If you don’t know him, Carey Smith is the founder of Big Ass Fans, a $500 million business which was built right through the Great Recession. He believes in all downturns you can find unique chances which could help the business. He recently has spoken at Real Talk: Business Reboot event on Inc., and in this article, we will share 3 tips from him on how to create a business in downturn.
In 1999, Smith formed his business (which sells huge fans) and placed it 11 times, between 2007 to 2017, on the Inc. 5000 list of fastest growing businesses. Through the heart of the 2008 recession, smith did grow Big Ass Fans to a multimillion-dollar company and finally sold it for $500 million in 2017. And here is his idea for driving the company through an economic recession.
Avoid firing your staff
As Smith claims his staff first noticed signs that a crisis was setting in in in the second quarter of 2008, his first move was to slash his own pay before laying off any workers. Smith says cutting wages is one of the best strategies in the world to cut costs, but it’s hard to hire workers back, because the business’ long-term survival relies on discovering new opportunities to make up for missed income.
“Furloughs are the way out for the losers,” he notes. “I believe we’ve been set up for next 10 years by the way that we’ve held people on and the fact that we’ve all struggled similarly.”
Smith and Big Ass Fans concentrated on reductions in company’s product development and incentives through the crisis. In 2008, though, they also decided to offer everyone a $500 bonus. This is part of his overarching culture of offering competitive benefits to make workers become fully involved in the purpose of the company. Employee benefits, such as funds or free or subsidized food, can often aid company owners in recruiting and empowering their employees through the pandemic.
“You ask someone for a large part of their life and I believe you owe them much more than paycheck,” he states.
Evaluate your strategy, and change it where you can
Smith says the crisis has been both a difficult period and a positive for his company— but not instantly. The long-term reward came when Big Ass Fans had agreed to focus on installing, not just building fans during the recession. It grew into an enterprise worth $30 million to $40 million. And, Smith adds, his staff understood more about customers when they communicated personally with them, which changed the way they managed the company.
The company’s legendary reputation was also came from their engagement with customers. Smith says workers will answer calls with the original name, “HVLS Fans”—the term stands for” high volume, low speed. “Consumers will hesitate and inquire,” Do you produce those big ass fans? “Gradually, Smith says, someone in the department caught on and they changed the name of the company.
Smith says smart business owners, will continue to move, stop worrying about coming back to a “normal” (there apparently can’t be one, he asserts), and find opportunities in sectors such as health and sanitation.
Have no concerns about rivals. Buy them
If Smith can go back and then do something unique, he claims, he should have purchased several of his rivals. Apart from that, he asserts, you don’t do something right when you’re worried about competitors. He remembers an Indianapolis hardware-business owner who wanted to send staff members to Lowe’s and Ace Hardware to look at prices and then reduce them in his shop. Instead, Smith recommended him to think up about ways to get customers by offering something creative that customers cannot find elsewhere, like a distinctive line of hammers, instead of just a cost-effective one.
Another way you can help guide your efforts is to make the problems you face more clear with the staff. This is crucial to successfully create a business in downturn.
“Anyway they will worry,” he states. Being truthful, he says, “will send the message that all of you are together in it.”
What do you think about these three tips? Let us know your comments about how to create a business in downturn.