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Welcome to Econosystems' April 29, 2002 -------------------------------------------------------------------- Welcome to all our new and continuing subscribers: I was quite surprised by the incredible growth of the U.S. economy during the first quarter of 2002, announced last Friday. The Bureau of Economic analysis estimates that gross domestic product increased a whopping 5.8% annualized rate. I wasn't expecting such a large number: Despite my optimism earlier in the year, employment has not even increased back to December 2001 levels. What's more, finding a job is still a challenge for the unemployed. The Conference Board reported that its help-wanted advertising index, which tracks newspaper job listings, has been essentially unchanged since November. In our neighborhood, long time businesses have been closing, and the layoffs that have been occurring at start-ups have hit home: My husband was let go in a fourth round of layoffs (or was it the fifth round?) at the software company he had worked at for 5 years. Looking more closely at the numbers, however, final sales of domestic product were up just 2.6%. The major spurt in the economy came from a jump in inventory investment, as the manufacturing sector recovered from its long recession that started in the fall of 2000. Retail sales (a separate report) were up for the January through March period by just 3.2 percent, which is a moderate increase, especially since the estimates are not adjusted for inflation. Inflation was up at a 3% annual rate during the first quarter of this year. But the increase in inventory investment is good news: it means firms are no longer dis-investing, which bodes well for moderate economic growth, and eventually employment. Companies are investing in inventory because they expect to sell the stuff soon, and if manufacturers are going to keep higher output levels up, they're going to eventually need to hire more workers. The recovery won't feel like a recovery for a lot of Americans, however, until companies actually do start hiring. With announced layoffs in the U.S. up slightly in the first quarter 2002 over year earlier levels, it looks like companies are going to increase output by bringing idle capacity back on line for a while. The good news for us is that my husband's experience with start-ups is making him a top contendor for a job at one of the few start-ups companies landing another round of venture capital funding (first quarter 2002 venture capital funding was down 26% from fourth quarter 2001 levels in the U.S., and down by more than 50% from year earlier levels!). We're keepin' our fingers crossed! In the mean time, I'm keeping my eye out for growing markets, and the organic food market is one of them. Read below how fast and why organic foods are becoming more popular. It's not just the U.S., either: sales are growing rapidly in Western Europe and Japan, too (see http://www.econosystems.com/Articles/organic.htm). And if you want to increase sales at your company, you might want to think about your current client base: is there a customer who really believes in what you do, and would love to help promote your business and success? You might want to take time nurture the relationship. Often when people really know you, and believe in what you do, they can help you grow your company. Read more about these "Centers of Influence" in this month's Marketing from the Trenches column. Until next month, enjoy the longer, warmer days of spring! Wishing you the best, ------------------------Special Announcement ------------------------ I would like to extend warm thanks and appreciation to the following companies that donated generously to Econosystems' Earth Week event, April 19 through 26, 2002 (in alphabetical order): ABC Gifts and Baskets; AlterCube; Blitz Promotions; Backyard Beauties; Cyberteries; E-Scent-ials; EverGlow Candle Company, a division of Baron Creations & Gifts; FUNotes, a division of Maryland Secretarial Services (MSS); Little Shop Of Flowers; Mossberry Hollow; Resumes, Etc.; Ritchie Secretarial Service; Safari Online Marketing, Inc.; SavingGrace, LLC; The Soap Box; Wahmpreneur Publishing, Inc.; Lois Shuck of Watkins Shuck-cess Team; The Wind Walker; and Linda Pickle of Weighless.net. Thanks to the above companies for helping to promote environmental awareness and Earth Day 2002. --------------------------------------------------------------------- SIZZLING ORGANIC FOOD SALES:
What's up? In, "Healthy Living Means Healthy Business," (Natural Business LOHAS Journal, Spring 2002), Mary Scott points out that organic food sales have been growing by more than 20% per year over the past decade. Organic food is generally more expensive than traditionally grown food, but health and environmental concerns are nonetheless fueling a growth in demand. Pesticides, herbicides and fertilizers are traditionally applied to farm crops, and many of these chemicals end up in our waterways, along with irrigation water runoff. Spray drift from pesticide applications can result in pesticide exposures to farm workers, children playing outside, and wildlife and its habitat. The U.S. Environmental Protection Agency points out that pesticides residues may remain in or on fruits, vegetables, grains, and other foods. Water contamination, land use concerns and food safety issues are leading many to conclude that our methods of supplying food are negatively impacting our environment. Food certification programs are also boosting sales. Consumers are more certain nowadays that foods labeled Organic are truly grown using chemical free and environmentally sustainable methods. And beginning Fall 2002, new labeling standards will allow consumers to choose organic even more carefully. For example, The label "100% organic" means the products have been produced using organic methods exclusively; the label "organic" will signify that 95% of the ingredients (by weight, excluding water and salt) in a processed product have been organically produced. A poll conducted by Roper Starch Worldwide