Market Share, or how much of the pie is coming through your door, is one thing that all businesses try to track. If you listen to the big guys, they’re always tracking if share is up, if it’s down and just how they can go and get more of it. Yet when the economy is down, many business folks and entrepreneurs alike will throw their hands up and say that “oh well, there’s nothing we can do to grow right now.”
Down markets present a host of opportunities for the savvy and innovative business person to grow their business. Listed below are five ways that you can increase your share of the pie when times are tough.
Examine/Exploit Your Competitors Weaknesses. When times are hard, companies will look to ease the bleeding so to speak. This might mean reduced advertising, hiring and marketing. If you look at where your competitors are failing and step in with better services or products, you might just see an increase in customers. For example, when Restaurant A had to stop offering free fries with their meals, Restaurant B took it as an opportunity to market that their combos “still” had free fries. The result? A few new customers during the lunch hour that use to frequent their competitor.
Get The Word Out. While marketing/sales professionals tend to live the good life when the economy is up, their budgets are often the first to be slashed when times head south. However, nothing happens in an organization until a sale is made and sales don’t happen without marketing. Thus when times are down, if you still have adequate cash flow, don’t cut your marketing but instead continue spending on “smart” marketing. What this means is that if you can highlight something you do that your competitors don’t – go for it! What you don’t want to do is spend money where it won’t make a difference. So, if for example you’re a landscaping company in Chicago, it probably doesn’t make sense to do a major ad campaign in December when it won’t lift your sales all that much (unless you offer snow removal of course).
Expand Product Offerings. Expanding by leaps and bounds is never advisable when the market is tough. However, businesses should be encouraged to look for add on, tuck in and complimentary products to help them grow. We’re not talking about adding on a major product line, but something that enhances what you already do. For example, a hot dog stand already attracts people who are looking for an inexpensive yet fast meal. Why not keep a case or two of “veggie” or vegan brats in stock? Many vegetarians don’t frequent this type of establishment alone but may wind up there when a friend or coworker does. If they can make a purchase from you, why not make the sale? It doesn’t cost you a ton to add the product, and you don’t even have to keep loads of inventory as the demand is probably pretty low.
Purchase A Failing Business. If you have deep pockets, a down economy is a good time to look for struggling competitors and help put them out of their misery. The only word of caution is make sure you do a thorough analysis of their business (i.e. due diligence) before you do the deal. Remember, there is a reason the business is struggling – just make sure that it’s something that you can fix or you will simply purchase a headache instead of increased profits.
Increase Volume. Playing the price card (i.e. reducing prices) is one of the last things recommend when times get tough. Not only do you lose money on the top end (e.g. sales) but you tend to lose it on the bottom line as well because of the inflexibility of certain fixed cost. However, if you have a streamlined operation that has solid margins (think > 50%) then you could go for a volume play. For example, if you can slightly reduce prices and keep yourself profitable, you may see an uptick in customers (volume). If the profit generated by the volume increase outweighs the money you lost when you reduced prices, then it’s a smart move. The goal would be to do this long enough where you increase your customer base and then gradually increase prices once the economy improves. The end result would then be a bigger market share and increased revenue/profits when compared to your competitors.