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Tuesday / August 16.
HomemibusinessSurviving an Economic Crisis

Surviving an Economic Crisis

All business owners currently have one question in their mind; how am I going to survive the current economic crisis?

The top level statistics are working examples in the science of large numbers: millions of people out of work, hundreds of billions in government aid packages, an unquantifiable amount of money lost in equity. It has to be bad, doesn’t it? Not necessarily.

Putting the Crisis in Context

This article is not going to offer any comfort that the crisis isn’t real or salve our fears through false assurances. The crisis may be short-lived. It may not be. It is what it is.

Step 1: Accept and Build Your Response on Reality

“Stop reading newspapers, watching television and reading internet stories about the crisis. You will not learn anything new, you’re wasting precious time and most importantly you cannot influence the outcome.”

People are spending less, banks are lending less, and assets are now worth less. We know that the total amount of money in the economy will drop, and specifically, the total spent on optical products and services may drop. When the same number of businesses compete for a smaller amount of money it will be more difficult for everyone. Yes, some practices will fail. The only relevant question is; will that business be yours?

Look Past the Headlines

What do the constant media headlines about government bailouts, unemployment or weaknesses in the banking system mean to your particular practice? Nothing.

What does a drop in the entire economy of five per cent reveal about your particular practice? Nothing.

Some practices will shrink and some will grow. Some product lines will shrink and some will grow.

Consider this example from the eye care industry. Research from the U.K. showed that from Sept to Oct 2007 to Sept to Oct 2008, the market size for almost all eye care product lines fell between 6.8 per cent and 44.1 per cent. The one exception was contact lenses, which grew 3.5 per cent 1 .

These statistics show that even in a difficult economic climate, the contact lens category is an area of growth and opportunity. What are the opportunities in front of your practices and what do you need to do to take advantage of them?

The first piece of good news is that you can rely on your competitors to be average. In times of crisis and stress, people tend to react in two predictable ways:

  1. They do nothing.
  2. Then they do what everyone else does.

Consider your own reaction. As the impact of the crisis became apparent, what was the first thing you did in your practice? If you are like most people, you watched, worried and waited. In other words you reacted in the first predictable way and ‘did nothing’.

Consider the second reaction. How many practices around you are following everyone else and cutting prices? Think about that reaction for a moment. You know that maintaining sales volumes will be challenging. If you also cut prices, your practice has been hit twice, with both low sales and low volumes. Wouldn’t it make more sense to ensure you are getting full value for the sales coming your way?

What We Know

A more considered response to a crisis is built on facts. Let’s focus on what we know:

  • People are still living, eating, working and enjoying life
  • Patients are still buying
  • More people than ever before require vision correction
  • Contact lens supplies are always running low and need replenishing
  • Eye sight is still changing
  • Frames are still breaking and need replacement
  • People are working and earning. Even in the worst estimates, most people will keep their job,

We also know how people change their purchase decisions in times of financial stress. People will:

  • Be more careful about their purchases
  • Delay large purchases and investments
  • De-emphasise the value of luxury and brand and increase the emphasis on reliability, lower maintenance and versatility.

Patients are much more likely to delay what they perceive as a ‘large’ purchase such as new frames than to delay a ‘small’ purchase of contact lenses. A pair of frames can be made to last a little longer while wearing contact lenses is a daily habit.

If you have already moved your practices away from one-off frame sales towards a passive income stream such as contact lenses you have set yourself up for success.

What You Need To Do

To prosper, you need to run a practice focused on the right areas.


Step 2: Stop Wasting Time!

Stop reading newspapers, watching television and reading internet stories about the crisis. You will not learn anything new, you are wasting precious time and most importantly you cannot inf luence the outcome.

Rather, engage in those activities where you can inf luence the outcome. Choose to stop being part of the ‘woe is me’ culture. There is no need to engage in gossip about the latest failure, government programme or to wear a fashionable mask of negativity. These discussions waste time, stop creative thought, leave you de-motivated and with a sense of the inevitable. Leave the doom and gloom to the other struggling practices. Success requires your focus and energy.


Step 3: Focus on Each Individual Patient

Forget the average, now is not the time to look for generalisations and unifying trends. The business from each individual patient is precious.

The danger of generalisations is not limited to economic data. It effects your judgement in your practice as well.

Consider your willingness to make recommendations. Younger people are more open to recommendations from an eye care professional. For example just under half (46 per cent) of people in the 16-24 year2 age bracket would try contact lenses if recommended by their eye care professional. In other words, every second younger person who enters your practice is open to your recommendation. This encourages you to engage, explore and proactively recommend contact lenses to this group. These are the behaviours that lead to higher fits and subsequent sales.

By the time people are in the 45-54 year age bracket, the proportion open to your recommendation to try contact lenses drops to one quarter (24 per cent) 2 . Three of every four older people are not open. This discourages you from engaging and you learn to wait and see what they want. Follow this feeling and you will miss the one in four who are open and possibly searching for your advice.

These one-in-four older patients, while harder to inf luence, also turn out to be the most valuable. They have higher spending power and with the case of contact lenses 79 per cent 2 of this group view contact lenses as a necessity rather than a luxury. This is the group that will remain loyal to your practice during the downturn.

