missed visiting your blog. I’m hoping you’re feeling better now.

    I’m thinking the world economy may be knackered, but also wonder if this isn’t just what we needed. So many people were living way beyond their means, and many companies were profiting by offering TOO EASY credit terms to consumers. The mentality of “we need to work hard for what we get” was out the window, and here in the States where the American Dream of home ownership was something to strive for, became the norm.

    Now that the economy has taken a down turn, I’m hoping we’re learning to live below our means, to go back to working hard for what we get and when the economy turns back around, we are wiser and a little bit more frugal.

    As for what a company can do to encourage consumers to continue buying from them, I’d say transparency is very important, as is a competitive price for a quality product of which we stand behind.

    Barbara Swafford’s last blog post..SEO – Are We Getting It All Wrong

  11. John Hoff on February 2nd, 2009 2:16 pm

    I have to agree with you, Cath. I’ve always been the kind of entrepreneur that said, “As long as you build trust and a solid reputation, you can charge any price you want (within reason).”

    However, these days I don’t think that’s so. Like you said, people don’t know if you’ll be around long or even if they’ll have money next month.

    In addition to a money back guarantee, you could also offer money back at any time for unused months of service.

    Hope you’re feeling better. Never had a chest infection before but it sure sounds like it sucks!

  12. Kim Woodbridge on February 2nd, 2009 3:59 pm

    Great to see you back Cath and I hope you’re feeling better.

    While I do agree with the commenters who believe that something better will come out of this economic crisis, that doesn’t really help the people who are suffering the most. For people who have already lost their jobs they are wondering how they are going to pay for food and shelter – they are not thinking, “oh good, something better will come out of all this.”

    Kim Woodbridge’s last blog post..February Special: 15% off All Services (I Love My Clients)

  13. cathlawson on February 2nd, 2009 6:11 pm

    Hi James, I’ve got to agree – the world really was screwed up, even before the economic crisis. Like you – I hope all this brings about positive change.

    LMAO Hunter – they both mean the same. I think I might start up on the side, giving Americans tours of the UK and teaching them our language.

    Akemi’s 2012 prediction is interesting – I’m not keen on the idea that we won’t be able to eat though.

    Hi Alex – that sounds like a good back-up plan. We have been learning Spanish using videos but they speak too fast.

    Hi Lillie – Thank you. I hate being ill at the start of the year. It’s kind of like your laces coming undone at the start of a race.

    Hi Ian – I’m glad you’re still doing great. And I never thought I’d say this but I guess price is important right now. And you have a huge advantage over those who only competed on price before, asthey won’t be able to beat you now.

    Hi Betsy – thank you. Yes, knackered means tired, broken, jaded, falling apart. I’m glad you have some good news though – that is brilliant.

    Hi Robin – I agree. It’s hard to do work that sucks, no matter how much money you’re making – but far harder when you’re making bugger all.

    Hi Stacey – I’m glad you’re seeing the positive side of things too.

    Hi Barbara – Thank you. I wish we’d see an end to the something for nothing mentality but after every crisis, all these books come out encouraging folk to flip houses etc. and many people seem to have short memories.

    Hi John – the money back thing is a good idea. And you’ve just reminded me – I was paying those tossers at Bluehost quarterly and they didn’t refund me – think I’ll claim it back through paypal.

    Hi Kim – Thanks. That’s very true – for folk who are already suffering, it may be more difficult to see things that way. Hopefully many of them will find better opportunities.

  14. John Hoff on February 2nd, 2009 7:19 pm

    Now that does suck. FYI, if you pay for hosting in advance with us and you cancel at some point, your unused months will be refunded ;)

  15. Vered - MomGrind on February 2nd, 2009 10:52 pm

    We’re going through a major recession. We’ve been through this before (not us personally, but the world). It will get better. If you’re not one of those who can profit during a recession, your goal should be to survive it. In this respect, your advice to break even instead of making profit is a good one.

    Vered – MomGrind’s last blog post..Women And Body Image: Ten Disturbing Facts

  16. Jason Cohen on February 2nd, 2009 11:22 pm

    Another thing you can do is take advantage of the fact that everyone else is knackered too.

