Have you felt it? A slow economy? A dip in traffic? Fewer sales coming through your website? If you have, you’re not alone. When the economy takes a nosedive, people alter their spending habits and businesses feel it.
But that doesn’t mean your handmade business is doomed. As with anything in life, you have to roll with the punches and adjust your course.
If you’re willing to go back to the drawing board and take a hard look at your handmade products, your customers, and your operation, you can get yourself back on track and keep your business thriving when some consider shutting down in a slow economy.
WHERE MOST HANDMADE BUSINESSES GO WRONG
The issue most small handmade businesses run into when the economy slows down is they feel desperate and think trying harder is the solution.
>> Create more products
>> Put out more ads
>> Send more emails
>> Run more promotions
>> Post to social media more
They don’t accept that people just aren’t buying what they’re selling anymore 🙁
For example, imagine you really wanted a luxury car but couldn’t afford it. Would more flyers, more phone calls, or more sales pitches encourage you to buy? No! You can’t afford it. End of story. No sale no matter how good the salesman is.
What if you sold accessories that followed a trend? If that trend died off and moved on to another trend, would you continue to sell products aimed at the old trend, losing customers as they move to someone who stays up to date?
It doesn’t matter how many products you make or how you market them. If no one is searching for or interested in what you’re selling, you’re not going to make any sales.
When the economy is slow, making sales isn’t about turning up the heat on what you’re currently doing. It’s about changing your tactics.
For example, if instead of pushing the same luxury car, the salesman told you about affordable leasing options, used vehicles on the lot, the amazing trade-in deals they had, or showed you different models that were more affordable, you may start to show interest and considering buying a car.
Here are 5 steps you can take to improve your business and change with your customers during a recession.
STEP 1 – CHECK YOUR NUMBERS
Now, more than ever, you must know where your profits are coming from and what’s eating into your profits.
It’s all about decreasing costs and increasing profits, in any small way you can.
>> Can you find materials for your products at cheaper prices?
>> Can you start planning your products/product collections (how to use product collections to boost sales) so you can buy materials in bulk and get discounts? When you plan ahead, you can also reduce shipping costs by only paying to ship one supply package per month, instead of several.
>> Can you find ways to sell more with each transaction so you’re increasing the quantity you sell without increasing the time and money spent acquiring new customers?
>> Perhaps the products you’re offering don’t have the ability to be very profitable and you may want to consider introducing a more profitable product. Check out: THE MOST PROFITABLE PRODUCTS TO SELL
Numbers are key during a recession and you must continuously work on them by:
- improving return on investments
- increasing conversion rates
- lowering costs
- increasing profits
THE SUCCESS PLANNER will help you get your business’s ducks in a row by taking a look at your numbers (in the easiest, most painless way possible) and plan next steps based on sales numbers you want to achieve.
STEP 2 – ENSURE YOUR TARGET MARKET IS STILL PROFITABLE
Are you currently targeting a profitable market?
Meaning, are your products made for, and are you marketing to, people who are willing and able to buy?
If you make products for teachers and the majority of teachers are uncertain about the future of their job, they’re unlikely to be spending money on luxury products such as teacher-themed mugs, keychains, or stationery. Although targeting teachers in the past may have produced a lot of sales for your business, that may no longer be a profitable market to target.
Consider if it’s time to target a different type of customer and altering the products you sell.
Even if the group of people you’re targeting are still buying, their needs may have changed, and your products should change with them.
>> They may be finding joy in new ways during a recession; you must know your customers’ PLEASURES (find out how here)
>> They may have different things causing them stress now: you must know your customers’ STRESSORS (find out how here)
If your customers are no longer buying, consider choosing a new, profitable, target market and offering them a product they’re willing and able to buy. Here’s a step-by-step plan to find customers who will buy your products.
STEP 3 – EXPLORE NEW REVENUE STREAMS
A revenue stream is any way your business makes money.
