Good Small Biz News

Here’s a great story about a local small business that is prospering in this tough economy.

http://www.kmov.com/v/?i=112357514
 

Merry Christmas to all our readers and friends.

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Small Business Social Media Guide

American Express is offering a free guide called Implement Smart Growth Strategies. It doesn’t go into great detail, but it does give some good examples of small business social media success.

It’s amazing to me that in 2010, almost 2011, so many medium to large businesses just don’t get social media.  It’s one area where smaller is definitely better.  I think what they’re missing is the “social” part.  Folks who use facebook, twitter, and other social media tools aren’t looking for slick presentations.  They want content.  They want information.  They want to be entertained.  They want to believe that the companies they choose to follow actually care about them.  Some big companies understand this.  Most don’t.

As a small business, you’re online approach should mirror your personal approach.  “Well, good morning, Mr. Buckley.  Gee I’m glad you came into my business.  How can I help you today?”  Not, “Go find the stuff you want, put it in a cart, then stand in a long line to give me your money.”

Check out this AmEx guide and think about what you can do to serve your customers better.

Small Business Saturday

You may know that I also write a religious blog called DeaconCast. The following is an item I posted there today.  I’m sharing it here because it deals with small business.  Hopefully the readers of DeaconCast will take it to heart.

OK, this isn’t a business blog.  It’s a Catholic blog.  But what could be more Catholic than helping your neighbor?  That’s what Jesus called us to do.  Tomorrow is your opportunity to do just that.

It’s Small Business Saturday!

You’ve gotten up early today to stand in line to get the “Super Bargains” at the big box stores.  Hopefully you have a little money left to spend.  Why not spend some of it to support your neighbors who own small businesses right there in your town?

I was an early supporter of something called the 3/50 Project.  The idea is to spend $50 per month at three locally-owned businesses.  That’s not $50 each;  just $50 total among the three businesses that you would hate to have to do without.  Why is this important?  Because if you don’t support these businesses with your discretionary cash, they may not be there when you really need them.

Case in point is my local True Value Store.  Whenever I lose my mind and decide to do some kind of project around the house, or when something (usually a toilet) stops working, Handyman Hardware always comes to the rescue.  Unfortunately, they’re never going to survive on my toilet parts business.  So, when I need things that I could buy at the big box, I always give that business to Handyman.  This year I bought a snow blower, a patio set, and any number of other things from them.  I want them to be around for a good, long time.

That’s what Small Business Saturday is all about.  Take advantage of the convenience, the short lines, and the surprisingly low prices at your local merchant.

Also, don’t forget your neighborhood dining spots.  Frankie G’s Grill, just a block from my house, has the best burgers around, reasonable prices, and an excellent staff.  (Full disclosure-my daughter works there.)  A meal at Frankie’s is no more expensive than one at a fast food joint and the experience is much better.  Besides beautiful waitresses, they have more TV’s than you can shake a stick at.

So, on this day after Thanksgiving, think about showing your thanks to that guy who sits in the pew in front of you who owns a mom and pop widgetorium.  Give him some of your Christmas business.  It’s just one more way to show that love that Jesus asks from all of us.

Practicing What You Preach

Apologies for the long gap between posts. I’m afraid it’s been a very busy few weeks.

One of the basic premises of Saint Benedict’s Rule for living the monastic life is consistency. It’s also a good rule for running our businesses. Obviously what we believe is important, but it’s even more important to be consistent in our beliefs.

There’s a running battle (Maybe battle’s too strong a word, disagreement may be more appropriate.) between the lovely and talented Mrs. B and your favorite blogger over the topic of Wal Mart. As a small business czar, I find her shopping for groceries at Wally World to be problematic. We’ve compromised on her alternating between the local grocer one week and Wal Mart the next.

It’s not a perfect solution, but for now it’s the best the Irishman and the German can do. It’s an uneasy truce. Sometimes spouses can influence everyone except each other. (She’s a weight-loss counselor. I’ve obviously remained immune to her arguments. Another standoff.)

I thought about this recently while I was trying to catch up on my podcast listening and watching. Andrew Lock does an excellent weekly video blog called “Help, My Business Sucks!” Recently he praised Hertz Rent a Car for their marketing strategy involving built-in GPS units in their vehicles. Hertz has long been at or near the top of the rental car industry stressing quality over price.

Then, just two episodes later Andrew tells us that he rented a car from Thrifty and that he had a number of problems with both the car and the company’s service. Andrew, buddy, you’re not being consistent.

This blogging stuff isn’t as easy as it looks. Oh, yes, it’s easy to sit at the keyboard or the microphone and offer good advice to others. But when the rubber meets the road, sometimes we have to make hard choices. “Buy American” I type on my Thailand-made keyboard. I pontificate “Buy local” while I munch on my White Castle burger. Andrew tells us to emulate Hertz but rents from Thrifty.

