Survival Secrets

The one thing that never changes in the pool and spa business is that it always changes. Learn to develop strategies for tough times, unexpected crises, changes in your market and competitive situations, or you will not survive in any business, especially this one.

In our 39 years in the pool trade, we have reinvented the wheel numerous times, yet there are still surprises and the need to think outside of that lovely, comfortable box lined with money we would all like to inhabit.

In our industry today we face scary and uncertain times on an almost unprece-dented level, yet there are lots of innovative strategies we can utilize to survive and even thrive. Some we have used before, some we are developing now and some we undoubtedly will come up with as we deal with inevitable and ongoing change.

There is always a path over, under, around or through the business roadblocks we all face. Here are some specific solutions that will help.

1) Analyze the size.

Many pool and spa businesses think bigger is better. That may not necessarily be the best choice in a slow economy. Compute your sales per square foot. Determine if you would be better served to downsize your space in order to cut your rent or payment. Relative to this technique, establish a relationship with a distributor with frequent delivery (if this is possible in your area) and utilize your distributor as your "inventory storage."

To be profitable, particularly in a retail store and particularly when the economy is down, your goal is to move your stock in and out as quickly as possible, with frequent purchases of smaller inventory rather than large buys that sit and eat up space in your store and do not turn quickly.

2) Take a hard look at costs.

Establishing a good one-stop source for purchasing will give you more leverage to negotiate your best pricing. But watch for cost increases and be sure to adjust your customer pricing upward to keep your margins as costs rise. Also, make sure to catch any mistakes in what you are charged by suppliers. You, or someone trustworthy, should check every invoice on every order to make sure it is correct.

Analyze payroll and see if it is more cost effective to outsource or downsize. Nobody likes to cut staff, but sometimes it is necessary. It is less painful if you can downsize by attrition rather than layoffs if you have to cut staff. Another way to keep costs down is to cut hours and limit overtime.

Control spending on nonessentials when times are tough. It is easy to get into the habit of buying things for the business that are nice to have but not essential. Little things add up, so watch the tendency to get sloppy and let spending get out of control. Do you really need the maid service, water service, lawn service, mail metering, etc., or are these things you might be willing to handle yourself to save a buck?

3) Bundle up.

Arrange items in your store that you can sell by "bundling," thereby raising overall revenue. A starter kit of chemicals is a good example. Or, you can add a rubber ducky or spa scent pack to every spa sale. A good pool care book is an excellent add-on with a pool or spa, and has the added bonus of saving you time on instruction, callbacks and warranty issues. Or, if golf is popular in your market, add a floating golf game.

Think about what you can include on repair and service calls. What if you add a pool care book to a replacement liner job, replaster or a heater repair? Why not try adding in starter chemicals to a remodeling job? Making an extra ten or twelve dollar profit 100 times a year adds an easy thousand or twelve hundred dollars to the bottom line.

Anything you can do to be a "value-added" company sets you apart from competitors and also, if done properly, adds extra profit.

4) Market free, advertise less.

Be aware of the difference between marketing and advertising. While both are necessary for your business, look at your paid advertising and see if you can save, yet still keep your business before the public in a positive light.

One way to do this is through skillful use of press releases. Realize you must make sure your press release is truly newsworthy and not written too much as an advertisement. A good example of a useful way to promote your business is to write a press release about your company winning a pool design award such as the AQUA Choice Award, or being selected for the AQUA 100.

If you are having a special event, even attending an award trip offered by a manufacturer, you can create a press release that gets your name in front of the public in a positive way. If you are not a writer or do not have anyone in your organization who can do this, see if you have a customer interested in trading pool chemicals for writing services. An English or journalism teacher, a retiree or stay-at-home mom, or a college student with a writing background might want to supplement income, or even trade for services.

Reevaluate your paid advertising, especially directory advertising, and see if you can get just as much bang for the buck by downsizing the ad. Look at cooperating with other businesses to share expenses for such advertising methods as direct mail. One of my stores is located in a shopping center that has a merchants' association that publishes its own quarterly newsletter cooperatively. The mailing is provided through our existing promotion fee. Also, look at ways through your local chamber of commerce to cooperate on advertising and promotion.

5) Reevaluate your insurance expenses.

See if there are better alternatives that cost less. Check into what is available through your local trade association. We recently moved our insurance to a company working through our local region's APSP chapters and will now save over $7,000 a year on insurance for the same coverage.

6) Look with a critical eye at your market niche.

You may find it profitable to either expand or contract what your company offers in response to your local market, your personnel situation, availability of materials and subcontractors, and customer demographics. For example, perhaps you can make more money by specializing in the high-end area of construction, or maybe you want to run a two-tier operation with a cookie-cutter pool offering and a custom design department.

Or, conversely, maybe the high end is not for you, and you need to focus on abovegrounds, price, only service, only maintenance, retail or all of the above. Realize that every market is different and your place in it may change over time. Be honest in assessing your company's best talents, resources and needs. Be flexible in changing as times change. Focus on doing what is profitable.

Resist the urge, however, to panic and cut price in a down economy. Years ago, the marketing officer of NSPI, Bill Markert, presented one of the most valuable seminars we have ever attended. He brought an older gentleman, the developer of the lumberteria concept of marketing, to talk to us about pricing. This wise man showed us mathematically the fallacy of cutting price and thinking you will make more profit through volume. We immediately went home and raised prices! We credit that tip with saving our business at that time.

Hang tough with pricing. Instead of cutting your price, either renegotiate or consider a less expensive chemical line or different supplier to attain your best-cost deal.

For retail sales, learn to loss lead. That is, sell the products on which people often compare price, such as tabs, for less than your usual margin. Then sell slightly above your margin on some of the rest of your stock. A good rule of thumb in a pool retail store is to strive for a 40 percent overall margin. With all of your products and services, keep your pricing at an overall profit. Sell value rather than trying to be the cheapest.

Remember: Hard times have happened in business before; they will happen again. Keep a positive outlook and keep focused on the customer. Provide the best service to your customer and the good reputation you build as a result will also see you through a lot of tough times. Not everything worthwhile in business can be measured in dollars and cents. Keep "casting that bread on the waters" as you look for the more economical loaf and a cheaper source to buy it!

Comments or thoughts on this article? Please e-mail editors@aquamagazine.com.