It’s All About the Mission

I spent the last two mornings helping set up for a charity auction.  The Poor Clare nuns hold an annual auction to help pay for the expansion of their monastery.  That’s right.  They’re actually expanding.  Reports of the demise of religious orders is greatly exaggerated.  Some orders are actually doing quite well.  But that’s a topic for another time and another place.

Here’s the thing.  There were more people helping over the last two days than there are nuns at the monastery.  How does this happen?  Why are so many people willing to give up their time to help out?

Obviously the volunteers support the nuns’ mission.  The Poor Clares are a Franciscan order and they have a lot of friends.  Their mission of peace resonates with people all around the world.  A lot of people are willing to give their time, their talent, and their treasure to support it.

So how’s this help you?  Unless you’re running a nonprofit, it’s not likely that people are going to work for you for free.  But how often have we seen friends and neighbors rally around a business that’s in trouble?  In times of disaster it happens.

On a day-to-day basis your employees and your customers will do what they can to support you, if they believe in your mission.  The question is:  Do you have a mission that people can support?  If you do, does everyone know what it is?

You may not be looking for volunteers, but you are looking for a staff that works hard and customers who are willing to patronize your business.  It all begins with a solid mission statement.

We’ll be talking more about mission statements soon.  For now, give this question some thought.  Why are you in business and why should I care?

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.

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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Doing a Personal SWOT Analsis

Anita Bruzzese has written a post called “Do People Draw a Blank When it Comes to Your Personal Brand?” at her 45 Things blog that made me stop and think.  Having worked in the corporate world in marketing and sales, I’ve often done SWOT (Strengths, Weaknesses, Opportunities, Threats) analyses for various products and programs.  Anita quotes Catherine Kaputa, author of a new book, “The Female Brand: Using the Female Mindset to Succeed in Business.”

Kaputa suggests that we do a SWOT analysis of ourselves.  And, why not?  We all have personal strengths, weaknesses, opportunities, and threats in our personal life.  Identifying these things and writing them down as a basis for a personal plan makes perfect sense.

You and I have things that we’re good at and enjoy doing.  Those are our strengths.  Likewise, we have things that we’re not so good at.  Those are our weaknesses.

What opportunities are out there for us?  Spend some time looking at your opportunities and use your strengths to pursue them.

Threats are all around us.  Some of them we can do something about. Some, not so much.  But identifying the things that stand in our way is the first step to overcoming those threats, either by getting rid of them or learning to work around them.

As the famous “Serenity Prayer says, “God grant me the serenety to accept the things I cannot change; the courage to change the things I can; and the wisdom to know the difference.”

Post Card Marketing for Small Business

As important as it is for small businesses to get involved in social media and web advertising, sometimes you just have to go to the Postal Service to deliver your message.  Computer-savy types like you and me may forget that there are a lot of folks who just don’t use a computer.  If we focus all our attention online, we’re going to miss a lot of people.

Over the weekend, I listened to my friend Krishna De’s podcast interview with Joy Gendusa, Founder of Postcardmania.com.   At a little over an hour, it’s a bit long but well worth your time.  Download it to your iPod and listen to it on your daily commute, or do what I do and listen as you bicycle, walk, cut the grass, or however you spend your outdoor time

Gendusa discusses the history of her business and offers some very valuable tips on things like selecting mailing lists, determining the size of your postcard, and what the message should look like.

Here’s the thing.  We all get a lot of direct mail at home and at work.  Often it goes right into the circular file unopened and the message is lost.  With a postcard you save on printing costs but you also ensure that your message will at least be seen.  As Gendusa points out, frequency is important.  The message may not register the first time, but after a few exposures it will.  Frankly I can’t imagine why more businesses don’t use postcards on a regular basis.

Check out the podcast, check out Krishna’s other stuff at her website, and take a look at the Postcard Mania web site.

