Emphasize value amid tight times

Dear Karen: How do I keep retail sales growing when consumers are cutting back?

Answer: In this economy, retailers must concentrate on increasing value in purchasing and on communicating value in marketing. Identify your products with the best margins and sell those aggressively, said Sam Herskowitz, president of franchise retailer Sterling Optical.

“Don’t cut back on advertising, but promote service and value. People are afraid to buy and so they don’t shop. But you still need to get them into your store or onto your website,” Herskowitz said. If your marketing budget is down, explore opportunities to advertise cooperatively with other local retailers or through your industry association.

If you don’t already use promotions, coupons and sales, start now. Add free shipping and service or warranty offers as well. “When people are watching every penny, they want excellent customer service,” Herskowitz said. Think of the economic slowdown as an opportunity: When people are on tight budgets, they may look for bargains in places they don’t usually shop. If you’re there for them, you can pick up new customers who become loyal to you in the long run.

Prompt creativity

with rewards

Dear Karen: I want to encourage more creativity from my employees. How do I do it?

Answer: Make generating ideas a staff priority. Hold contests and offer a prize for the best idea of the quarter. If your employees like competition, see which team can brainstorm the most or best ideas and reward them accordingly.

The reward doesn’t have to be monetary, said Andrew Morrison, president of Small Business Camp. “Managers think that a salary plus a bonus should serve as sufficient motivators. Psychologists, on the other hand, suggest that recognizing someone for the completion of a task that stretched their ability is the greatest form of motivation,” he said.

Once you’ve got new ideas, make sure they are protected. Talk to an intellectual property attorney about patents, copyrights and non-disclosure and non-compete agreements. You also should make sure that your non-idea-generating employees are rewarded as well.

Boosting firm’s

fuel economy

Dear Karen: Rising fuel costs are killing my profit margins in local transport. Is there anything I can do besides raise prices?

Answer: First, take a hard look at your financials, and if you need to raise prices, do so. Many small businesses are so fearful about price increases that they wind up with prices far below what the market will support.

That said, you cannot erase large fuel price increases, but you can mitigate them by better managing your fuel use, said Norm Bogner, vice president of international development at 4Refuel. “Start treating fuel not as a cost but as an investment, where you demand a return,” he said.

Determine what fuel is truly costing you, not just per gallon but also in labor and time for refueling. Then cut down on anything affecting your firm’s fuel economy, including inefficient trips to the pump, aggressive driving, excessive idling, speeding and improper equipment maintenance, Bogner said.

Theft is another culprit that many entrepreneurs don’t recognize, he said: “There may be draining of tanks overnight in your parking lot or unauthorized fill-ups taking place on your credit cards.”

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Got a question about running or starting a small enterprise? E-mail it to ke.klein@ latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.