The Most Important Thing

I’m a little behind in my blog reading (and blog posting) but I ran across an excellent piece today from last month by my buddy Doug Fleener at the Retail Contrarian blog called The Most Important Thing You Do. As Doug so rightly points out, the most important thing you do as a manager is to create the best place to work.

You probably think that customers come first, and you’re right.  But without happy, no make that delighted, employees, your customer’s experience will never be first rate.

I hate to tell a story without proper attribution, but I think this originally came from Steven Covey.  A restaurant owner was asked who was more important, his best customer or his very excellent hostess.  Without hesitation, he answered “the hostess.”

“I can always find another customer, but a well-trained, customer-focused, efficient hostess is worth her weight in gold.”

To quote Doug’s post:

You might have a beautiful store with fabulous products but chances are whatever you sell I can find somewhere else.  It’s the people in your store that make the difference. It’s the people that keep your customers coming back time and again.  The reverse is true, too.  At some stores the reason the customers don’t come back is because of the people.

BTW, a Happy Beleated Birthday, Doug.

Small Business Owners–I Need Your Help

A shameless request.

I’ve never done anything like this before, but I need your help.  Hopefully those of you who follow this blog on a regular basis find some value in it.  If it makes you think, or moves you to action, or occasionally makes you laugh, then I think I’ve done my job.

Over the years, from Mine Your Own Business and Mining the Store, we seem to have developed a pretty loyal, albeit small, following.  It’s that small part that’s the problem.

Although the blog is mainly a labor of love and generates no revenue, (notice, there are no ads) I would love to see it grow.  Frankly, at some point, given the current state of the economy, I would like to/might have to create some positive cash flow, either through consulting, speaking, or publishing a book.  To do that, I have to get the word out.

What I”m humbly asking of you is to mention MTS to your small business friends.  If you find a post to be especially relevant, share it with them.  If you have a blog or web site of your own, a link to MTS would be greatly appreciated.  Let me know and I’ll be glad to link back to you.

If you’re a social media user, a mention on facebook, LinkedIn, or Friendfeed would be wonderful!  And, if you’re a twitterer, a tweet would be great!  You’ll notice that I’ve added a “Share This Blog” button to the top right of the page to make it easy for you to share MTS.  Just click on the word “more,”  select the appropriate social media site, and you’re good to go.

That’s it.  I don’t ever expect to be an A-List blogger and don’t really care to be.  I’d just like this blog to be helpful to as many people as possible.

Thanks for your help!

No Wonder We’re in a Recession!

An interesting thing happened to me today.  I had a flat tire on my bike.  Fortunately it went flat while I was having lunch with my wife, so we threw the bike in the back of her SUV and she dropped me off at a local bike shop.  While the mechanic fixed the flat I wandered around the store for about fifteen minutes looking at the bikes.  No one said a word to me!

These guys sell bikes that run well into four figures, some almost five.  They had my bike.  I couldn’t leave.  They could see that I could use a new ride.  In fact, they sold me the one I have now.

For the life of me, I can’t understand a specialty retailer that doesn’t try to show you something, especially when they see you kicking the tires like I was.  No wonder we’re in a recession.

C’mon people! At a time like this you can’t let any potential sale get away.  At least do a quick demo with every warm body that comes into your store.  No one should ever leave without at least a brochure.  That’s just common sense.  But I guess common sense isn’t really that common.

Experts?

It’s Friday!  Another summer weekend is at hand so I hope you’ll forgive me for this mini-rant.  It’s not a big deal, really, but it’s something that bugs me.

We live in an age when anyone with a computer and an internet connection can create a presence for him/her self.  (Including me)  That’s great!  Even if no one reads your prose (or poetry) it’s therepeutic just knowing it’s out there.

But, this explosion of on-line information has created a rash of “experts.”  I guess everyone is an expert in something, but these self-proclaimed “expertsare something else altogether.  You find them on blogs and web sites, and especially on social media sites like InLink.  In their bio they announce themselves to be business-experts, or social-media experts, or some other type of expert.  In fact, a search on InLink for the term “expert” returned 385,358 results.

