See the USA in Your ????

Chinese Chevy DealerHere in Saint Louis, a local car dealer, Frank Bommarito, often buys full page ads in the dead-tree newspaper to comment on business topics. He recently did a nice comment piece on the death of his competitor, Dave Sinclair.

But today, in a piece on China’s economic recovery, he made some comments that frankly, scare the hell out of me. Unfortunately the ad doesn’t seem to be available online, but here’s what he said in bullet points:

  • China’s economic recovery is progressing nicely. The one weak spot is manufacturing.
  • Chinese auto makers have been waiting for the right time to enter the US market. Our weak economy has held them back.
  • There are ten thousand US auto dealers who lost their American car franchises in the recent cutbacks by the “big three.”
  • These dealers will be lining up at the National Auto Dealers Convention in Orlando, more than happy to take on a Chinese car line.

After many years in the import business there are two sure things I can tell you about Chinese manufacturing.  One is they can undercut any American manufacturer based on their huge labor pool and cheap raw material prices.  The second is that they will build in as little quality as they can get away with.

American car dealers with no cars to sell will be very tempted to jump in bed with the Chinese.  Many of them will be eager to be pioneers in this new business.  At some point they’ll find out that undependable deliveries and inferior products will put them in a very difficult situation.  Trust me.  Been there; done that.

Of course, the high dollar value of a vehicle and the thousands of cars and trucks that will be brought in initially will further tip the balance of trade between the US and China, putting our fragile economy in even more trouble.

Hopefully Bommarito’s prediction will turn out to be wrong.  Hopefully our friends and neighbors who have lost their livelihood due to the mismanagement of American car manufacturers won’t be sucked in by the promises that the Chinese car makers are sure to make.  (Again, been there; done that.)

I sincerely doubt that our current administration  would dare take any steps to stop this disaster before it occurs, especially since we’re so deeply in debt to the Chinese.   In the midst of all the other turmoil in our capital, this whole thing could slip by under the radar with no one even noticing until it’s too late.

This might be a good time to write to your representatives and senators, voicing your objections to any more erosion of the US manufacturing base by Red China.

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5 Tips for Shopping Local

[picapp src=”7/0/4/5/Steamboat_Winter_Carnival_2966.jpg?adImageId=6860296&imageId=3461828″ width=”234″ height=”154″ /]Thanks to Phil Reed of  Vacuums and More in Lincoln City, OR for sending me the link to this article from MSN City Guides.  It’ s directed toward your customers.

The article, by John Rossheim,  begins by appealing to shoppers’ civic pride and their desire to help their fellow citizens.  If that doesn’t move them, Rossheim points out that $68 of every $100 spent with local merchants stays in the community compared to just $43 out of $100 when you spend it with a national chain.

The article points to a few “buy local” programs including my personal favorite, the 3/50 Project.  Here are the five tips:

Visit an independent before heading for a big box. The article suggests that the shopper think of one item that could be purchased locally and to scan local advertising before heading out to shop.

Patronize local merchants who add value. Shoppers should consider more than just price when they purchase.  Professional guidance may not be necessary when you buy laundry detergent or toilet paper, but in other cases the expertise of the merchant often more than offsets a slightly higher price, if the price is actually higher.  Often it isn’t.

Hold the plastic and pay cash. The author throws this on in even though he fails to cite an advantage to the shopper.  Of course there’s a big advantage to the merchant if the customer opts to pay cash.

Beware “local-washing”. Some national merchants pretend to be “local” though I can’t imagine anyone would actually fall for it.   If there’s a competitor in your market doing this, I wouldn’t hesitate to point it out both in-store and in my advertising.

Small Business Myths

[This post originally appeared at Mine Your Own Business on November 2, 2006.]

In this past Sunday’s (actually 10/29/06) Napa Valley Register, writer Beth Pratt exposes 8 myths about starting and running a small business.

1. Over 95% of small businesses fail. In the 1990s there was a report that said 95% of all new restaurants fail. Somehow, like the old “telephone” game, this statistic somehow got applied to all small businesses. According to the Small Business Administration 2/3 of new small businesses survive at least two years. Over 1/2 survive at least four.

2. The government will give you cash to start a business. The SBA will guarantee a loan, but the government isn’t in the business of making loans.

3. My favorite. Small business owners are rich and get to take it easy. No comment needed.

4. I’m a good cook so I should start a restaurant. Feel free to insert any specialty in place of the word “cook” and any type of business in place of “restaurant”. As we all know, there’s a big difference between doing any other type of work and running a business.

5. Failure is bad. Most successful business owners will tell you that they failed many times before they became successful.

