Small Business: Risky Decisions

As you have probably experienced, there are times when your sales level out or decline.  Most call it “the slow time.”  Business seasonality, poor market conditions, higher than normal shipping costs, increased labor rate and countless other factors can contribute to a downturn.  Taking advantage of the downturns can go along way to properly handling the busy times.  For most entrepreneurs, we hit the slow time and begin to stress over how we will survive, but I’m here to tell you that there are opportunities in economic downturns.

 

Two years ago, we saw a downturn when one of our clients unexpectedly went out of business.  His cosmetics line had been booming.  Retail orders were up.  Wholesale orders had been rolling in.  He received an order from a major retailer, but to handle it he had to make a tough decision.  His bank account was stretched thin and he needed a large amount of capital to fulfill the retailers request.  He took the chance of losing a few wholesalers and upsetting long time customers by focusing solely on the large retailer order.  Days before he was to ship the order he received a change request.  The purchase order was cut by 3/4 leaving him with a large amount of custom packaged inventory.  Having already isolated his customer base and upsetting his wholesalers – he was forced to lay off staff, cut his product offerings and cut his marketing budget.  The result was catastrophic to his business.  Within three months he gave up and shut down for good.

 

I wish that I could say that he came back from this and was far more successful than ever before, but the reality is what he faced is what many small businesses face every day.  They take chances and their future depends on the results of those risks.

 

Here at Lynx Fulfillment, we were directly impacted by his risky decision.  In our effort to help him succeed, we ramped up our staff and systems to help this client meet the demands of the retailer.  When his business failed we were left with some difficult decisions to make.  Do we lay off staff?  What do we do with the systems that were put in place to meet his demands?  How do we fill the space vacated by the departure of his inventory?  Rather than see this as a threat to our business, we saw it as an opportunity.

 

We took our excess labor capacity and re-organized our warehouse.  We set in motion “House In Order” – our way of managing an efficient warehouse.  We consolidated inventory and compressed inventory to better utilize the space available in our facility.  Our staff completed numerous assembly projects and laid out an assembly area that would become the foundation for future assembly projects.

 

We reviewed our packing and shipping stations and made modifications for greater throughput.  We then analyzed our software and made modifications and changes that are being felt today.  Our team went on to analyze the facility layout and suggested modifications.  We added to the size of our call center and moved staff into new roles.

 

In the end – not a single person was laid off.  We better utilized our warehouse space and developed new aspects of our business that we had not considered.  Our business became more efficient, software more robust and our speed and accuracy improved.  The space vacated by this client was quickly utilized.  Our corporate culture was impacted as our staff was given opportunities to make Lynx Fulfillment stronger.

What was initially a downturn turned into an opportunity that has had a long term impact on our business and the businesses that we service.  What could have been an economic downturn soon became an economic opportunity with lasting results.

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