TODAY   |  February 01, 2014

Main Street Makeover: Failing small businesses get expert help

Small businesses are crucial to the overall economy, and in many places, the lifeblood of a community. As many struggle under the pressures of the economic downturn and online retailers, one expert steps in to see if he can help. TODAY’s Erica Hill reports.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> " main street makeover." 2 million small businesses across the country employ more than half of the working population. they are crucial to the overall economy, but many are struggling, due to the economic downturn as well as competition from online retailers and big box stores. so, can some of these small businesses be saved?

>> we opened 18 months ago here in nashville, tennessee.

>> we're the third generation to own and operate my family-owned toy store here in indiana.

>> reporter: two small businesses struggling to survive.

>> we're probably two bad weeks from really starting to worry about having to close doors.

>> if i lose this, sometimes i don't know what i'd do.

>> reporter: and losing hope for the future.

>> and i think we need to be --

>> reporter: one expert says he can turn them around, but not without some tough love.

>> guys, this is a disaster! i mean --

>> how did these two businesses get to this point?

>> because they're in panic. they are in survival modes right now.

>> reporter: inside this main street landmark, john and sherry veach feel an intense loyalty to both their family's 75-year-old business and to the town of richmond , indiana.

>> everyone thinks of downtown and the toy store .

>> the other shops feed off of the folks that we pull in.

>> thank you for shopping.

>> reporter: last year, the couple purchases veach's toy station from john's father. when you took over the store, how were things? how was business?

>> we've been struggling for several years. we've had old ideas and we're trying to implement new ideas.

>> when i saw this store for the first time, i thought, oh, my gosh! it's one big mess. i mean, in reality, this has to be for kids down here. you have to see from down here and then you have to create another world up there for the parents.

>> why do you think this is a business that can be saved?

>> they have great toys, they have great passion and they have great expertise.

>> reporter: 350 miles south in nashville, the biscuit love food truck is running on fumes, but there's no denying this husband-and-wife team have their heart in the game. so, at this point, how much have you invested in biscuit love?

>> about $80,000.

>> there are weeks or potentially months where you're operating at a loss?

>> yes.

>> if it rains for a week, nobody really is going to go out and come to a food truck .

>> reporter: but the weather isn't the only problem for the husband and wife running this business.

>> well, they claim they're selling love. they're not selling love, they're selling food stuffed into a can with no label on it on four wheels. the job is that you're going to transform the way you sell stuff. you are not selling food, you're selling an experience.

>> how long, realistically, do you think these businesses will survive?

>> biscuit truck, with a little bit of help from their friends, a couple of tears, three months, then they're dead. the toy store , probably half a year to eight months.

>> i love this place. this is where i grew up. i don't want to fail. i don't want to let anyone down.

>> martin lindstrom is an international branding expert and author of "buy-ology." nice to have you this morning. good morning.

>> good morning.

>> as we went through visiting these businesses and we looked at them, you said to us that while they're very different they got here because they were both in panic mode, they were just operating in survival mode. are there some warning signs along the way that they both missed?

>> absolutely. retailers need to listen to the alarm bells. the problem is, they don't know how they sound like. so, i have a rule of thumb , a general rule of thumb . if a customer is spending less than five minutes in the store, you can be pretty sure there's an issue. now, this is interesting. if you can make a customer spend one minute extra in the store, one additional minute, they will spend 1% extra in revenue. that means ten minutes extra in the store is equivalent of 10% extra in revenue per person. now, you should is not go into panic if people are not recommending your store. here's the best advice. what you do is you take ten of your customers, those who don't like you, those who love you. and you ask them, what do you think about my store? be prepared to listen and be prepared to lay it on.

>> so be prepared for what they have to say. you also point out it's really important to establish an emotional connection. you said biscuit love wasn't selling the love, it was just the food. how do you make that emotional connection with your customers?

>> the best thing you can do is live your life as if you were a customer. put yourself in the shoes of them, and the way you do that is to engage the community. you see, communities are incredibly powerful, in particular if they feel partly responsibility for your store. so, go out and ask them, what do you think about this store, what should i change? now, here's a trick. change and then go back to them and tell them, hey, i've changed. do you like it? you see, what's happening is they not only feel you're listening to them, they also feel partly responsibility to come back to your store and support you.

>> which is great. then hopefully, they tell their friends as well. what are some of the biggest mistakes that businesses make when they're trying to turn things around?

>> biggest mistake is that retailers are probably the most reactive people on the planet earth . i'll tell you, if the cash register is not ringing in the night, they're going to change everything day two. so, the most important thing for retailers is, if they're changing their strategy, is to stay on course for a long period of time and really give it a fair chance. this is where main streets usa is failing today. they're in panic mode right now.

>> okay, so give it a chance to actually work before you try something else. martin, nice to see you this morning, and you'll be back tomorrow.

>> i will.

>> so, we'll look at the changes that you suggested for the businesses and whether or not they worked.

>> yeah.

>> no pressure at all.