Sometimes we have no choice. As far as I know, there are no American-made keyboards and White Castle doesn’t play fair. Their burgers are addictive. If there were a local restaurant with an equally-delicious sandwich, I’d eat there in a heartbeat. (At least until their burgers clog my arteries to the point where I have no heartbeat.)

Here’s the thing. Mike Buckley, and Andrew Lock, and you must be as consistent as possible. I’ll keep trying to get my better half to buy her groceries from the local chain. I pointed out Andrew’s inconsistency in a blog comment. And you, my independent business owner friend, must patronize local business as often as you can.

If you’re a retailer, please don’t let your customers see you coming out of the warehouse club with a cart full to overflowing. Sometimes we have no choice, but when we do, the long-term success of the business is more important that saving a few cents on a box of soap powder.

Fighting the Big Boxes

Some one pointed me to this video today and I thought I’d share it with you along with a few thoughts. The film isn’t new. It’s been around for a few years. But it’s worth watching if you haven’t seen it before.

Independent America

Independent America

One thing that concerns me a bit is the lumping of big-box stores and franchised fast-food places together. The 3/50 Project which MTS has supported almost since the very beginning does this too. If my neighbor owns the local McDonald’s franchise, I don’t see why I should boycott Big Macs. Granted, some of the restaurant’s revenue goes to McDonald’s corporate, but the bulk of it stays right here. That’s a far cry from he huge share of revenue from the local Wally World that ends up in Bentonville, AR.

The other thing that disturbs me a little is the tendency to bash the big boxes rather than pumping up the local merchants. It reminds me of walking through the woods. If you don’t watch where you’re going and you step on a snake, there’s a good chance the snake will bite you. If it happens, don’t blame the snake. He’s just doing what snakes do. Same for the boxes stores. They’re the most predictable of competitors. They’re going to do what they always do. Don’t play into their hands.

I’ve covered this before, but it bears repeating. Don’t try to compete with the chain stores on price. You can’t win! With their deep pockets they can lose money for a while, just long enough to put you out of business. Avoid going head-to-head. Find your niche and stick to it.

Most important of all, rather than fighting to keep a national chain out of your market, fight to keep your local government from subsidizing the big box with your tax money. There are enough small-town and even big city governments desperate for tax revenue that they’ll do whatever it takes to get the chain to locate within their boundaries. They do this by direct tax breaks and by indirect tax breaks. (We’ll widen the street and put in traffic lights at city expense.) As a taxpayer, scream bloody murder about this nonsense. Using your tax money as an incentive to bring a competitor into your marketplace should be cause to terminate the local government at the next election.

To me, there’s nothing quite as ridiculous as a local government who whines about the deteriorating downtown area while they pump your tax dollars into an infrastructure that encourages people and businesses to move to the outskirts of town.

Finally, adopt the “serenity prayer.”

“Lord, grant me the serenity to accept the things I can’t change, the courage to change the things I can change, and the wisdom to know the difference.”

The Marts and the Depots aren’t going away anytime soon.  Remember that every one of them started out with one store, just like you did.  What can you learn from them?  Study their operations.  Read anything you can find about their operations.  Then, do it better than they do.

They have greeters.  At your store make sure they’re greeted by the owner.

They have a liberal return policy.  If you have a sign that says “no refunds” or something like that, get rid of it!   Offer loaner programs.  Make sure your vendors back you up as well as they do the chains.

They have convenient hours.  Most likely you can’t afford to be open 24/7, but you do have to be there when they need you.

You have a number of advantages over the national chains.  Find out what they are and use them to your advantage.

Retailers, What to do about the Internet?

I’ve been following a conversation on another forum that was started with my recent post, “Are Your Suppliers Letting You Down on the Web?”  You may recall that the original article was about manufacturers who don’t use the web effectively to communicate with their dealers.  Like most on-line conversations, this one has morphed into a discussion on how independent retailers and manufacturers should handle Internet sales to consumers.

We know that there are price-only shoppers who will come into your store, get all the information they need, then go to the web to buy the item at the lowest price they can find.  On the other hand, there are customers who do their research on the web then buy the item locally.  The question is, which group is bigger?  My guess, and it’s only a guess, is that more consumers fall into the second group.

Maybe I’m not a very good shopper, but I’m in the second group mainly because I (1) prefer to support my local merchants and (2) I’ve yet to find anything on line that I couldn’t buy at the same price, or close to it, locally.

Here’s the thing.  If I can buy an item for, say $200.00 on line and I can buy it for $210.00  or $220.00 locally, I’ll buy local every time.  Basically, I’m a mechanical idiot.  It’s worth it to me to spend an extra 5-10% to have somebody close by to hold my hand when I can’t figure out how to make something work.  I’m not alone.  Based on the statistics, a lot of people feel the same way.