If a jewelry maker sells their finished pieces and also sells an online course teaching jewelry making, they would have 2 revenue streams.
The more revenue streams your business has, the more likely it is to survive a recession.
If the jewelry maker relied on craft shows to sell her jewelry and can no longer sell at them because people are staying at home, she can still make money by selling her online course.
Her revenue may decrease due to the lack of sales coming from craft shows, but at least there’s some revenue coming in from her online course.
Explore different ways you can make money through your business, aside from simply selling the products you make through Etsy or craft shows.
STEP 4 – CONSIDER OFFERING NEW OPTIONS
Your customers may have different budgets now and be reconsidering how much they’re willing to pay for products in your category.
Consider the price range your customers may be comfortable spending within during the recession and how you can alter your product offering to be more fitting.
Unless you have really healthy profit margins, you should never simply drop your prices. You must first alter your products to reduce their costs and then reduce your prices.
You also don’t want to do away with your higher-priced products completely.
There are likely still consumers willing and able to pay for your higher-priced options, so you want to continue to offer products for them.
Consider the following product options:
- Entry-level products – here’s how to add products that introduce new customers to your brand and give them options they’re more likely to spend money on as a first-time buyer
- Down-sell products – here’s how to offer your customers a less-expensive version of your products, so you can make a sale instead of no sale at all.
- Up-sell products – there will still be customers ready and willing to spend more on your products. Here’s how to add up-sell products that give consumers the option to buy a better, more expensive option.
- Cross-sell – here’s how to offer add-on products so you can increase the value per transaction, even if it’s just by a small amount. Adding fries to a hamburger only earns a business a couple more dollars but it’s an easy purchase for the customer to say yes to and those couple of dollars add up with each transaction.
STEP 5 – INCREASE PERCEIVED VALUE
There may be small changes you can make that only increase your costs by a small amount, but greatly increase the value customers place on your products.
For example, if your products are often purchased as gifts, you may consider offering free gift wrapping.
It may only cost you a few extra pennies if you purchase wrapping paper and gift tags from the dollar store, and take you an extra 5 minutes to gift wrap a package and write a short message on a card, but a shopper will see a lot of value in that.
They’re saving money by having the item shipped directly to the gift recipient and it’s one less step they have to take.
Here are a few other ways you can make your products seem more expensive than they are (making customers feel they’re getting a steal of a deal):
- Improve your photography – imagine a Tiffany & Co bracelet photographed in bad lighting and on someone’s kitchen countertop. Would you be willing to pay $1000+ for that item? Now imagine a plastic beaded bracelet with photos that look like these. Wouldn’t you think that plastic bracelet was worth more money? Here are some easy tips to improve your product photography.
- Improve packaging – let’s imagine a Tiffany & Co bracelet again. What if it came in a clear Ziplock bag? Would you think that bracelet was worth thousands of dollars? On the other hand, what if you packaged a plastic bracelet in a similar way to Tiffany & Co’s actual packaging? The bracelet was placed inside a fabric pouch, which was then placed inside a box wrapped with a beautiful bow. Now that plastic bracelet seems a lot more expensive with just a few inexpensive packing supplies. You can buy your packaging supplies at wholesale prices so they only cost you pennies per product but increase the perceived value of your products.
- Improve product descriptions – a short product description simply telling shoppers what they can already see (e.g. green tote bag) doesn’t make the item seem special. Help the shopper imagine the product in their lives. If they can imagine themselves wearing a product, using an item, displaying a product in their homes, etc. it instantly becomes more valuable to them. Here are product description templates, samples, and examples you can use.
- Improve customer service – it may require you to spend extra time for each sale, but offering a one-on-one call to help a shopper choose the right products for their skin, or the perfect art for their home, or to answer questions they have about your products, may help them feel much more comfortable spending money with your business. Or you may improve your customer service by offering next day shipping or another perk the customer isn’t expecting.
Brainstorm ways you can make your products seem more valuable to your customers, without spending much money.