Opinions expressed by Entrepreneur contributors are their own.
How do you respond to an earthquake or a tidal surge that threatens your business? The tsunami that formed after the Tohoku earthquake in Japan caused the worst nuclear accident since Chernobyl 1986.
Or we would have been out of business in 45 days. The years of sweat and blood spent building an entrepreneurial dream are about to disappear into the void.
What was the best way to solve the greatest crisis without any resources or knowledge? How can we transform collapse into unprecedented sales and profits? My business was a sole importer of Japanese products. Our business was in crisis even though it wasn’t physically.
Each owner will relate to current crises and the inability to prepare for them. It is nearly impossible to find people, information, and ways of getting through this crisis when there are no clear answers.
When crisis problems become tangled, they look like impossible knots on a fishing line. A fisherman can solve an impossible knot by “cutting the fishing line.” Usually, cutting the line means that you are out of business.
The problem of the impossible knot was caused by low inventories and a broken supply chain. We had no other options but to get new inventory. Customers were afraid of future contamination after the nuclear accident. We had low cash reserves and the banks refused to lend us any loan. To top it off, the Yen-USD exchange rate crashed, meaning that a $10,000 investment would result in $7,698 of product. In a highly competitive marketplace, we would have to increase our prices and not tell customers when orders will be received.
Below is my process, with examples and tangible results.
Reduce complex problems down to bite-sized pieces
Complex problems can be difficult to solve as they often arise from dozens of small issues. We were like many small business owners, with limited resources, time, and money. It was easier to break down each problem and make it manageable. It can become stressful, frightening, and mentally draining to look at one problem.
Here’s how I solved the problem:
Chain of supply
Marketing and sales
Because you are able to quickly assess and then take appropriate action, smaller issues can be easier to resolve.
We were able eliminate supply chain and inventory problems by analysing chunks. We realized sales were more than a sign of cash flow problems. The customer problem wasn’t a “symptom”, it was caused by things we could not control.
It was much easier to resolve the one problem that we had control over — cash — than it was to try and solve every other issue.
Be bold and imaginative in your problem solving.
You have the chance to be liberated in times of business crisis. The worst case scenario is closing. You know this and you can prepare for it if things go as normal.
You’ll be completely unaffected by the usual reservations that you might have about disrupting what works. Because we are already at the most risk, we have freedom to innovate. Because the risk is shifting, being bold and creative can be safer than normal operations.
We had enough cash to order inventory, but we could not get the inventory. It would be sitting in the bank, and probably getting drained. We knew that our partner companies needed money to expand. What did we do then? They were given loans for 2-3 months.
We believed that the money was gone, and that it wouldn’t come back. But we still had to take that risk even with some cash. It was easier to make rudimentary loans, and reissue them so that we could purchase inventory. It was quite counterintuitive to solve a cash problem with cash. However, it worked.
We also worked with people who wanted to invest in new areas. We devised a strategy where the individuals could purchase products wholesale, and then we would just make it available to them in our regular operations from our warehouse. They got the wholesale profit, and we got the retail profit. This worked well that most people continued to reinvest even during the crisis.
Nine months after we were able to order again, we purchased significantly more inventory. All of this was powered by wholesale investments as well as retail pre-orders. We were able to reduce our costs by placing larger orders and made a profit through loans, wholesale investments and retail sales.
Your most valuable tools are your website and email lists.
A website that works and an email list that is quality can solve all your problems. Because they drive revenue generation on demand, they’re worth more than cash. These assets are your only direct asset and essential to any modern, stable business.
Different purposes are served by social media. Social media is used to reach an audience that you might not otherwise be able to. These tools have the potential for gaining rapid, explosive exposure. They are crucial components of building your email list and website. The website is not capable of generating the same instant exposure on its own.
Social media has two issues. The first is that you don’t have anything. You can rent your profile, followers and content. All of your content can be removed at any moment, and for whatever reason the platform determines appropriate. One: Engagement results aren’t as great as your email and website because everyone is competing for your attention.
Our YouTube channel had millions of viewers and our Facebook page was the most popular in the sector with over 100,000 fans. These were essential in growing both our website and customer base. Social media was the problem — it got only a tenth of the engagement as email or the website. Although followers and views are a wonderful ego boost, they wouldn’t be enough to save the company.
We were only able create tangible business savings because we were able adapt, grow and modify our website according to the situation.
What if there was no email or website? We wouldn’t be able reach enough people to fix the problem with our other solutions. These assets are so important and have such an impact on the ability of a company to thrive and survive, that I made website design and development my core service when I founded it in 2015.
Be direct and face the problems with customers.
Everybody knows that life can be unpredictable and messy. Making it seem like there is nothing wrong will only make the situation worse. We will often avoid talking with customers and hide information to be safe from the inevitable response. The situation will eventually come out, and you risk losing their faith and trust if they don’t know.
Take immediate action, and communicate clearly with your situation. Even if there isn’t a good reason, be overly communicative.
Our customer base included 8,500 customers. Every single person on our customer list was contacted by me via email, phone, or text. They were like team members within our company. They were treated like team members, even though they weren’t warts. In the end they became so involved in our business that we started holding online “war room meetings.” Customers began to feel like they were part of the team, sharing in our successes and our failures. Even though they didn’t know when their orders would arrive, the result was record-breaking.
Humans have an inexhaustible capacity to be kind, understanding and loyal. It is not something that anyone gives away. It must be earned.
Publiated at Sun, 12 September 2021 20:16.14 +0000