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How to Boost Sales in a Deflated Economy Introduce new products or services to help your small business beat the recession in ways that cost-cutting can't.

By Randy Myers

It's time to stop playing defense. To survive a brutal economy like this one, you need to spend at least as much time building your business as you do cutting costs. That means going on the offensive.

More sales calls? New marketing strategies? Sure. But for some of you, that won't be enough. I'm talking about refining or expanding the lineup of products or services you offer, or changing the way you sell them. If your circumstances are sufficiently dire, I'm talking about overhauling your entire business model.

Too risky? No way. It's doing nothing that's too risky. Doing nothing gives your competitors a chance to steal your customers and your momentum. Marcus Muniz, for one, is having none of that.

New products, new services
Muniz is president of Boxes Etc., a 25-employee wholesale packaging supply company in Orlando, Florida. When the economy was humming along, Muniz grew accustomed to seeing his 70,000-square-foot warehouse stocked full of corrugated boxes, bubble wrap, tape and other paraphernalia of the packaging trade. So when the recession began translating into big chunks of that space sitting empty last September, he began looking for ways to refill it.

First, he added new products--for example, janitorial supplies, ink cartridges, toner--that his customers routinely purchased elsewhere. He offered competitive pricing and convenient delivery, and quickly began taking orders.

Muniz also began offering warehousing and distribution services to customers who don't have sufficient space of their own, and launched a contract packaging and design business. The latter offering has already led to jobs for a nutritional products company and the nearby Universal Studios theme park.

"I don't like to get overconfident, but I think we'll get through this recession," Muniz says. "Compared to other people I'm talking to, we're doing very well."

A new business model
Like Muniz, Ellen Malloy isn't content to wait out the recession. A longtime Chicago-based publicist for the restaurant industry, Malloy says her business "fell off a cliff" late last year.

In January, she pulled the plug on it and within three months launched , a public relations web site that connects restaurants and journalists. Now, instead of charging her restaurant clients monthly retainers ranging from $2,500 to $5,000, Malloy bills them just $750 per month to be on her site. How can that work? Volume.

Under her old business model, Malloy juggled fewer than a dozen clients. By the time her site launched, she had approximately 40. And because her new model is far more automated than her old one, she can easily accommodate many more.

Malloy admits it was scary to undertake such a dramatic change--and being "disastrously broke" after hiring a software developer to help her create the site. But she's also optimistic. "This was a calculated, difficult risk," she says. "But I believe the payoff could be far greater."

Brand extension
Heidi Ganahl isn't overhauling her business model, but she is leveraging her brand to gain access to new markets. Ganahl is the creator of Camp Bow Wow, a Boulder, Colorado-based franchiser of day care and boarding camps for dogs. Her nine-year-old company was growing rapidly until the fourth quarter of last year, when the economy really contracted. Franchise revenues began to slip modestly, but that wasn't her biggest problem. As business lending dried up, potential franchisees began turning away because they were finding it harder to raise the approximately $450,000 needed to start a new camp.

To fight back, Ganahl created Home Buddies by Camp Bow Wow, an in-home pet care franchise that offers services like pet sitting, dog walking and grooming. Startup costs are less than a third of those for a full-blown day camp, ranging from $64,000 to $130,000, depending on which services a franchisee offers.

Ganahl's brand extension is off to a fast start. She just held a training class for her first 10 Home Buddies franchisees, including five existing Camp Bow Wow franchisees and five completely new ones.

Like Muniz and Malloy, she embodies the entrepreneurial spirit that makes the American small-business owner such a vital force in our economy. "This is a great time to be looking at your business and making it as lean and efficient as possible," Ganahl says. "But this is also a great time to try new things. A lot of other businesses are afraid to spend money to grow their brand right now. Opportunities are there for the taking if you can figure out a way to do it without spending a lot of capital."

I agree. Let me know what you're doing to grow your business, and how you're turning this challenging economic environment into an opportunity.

A former reporter for The Wall Street Journal and Dow Jones and contributor to Barron's, Randy Myers is a contributing editor for CFO and Corporate Board Member magazines.

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