Mike Buckley (2nd from right) and his wife Jan (right) meet with Irish Minister John McGuinness (left) and Krishna De (2nd from left)

Mike Buckley (2nd from right) and his wife Jan (right) meet with Irish Minister John McGuinness (left) and Krishna De (2nd from left)

Small Business–The 3/50 Project Is Taking Off

3_50 project smallI hate to repeat myself (I hate to repeat myself) but I wanted to update you on something I wrote about a few weeks back (Saving the Economy 3 Stores at a Time),  The 3/50 Project.  In case you missed it, the idea of the project is to support local business by choosing three locally-owned businesses that you can’t live without and spending $50 with them.  That’s $50 total, not $50 each.

It’s a win/win deal with virtually no cost to anyone.  The customer gets to help ensure that her favorite business will stay in business and all she has to do is spend money she was going to spend anyway.  She doesn’t have to spend anything extra–not one penny.

Local business wins by getting more business.  And the cost is virtually nothing.  All the materials for the project are available online at no cost.  The only expense is the paper and ink to print bag stuffers and window signs.  There are some promotional items that have a cost but they’re strictly optional.   The cost to enroll in the program?  Zero.

The local community also wins by having a strong merchant community.  The town is more vibrant and alive.  And, local merchants live and pay taxes there as well. (I guess that makes it a win/win/win.)

The good news is that this thing is really taking off.  Community organizations and local Chambers of Commerce are getting on board.  The member list is growing.  Lots of local news media are getting the story out.

As far as I can see, there’s absolutely no downside to the 3/50 project (unless you’re a big box store).  If you haven’t already, check it out.  You could be up and running literally in a matter of minutes.

Links:

Former Retailer Provides Her Own Economic Stimulus Plan for Main Street

The 3/50 Project Goes Viral

The 3/50 Project Hits 5,000 Supporters Mark

Supporting “Local” Small Business When You’re Out of Town

3_50 project smallThis post is inspired by a comment on the 3/50 Project facebook page.  [In case you missed it, I wrote about the 3/50 Project earlier.  There’s also a link to their home page on your left.

Lili Johnstone wrote:  “Just wanted to say that even when you are far from home, you can still support local stores via the web. Many locally-owned, small business owners have created a cyberspace presence. Next time when shopping online search some of your local favorites.”

An excellent idea for many purchases and I couldn’t agree more.  But when traveling, there are a lot of things that you need to buy from a brick and mortar merchant.  If we support “buy local” at home, then it only makes sense to do the same when you travel.  Every town has excellent local merchants and we should patronize them just as we hope that travellers will visit our stores.

In my response to Lili’s comment, I mentioned restaurants.  When I travel, I never eat at chain places (with the exception of Waffle House.  Sorry, I’m addicted to the Fiesta Omelet.  Nobody’s perfect.))  Not only does eating at local restaurants support the local economy, it provides a local experience that you can’t get at the chains.  You almost always find better food and more interesting people at Mom’s Diner than you do at McDonald’s.

As the 3/50 movement spreads and more and more of their window stickers begin to appear, look for them when you travel.  Patronize your fellow small business owner.  It’s good for all of us.

A Small Business that Got Big

Lest anyone think that MTS is anti-big business, let me set the record straight.  What we’re about here is fair competition.  Big companies  aren’t inherantly evil (with a few notable exceptions).  Every large business is just a really sucessful small business and we should try to learn from their successes (and their failures).

rei_logoCase in point:  Recreational Equipment, Inc., better known as REI.  Lloyd and Mary Anderson started the mail order business in 1938.  Operating as a member-owned co-op, REI’s income before distributing member dividends in 2008 was $82 million dollars.  Member dividends totaled almost $73 million.  In fact income was down compared to 2007 while dividends were up.  [Full disclosure:  As an REI member I received a 2008 dividend of $14.10.  It would have been higher, but I usually shop the sales.  Also, having a son who works there, birthdays, Fathers’ Day, and Christmas are a steady source of outdoor gifts for the family. ]

