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        Another AHBBO Article
        The Difference Between Ants and Squirrels

        © 2013 Elena Fawkner

        You  may  have  read  in  your  local  newspaper  yesterday  of
        Amazon.com's  stock  rise  of 15% on the back of strong holiday
        season  spending.   Etoys'  49% rise and Buy.com's 25% increase
        followed suit.  Overall, the Nasdaq (the tech-stock index)
        jumped 5.4%.

        Good news for the likes of Amazon.com, right?  But is it really?
        What happens AFTER Christmas?  Here we go *again*.  Investors
        are jumping  back  on  the  bandwagon  on the strength of a
        holiday buying frenzy.  Up goes the stock and everybody jumps on
        board.  After Christmas, back down it will go, investors will wring
        their hands and bail out, the stock will nosedive and everybody will
        start moaning about the great internet shake-out of 2013.  Again.

        The holiday boom is nothing new, of course, and it certainly
        isn't restricted to online businesses.  And there's nothing
        wrong with a holiday-spending induced surge in business.
        Provided business is respectable during the remainder of the
        year as well.  After all, if business is ONLY good at holiday
        time, how is that business going to survive for the rest of the

        How about you?  How is your business faring now that Christmas
        looms?  If you're a retailer, this may be a good time of year
        for you.  If you're not, then, like me, you're probably finding
        things pretty slow right now as people go into underdrive as the
        year winds to a close. 

        No matter what your business, there will usually be certain
        times of year that are better than others.  The challenge is to
        be sufficiently successful during the good times to be able to
        weather the slow times.  Better still is to be able to
        anticipate your slow times and compensate for them, in effect,
        smoothing out the seasonal highs and lows.  In this article, we
        look at ways to do that.

        => Learn From Ants, Not Squirrels

        Those of you familiar with Jim Rohn will also be familiar with
        his ants philosophy.  Ants never rest.  They are constantly
        working.  They don't rest over summer.  Why?  Because they know
        winter is coming.  So they work all summer long to build their
        nests so they have shelter in the winter.  They do something in
        winter too because they know summer is coming.  I can't remember
        now what it is but it's really big. 

        You may be thinking of squirrels as another example.  Storing
        nuts for the winter and all that.  But that's only half the
        story.  You, unlike a squirrel, don't get to rest during the
        winter just because you've gathered nuts during the summer.
        Even if you've gathered enough nuts to last through winter,
        where are next year's nuts going to come from if you no longer
        have a business by the time fall comes around again?  So, don't
        think like a squirrel, think like an ant.  In the summer, think winter. 
        In the winter, think summer.

        => Think Bottom Line

        Don't just focus on your sales.  Focus on your bottom line.  If
        your costs are $10,000 and your sales are $20,000, your profit
        is $10,000.  Similarly, if your costs are $5,000 and your sales
        are $15,000, your profit is still $10,000.  So, during times
        when you know sales are going to be low, look for ways to reduce
        costs.  Now, some costs are fixed and there's just nothing you
        can do about it.  Rent, webhosting fees, ISP fees and the like
        are examples of fixed costs.  Costs like payroll, however, can be
        variable.  So think in terms of reducing your variable costs.
        In the case of payroll costs, flexible staffing arrangements may
        be the answer.  Rather than hiring another employee because
        you're run off your feet at certain times of the year only to
        find you have trouble occupying that employee during other times
        of the year, hire temporary staff to help you out during busy
        times.  You don't have to buy a cow to get milk.  Just buy the

        => Know When Winter Comes

        You can't plan for winter if you don't know when it's coming.
        So analyze your sales history and identify, as best you can,
        where your peaks and troughs (summers and winters) are.  Only
        then can you anticipate your slow periods and be ready for them.

        => Promotions

        Seasonal promotions can be a good way to temporarily increase
        sales during a slow period.  Let's say your regular price for
        widgets is $10 and during your "non-slump" time you sell, on
        average, five a day for a total of 35 a week or $350.  Your
        costs are $200, leaving a profit of $150. 

        Let's also say that during your slow times, you sell an average
        of only three a day for a total of 21 a week, or $210.  Your
        costs are still $200 (we'll assume sales all come from existing
        inventory), leaving a profit of only $10.  So you're in the hole
        $140 compared to non-slump time.

        If, during your slow period, however, you were to run a
        promotion (or "sale" if you prefer that term), you can make up
        some of your lost profit.  Let's say you decide to sell your
        widgets for 10% off for the month of July, traditionally your
        quietest month of the year.  So, you drop your price to $9 per
        widget.  As a result, you find that you're now selling five a
        day again for a total of 35 a week, or $315.  Your costs are
        still $200, which leaves a profit of $115.   Much better than $10.

        Now, this is obviously an over-simplistic example.  In the real
        world, all of your costs would not be fixed and, as a result,
        lower sales would translate to lower costs.  You'd vary your
        stock purchases for a start or, if you manufacture your own
        product, you'd just produce less, thereby resulting in lower
        expenditure.  But hopefully this example illustrates well enough
        the principle of promotions as a tool for increasing profits
        during slow periods.

        => Back-End Sales

        Slow times are also a good opportunity to go back to customers
        who have bought from you in the past and directly solicit
        business from them.  This is particularly effective if you run
        an online business.  Just pull out that mailing list of previous
        purchasers and introduce them to another item in your product
        line that may appeal to them.  Once someone has purchased from
        you once, they are MUCH more likely to do so again in the
        future.  The increased sales you generate in the form of
        back-end sales can help you ride out a slump.

        => Introductory Specials

        Slow times can also be a good time to introduce a new product or
        service.  Think of it as a way of testing the waters before the
        big push for sales during your peak sales period.  Again,
        previous customers are a good source of prospects for purchasing
        new products.  Simply publicize an introductory special for
        valued customers.  Giving people the opportunity to be among the
        first to acquire something not yet generally available can be a
        powerful sales generator.  It appeals to people's desire to feel
        special or exceptional in some way.  So think about taking
        advantage of this human tendency to help increase sales during
        your winter times.

        => Increased marketing

        Simply increasing your marketing efforts may help smooth out a
        trough but be judicious.  There's no point generating additional
        sales if the marketing cost of generating those additional sales
        exceeds the profit generated!  Look instead for low-cost or
        no-cost marketing initiatives you can take to increase awareness
        of your products and services.

        => Strategic Alliances

        Another idea, especially if you run your business online, is to
        forge strategic alliances with businesses whose busy times are
        your slow times and vice versa.  This is a win-win situation for
        both of you as you each have the benefit of each other's
        relatively higher traffic during your respective busy times
        which can help offset your respective slow times.

        => Constructive Use of Down Time

        Finally, don't discount the value of slow periods as an
        opportunity for business and product development.  Investments
        of time in these developmental activities can make a substantial
        impact on the long-term viablity of your business.  These are
        activities that can be hard to find time for when you're busy so
        learn to embrace slow periods as an opportunity to invest in the
        future growth of your business.

        It's easy to get discouraged when you're working as hard as
        ever but the sales just aren't coming in.  It helps to know that
        virtually every business (with the possible exception of funeral
        homes I guess) has slow periods.  By thinking like an ant and
        focusing on winter in summer, you can go a long way towards
        turning a long cold winter into spring.


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        Elena Fawkner is editor of Home-Based Business Online. Best business ideas and opportunities for your home-based or online business.

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