We’re All on the Same Team!

Doug Fleener, he of the Retail Contrarian blog and The Daily Retail Experience newsletter has been attending a conference in Phoenix.  The purpose of the conference was for retailers and vendors to get together and talk to each other, something that we probably don’t do often enough.

Doug writes: 

"* Communication, communication, communication.  Over and over I heard vendors tell retailers that they want to work with them.  Vendors know they can only succeed if their retailers succeed.  So why is it that sometimes we act like we’re not on the same team? We retailers need to partner with vendors on ordering, sell through, and events.  I think there are times we retailers don’t ask enough of our vendors.  And I’m not talking about discounts, dating, or free shipping, I’m talking about asking them for honest opinions and feedback on what we’re doing well and not doing well."

I consider myself the retailer’s advocate, but I do work for a vendor and I can assure you that Tacony Corporation along with the huge majority of vendors want to work with our retailers.  We’re on the same team.

Some retailers (and, sadly some vendors) believe that there’s a pile of money that represents the difference between the cost to manufacture an item and the price the consumer pays; and that the size of that pile of money is fixed.  They view the relationship between vendors and retailers as a tug-of-war.  We’re all fighting for the same dollars.

Tug_o_war

Nothing could be further from the truth.  Vendors need retailers.  Retailers need vendors.  If we work together, we’ll all make more money.  If there’s an enemy, it’s the competition.  Instead of fighting over our pile of money, we should all be trying to get some of their pile. 

Here’s a good example.  At a meeting this morning, Ken Tacony read us a letter from a dealer.  Since I don’t have permission to use his name, I’ll just give you an outline of what he said.

Two years ago one of our sales professionals convinced him to take on our Simplicity line of vacuums.  In just two years, his business has tripled.  He’s reinvested the profit from the Simplicity vacs in his business and has changed the course of his business and his life. 

Did we make money on the deal?  Of course we did.  Was it a win-win?  You’d better believe it.  Did this dealer make money buying our vacs?  No.  He made money selling our vacs–and we helped him with training, marketing materials, and other tools.  That’s what a good vendor does.

As Doug points out, retailers often don’t ask for help.  Or they view vendors offers of help with suspicion.  After many years of selling, I can back him up.  I can’t tell you the amount of advertising and promotional funds I’ve seen go unused; the number of point-of-sale materials I’ve found collecting dust in back rooms; the non-functional displays I’ve repaired or replaced.

Right now you and your customers are being bombarded with negative news.  Gas prices are up.  Housing sales are down.  We’re turning food into fuel and now there’s not enough to eat.  The sky is falling!  Run for your life!

But, unless there’s an oil deposit under your store, you’re going to have to keep doing what you’re doing, only better.  And the best place to find out how to do it better, and to get help doing it,  is from your vendor partners.

But it’s not a one-way street.  Vendors need your help, too.  If you see a better way to do something, let us know.  If you see a way to make a product better, let us know.  (See No More Lost Straws!)  If a competitor is doing something better than we are, let us know.

If we all work together, we’ll all come out ahead.

If you have something you’d like to share, comment below.

Are You Putting in Too Many Hours?

I recently had a chance to visit with a young man who you would have to call successful.  He owns two profitable fast-food restaurants. There are always lines at his drive-up windows and he’s even experimented with using a maitre de at lunch time to speed up the seating process when there are more customers than tables.  It appears that life is good.

But appearances can be deceiving.  Bob (not his real name) has a problem.  The problem is that he’s working way too many hours.  When he’s not at one restaurant, he’s at the other one.  He’s wearing himself out. He’s also limiting his ability to expand.  There’s definitely room in the market for several more of his restaurants, but there’s just no physical way for him to open them unless he changes his management style.

Michael Gerber, in his book "E-Myth Revisited" suggests that every business should be run like a franchise.  There should be systems and processes in place that work no matter who’s doing them. 

