A while back, I figured that since my SUV is just about six years old, it was time to trade it in for a new one. So, I called around and was told that there are no cars to be had.

Then, just a few weeks ago, I got a call from my car dealer that an order had been cancelled due to the now higher interest rates and that I could have it. Apparently, the lease payment increased by an eye-watering $750 a month! As predicted and not surprisingly, interest rates continue to rise.

When making business decisions, fear inevitably comes into play. Our natural inclination is to hold back on making new purchases or hiring new staff, not that there are any available anyway. Covid forced many in the music business to find jobs in other industries, leaving the old days behind.

Without additional staff, audio rental companies find themselves so busy that they don’t have time to meet with salespeople, to consider upgrading to the “latest and greatest,” or even to service older equipment. Everyone’s on emergency band-aid mode, making do with what they have just to get the job done.

Clear Mandate

At Radial, when we were facing the financial crisis in 2007-2009, even though concert touring was active, the fear of uncertainty caused everyone to pull back. With sales in the gutter, manufacturers pulled their advertising budgets and audio rental companies deferred spending.

I addressed the situation by bringing our sales team into the boardroom and gave them a very clear mandate: focus on products that people need versus products that they want. I also stressed that since most of our competitors would be reducing expenses by cutting travel, it would be a good time to get out and meet customers and strengthen relationships.

And instead of cutting back our marketing budget, I negotiated better ad rates and increased our presence. The result: when things turned around, our sales skyrocketed.

Added Focus

We’re once again in unchartered waters. What’s the best strategy moving forward?

As a supplier, it may be worth taking time to do some soul-searching. For instance, you may ask yourself: who are my best customers? The ones that carry your brands and are open to trying new things? Are they the ones that go “the extra mile” by recommending your products to their clients? Do they order regularly and pay their bills on time?

No one likes to cull hard-won customers, but now may be a good time to leave problem customers behind and focus on those that really matter. Once you’ve pared down the list, it’s important to ask yourself: what do these customers want in return? How about great customer service, fast just-in-time delivery and the comfort in knowing that because of your relationship, you will go the extra for them when push comes to shove?

If cash is tight, this may be a good time to offer extended terms instead of offering a discount. Price is rarely the primary motivator when someone is making a purchase.

Now is also a good time to focus on “Bible brands” – the big-name products that always show up on riders. Trying to convince a sound company to try something new may be a tough slog – not to say you shouldn’t introduce it along the way – just that focusing on products that people need as opposed to what they may want will likely show healthier returns.

As a rental company, this is a wonderful time to take advantage of the market slowdown. If by chance you have put aside a war-chest, (I’m a huge believer in forced savings – even as little as $500 a month), you can take advantage by negotiating better prices for new goods and dumping well used items in the open market.

Just keep in mind that with supply chain shortages looming, there’s no point in trying to negotiate a lower price if the item in question is out of stock. So, when “no alternative” is mandated on that rider, and you’re forced to order that special item, you may be faced with the reality that the item in question is simply not available. This will force you to either try to slip in an alternative or arrange a sub-rental, which will invariably increase your costs.

And just as with the supplier scenario, as a rental company, it’s a good time to evaluate who you buy from and who you support. Salespeople need to make their monthly budgets and will often offer incentives as you approach month-end. As a small player, it may be the ideal time to grab some extra attention from some of the more important suppliers who are often way too busy to give you the time of day.

Creating Demand

I recall my days as product manager for Fender Canada when Eddie Van Halen exploded on the market and Kramer was the guitar of the day. Even though Fender has always been a Bible brand, the big box retailer had no impetus to push Fender. They merely sold what folks came in and asked for and Fender sales plummeted.

In response, I opened up smaller, more aggressive dealers that were hungry to have a strong brand in their product mix, and they created local demand by pushing Fender. The big box store had no choice but to follow suit in an effort to keep their customers. Sales increased and when the low-cost Squier range arrived, sales once again skyrocketed.

For an entrepreneur, the word “no” does not exist in our vocabulary. When things get tough, it opens the door to new opportunities. It’s merely up to us to uncover them. There is always a way.