By Shel Horowitz
In a return visit to the Family Business Center, Lyne Kendall led three business owners through a mini-evaluation process to begin developing a SWOT analysis: strengths, weaknesses, opportunities, and threats. Kendall says it’s crucial to do this not only for your own business, but also for your competitors. And she challenged every attender to be thorough: “Can you write a profile of your customer, the demographics, the psychographics of all of your competitors?”
Kendall is not afraid to be outrageous; as a student in a graduate marketing course, she developed a perfume named “Sex” – because she understood, as a purchaser of cosmetics, that this is what her customers were really after. ” You’re not selling a product, a service–you’re selling benefits, and they turn into hotspots. Why do women go to cosmetic stores and buy cosmetics? I go because I see these gorgeous women behind the counters. If I bought that makeup, could I look like that?
“There are probably only 10 or 15 people in the room who could clearly give me a description of their market, in two minutes. Whether we are or are not in a recession, the key to running a business is to understand your market and have some sort of managed growth. Understanding your market leads you to be conservative, to say how many people do I need, can I do it in-house?”
Two entrepreneurs volunteered as her guinea pigs, showing how their companies had used the SWOT process: Fred Filios of WGI, Inc (which manufactures parts for jet engines); and Nan Hurlburt of Designworks, a dance and athletic apparel company. Both face the challenge of needing to diversify in a changing marketplace
For Filios, his major market – commercial aircraft – has been in decline for a while – and after September 11th, the entire industry was paralyzed. Three years ago, the company went through the SWOT process and identified several new possible product lines. “We have plans to diversify, but the industry changes so rapidly that we are like a cockroach scurrying to the next bit of food. So while we have pursued some ideas such as ground engines (power generation), other ideas such as fuel pumps and military work had not gotten enough development attention.”
As his industry began to recover from the shock of 911, Filios noted that his customers’ needs had changed. Whereas in the past, the market put price first, delivery time next, and quality last, now he sees an emphasis on quality, followed by delivery schedule.
Hurlburt’s issue was how to maintain year-round sales in a seasonal business. Staff retention is a big motivator for her; she doesn’t want her highly skilled artisans to find work elsewhere during her slow periods. Working in the dance costume industry keeps her shop busy in the fall and winter, but “Memorial Day, we fall off the planet.”
After extensive research, she settled on a high-end niche within the girls’ soccer uniform market. Hurlburt already knew how to work with girls’s sizes and shapes, the fabrics and specifications were similar, and she could use her existing equipment. And the timing worked: soccer uniforms are made during the summer and sold in the early fall.
The part that didn’t transfer well was the marketing strategy. “You have to find the buyer for the league. Most of them don’t have offices or full-time people. Do I want to call people at 9:00 at night to find out if they’re making buying decisions? There’s no formalized plan for how you bid and when you bid.”
One audience suggestion: build strategic alliances with noncompeting merchants working the same space (such as trophy manufacturers),
Kendall’s advice to all entrepreneurs: “After you do all this research, you should be able to answer these questions: Who are we? What is our product, our market, our sales growth plan, our competition?
“Who are your target customers, where do they live, how much do they earn, where do they spend their income, during what time of year do they buy? What are their leisure activities? Family structure? Numbers by city, country, state? Amount they buy annually? A lot of this info you have in-house – analyze it! You’d be surprised about the amount you know.”