Personally, I think that if you really are an expert, others will gladly point it out.  But if you call yourself an expert, your credentials might be a little suspect.  C’mon.  Am I really supposed to believe that you’re an expert just because you say so?

If you are the expert you claim to be, then let your work speak for you.  Give me examples.  Give me testamonials.  Write a book, or at least a blog.  I’ll decide whether you’re an expert or not.  And if you are, I’ll be happy to spread the word for you.

Meanwhile, have a great weekend!

Multiple Channels of Distribution

This may get a bit long, so I apologize in advance, but it’s a complicated issue.

I’ve been following a discussion on another forum on the subject of multiple channels of distribution.  Here’s the gist of the conversation.  A company who manufactures consumer goods in the United States offers two protected lines to independent retailers.  There are restricted dealer territories for each line and Internet advertising is prohibited.  The company does not sell to mass merchants.

However the manufacturer does market its products through other channels which normally don’t interfere with their indy retailers.  Products for these other channels are cosmetically different from the retail product.  Only lower-end items are sold through the other channels, with the more expensive top-of-the-line reserved exclusively for the indy dealers.

The question is, should the manufacturer be selling through these other channels?

Disclaimer:  I used to work for the manufacturer in question, albeit in another division.  I have had this discussion/argument many times, both with dealers and within the company.  Since I no longer work there, I believe I can shed some impartial light on this issue.

hammerYou don’t have to be a rocket scientist to figure out what product I’m talking about, but to keep the blog industry-neutral, we’ll say the product is hammers.  I’ll admit I know very little about hammers except that they’re used to drive nails and that you hold onto the handle and hit the nail with the other end.

First, it’s very difficult to be a supplier exclusively to independent retailers and any manufacturer deserves a lot of credit for trying to do it.  Face it, one order from a big box chain can account for more units than hundreds of indy dealer orders.  Considering the fixed costs of manufacturing, either domestic or off-shore, the chain store numbers are hard to ignore, especially if you want to keep your work force employed and make a decent return on your investment.

On the other hand, it’s very costly to do business with most chains.  The low prices they brag about are usually made possible by their predatory purchasing, payment, and return policies.  If a vendor isn’t careful, he may end up paying dearly for the privelege of having his product stocked on the big boxes’ shelves.  More than one manufacturer has gone broke trying to do business with the big guys.

So, if a company makes the decision to stay out of the chains, how does it generate enough volume to keep the factory running?  One way is through multiple channels of distribution which don’t include the Marts and Depots.

not a hammerLet’s say I’m a manufacturer and I produce a line of hammers that I only sell to independent hardware stores.  I have a full line of these consumer tools including claw hammers, ball peen hammers, and others.  I’ll call this the Alpha Homeowner line.  Within the Alpha line I offer a basic assortment and a deluxe, gold-plated assortment.

To keep production going I also sell a line of professional hammers through industrial supply houses that sell directly to carpenters and other professionals.  I call this the Beta Builder Line.  It has all the same type of hammers, but they’re cosmetically different from the Alpha line.  I don’t offer the gold-plated line-up to this channel.

The problem is that consumers (and builders) are very savvy today.  It’s fairly common knowledge in the tool community that Alpha and Beta are made in the same factory.  It doesn’t happen often, but once in a while, a carpenter will come into one of my retail dealers with questions about  his Alpha hammer.  Some dealers will take it in stride, answer the questions, and maybe sell the customer other merchandise.  Others will be highly offended that they missed a hammer sale, refuse to help the customer, and raise heck with me for selling his “competition.”

The dealer’s suggestion to me is that I stop selling in these other channels.  He argues that with less competition he’ll sell more Alpha hammers, making up for the loss of sales of the Beta line.  But will he?

If I stop selling the supply houses, they’re just going to find another supplier.  Typically, the supply house’s customers don’t shop in hardware stores.  And, consumers usually don’t shop in the supply house either.  So, I lose the business from the secondary channel and gain no sales in my primary channel.

