National Clothesline

Deflation now has the U.S. economy in its icy grip. If it continues at the current pace for a year, it could bring 20 percent deflation, fully twice the drop in consumer prices seen during The Great Depression nearly 80 years ago.

Even the Federal Reserve slashing interest rates to between .25 percent and 0 percent doesn’t have a chance of ending this deflationary spiral. They’re addressing the wrong problem!

The fact is, we didn’t get into this mess because interest rates were too high. Nor are we experiencing a debt crisis because of too few debts. We got into this situation because everyone – from banks to companies to consumers – have too much debt and are now scared to death, cancelling purchases and hoarding cash.

Here’s the problem: The cheap money being made available can buy some things, but it cannot buy confidence. To restore confidence takes a long, long time. And without it, banks won’t resume lending, nor will consumers and businesses resume spending.

Deflation is a long-term reality in the U.S. Therefore, it’s more crucial than ever that you get the answers you need to survive and thrive in the year ahead.

The Golomb Group will do everything we can to help protect and grow businesses with objective, timely and actionable information and recommendations.

Our members are well positioned to not only survive, but thrive during these troubled economic times. Just as home sales are down 28 percent and automobile sales are down 40 percent, clothing sales are down over 20 percent!

Drycleaners are in the business of “repair and extend the life of your clothing investment.” We are one of only a handful of businesses that are not trying to convince customers to buy new merchandise. We can help them avoid the high cost of replacing their wardrobes.

Let’s face it, people are not going to stop wearing clothes anytime soon. Yet they either can’t, or don’t want, to buy new clothes. Their current wardrobes need to be maintained now more than ever.

Drycleaners are fast becoming the white knights of this recession. Just as they were during The Great Depression. If you’re as old as I am (61), you may have heard some of the old-timers talk about how their businesses fared during that time: they did very well! Drycleaners were one of the few businesses that survived those bad economic times and prospered immediately afterwards.

Remember, your competitors are feeling the crunch as much or more than you are. One of the first mistakes they’ll make is to stop advertising. It’s easy for them to do, because they won’t immediately see the effects. But the ultimate effect will be the loss of much needed sales. Right now, all businesses need all the sales they can garner. The losses they sustain will be the fatal blow for them.

Many drycleaners face additional challenges. Some are facing shrinking customer levels, especially in areas where unemployment is epidemic. The greatest challenge will be maintaining a satisfactory level of service to keep current customers happy and to attract new customers. In any service business, you must maintain excellent service, even if that means increasing your prices.

In the meantime, you should “tune your motors” by carefully reviewing every expense your business has: employee hours, utilities, equipment, supplies, marketing, rents, etc.

Employee hours. You may think you’re using the minimum of labor necessary to run your business efficiently, but good time management can reduce to the minutes worked.

Utilities. Major pieces of equipment (boiler, air compressor, cleaning units, etc.) should be on digital timers. These timers can have over-rides for exceptional situations, but for the most part, every employee should know what time frame you expect all production work to be completed in. Additionally, equipment will be ready for production as soon as employees arrive.

Equipment. When I used to do plant efficiency evaluations, I was always amazed at how plant owners allowed employees to “work around” equipment inefficiencies. For instance, rather than add another program to a cleaning unit, many plant owners allow a valuable employee (or sometimes themselves) to stand by the unit and operate it manually. In the course of a year, hundreds of man-hours and thousands of dollars, can be wasted.

Supplies. It’s time, again, to pick up every safety pin, button, twist-tie and paper clip that hits the floor. Clamp down on waste. Don’t let your profits go into the trash.

Marketing. Don’t waste your marketing dollars. Each year, you should have a written marketing plan, budget that plan, and stick to it. It is the only sensible way to operate a business. If you need help developing a marketing plan, please call our office. This is a free member service.

Rent. Yes, it’s true. You can renegotiate an existing lease. Landlords are defaulting on their loans. Many others are unable to refinance their loans. They will do whatever is necessary to keep good tenants.

Opportunity comes in the midst of adversity. Do your competitors a favor. Seize this opportunity to capture a larger market share and help them close their doors.