    Two examples:

    That graphic design work you wanted to get done for a few years now? Freelance designers are begging for work. Talented kids just graduated and need any job at any price to start building a portfolio.

    Advertisements? You’ll be amazed at how far off the rate card you can get. It’s true for web properties but even more true for print media. Print is still useful at the right price.

    Jason Cohen’s last blog post..Convert shortcomings into advantages without lying

  17. Davina on February 2nd, 2009 11:55 pm

    Hi Cath. I’m so happy to see you back again. I was worried about you. I loved the metaphor you used in your comment to Lillie regarding you having to fight off this infection at the start of the year “…like your laces coming undone at the start of a race” LOL.

    Obviously there is a lot of unrest in the world today, but money is only a symptom. I think this is forcing us to revisit our priorities about how we use money. I’ve known people (including myself), who will say, “Oh I can’t afford that right now” and then the next day they are doing something else that costs the same or more than what they thought they couldn’t afford. One choice was more important to them and they just used money as the excuse to not do the other.

    I agree with Barbara about too many people living beyond their means. I know everyone’s situation is different too. Some people genuinely don’t have the money and I have no answer for that. I think part of the responsibly lies with the people who do have the money to both choose wisely for themselves and to pay people and businesses appropriately for what they bring to the table.

    Davina’s last blog post..Shopping for Effective Attitudes

  18. John Hoff on February 3rd, 2009 1:22 am

    Hi Cath. I’m trying to send you an email but for some reason it won’t let me send to your address? I received yours. Do you have an alternate email address I can send to? Thanks.

  19. Patricia on February 3rd, 2009 2:02 am

    Cath,
    I have been very worried about you and I too could not send an email. I am so glad to see your around and about today. Oh being ill at the start of a new year is just awful.

    I liked all of your suggestions and hope I can apply them. I paid off my plane ticket and tour for Scotland and England in July early and the tour company and British Airlines just sent me a very large readjustment check – I might even be able to eat and purchase a few mementos while there!

    I believe this is a readjust and that the news media is making everyone afraid – I think folks need a reality check and then some education about building upon their values….then again the next round of rip off folks will just figure out new schemes…

    I think trust is so important and valuable… we will survive and be healed…Let’s hope this century grows some better solutions and resolve…
    I hold you in my prayers…and am so excited to find you back…
    I truly missed you.

    Patricia’s last blog post..Increase Your Emotional IQ

  20. Ruth on February 3rd, 2009 2:35 am

    Glad to see you up again but sad you’ve been ill. I hope you’ve got this thing licked!

    As for the world, I’m feeling all over the board. Sometimes I’m thrilled that I have a comparatively secure job (nothing’s perfect, but comparatively) and am still earning extra income from my side businesses/blogs. But I also feel worn down by all the bad news, all the fear, all the fear for people I love whose situations aren’t as good as mine and who I can’t help. Like one friend who’s been dealing with underemployment and fear of not making ends meet. Plus he’s depressed and lost his health insurance, so no anti-depressants or therapy.

    As for my business, I’m trying to run it as before. I’ve probably always worked for too little but I like the experience and try to provide great customer service and have fun with it. Speaking of, though, I have one client ignoring and invoice and am not looking forward to following up. *sigh*

    Ruth’s last blog post..Somewhere, Someone is Meditating or Intending Actions So You’ll Find Happiness

  21. Natural on February 3rd, 2009 3:04 am

    eliminate the risk is a great idea. there’s a car dealership here in the states that said if you buy from them and you lose your job you can return the car. period. my next car will be from them, but i liked them anyway.

    What can businesses do, to encourage people to continue to buy from them?

    I think prices need to be reduced across the board to reflect our economy. prices go out, but people don’t have jobs to buy anything. we’re all suffering so put us all on even ground.

    Natural’s last blog post..Roll Call

  22. Cath Lawson on February 3rd, 2009 3:17 am

    Hi John – I wonder if my inbox is full? Could you send to noblecinds at aol.com please? Ta

  23. wilhb81 on February 4th, 2009 6:08 am

    I agreed of what you’ve said here, Cath. A small change will make it good and productive…

    wilhb81′s last blog post..Business one-liners 37

  24. wilhb81 on February 4th, 2009 6:09 am

    I agreed of what you’ve said here, Cath. A small change will make it good and productive…

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