Sally Jewell, the President and CEO had this to say in REI’s annual report:

“With adversity comes opportunity, and this recession will be no exception.  As people adjust to fundamental shifts in our economy, the outdoors can provide a welcome, affordable refuge.  Fresh air, excise, and experiencing nature with family and friends provide an ideal antidote to the stresses of everyday life, helping deepen our relationships with the people and places most important to us. “

Think about that for a minute!  What is it that you sell that can provide a “welcome, affordable refuge”?  How can you make life easier for your customers while they struggle through a tough economy?  Do your products take them away from their troubles?  Do they make life easier?  Do they provide a better environment?

Your business has a story to tell.  If I’m your customer, or potential customer, I want to know how spending my hard-earned money with you will make my life easier and less stressful.  You have to convey that message to everyone, especially your staff.

Keep in mind that REI sells bicycles costing thousands of dollars.  They sell top-of-the-line equipment for outdoor sports.  They feature quality brands at quality prices.  You might not think that they would see a recession as an opportunity, but with good marketing, excellent service, knowledgeable  associates, and a very effective marketing program, they’re a company to watch.

They’re not over-stored.  They use mail order sales data to determine which markets they should enter with brick and mortar stores.  When they do enter a market, the specialty nature of their merchandise makes the store a destination for outdoor enthusiasts.  And, they have a very liberal return policy.  They just do a lot of things right.

Like I said, they’re a very successful small company that got big.

Independent Businesses Get Organized

amiba-bumper-sticker

As a follow-up to yesterday’s post on independent business, here are some interesting figures from the American Independent Business Alliance (AMIBA).  According to their January 15, 2009 press release, a survey of 1,142 independent retailers found that holiday sales at independents declined an average of 5.0% from the same period last year compared to a 9.7% decrease in all retail.

The survey was conducted for AMIBA, so it’s not surprising that the results were favorible to their cause, but it’s still impressive to note that independent retailers in cities with “Buy Local” organizations saw sales drops of 3.2%, much better than the 5.9% decline in cities without such organizations.

I swear that I read the press release after posting yesterday’s article.  The following quote certainly backs up what I said.  It’s from Jeff Milchen, AMIBA co-founder:  “While most economic recovery stories focus on national policy, finding ways to recycle money within the local economy is the most effective economic stimulus for most communities.

Milchen recently published a feature in the San Francisco Chronicle, “The Next Bubble to Burst?” urging communities to enact laws that encourage the growth of small, local  business.

Yesterday I mentioned some reasons why consumers should support local business, but here are some more that you might highlight in your store from an handout called “The Hometown Advantage.” from the New Rules Project, another group that promotes local business.

  • Jobs and Tax Revenue. New chain stores create jobs and pay taxes, but at the expense of existing local businesses.
  • Public Costs. Spread-out land use patterns raise the cost of roads, sewers, and police and fire services.  The costs of retail sprawl can exceed additional tax revenues, if any.
  • Local Economy. Mom and pop keep the money local.  The big bux stores send it out of town.
  • Consumer Choice. Centralized buying reduces the number of suppliers, limiting choice for consumers and opportunities for small suppliers.
  • Long-term Prosperity. Research is showing that trading a vibrant downtown for cookie-cutter development reduces the attractiveness of a community, limiting the prospect for future investment and well-paying jobs.
  • Environment. Chain store sprawl is harmful to the environment, increasing automobile usage, air pollution, and stormwater runoff.
  • Community. Local business owners are often very involved in community activities.  They give more money to charity.

Check out AMIBA’s web site, or the New Rules Project, or the Institute For Local Self-Reliance. There may already be a “Buy Local” organization  in your town.   If not, starting such an organization is a fairly simple project, especially if you can involve other like-minded members early in the process to share the work.

Clearly many Americans want to buy from you.  All you have to do is give them a little nudge.

AMIBA window decal

AMIBA window decal