By Jenny Neyman
In a difficult economy, where businesses may not even be able to afford all their bills, they especially can’t afford to keep doing things the way they were when profits weren’t being pinched by a recession.
“They definitely have to be making some changes and thinking about the future. In these times, businesses need to be a little bit tactical in their approach to business and able to move around, rather than just doing things the way they’ve always done them,” said Bryan Zak, Southwest regional director of the Alaska Small Business Development Center.
For some businesses, that may mean expanding services or branching out into different revenue opportunities. Zak said he’s seen longtime local fishing charters on the peninsula start offering sack lunches and other perks to give them an edge in attracting the lower-than-average number of clients during the recession.
For other businesses, it could mean limiting costs, like a small grocery operation that cut its inventory during the slow season to be able to shut down a walk-in refrigerator, which trimmed its electric bills, Zak said.
For the owners of Veronica’s Coffee House in Old Town Kenai, it has meant creating a tropical oasis to brighten up the end of winter.
“We’d heard of a lot of people who were planning on going to Hawaii and we knew that we couldn’t go because we needed to be here,” said Diane Hooper. “If we can’t go to Hawaii, we thought we’d bring Hawaii here.”
Hooper had a stash of tropical decorations from a Hawaii-themed party she threw a few years ago, and she and co-owner Kathy Miller unleashed them on the quirky old cabin café. Tiki torches and pink flamingoes greet customers outside. Inside, a grass runner lines the coffee bar, Hawaiian-print cloth is draped over various surfaces, tropical flowers and parrots add pops of color against the weathered wood walls, and a sparkly palm tree brightens up the enclosed back deck, where a little stove does its best to match Hawaiianesque temperatures.
The theme, held through March, started more as a way to brighten themselves up after a long winter and the infeasibility of taking a vacation. But it’s turned into a good business promotion, as well. They’ve added Hawaiian-themed food and drink specials to the menu and offer a 10 percent discount to any customers wearing something tropical.
“We’ve got one guy who comes in with a different Hawaiian shirt on every day,” Hooper said. “It’s just made the sun shine in here every single day. It just started kind of for fun because I want to go to Hawaii, but it turned out really good because it’s given people a reason to come in. We’ve had people in here who said they’ve heard about it.”
Veronica’s has felt the pinch of the economy, Hooper and Miller said, though business is picking up this winter as opposed to last year, when they bought the café. They attribute it to the atmosphere they try to create, which they hope entices customers to come back.
“People just love it here,” Miller said. “We want to make it homey, very friendly and very welcoming. They can stay and hang out as long as they want. It’s an eating and gathering place for people. They don’t have to be run off within 45 minutes. And we just kind of love on all of our customers. They walk through the door and just know that they’re going to get loved on, and they love that.”
Miller and Hooper left other professions to move to the central peninsula and buy Veronica’s. They planned to both work there in order to limit costs. In the winter, they’ve got one extra employee onboard during the week, Sarah Superman, and extra help on weekend music nights. In the summer they hire extra help, too, but replacing themselves as workers would be costly and counterproductive.
“We bought it because we love to cook and do all that stuff. We didn’t want to just buy it and walk away and have somebody else run it. That wasn’t our purpose,” Miller said.
They also made it a goal to pay it off as quickly as possible. That was challenging, but they did it and are especially pleased now that they did.
“We had some snags along the way, but we’ve got it all worked out and it turned out to be better than we thought it would be. We just felt that that was a priority, and anything after that would come back to us. And just for our ownership of it, to know that it was ours. It was a personal thing,” Miller said. “If we can make our bills through the winter and get to the summer that’s all the better because Veronica’s is paid for now, and that was a real blessing.”
Having a well-researched and comprehensive plan in place is crucial when starting or buying a business, and it’s important to update that plan to help meet challenges and grasp opportunities, Zak said.
Creating a business plan is the first thing he recommends to any of the businesses he interacts with at the SBDC, whether they’re just starting out or have been in existence for years.
“The majority of people who fail in business fail because they did not have a business plan that was well thought out ahead of time,” Zak said.
The process of completing a business plan gets owners to think about all the elements that will contribute to the success or failure of the endeavor, including their product, competitors, customer demographics, marketing, revenue and expenses.
“A business plan gives them a clear roadmap to the future — the how and why a business will be a success,” Zak said. “You’re taking a big commitment for your future. Hopefully you have a passion for what you’re going into and you’re focused on what you’re doing. A lot of times folks spread out too wide. A plan will help them to be productive without doing too much, to focus on the key things that will make the business successful.”
Businesses may start out too fast, buying a building right off the bat or freezing up too much capital in inventory or equipment. Or they may not have thought through all their expenses to know how much they have to make to cover their costs and stay in operation. Zak said the SBDC offers an online business-plan builder, a profit mastery workshop, tutorials in accounting software and business counseling in order to help businesses budget, prioritize and be realistic.
“A lot of times I find people undervalue their products. The good thing about doing these projects is they will tell you, ‘Based on your expenses, OK, if I sell it for this will I be able to show a profit?’ A lot of people who go into business realize they’re too kind on their prices and find they cannot afford to be in business. They’re slowly bleeding,” Zak said.
He said there’s no time like the present, especially in a difficult economy, to consider these factors and look for ways to reorganize or re-prioritize in order to cut expenses or bring in new revenue.
“One thing we really pride ourselves on is the ability to survive and be resourceful. Even with logistics being tough, I think we’re survivors here in Alaska. As business owners we need to tap into that. Sometimes people have writers block, well, it might be they have business block and they’re not sure what steps they could take, what creative ways can help the business succeed,” Zak said.
Businesses can look into government contracting, Zak said, which is available for a wide range of services, from construction to equipment rental to lodging. Business owners should also explore social networking, such as Facebook and Twitter, as well as the Buy Alaska program, which promotes in-state businesses and products. Owners should also make sure to network within their communities, through chambers of commerce, Rotary clubs, The Kenai Peninsula Tourism Marketing Council and other organizations, he said.
“Don’t think of it as competition. Businesses need to work together, to pull together. If you look at it from an abundance mentality, you will be much more successful,” Zak said.
Zak said the peninsula SBDC has seen an increase in clients in the past year despite the recession, or even because of it.
“Our numbers are way up as far as people looking at starting new businesses. Folks may have been employed or in a business where they got laid off or something like that. And I think, nowadays, people are realizing that in order to have secure employment it really makes sense, if you’ve got an excellent business idea, to start a business for yourself where you’re guaranteed employment as long as you’re able to make it work,” he said.
That’s been a benefit for Hooper and Miller in buying Veronica’s — they bought themselves jobs they love and from which they can’t be fired or downsized. Unless they do it to themselves, that is.
“We haven’t fired each other yet,” Hooper said.
“We fire ourselves, actually,” Miller said. “‘I screwed up too many times today. I fire myself.’ ‘No you don’t. If you’re leaving, I’m leaving too.’ ‘OK, I’ll stay.’”
That’s one more tip for success that may not show up in a workshop, but is important all the same.
“Just keep laughing. You’ve got to keep a sense of humor,” Miller said.