As I write this article a few hours into the new decade, I am trying to figure out what the rest of the year will look like.
During the last week of 2009 we were inundated with information about the year and the past decade along with projections of what the New Year will bring. It seems to me that the press talks mostly about the financial world, what stocks or bonds to buy or sell, which industries and which international market one should invest in etc. Obviously we’ll never read in the Wall Street Journal or Financial Times about the portable storage industry. At least not in the context of what the future will bring. However, we can translate the financial projections from the mutual funds and investment banking industries so that it becomes one of the tools for running a portable storage company. It has always been my view that the portable storage industry follows the main flow of the economy, perhaps with a lag of a quarter or two. There are obviously exceptions in areas that, for one reason or another, are more dependent on one industry or one dominant business.
Here are some quotes I have read which I think make sense to translate into our industry.
- “The best performers will be larger-cap companies with free cash-flow generation fortress balance sheets, significant exposure to foreign markets and in some cases good dividends”. John Goode of Davis Skaggs Investment Management
- “Many stable, large-cap companies with attractive dividends were not the ones investors rushed to own (in the 2009 stock rally). Many of them look attractively valued.” Ed Perks of Franklin Income Fund
- “Today, there’s no obvious catalyst. Inflation and interest rates are already low. I think large-cap stocks will hold well with the global recovery.” Gary Schlossberg of Wells Capital Management
What I can read from the three quotes above is that the larger companies in the US will do better than others in the coming year. Looking at it from another prospective, we know that the economy is rebounding, we know that the real estate and banking industries are still challenged and we know that there is high unemployment. Furthermore, we know that banks are very restrictive with credit and that cash or credit is required for a business to expand. Therefore, only cash rich companies are likely to be able to borrow money and be the leaders in the early stage of this recovery.
Opportunities in the private sector
So how does this apply to the single site guy in the portable storage industry? First of all, pick your targets. Knowing that the large US companies are going to do well in 2010 we can define the area where we ought to focus our marketing efforts. Now if companies like 3M, Cargill, Honeywell, Raytheon, John Deere, Caterpillar, etc are in your area they are the obvious targets for your marketing and so are their subcontractors.
The next step is to set up a marketing program so that you can reach your target customers. Hopefully you have kept the contact information from your old customers. If the upswing is going to come from the blue chip companies in your area it is highly likely that you have already done business with them. Marketing is challenging in our industry, there is now clear seasonality for renting portable storage containers, with the exception of renting to the retailers. Therefore, design a marketing program that keeps your company name and product in the mind of the customer at the time when he has a need. Do your marketing in bits and pieces. It’s not feasible to send a direct mail piece every week, nor is it practical to send a blast email too frequently; it’ll just go in the junk mail box. The most efficient way of marketing has always been to display the container. Most of the time, you can only display a container when a customer rents it from you and thereby provides visibility at his location. There is no question that visiting potential customers can be worthwhile despite the cost. Doing a little bit of each of these four methods is probably the best way. I hear of many different combinations but here are two of my favorites.
- Pay a visit to every business within a mile of your office. Containers are visible; it is very likely that every neighboring business has seen your yard. Some need to be reminded of what you do, some need to be educated and if you are lucky some have the need when you pay them a visit or when you follow-up with an email or direct mail piece.
- Make a reason to pay a visit to your customers. Someone I know keeps a bowl of candy at his major customer’s office. The bowl is replenished with a certain frequency, which creates an informal visit. Often enough, this keeps the company name in front of the decisions makers at all times and infrequently enough to not be a nuisance. The always full candy bowl is a great way to maintain the personal relationship and be visible to the customer at all times.
I am sure you already know this, but it is worth mentioning an endless number of times; don’t give discounts to create demand, it is just another way to negotiate with yourself. Very rarely does anyone buy or rent a container because it is cheap, the decision to rent or purchase is driven by a need. If you contact prospective customers and offer discounts without them having a need you are just lowering your revenue potential.
Opportunities in the public sector
During normal economic times, governments (federal, state and local) are a very large customer in all regions of the country. Currently, the Federal Government has a stimulus program to help with the economic turnaround and there are many opportunities at all levels across the country. However, dealing with governments requires extra efforts. The spirit of the process is that all vendors should be treated equal through a fair bidding process. The reality is that it doesn’t work that way, there is a myriad of preferential treatment, qualification hurdles and need of a speedy process that sets the democratic process aside. However, it is still worthwhile to stay on top of and participate in the bidding process in markets where you can deliver. There are many websites that assemble government bids at different levels. Look at www.govcb.com, a service that alerts you on government contracts. You can try it for free and tailor it to fit your business.
Here are a few recommendations on how to prepare you for dealing with the Federal Government.
- Get ready: The first thing to understand is the Federal Acquisition Regulations (FAR) and learn the process of placing bids. It is also a good idea to learn about what the agency wants to target. Realize that the agency will look critically at your business, your financial status, history and track record.
- Pick a niche: Government agencies are required to meet various small business procurement goals. Any small business can bid on government contracts, however, some are given preferential treatment.
- Women-owned businesses
- A small disadvantaged business
- A veteran-owned business
- A service-disabled veteran-owned business
- Get a CCR profile: To bid on government contracts, you need to register with the Central Contractor Registry (CCR). To register, you prepare a profile of your business explaining what it is you offer and what makes you unique.
- Locate the contracting opportunities: First, contact the small-business liaison within each agency; when you talk to the agency’s small business specialist, understand that he or she is a person who will point you in the right direction and is not the ultimate buyer.
Second, participate in Business Matchmaking events arranged by United States Small Business Administration, www.businessmatchmaking.com . It is an event arranged across the country where small businesses can have quick get-to-know-you meetings with government and corporate procurement officers.
- Sell: The final phase is, as always, sales. You have to make a compelling argument for why you should be the selected vendor. Salesmanship is as much a part of a Government sale as any other sale.
Therefore, be patient and disciplined in 2010. There is business out there, but the economy won’t be roaring back. Keep marketing in focus and assign a specific time for marketing to different target markets, for example visit neighboring businesses every Tuesday or call government agencies every Wednesday. I’d like to say that overall the glass is half full and slowly getting fuller. Your discipline, efforts and enthusiasm determines how full your glass will be at the end of 2010.