Building a business when money is tight
Unless you’re living under a rock, you’ll be aware that we’re currently facing a cost-of-living crisis. Actually, if your current home is under a rock, you’re probably more aware than most. It’s worse in the UK due to the choice to self-impose sanctions via the economic disaster that is Brexit and the government’s complete refusal to address it in any way, but there is no doubt that the effects are being felt globally.
Energy prices are up, interest rates are beginning to climb, the labour market is feeling the squeeze, and commodity prices are also rising. As small business owners you may be feeling this already as your expenses rise and any debt servicing you might have gets more expensive.
But is it all bad? Are there opportunities that you can grab?
Being perfectly blunt, if your business is in the equestrian space then your customer base is going to be less impacted than most. Horse owners and riders, by definition, have disposable income, which means some form of cushion. They may moan a little, but they’ll get by.
More pertinent is how customer behaviour changes during a recession, and for this there is a lot of historical data.
Interestingly in previous downturns, it has been shown that in the 5%, there is more spending on luxury and premium items than there is when the economy is flourishing. This may seem counterintuitive, but when you investigate, it makes sense.
When money is tighter for the higher income brackets, they stop buying big ticket items. The new car, the new home, the new 5* horse. Instead, they spend on the nice stuff, the fun stuff, the things that make them feel good in the moment and soften the blow of having to drive around in last year’s Range Rover.
Champagne sales go through the roof. Short breaks at local venues are favoured. VIP experiences are sold out. High end clothing does very well.
Our customers have money to spend. They will be buying the new blingy bridles. They’ll want the matching saddle pads. They might not buy the new horse, but they’ll happily spend money on coaching to make the most of the one they have. Make them feel special by putting on clinics with accommodation and entertainment and they’ll be eating out of your hand.
As body workers or farriers, let people know that if they’re not going to be able to tour the continent attending all the shows, it’s the perfect opportunity to have themselves and their horses feeling at their best and performing at their best for the shows they can get to. It’s the perfect time for artists and photographers to ply their trade.
Whatever you do, don’t discount. It can be tempting when you hear some of your clients claiming you’re out of reach. The problem is that a successful business relies on return custom or reputation. This economic downturn is only just beginning. If your clients can’t afford you now, that is not going to change for quite some time.
Spend your effort developing a product or service that is recession proof and your time marketing it to the customers who can pay you what it is worth.
It is possible to build a successful business when things are tight. You just have to think a little bit laterally. Think like your ideal customer, someone who can pay you easily and will pay you willingly. What do they need? What do they want?
Do that and then tell them about it.