Every McDonald’s in the world serves the same french fries.  It doesn’t matter if it’s Chicago or Beijing, the french fries are all the same.  Why is that?  Because there’s a process.  Put the potatoes in the fry basket.  Put the basket in the grease.  When the bell rings, take them out.  It never changes.  It doesn’t matter who the french fryer is.  It doesn’t matter who the manager is.  The manager doesn’t even have to be there.  That’s how every business should be set up.

It doesn’t stop with french fry frying.  Every aspect of the business is governed by a system, whether it’s ordering, serving, cleaning, or doing the books.  It’s all there in black and white in the business system.  The owner of the business can be a hands-on type of guy (or gal) or not.  It doesn’t matter.

Bob’s problem isn’t that he doesn’t have the system.  His restaurants are franchises.  He paid a lot of money to buy a proven set of processes.  His problem is he doesn’t trust the system.  That’s the hard part, isn’t it?  Whether we designed the system ourselves, or we paid thousands of dollars for an existing system, the real issue is trust. 

You have to trust the systems and you have to trust your own ability to hire people capable of using the systems.  If you don’t have that trust, you’re doomed to a life of ten-hour days and six or seven day weeks. 

Ask yourself these question: 

  • Do I have processes in place for every aspect of my business?
  • Are they written down?
  • Do I have the people in place to make the system work in my absence?
  • If space aliens grab me in the middle of the night and take me away in their flying saucer, would the business continue as if I were still here?

If you can’t answer "yes" to all four questions, you know what you have to do.

Tacony Manufacturing Expands Again

There’s a lot of speculation going on about the present and future state of the economy.  [See "Goodbye 2007", Their Glass Isn’t Even HALF Full", "Is the Sky Falling?"] It seems like the "glass half empty" guys (and gals) have the biggest megaphones and the tallest soap boxes.  But the "glass half full" folks are the ones who get the actual work done.  I suppose there are valid arguments on both sides, but it seems to me that the opinions of the people on the front lines mean a lot more than the opinions of the so-called experts.

Case in point:  Here are some pictures of the multi-million dollar expansion that’s going on at Tacony Manufacturing in St. James, MO.  The expansion is necessary to keep up with the demands of our growing business.  The new addition will house both manufacturing and distribution.  It’s part of our on-going commitment to our US manufacturing and to the economy of the Missouri Ozarks.  Call me biased, but I believe our team in St. James turns out the finest vacuum cleaners in the world.

The expansion in St. James is not a fluke.  In the last year or so, we’ve relocated our Jacksonville, FL distribution center to larger quarters, we’ve expanded our sourcing and engineering facility in Suzhou, China, and we’ve acquired two new companies.  We’re currently looking at our Fenton (St. Louis), MO headquarters, our Fullerton, CA distribution center, and our newly acquired Truvox division in Southampton, England for possible expansion. 

What’s it all mean?  It means that Tacony Corporation and our bankers have confidence that you, the independent retailer, are going to continue to grow your business and, in the process, grow ours.  We’re not just buying land, and concrete, and steel.  We’re filling up these new spaces with merchandise and people to help you grow.  Investing millions of dollars in new facilities, new people, new programs, and new products is tangible proof of our faith in you, our valued business partners.

PS.  While everything around here is getting bigger, Mine Your Own Business will continue to fit perfectly on your computer monitor.  And, if you click on the pictures, a larger version will open up in a new window.  (Click here to see all of our locations.)

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Are You a Planner or a Doer?

Ed Roach, writing at the Small Business Branding blog asks a very good question, "Are you a planner or a doer?"  He writes, "Ask anyone in business what their plans are for the upcoming year?
Chances are good that most will say, ‘I’m planning on taking my
business to the next level’”

I guess that’s as opposed to "taking my business back a level or two".  I would hope that everyone who reads MYOB is interested in "taking the business to the next level" or you wouldn’t be here.

The correct answer to Ed’s question is "I’m a planner and a doer."  If you plan without doing you’ll likely fail.  If you do without planning, you’ll most likely fail."  You have to do both.

The questions you have to ask yourself are:

  • What is my business’ current level?
  • What is the next level?
  • What do I have to do to make up the difference?

