Making Money When Others Fail. A Story Worth Noting

I was in a small business yesterday that was doing just fine in spite of the fact that others in this type of business are experiencing a big down turn in their business. Do you ever wonder why some small businesses survive in bad times and others don't? I know I do. The owner may have the answer to that question. "How is business these days?" I asked. Here is what he told me.

We all know that when times are bad the consumers will cut back on those things they see as luxuries. Meals are eaten at home, people travel less, recreation gets the ax, and women spend less on hair cuts, gym workouts and manicures. Those businesses providing the services suffer a lot during bad times...unless they have a plan. That is what the businessman I visited with yesterday had...a plan.

Carl, the owner of a small styling salon here in Tucson has been in the same location for over 15 years. He opened the salon in a recession..  He styles hair for models and has taught seminars in New York City. The man knows how to survive when others are failing...obviously! This is his 1-2-3 punch business plan:

1. Give the best quality service around. This is where talent and passion come into play. The people that style hair in the spaces he rents out have been with him since the beginning. They share the philosophy that they will always have work if they do what they do better than anyone else.   
2. Keep overhead down...location is important but should not come at the price of high overhead. Carl has only been in two locations here in Tucson. His current salon is in a small strip mall on a very busy street. His sign is up there with a list of the tenants on the street. Rent is low because this mall is your basic small space lease space. The space is not decorated with any elaborate do-dads. It is just clean and serviceable. The operators work 10 hour shifts.
3. Charge a reasonable price...no matter what! Because the overhead is low and the stylist are not greedy, they charge less no matter what the market is. A steady flow of traffic gives them a growing source of income. My friend tells me that the charge for her hair color done by Carl is almost half of what it would be at a big salon!

Carl had worked for a very large spa operation in a large city on the west coast. He earned a great deal of money and learned from the experience. He did this for 10 years. When he decided to go into business, he interviewed other salon owner and asked what they thought the key to their success was. Each interview built his reservoir of knowledge and helped him design his business strategy. Even though his friends in the same business were following the advice of hot shot seminar leaders...renaming services with a gimmick and doubling their prices...he had a sense that such practices would not work over the long haul.  The technique was called "hair sculpting" and was actually less work for the stylist even though it carried an expensive sounding name. He may have liked the techniques but he knew that he was not going to charge more for doing less.

During the days when our country was experiences growth and money was flowing, lots of stylist followed the get rich quick plan and did make a lot of money. Our business owner did a good business too. The difference between the two was when the recessions hit. The glitzy salons saw big fall in business because people began to cut back and Carl's small overhead salon was actually seeing an increase. People were looking for great service, quality hair cuts but at a more reasonable price...one they could still afford. When they found Carl and his 10 stylist in the small, basic salon they became loyal customers. So the small business owner built a solid clientele over the years and even during the downturn he continued to succeed.

I am a consumer...I love to shop and my personal appearance is important to me. But I am also a senior citizen so money is what it is. When we retired, we knew that we were not going to be climbing the ladder of success anymore and our income, while sufficient, was not going to grow a great deal in the years to come. As a result I am always looking for good quality and good service at a reasonable price. I was very impressed with this man and his philosophy for business. His ethics were in place and he knew that success was not the same as celebrity. The first endures and the second is gone in a flash. So even though his clients include models and beautiful sales women in our community, he has remained aware that the client is the one that makes his success and treats each person as though they are the most important part of his day. I liked that a lot.

Being in business is a hard way to make a living.  It is like walking a tight rope without a net.  In the United States small business makes up over 99% of all the employer firms and employs over one half of the private sector.  They pay up to 44% of the private sector income.  Small business is a big deal.  Finding the business plan that works takes a lot of work and talking to people that have succeeded can give the clues necessary.  Service, low overhead and low prices seems to work even in a recession.  

Statistics from the Office of Advocacy-Frequently Asked Question: How Important is Small Business?