All patients are precious. Contact them, talk to them, ask them and learn from them: What are their needs, their fears and their aspirations when it comes to their eyesight? All the time, search for an answer to the question: what can we offer that meets this person’s unique eye care needs?

Your patients have changed their priorities. Look for these changes and adapt accordingly.

  • You may have a two-week lens wearer who is complaining about the cost of their lenses or not complying with replacing their lenses on schedule. Compliance with this modality is the lowest of all lens replacement schedules. 3 Moving to a monthly replacement lens option will provide the patient with better value and at the same time increase the chances of improving compliance.
  • Maybe a regular wearer of monthly lenses is making negative comments about the cost of lens care. Explore these comments further to uncover the reason. Maybe they are not wearing their lenses as often or they find lens care a hassle. Perhaps you could suggest a move to daily disposables as an easier and more affordable part-time alternative.
  • Focus on the patient not the rule. Maybe a regular user of daily disposables is concerned about the relatively higher outlay. Explore and you may discover they are now wearing their lenses more regularly and a move to monthly lenses would save money.
  • Maybe your practice’s position is to provide cheaper brands and patients are now concerned about how long the new frames will last? Perhaps you could offer your own frame guarantee and promote the premium products over cheaper products to encourage a higher value for your patients.
  • Maybe your usual practice is to sell a full year’s supply of contact lenses? Offer a six-month supply and create a robust system to remind yourself to follow-up in five and a half months. 62 mivision Perhaps a move to monthly instalments or direct debit system for three or six- month supply of contact lenses would help your patients make payments.
  • Ask your patients what their needs and desires are for contact lens wear. Do your patients want to change their eye colour? Would they prefer to use contact lenses over reading glasses. Offer coloured contact lenses, multifocal lenses to solve these wants and needs.

Each patient is unique. Listen carefully and craft solutions for their requirements.


Step 5: Focus on the Details

Focus on each detail of your practice from the financials, to the appearance of the practice, to the quality of service.

  • Cash is the lifeblood of your business; preserve and protect it as your highest priority.
  • It is likely that most of your cash is tied up in product inventory. What can be done to manage this inventory more effectively? Work with those suppliers who are interested in the financial health of your businesses. Make smaller orders, more often. i.e. just-in-time replenishment.
  • Look at the product range. For example if you are carrying two-week replacement contact lenses, recommend your patients change to monthly replacement lenses. To service the same number of patients will require half the number of boxes, half the space and reduce your inventory significantly.
  • Clean and maintain all aspects of the practice experience, especially those areas related to the delivery of eye care. Now is not the time to save in these areas.
  • Create a cleaner brighter practice with sharper service. Renovate and look successful, use brighter lights and a fresh coat of paint.

The Key Detail – Your Staff

Now is the time to work harder with your staff than ever before. They are concerned and worried and are most likely absorbing the negativity from around them. Unless you intervene, they will pass it onto your patients. Your staff need to be focused in the right areas – on the patient and the details.


Step 5: Engage, Inspire & Train Your Staff

Engage

If you are feeling uncertain it can be tempting to withdraw from your staff and wait until you can give a positive message. It is much stronger to proactively engage with your staff. Listen to them, share your concerns and bring them into the goal of growing the practice through the challenging conditions.

Be on the look out for honest struggles and see how you can help. Have a preference for helping rather than hiding behind policy and you will be rewarded with support and contribution.

If you don’t already, hold a 30 to 60 minute focussed weekly staff meeting to discuss relevant issues, update each other and learn from the experiences of the previous week. Very few eye care practices conduct weekly meetings. In a survey amongst practitioners in the U.S., only 23 per cent of practices conduct a weekly staff meeting. 4


Inspire

Bring your staff into the goal of creating a practice that will prosper in the current marketplace. Your job is to provide your staff an alternative to the negativity that surrounds them.

Inspiration does not require you to be a charismatic, act or pretend in any way. Your attitude and actions are the most powerful channel of inspiration we have – the confidence you bring into the practice, the way you engage with patients, and the way you search for the best possible solutions to their eye care requirements.


Train

You will need a sharper and higher quality of service from your staff. If you have engaged and inspired them, if you have ensured that the practice is above standard, the final step is to equip staff with the skills to operate at this level.

Training does not have to cost a lot of money. Partner with those suppliers who are interested in your practice growth, staff training and practice management. Invest in your staff.

I
t’s Not Diffcult But It Is Hard

Moving to the front in a downturn is not difficult. It is aspiring to accept the challenge and be a business that grows. It is an intense focus on each patient. It is working the details of your practice. It is developing your staff.

It’s not difficult, however it is hard work; hard work that creates a tremendous reward and will see you through these difficult times.

References

  1. Ciba Vision data on file, 2008; Beating the Economic Downturn, International Workshop 03.12.08.
  2. Ciba Vision data on file; Contact Lens OnLineBus Survey 30/10/2008 to 10/11/2008.
  3. Ciba Vision data on file, 2005.
  4. Confidential Practice Profile available at http://mba-ce. com, accessed on March 24, 2009.


Andrew Wilson is the Management Partner of Vaughan Govier, a company founded to support businesses through organisational coaching. He has worked with businesses from industries as diverse as manufacturing, media, fnance, pharmaceuticals through to logistics. He works alongside eye care professionals in Australia, New Zealand and South East Asia to help them improve their management skills and ultimately, their practices.