So, putting on my small business hat, should I, an independendent retailer, buy from a manufacturer whose products are available trrough other channels?  I’d say the answer is “yes” with qualifications.  Of course, the big qualification is whether I can make money selling the line.  Or better yet, can I make more money selling that line versus something else?

The Alpha hammer may be available through the supply house, maybe at a local auto parts store, and a few other places.  I may lose an occasional sale.  But, looking at the big picture, is it a profitable line for me, day in and day out?  Is it a quality product?  Do I get support from the manufacturer?  If the answer is yes, then I’d say you’ve got yourself a good line.

Taking off my indy hat and putting my manufacturer hat back on, there’s another 500 pound gorilla in the room that often doesn’t get talked about.  More than three fourths of my retail dealers carry another line of hammers.  They want to offer their customers a choice.  Of course, I have enough hammers in my line between the regular items and the gold-plated series, but the majority of my dealers still devote 1/2 their hammer shelf space to another brand.

All of my competitors do sell the big box stores.  Yet, more than 75% of my customers still sell their lines.  While I give my dealers a protected territory and keep my line 90% competition-free, these dealers still carry other lines.

If my dealers gave me the same protection that I give them, I wouldn’t need the other channels.  Of course, that might mean adding additional models and features, and possibly spending more money on advertising.  It’s really a Catch 22.

In the end, wearing both hats, or no hat at all, I have to say that this whole issue comes down to profitability of the line and to manufacturers and dealers working together.  Both sides have to ask each other (and themselves) how can we reach an agreement that lets both of us make a reasonable profit?  Dealers, do you really need that second line?  Manufacturers, what can you do to make the second line unnecessary?  How can we make this a win/win situation?

In a tough economy, the manufacturer has a responsibility to satisfy all of its stakeholders and keep everyone working.  I say “kudos” to any company who can do that without getting in bed with the big boxes.

Retailers have the same responsibility to themselves and their staff.  Again, I say “kudos” to those of you who can do that and support quality manufacturers who do their best to support you.

Getting Response in a Down Economy

Dean Rieck, who writes the Direct Creative blog has put together a 38 page white paper called Getting Response in a Down Economy.  In Dean’s own words, the white paper “reveals what’s really happening in the marketplace, how your customers are reacting, and the 4 key principles you can use to boost your direct mail profits. Plus, get 32 pages packed with the powerful tips, strategies, and resources you need to cut costs and increase sales.”

In fact, Rieck does deliver what he promises.  He writes that the sky isn’t falling and that people are buying,

It’s just that they’re slower and more cautious, so it’s harder to sell them.  Harder, not impossible.  That’s an important distinction, because if you assume people don’t want to buy now, you will make less effort to sell them than you should and may end up supressing your own profits.”

As promised, he goes on to offer good advice and tips on doing business in the current economy.  GRIADE is an easy read and well worth your time.

Take Notes with Your iPhone

iTalkIf you’re like me you need to take notes.  Sometimes I think of something then forget it while I’m looking for a piece of paper to write it down.  If you’re an iPhone user, here’s help from Griffin Technologies.

Griffin is offering an app for your iPhone (or iPod Touch) called iTalk.  iTalk turns your iPhone into a dictating machine.  Best of all, the ad-supported version of iTalk is free.  You can avoid the ads by paying just $4.99.

I’ve not personally seen iTalk in action, but from Griffin’s description, it certainly sounds like a useful tool for your iPhone at a very affordable price.

Multi-Billion $ Small Biz Tax?

According to House Republican Leader John Boehner’s blog,

House Democrats plan on raising taxes – to the tune of “$540 billion over the next decade” – on small businesses, investors, and job creators in the midst of the worst economic recession in 30 years, all in an effort to cover some of the cost of their massive government-run health care proposal, which one independent study said would result in $3.5 trillion in added federal spending over the next decade.”

The author of the post, Kevin Boland, quotes from a Wall Street Journal editorial:

This would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study. That study also found that almost half of the income taxed at this highest rate is small business income from the more than 500,000 sole proprietorships and subchapter S corporations whose owners pay the individual rate.

