I’ve lived through nine recessions in my time and in my estimation there has never been a better time to start a business in Montana than today. That probably flies in the face of everything you read on the front pages of your morning newspaper. Eight percent unemployment, gas prices through the roof, and the dollar losing value by the day would seem to conflict with my view. However, there’s a much bigger picture out there and your new business should take advantage of it.

Are Recessions Good For the Economy?
That’s sort of a trick question. It’s not that recessions are good, but they’re not necessarily bad either. Let’s face facts. No matter how bad the economy is, people still have needs and they still buy. The problem that small business has is not taking advantage of that portion of the economy that is still solvent. Customers have a finite amount of income. When the price of gas goes up, they don’t stop buying gas. They adapt another part of their lifestyle to accommodate the increase in that part of their income budget.
The mistake businesses make is thinking that customers are going to behave in the same way no matter what the economy. So business runs the same ads, has the same sales, and keeps prices the same and then can’t understand why they are doing less business than they did before.

Why Customers Buy
People don’t buy things for what the product has. That’s a feature. People don’t buy cars with four doors unless that’s a benefit. And what’s the down and dirty definition of a benefit — it’s how the product makes you feel.
The benefits of your product saves me time, saves me money, makes my life easier in some way or solves my problem. If my need outweighs the cost of the solution, then I will find the funds to make it happen. Because, the longer I live with the pain of not having your product, the more I want it.
Price only becomes an issue if the customer can’t see the value of having the benefit of your product or service. Think about the last thing you bought. Chances are you looked at the price. Yet, you still made the purchase. Why? You might say, “I bought it because it was affordable.” Or, “It fit our budget.” Actually you bought it because you felt you needed the benefits more than the dollars in your wallet.

Recessions Clean House
In smaller communities like Bozeman, Belgrade, Livingston, it doesn’t take long for word to get out that you’re a crook. That your business doesn’t perform as advertised. And the more serious the recession becomes, the harder it is for those bad businesses to stay in business. A recession also weeds out the “undercutters.” Those who try to survive on price alone. The smaller the margin the more customers it takes to keep the doors open. And when traffic dries up so does the business.
Most businesses actually undercharge for their products and services rather than overcharge for them. Only about 7% of buyers wake up every morning searching for the lowest price on the things they buy. Most of them actually spend more driving all over looking for the lowest price. Most people want to deal with businesses where they feel confident, that when all the dust settles, they got good products or services at a fair price.

Work Smarter Not Harder
Earlier I said many businesses undercharge rather than overcharge for their products and services. Let’s assume you have a product and you make a profit of $15 on each one you sell. If you sell 100 customers you make a $1,500 profit. Suppose you raise the price on that product to a profit of $25, a $10 increase. Now you only need to sell 60 customers to make the same $1,500. You could actually lose 40% of your customers and still make the same profit.
Earlier I said that only 7% of buyers are price shoppers. If you sold 93 of your original 100 customers at the higher profit you would make $2,425 rather than $1,500. If the benefit of the product is there, and the need is there, or if you can create the need through advertising, why would you not make the sale?

Some Final Thoughts
People don’t buy based on price unless that’s the only measure of value they have. The more benefits a product has to the customer the cheaper it becomes. Price is nothing more than a perception of value. Justin Beiber sells a lot of records. I don’t happen to own any. While millions see the value of his music I prefer a good Willie Nelson. It’s perception; it’s what you need, and how it makes you feel.

There is a great saying that every public speaker knows, “No one will remember what you did, or what you said, all they will remember is how you made them feel.”

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