Thursday, January 22, 2009

Tough Times and Business Survival

In a previous post I highlighted some of the troubles being experienced by businesses in the old Gate 2 & BC Street areas of Okinawa City. With that being said, we did see some businesses that were thriving in spite of the hard times this area has seen and in spite of the impending economic downturn too. So the question that has to be asked is why do some survive (or even thrive) while other’s die?

The answer to that question is neither easy nor is it simple. Sorry if you were studying for a final exam on your business class and was hoping I’d give you an easy “A”! But there are certain factors that make some small businesses stronger than others and these are the ones that can usually weather the stormy times.
First of all, small businesses like the ones here have the luxury of small overhead. Many are small “mom & pop” businesses that either own or rent the facility at very small fee. The places they do business in are generally small, sometimes less than a hundred square feet and without the high overhead for labor, they can get buy on a lot less than the larger establishments.

Secondly, they have to be patient. If they’ve been in business for a while, they were hopefully smart enough to save their money for the lean times. Business goes up and down in cycles. Sometimes its feast or famine and they prepare for the famine by keeping expenditures low in the good times too.

They’re also innovators. While many of them specialize in certain items, they usually don’t have all their all their eggs in one basket. For example, the Gabusoka soba chain of restaurants got its start when an enterprising butcher looked for a way to eliminate having to throw away a lot of excess meats that might have otherwise spoiled or gone rancid. He decided to start cooking it before it went bad. Once he got his recipe down he opened his first soba shop. Today it’s one of the largest chains on island.

They also provide superior customer service! Where they cut corners to save money is not where it affects the product or service. The customer’s satisfaction is their primary concern. They know that to survive in lean times they need repeat business and referrals from satisfied customers.

Lastly, they invest in their businesses wisely. They don’t always have to have the latest and greatest in equipment to get the job done. What they will do is observe what works and what doesn’t. Based on what they learn from the success and failures of others will determine how they invest their savings into their business.

The great thing about this is the principles listed here don’t just apply to already established businesses, they apply equally to start ups as well. Are you thinking of starting a business in these difficult times? It’s scary to think about it but in some cases this is the best time to do it. If you have an idea that you think may work and have saved wisely, maybe now is the time to think about becoming your own boss.

Which of the businesses pictured here will be the winners and losers in this current economic downturn? We have no way of knowing for sure but we feel safe in assuming that if they follow the guidelines listed here, they’ll have a far better chance than those that don’t!

(Edited to add) click on the title to this post for a related article from local news sources.

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