Inc. in October 2001 hints that strong growth in organic food sales is expected to continue. More than 60% of consumers polled said they buy organic foods or beverages at least sometimes when they shop. About half of organic foods are purchased in grocery stores, but the selection remains small, and the limited selection in mainstream grocery stores is restraining sales growth: Of consumers who never or rarely buy organic, 51% say a lack of selection or variety of organic foods and beverages are the reasons they do not purchase them more often (see "Growing Organic" in Prepared Foods, Oct 2001). As long as grocery stores respond to demand by stocking their shelves with a greater selection of organics, sales will continue to grow at a strong rate. Mainstream consumers are increasingly purchasing organic foods, and conventional manufacturers are moving in that direction as well. Tyson Foods, Inc. (Springdale, AZ) recently began testing a new line of fresh, certified organic chicken, Nature's Farm, in the Dallas and Houston markets at select retailers and stores. Companies are merging, or being bought up, as well. General Mills, Inc. (Minneapolis, MN), bought Small Planet Foods Inc. (Sedro Woolley, WA), a profitable organic food company with just under $100 million in annual sales. Albert's Organics, Inc., the wholly owned subsidiary of United Natural Foods, Inc. (Dayville, CT), bought privately held Boulder Fruit Express (BFX, Louisville, CO). BFX provides high quality organic ingredients, produce, and perishables to natural food and grocery stores in Colorado, New Mexico, Kansas, Nebraska, and Iowa. Spectrum Organic Products, Inc. (Petaluma, CA, a leading manufacturer and marketer of organic culinary oils, vinegar and condiments), was formed in October 1999 by the merger of Spectrum Naturals, Inc., Spectrum Commodities, Inc., Organic Food Products, Inc. and Organic Ingredients, Inc. Profitability of organic food companies varies greatly, however. For example, Horizon Organic Holding (NASDAQ: HCOW, makers of organic dairy products and organic juices) reported 2001 sales of $159 million, up 25 % from year 2000 sales of $127 million. 2001 net income was $1.7 million or $0.17 per share, more than triple the $0.5 million, or $0.05 per share, earned in 2000. However, Spectrum Organic (NASDAQ: SPOP) reported a net loss of $5.2 million on 2001 sales of $9.9 million, or $0.12 per share, versus a net loss of $2.0 million on sales of $9.7 million, or $0.05 per share, for 2000 (financial results are available only for the larger, publicly traded companies). Members of the U.S. Organic Trade Association (OTA) were surveyed and reported especially brisk growth in a few up and coming segments of the organic food industry: Sales of canned and jarred products were estimated to have increased 45% in 2001; dairy products, up 41%; meat and poultry and eggs, up 59%; and sales of soyfoods and other meat/dairy alternatives were up 94%. It appears that organic food sales will remain vigorous, no matter what is going on in U.S. economy at large. --------------------------------------------------------------------- CENTERS OF INFLUENCE:
Business Referrals from Those Who Really Believe in You and Your
Business Centers of Influence refers to what JoAnn Corley, founder of Convergence Consulting Group, calls "folks who know folks and also are real believers in the service you are providing and therefore refer people to you regularly." Ms. Corley speaks from experience: "One of my first coaching clients referred friends from all over the country for career coaching. Her referrals alone generated several thousands of dollars in revenue." Centers of Influence have helped Peggy Murrah, Personal Coach, to grow her business. Referrals from Guerrilla Marketing Coach were especially important for building her online services. "My overseas clients had first contacted Guerrilla Marketing Coach, wanting their coaching services. They specifically wanted online coaching due to the fact they lived overseas (e.g., Vietnam and Bulgaria). Phone costs from those countries would have been prohibitive. They referred these clients to me because I'm so familiar with the Guerrilla Marketing Coaching programs, and I'm very comfortable working on the computer." Ms. Murrah says. Referrals, also call "word of mouth advertising," are always an important source of business. "Fifty percent of our business comes from referrals from existing clients – unsolicited," says Linda Maul of Corporate Source, Inc. The difference between a center of influence and a referral, however, is personal commitment. "One every good example comes to mind," Ms. Maul continued. "One of my former associates joined a new company in the role of HR Consultant and they made a conscious decision to create an 'in-house' university. I had been in the training business only about a year at that time and she called and asked us to bid on that contract. Well, after much coaching from her, we finally did agree to respond to the RFP and won - much to our surprise!!!! That project took us to a whole new level in our organization. It spanned about five years and we continue to work with that client in new ways and many others as well. She has since moved on to another large company and we are now involved in on-going training and development with that organization. She is a wonderful cheerleader, knows our strengths and our weaknesses and knows when we can make a difference." When someone really believes in you and your business, there is a consistent flow; he or she makes it their business to promote you. The referrals keep coming, out of the person's conviction that you have something special to offer others. As JoAnn Corley says, "It's like having a business advocate or 'followers' with the personal desire to help you grow your business." ------------- A special thanks to JoAnn Corley (http://www.unlockthepotential.com) for contributing to this article. --------------------------------------------------------------------- Send a polar bear e- card to
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