Case in point:  I just bought a new cell phone.  The instruction book wasn’t in the box.  Today I’ll go back to the store and get it.  If I had bought the phone on-line, I’d have to send an email and wait for a response.  Assuming they get back to me, I’ll then have to wait for the instruction book to come in the mail.  Meanwhile, I have a $179.00 phone that I can’t use properly.

To me, the key to competing with on-line merchants is to let the customer know how much your service is worth.  Granted, some people just don’t care.  All they’re interested in is getting the lowest price.  Chances are those people aren’t your customers anyway.  If there were no Internet, they’d either buy from the big box store, or they’d be searching the ads in the back of the magazines.  Either way, you don’t get the sale.

There’s a lot of hype about on-line merchants.  The media love them!  Price shoppers think they’re the greatest thing since sliced bread.  (I wonder what the greatest thing was before somebody invented sliced bread?)  Anyway, the facts don’t necessarily support the hype.  Depending on the industry, web sales still represent a small piece of the total pie.  According to the US Department of Commerce, 3rd Quarter 2009 on-line sales represented 3.7% of all retail.  Obviously the percentage varies by industry, but overall, nine out of ten retail dollars are spent at brick and mortar stores.

e commerce stats

Big on-line merchants like Amazon.com are doing very nicely, thank you.  But there’s still a huge market out there for your store.  Rather than chasing sales that you’re never going to get, in 2010 your brick and mortar customer should be your major focus.

Granted, on-line sales are growing, 4.7% in the third quarter of ’09 vs. 4.3% in ‘o8.  Today’s strategy may not work in the future but carpe diem,  seize the day.

Meanwhile manufacturers will continue to wrestle with the question of how best to market their products.  That 4.7% is worth more than $30 billion, hardly chump change.  Like I said in my last post, brick and mortar independent retailers should support suppliers who support them.

Here’s a post that I wrote in 2006 on Your Business Strategy that you might find interesting.

Chinese Imports, again

I must have ESP (or some other cable network).  Yesterday I mentioned that US government-imposed restrictions on Chinese products might have consequences.  You may recall that I suggested a more grass-roots approach to the problem of cheap Chinese goods.  Lo and behold, our government did just what I suggested that they not do yesterday.  (Big surprise!)

The government has imposed new duties on Chinese steel pipe.  Chinese pipe manufacturers have been taking advantage of subsidies by their government to dump low-priced pipe on the US market, costing thousands of American jobs this year.  It’s hoped that the tariffs will slow down the flood (pun intended) of low-price, low-quality steel pipe and restore lost American jobs.  Stay tuned to see how the Chinese respond.

I promised yesterday that I’d give you a little insight into the process of sourcing Chinese goods, from a manufacturer’s perspective.  Here goes.  For the last year before my “retirement” I was involved in purchasing new items for my former employer, specifically small electrical and furniture items.  It was a very frustrating and disappointing task.

For the most part, Chinese manufactures aren’t set up to supply quality merchandise.  In fact, it often seemed like a “foreign” concept to them.  While we may try to spec a premium item from them, they are geared up to produce “low price” items for the mass merchants.  When their production lines are set up to produce millions of “just good enough” items for the big box stores, an order for a few thousand quality items just isn’t worth their time.  Make no mistake, the big boxes and their big buying power are very much in charge of the products that are shipped to the US, even to other suppliers.

Here’s a typical scenario.  I would email a supplier asking them to send me a sample of an item based on my specifications.  A few weeks would go buy and samples would arrive that basically were nothing like I asked for.  Nine times out of ten they would fail our QC tests.

I would send the testing results to the manufacturer asking them to correct the problems and send me what I asked for in the first place.  A few weeks would pass and I’d get new samples, exactly like the first ones.  Strike two!

Keep in mind that we were paying high air freight rates to get these samples shipped to Saint Louis.

This would go on for several cycles and maybe, if we were lucky, we would finally get something close to what we asked for.  Sometimes we never did get what we wanted.

I spent over a year working on two particular items and never did get what I wanted.  Often the response was that such-and-such big box chain sold thousands (sometimes millions) of the inferior products and why was I so particular?

A simple process of building something that would pass minimal quality standards took months and often never did result in a salable product.  If I had hair, I would have pulled it out.

Bottom line, there is no motivation for  the Chinese manufacturer to build anything above minimal standards.  They flood the market with low-priced, low-quality merchandise.  American manufacturers can’t compete.  So, they either lower their quality to reduce the price, or move their operations off shore where labor costs and benefits are much lower than they are here.  Even then, they are going to face higher returns and damage to their reputation because the imported goods aren’t what their consumers expect.

Don’t get me wrong.  I have Chinese friends, including some who I’ve worked with as suppliers.  Because China is a totalitarian state, they are under a lot of pressure to tow the company line.  Language problems and a society where the Chinese people are accustomed to low-quality products often make it almost impossible to explain to them that we want good products.

The solution, as I pointed out yesterday, is for American consumers to demand quality and to be willing to pay for it.  Until that happens, this problem is only going to get worse and at some point it will be too late to fix it.