In addition, many more smaller business owners with lower profits would be hit by the Rangel plan’s payroll tax surcharge.  That surcharge would apply to all firms with 25 or more workers that don’t offer health insurance to their employees, and it would amount to an astonishing eight percentage point fee above the current 15% payroll levy.”

I don’t know about you but this scares the hell out of me.  When one party (either of them) controls both houses of Congress and the White House, especially with the majority that the Democrats are enjoying right now, there are no checks and balances.

This is a business blog, not a political blog, but at some point they become one and the same.  If this economy is going to recover, the government must encourage job creation.  Piling tax upon tax on the very people who generate most of the new jobs isn’t going to work

The only way to make your feelings known is to contact your senators and representatives and let them know that you oppose any new tax increases, especially on small business owners.

All Star Weekend

Those of you who are sports fans know that Major League Baseball’s All Star Game takes place here in Saint Louis tomorrow (Tuesday) night.  It’s been forty-three years since the last Mid-Summer Classic was played in our town so I’m thinking this will be my last chance to get in on the fun without traveling.

Tickets to the game, and to tonight’s Home Run Derby were prohibitively expensive so I decided to check out the other activity going on in downtown Saint Louis today.  Fearing that parking might be a problem considering the thousands of visitors expected to be in town today combined with the people who normally work downtown, I parked in a neighborhood a couple of miles away  and rode my bike.

It turns out the only way to see everything, avoid traffic, and avoid paying thirty bucks to park, is to take two wheels.  I can’t believe more people weren’t doing it.

The actual All Star events will take place this evening, but there was plenty to do today.  One of our civic embarrassments is something called “Ball Park Village”.  It’s supposed to be a mixed-use development of hotels, residences, and retail located across the street from Busch Stadium.  It was supposed to be finished in time for this weekend’s festivities.  Sadly, the project still hasn’t gotten off the ground.  It’s still a huge vacant lot.  The good news is that the space provides a great venue for All-Star Game sponsors to set up exhibits of their merchandise.

There are new cars, and free food, sporting goods merchants and the famous Clydesdales to entertain the folks.  Nike has set up a temporary retail operation in the former Pro Bowling Hall of Fame.  (Yes, there is a bowling hall of fame.  It packed up its pins and trophies and moved to Texas a couple of years ago.  I believe they had to leave to make room for Ball Park Village.  Oh, well.)

The entire downtown area has been spruced up and it looks great for the money-spending visitors.  And they’re definitely here.  People are milling around downtown spending money like they had it.  And aparently they do.   I overheard a man waiting to cross the street tell his friend that he had paid $1,000 for tickets to the game.  I guess he must be one of the 90% of Americans who are working.

The point is that recession or no recession, people are spending money on the things they want and need.  People who will travel to a distant city and spend thousands of dollars to attend a baseball game that doesn’t count should be willing to buy what you sell too.  All you have to do is make them want it.

Here’s another phenomonon that I noticed today.   A beer cost $8.75 right in front of Busch Stadium.  Two blocks away it was $6.00.  I guess “location, location, location” works for beer as well as real estate.  By the way, the world’s largest brewery can be seen from the stadium.  If you want to make the trip a few blocks south, you can tour the brewery and get free samples.

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The WSJ on Buying Local

3_50 project smallIn case you missed it, here’s a link to a recent Wall Street Journal article featuring the 3/50 Project.  Frankly, the article isn’t that great, but it does highlight the experience of one small business owner’s success with her “buy local” efforts.

We don’t have the resources of our larger competitors when it comes to advertising and PR, so it’s important when any “buy local” program gets national exposure.

Of course, 3/50 works because it appeals to the consumer’s needs as well as the merchant’s.  Pick three local businesses that you couldn’t live without and help them stay in business.  It’s a win/win.  Contrast that approach with the Chicago pen dealer’s personal plea.  He got a brief bump in sales but it was short lived.  Let’s be honest, it’s one thing to spend $50.00 that I was going to spend anyway to ensure that my local hardware store or diner is going to stay around.  It’s something else to ask me to buy a $300 pen to support a store that sells $300 pens.

Check out the article and if you haven’t already, check out the 3/50 Project web site.  There’s a permanent link to it in the left hand column of this page.