6. Small business owners, with few employees, don’t really have to worry about federal and state labor laws. As you know, it just isn’t so. In fact, lacking human resource and legal departments, small business owners may have more to worry about than their larger counterparts. This is one you’d better take seriously.

7. You need a lot of money to start a business. It depends on the business, but getting the money is usually not an obstacle to getting started.

8. Money will fall out of the sky if you have a great idea. Money’s never easy to come by, but hard work and persistence are usually more important than the idea. Edison had lots of great ideas, but he had to work awfully hard to make any of them successful.

Telephone Etiquette

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What with high gas prices and time pressure, your customers and prospects are using the phone more than ever to get price and product information.  How you and your staff handle this important means of communication may well determine whether you ever get a chance at someone’s business.

Jeff Mowatt provides an interesting telephone test on the business know-how web site.  Questions include how long your phone rings before it’s answered, what you say when you answer it, and how you put a caller on hold, among others.

One point that’s very important is how you juggle a phone call and a customer who is actually in your store.  I recently waited several minutes, cash in hand to make a purchase while the person behind the counter looked things up for someone on the phone, never even making eye contact with me.  I eventually left and went to the competitor down the street.

You want to turn callers into customers, but you can’t ignore the people who have taken the time to make the trip to your store.  It’s a delicate balance, but one that can have a big impact on your business.

[This post originally appeared at Mine Your Own Business on October 2, 2006]

Persistance

[This post originally appeared at Mine Your Own Business on October 10, 2006.]

Today, I’d like to offer a famous quotation without any additional comment. It’s just something to think about.

“Nothing
in this world can take the place of persistence. Talent will not;
nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. the slogan ‘press on’ has solved and always will solve the problems of the human race.”

Calvin Coolidge, 30th President of the United States.

Impulse Items

This post originally appeared at Mine Your Own Business on October 23, 2006.
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We all know that grocery stores love to put high-margin impulse items near the cash register.  They know that, while you’re waiting in line, you’ll keep your mind occupied by looking over the merchandise that’s right there in front of you.  Most of us will be tempted by something, if not every time, at least enough times to pay for the shelf space. (Isn’t it ironic that the slower the service is, the longer you have to stand there and, up to a point, the more you’re likely to buy?)

This same psychology is used throughout the store.  The most profitable items are always located at eye-level, with the less profitable ones near the floor.  The higher profit may be in the form of larger margins, or it may be in the form of rebates from the manufacturer for the prime spots.  A successful grocery store will never put staple items like milk and bread in the front of the store.  Intense competition on these items makes them very low-margin.  If you’re going to buy them, you’re going to have to walk past other, more profitable areas of the store, much like the Las Vegas casinos make you walk past the slot machines to get to the cheap buffet.  There are many other ways that grocers, who work on razor-thin profits, use human nature to increase both sales and margins.

How about your store?  Have you studied your customers to see what areas of your store they naturally gravitate to?  If you haven’t, you should.  If you carry something that’s a staple, the equivalent of milk and bread, it should be at the back of the store.  High-margin accessory items should be displayed near the check-out just like the grocer’s candy bars and magazines.  This is also a good place to have an add-on item that the customer may not have considered buying when they came in.  And, in case they don’t have their glasses on, your staff should mention these add-ons to every customer.

I once managed an electronics store.  One year I had an opportunity to buy a pretty nice car ice scraper for 50 cents.  I marked them $1.99, stacked them by the cash registers, and paid my salesmen a quarter for every one that they sold.  We sold hundreds of ice scrapers that winter, at $1.24 profit each.  The customers were happy because they got a nice ice scraper that wouldn’t break off in their hand the first time they used it.  My salesmen were happy because they made an extra quarter, and sometimes more, on just about every sale (this was when a quarter was really worth a quarter) and my boss was happy because I was adding extra margin to almost every sale.

As we approach the busy Christmas season, it’s important that every square inch of your selling space generates the maximum amount of profit.  A little time spent analyzing customer traffic patterns and placing the most profitable items in the spots where they are most likely to sell could pay big dividends.

Small Business Bailout?

[picapp src=”0301/0000301345.jpg?adImageId=5829324&imageId=304673″ width=”234″ height=”156″ /]According to an article from Bloomberg.com, Senator Mark Warner (Dem-VA) is calling on the Obama administration to do more for small business. Warner believes that more of the $700 billion TARP funds should be used to give direct help to small business.

“The original notion of the TARP was, we were going to help Main Street by bailing out Wall Street,” Warner said in an interview. “We’ve seen Wall Street recover, but we have not seen Main Street reap the direct benefits.”

Hard to argue with that.  With the DOW topping 10,000 this week, maybe it’s time for Uncle Sam to step in and help businesses who actually create American jobs.

Read the full article here.