What to Do When the Fish Aren't Biting
Opinions expressed by Entrepreneur contributors are their own.If the market isn't buying what you're selling, maybe it's time to take your lemons and turn them into lemonade.
Last week, I sat down with my colleague Joe Fulvio of Third Coast Partners, a management consultant who has spent more than 25 years helping clients enter new markets and capitalize on new business opportunities, and picked his brain on what small businesses can do to reinvent themselves for today's post-bubble economy.
For example, if your company sells granite countertops, luxury bathroom fixtures or anything else tied to the still-struggling housing market, how can you change your product mix to appeal to homeowners whose equity is under water and who may not be able to afford a remodeling project for many years to come? And what can you do if you're a retailer who rented a big store in a prime location when times were flush and now is struggling to pay the rent and move your inventory?
Joe's solution: Leverage your contacts, expertise or location to peddle another company's products or services that the marketplace likes better.
"Ready access to customers who know and trust you is an enormous asset to vendors of other products and services eyeing those same customers but lacking a foot in the door," Fulvio told me. "Providing introductions, referrals or sales for companies with complementary offerings can generate new revenue without investing in inventory or other infrastructure."
Want to break into a new market? "Other companies have customers you could be doing business with, so cut a referral fee or commission deal and put them on your sales team," Fulvio says."They'll require support, but you'll save time and resources you'd have to spend on advertising and cold calls. Think vertically, too. Supply-chain partners can help locate new business and offer opportunities for cost savings and efficiencies through integration."
The key, says Fulvio, is to structure a referral relationship that creates a win for both sides. While every industry has its own way of slicing up the pie, referral fees and commissions can range from 5 percent to 20percent, depending on the size of the deal and the profitability of the product or service being sold. If you're willing to shoulder some of the risk to reap a higher return, you can buy the partner company's products and services at a discount and resell them through retail or online channels to make an even bigger profit. Licensing a competitor's product for manufacturing or distribution can be another profitable source of revenue.
Whichever route you take, just about anything is better than sitting around waiting for your BlackBerry to buzz or your cell phone to ring. Says Fulvio, "Regardless of the outcome, your experience during the Great Recession will make you a better businessperson."