Ian: Welcome to the Business Coach Podcast, an advice-oriented series that tackles the top issues and opportunities facing Canada’s small businesses. I’m your host, Ian Portsmouth, the Editor of PROFIT Magazine and we’ve developed this podcast in cooperation with BMO Bank of Montreal.
Frank Wilson is better equipped than most entrepreneurs to talk about coping with recession. That’s because the president and co-founder of TES,The Employment Solution has managed through several downturns. Moreover, Frank’s Toronto based staffing agency has come out stronger after everyone. Frank is joining me by phone to share some of his best lessons from hard times. Frank, welcome to the Business Coach.
Frank: Good afternoon Ian.
Ian: So Frank, you’re a young man but you have been through a few downturns. What can you tell us about them and which one was the worst?
Frank: Wow, it’s interesting because I was there in 1974-75 and ironically, that’s the time we started this business in 1975 and from there it’s been uphill. Then of course, we had 1980-81, 1990-91, 2000-01 the dot com era and of course the present one today. I would say generally the worst recession that we’ve encountered was the 1990-91 period because it not only I think affected our business, it affected the industry in a big way. I saw personally many of my business acquaintances and friends having to scale back immensely and many of them even shut their doors. There were a lot more people out of work at that time and it was a strange time at that particular period. There was such thing as I remember, there was a silly thing suggested like, go out and buy a suit much larger than your frame to show that you weren’t eating too much, to show that you are hungrier than the next person. That was not a pleasant thing for most people.
Ian: Your first downturn was 1975, was there anything that surprised you about this? I hope you can share some lessons that will be of assistance to the people in our audience who’ve never managed their business through a recession.
Frank: Well, we encountered a lot of issues, I mean there were things that customers were going through that obviously affected our business as they do most clients businesses. And those were having to deal with payment cycles, with customers and I would implore people don’t let your clients turn you into their bank, rebate issues with customers, cost cutting, staff cutting in many cases, that even entails cutting sales staff which is one thing that this company has never and probably will never do. You can’t cut off your lifeline to your customers and that’s your sales and marketing team. Even if you look at today, people are really holding their breath because major corporations are sort of analyzing, cutting, putting projects on hold and I am talking only just many like banks, insurance companies, pharmaceutical companies. And even today, you can read the magazines, they talk about how to do things for less, how to go shopping for less, how to purchase clothes with less money. The whole thing is like a vicious cycle and those are the sort of things that I have seen and that we’ve encountered, you know. If you want to get into how we dealt with some of these things, we’ve always found that when you are going through a downturn, it is an opportunity to get to spend more time with your customers, what we call quality time. Because when you are having good times, many of these customers are very hard to go see because they are too busy and we found that derived much more interest and growth by virtue of the fact that when people are in slow times or in bad times, as it has been in the past and are today, they will have more time to speak with you and see you and giving you that opportunity to talk about how you can best assist them, where their weaknesses are and so on and so forth. So I think in general terms, that’s what we found.
Ian: Yes, there is definitely a silver lining in recession when it comes to being able to service your customers. You simply do have more time to do that kind of thing. Now, one thing that a lot of companies do in recessionary times is they resort to slashing prices in order to generate sales and of course, their customers are a lot more price-sensitive during recessionary times. What’s your view of competing on price during a recession?
Frank: Well, we don’t compete on price alone, the word alone is very important. If you are not charging the customer prices that are sort of appropriate with the market, you’ll fail very quickly. I mean what we’ve argued against is competing on price alone as I said and if the only thing that you can say about your product or service is that it is the cheapest, then you need to look at what you are offering and evaluate whether if you’re still providing something that really do what customers need it to do. And when you’re prime tactic is slashing prices, the odds are good that someone else will be able to force it down even a few more cents. And then you have lost your edge. I think you need to compete in ways where you can’t be pushed down the first place quite so easily. So, I say, put the price on the table. That is something that we, as a corporation have done for many years. We have a full disclosure policy that lays out our competitive and complete price breakdown to our clients. We show them what our costs are, what the government remittances are and what our margins are. And they are very lean. It is just part of the industry that we’re in. Then we say, well, ok, where would you want us to cut, the reference and background checks on the people we provide to you? The customized report that saves you time and money on your expenses? Your tracking processes? And most of our clients then realize very quickly what they get for the price. And they want to keep those things obviously on the table. And they get a little more suspicious of the person or companies who say they can do it less expensive or cheaper. So I think price alone certainly is not the answer.
Ian: So you’re making sure you point those things out to customers, you are staying close to your customers in this recession. Are there any other things you are doing in this recession, perhaps to prepare for sunnier days ahead?
Frank: Well, I can tell you one thing, I’ll repeat it again, we don’t cut sales staff, we have to have the sales staff helping our customers and creating new relationships. We put an emphasis I think on staying close to the customers as you know. And our relationships it doesn’t end at the door, you know, we deliver the product, drop off your invoice and then it’s very easy for them to look around for someone who can do that same thing for less money, if that’s the way people look at doing business, that’s the wrong approach. But when you come right into their business processes and you help them sort of solve problems, and meet unexpected challenges, then you are their partner. You know, you’re someone they can rely on to help them survive and then they won’t want to loose you as a supplier. Whatever product you provide to your customers, the more flexible you are about how you do it and the more attentive you are to the challenges that they face as a client and then the more you can move into that role, the more they feel that they can form this longer term relationship. And you were their go-to person in the rough times or the though times, you will be their set-to-go again with them when times and situations are better for them as a company and for you to provide that service because you haven’t let the service portion of the industry or business suffer.
Ian: Frank, that’s great advice and I want to wish you best of luck in this recession and those to come.
Frank: Thank you kindly.
Ian: Frank Wilson is president and co-founder of TES, The Employment Solution.
That’s it for another episode of the Business Coach Podcast. Be sure to check out other episodes which you can download from BMO.com, profitguide.com and iTunes. If you have any comments or suggestions about the podcast, please send them to me at email@example.com.
Until next time, I am Ian Portsmouth, the Editor of PROFIT Magazine, wishing you continued success.