Know-How Exchange : Branding

I hope your husband and his friends do better diligence in researching a new name and visual than they did when they bought a business not knowing it had a bad reputation. Going in, they certainly should have known and planned for an uphill reputation battle.

That being water over the proverbial bridge, word-of-mouth that this IS different ownership should drive traffic, but the previous owners may have burnt bridges that cannot be repaired. I would look into changing the business name to reflect more of the service and product it provides, and work like crazy to provide customer service-plus. Again, seek legal assistance and be sure that the name and visual aren't in use.

This is a situation where you need professional marketing, positioning and business advice. We can't possibly do justice to your question with limited information in a few quick responses.

It certainly looks like a name change could help, but it's not the whole solution, and you might have to invest more in marketing just to have a chance at getting the business back to profitability. That's a tough decision when you're already struggling to keep your heads above water.

These days, reputations are vital. Buying one is a terrible mistake, but then again, buying low and selling high is the foundation of some of the biggest profits.

Everyday is an opportunity, every challenge is an obstacle to be overcome. A bad reputation is best lost by changing business practices that put customers first.

So the previous owner has a bad reputation. One of the fastest ways to change a bad reputation and start to earn your way into customer's good books is to put a 'satisfaction guarantee' in place. Guarantee every purchase, and MEAN IT! Immediately make a refund if a customer has an issue. Plaster that guarantee everywhere (on signs, on your bags, on every advertising piece).

I would also recommend a 'voice of customer' feedback system. These days it doesn't cost much to create an online survey system or customer feedback system. Investigate every customer complaint keeping the customer informed at every point as you try to resolve any complaint. It shouldn't take much time before folks start to talk positive about their experience with your business.

As for the old stock, I'd try selling some of it on Ebay. Also, Ebay is a great training ground to learn just what it takes to be in business today. I've found first hand that ebay buyers can be some of the most demanding in the world, and I think that is a good thing. If you can keep a 100 percent or 98 percent satisfaction record on ebay, dealing with folks who walk into your bricks and mortar store will be a walk in the park. Open a regular ebay store (35 or 40 bucks a month), and fill it with inventory. You should be able to start selling almost immediately. If you need a few purchases and feedback, well blow out a few items at very good prices to get the ball rolling. No harm in offering a few super deals to get your online sales rolling.

If you need an example of online customer feedback surveys, I have a few samples I could share off line (hit my profile for contact details). I hope I helped you.

Darcy Moen
Customer Loyalty Network

Great feedback from MONMARK, mgoodman, and Darcy. And I agree with all of it. As for having a sale? No. Don't do that. The "flight to cheap" is the road to ruin and it'll mark you [ brand you] as the cheap place. That's not good because all being known as "the cheap place" will do for you in terms of perception is bring in the bargain hunters and the 99 cent brigade. They'll bleed you dry and then bitch, moan, and whine because you're not cheap enough. What follows might sound drastic, but in the long run, it could just save your bacon.

Consider the following:

The merchandise that isn't selling? If Darcy's idea to use E-Bay won't fly you have two other options, neither of which will go down well with your accountants, but they're not the ones putting in the six day weeks and not pulling in a salary, are they?

Option 1: Give it away. Yes, you read that correctly, just give the stuff away. Use simple press ads to announce a huge "give". Not a sale. A freebie. One time only, one day only, limits per customer on select goods, but select goods are free to all. This alone will make people remember you because NO ONE ELSE will be bonkers enough to offer a deal like this, EVER. Make it clear that you're doing this to save the business and to make way for new inventory that will NOT be free but that will appeal.

Option 2: Write it off. If it's not selling and it's proving to be difficult to offload, even at a loss on E-Bay, take the hit, hire a dumpster and get rid of it. All of it. Anything that's too hard to sell, goes. Out. Gone. I'm serious.

Every day in which those pieces are not selling, they're costing you money just to store them. In that sense, your inventory becomes a liability.

One key to profitability is your ability to offer your customers items that WILL sell and items on which you've received or negotiated good wholesale terms.

Let's say the items you've brought in from wholesale are red socks that you've paid a $1a pair for. Normal mark ups might suggest a 400% increase on the wholesale price to create a decent margin. so you'd offer your $1 socks for $4 at retail.

By cutting your mark up to 200% you reduce the retail price, making the merchandise more affordable and potentially giving them more appeal through your stellar marketing descriptions of toasty toes for a lot less than the other guy.

Do this with the a range of inventory from your wholesale price points and you can then re-order, re-stock, and re-sell your second wholesale buys with the sale proceeds from your first wholesale buy. The more you tweak this arrangement with wholesale and retail prices and the wider you go with sales lines, the more information you'll build us as to what sells fastest and at what price point and when.

Over time you could then pull the items that sell less well and that are therefore less profitable, and offer more of the items that sell better and that therefore bring in more sales over time.

The longer your net wholesale terms are (or the longer the time period that you can negotiate because your wholesaler will begin to see that you'll be back to buy more), the more you can reorder, restock, and resell before your wholesale bills become payable.

Is this risky?

Yes. Of course it is. That said, it's a darn sight more sound than the initial voyage you made into the business where you failed to figure out that the place had an iffy reputation.

This process is called inventory turn and it's the main strategy used by Wal-Mart.

You may not be on the same scale as Wal-Mart but the strategy is sound IF you pick merchandise that people want to buy and IF you don't get too greedy and put too high of a mark-up on your retail prices to then drive customers away.

You also need to look at your sales road and just how straight a path it is from the initial attention getter to the register and any eventual returns. The guarantee mentioned by Darcy is VITAL. You need to do as much as possible to make buying from you the only logical and sensible thing to do for people that are looking to buy the kinds of merchandise that you're offering.

Gary Bloomer
Princeton, NJ, USA