The ups and downs for SMEs

SmartCompany is read by a very broad base of readers. It is driven home to me when I meet people like Richard Uechritz at JB HiFi who knows of me not just because my business does business in his stores, but also because he reads my blog and follows stories on SmartCompany.

I was always lead to believe that online news services’ main readership among the business community (that’s your eyeballs we’re talking about here) were small to medium business owners. And small to medium business owners is a description I was very proud to use of myself for a long time…

For almost a decade, myself and a small group of hard working men and women built a medium size international employer of 1,000 staff from a humble Sydney-based small business, beginning of 80 staff.

As I watch the rates cycle being described as “normalising” I am looking in and back at how each of those moves used to affect me and my team in that medium-sized business space.

There were times when we sweated all our assets because everything was on the line. When things were slower we didn’t turn to the bank for help, we turned to the equity in our homes, hunkered down and in the words of Calvin Coolidge, “pressed on” through the tough times.

In the small retailer space and in department stores last month, sales slowed again. That’s all the stuff not sold by Woolworths, Wesfarmers and the major car distributorships.

Sales of staples – food and clothes – continued to grow, even in the face of our two grocers lowering their shelf prices. The top line April sales from the Australian Bureau of Statistics were 0.9% lower than in April 2009. More concerning for a small retailer was the fact that sales decreased 2.4% in April compared to the previous month of March.

While at the core of our retail market things are good, at the two ends of the market things are slowing. At the bottom of the discretionary spend space, it’s at the gift shop, restaurant, coffee shop and corner store, and at the luxury end of our discretionary spend it’s the department stores.

Both these areas are pointing to that $50 or $60 less we have to spend each month, because our mortgage repayments have gone up, not being spent on coffees and a lunch or dinner out. Or we won’t spend $150 in the department stores on a small luxury for ourselves.

It’s not a big deal on the macro-economic table in the Reserve Bank or cabinet meetings in Canberra, but it is an issue on the family dinner table in the homes of the small retailers. In different states the dinner conversations are a little happier or a little sadder, depending on where your small store trades, with the saddest being in NSW which had the greatest drop in retails sales, at 0.8%.

However the good news is this: As long as you are providing good service at sensible prices, your business will continue to feed you and the family. As long as you love what you do and remember why you got into it, your customers – happy or sad, God bless ’em – will keep on spending their money with you. Because at your end of the market they come to your store because YOU, and YOUR staff work there.

A friend of mine owns a small coffee shop in Sydney’s northern beaches, and sales have been down. But she and her staff are the loveliest people you could hope to see at 6.30am when you need your first coffee of the day.

The owners (Jay and Ash) will marry in a few months time. And the business she’s built on great service, through ups and downs, will help pay for their wedding, honeymoon and support their life together going forward. Owning a small business is great if you love what you do.

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.