Three simple questions–simple to ask, not so simple to answer.

But to move to that "next level" it’s imperative that you answer them with specific, measurable steps.  Ed mentions the large number of people who resolve to lose weight every year.  Where most folks go wrong is saying "I’m going to lose 50 pounds this year".  That’s the weight-loss equivalent of taking the business to the ‘next level".  They’re both open-ended goals with no strategy to make them happen.

Ww_yogurt
If you really want to lose 50 pounds in 2008, you have to lose one pound per week.  How do you do that?  Easy.  Either cut 3,500 calories out of your weekly food intake or add 3,500 calories of exercise each week, or do some combination of the two.  3,500 calories equal one pound.  Lose one pound per week for fifty weeks and you’ve done it.  Simple.

It may be simple, but it’s not easy.  You have to have the discipline to stick with your plan for the full fifty weeks.  You have to have the resolve to double up in the week following a week where you didn’t lose any weight.  The key is to measure your progress and make adjustments as necessary.

Great.  But what if I want to increase my sales by 20% this year?  Again, simple but not easy.  Every business is different, but you have to break that 20% increase down into small, easy-to-measure steps.  How many more units must you sell each week to get that 20% bump?  How much must you increase your average sale?  How many new customers do you need each week?  These are all measurable metrics that you can track on a weekly, or even daily, basis. 

Just as the dieter can change tactics from day to day (packaged diet dinner one meal, salad the next or jog one day, swim the next) the business owner can do the same (advertising, promotions, price reductions, salesman commissions).  As the year goes on, keep careful records.  If something works, do more of it.  If it doesn’t work, find out why and either give up that particular tactic or tweak it until it does work.  And measure, measure, measure.  If you were trying to lose that 50 pounds, you wouldn’t wait until November to step on the scale.  The same if true for your business.  The fourth quarter is not the time to find out that you’re running behind last year.

At the start of the year strategic planning is the single most productive thing you can do. Hours spent now in laying out your strategy for 2008 will have huge returns later.

Be Prepared

Sba_disaster_brochure
Disasters come in all sizes and shapes.  While a structure fire can be considered a major disaster, help is usually available.  Other disasters like floods, earthquakes, tornadoes, wildfires and hurricanes stretch police, fire departments, and other rescuers to the limit and help may be slow in coming, if it comes at all.

The U. S. Small Business Administration and Nationwide Insurance have recently published a pamphlet called "Expect the Unexpected-Prepare Your Business for Disaster."  The ten-page guide emphasizes planning as the key to successful disaster recovery.

Some of the things suggested are common sense, some are more innovative.  But it doesn’t hurt to be reminded of even the simplest steps once in a while.  One tip that I thought was particularly relevant for retailers was the issue of customers.  You may have a plan for taking care of your staff in an emergency, but what if the store is full of customers?  Where would you put them? 

The guide is broken down by the type of disaster, so if you’re on top of a mountain, you can probably skip the part about floods.  But, most of the ideas can be adapted for use in your particular case. 

There’s also a list of items to put in your disaster kit which should be easily accessible in an emergency.  Even if you don’t experience a major event, a flashlight, radio, and batteries and a blanket could come in handy if you have a simple power failure.  A separate set of basic tools and a first aid kit that are strictly for emergencies is also a good idea.   Even if you have all the items somewhere in the store, a centrally-located supply kit will make things a lot easier if you’re stumbling around in the dark.

The guide includes a number of links to good resources for your disaster and recovery planning.  Links include the American Red Cross, FEMA, The Department of Homeland Security, and others. A few minutes spent today could save money and even lives in the event that a disaster strikes.

This is one of those things that we may not think about because disasters only happen to other people.  But in this case, procrastination could turn out to be very expensive and potentially dangerous. 

Benchmarking

Benchmarking.  Isn’t that something that just applies to big companies? How can I get useful information from my competitors?  They’re not public companies that share their operating information with the public?  I don’t think it will work for me.

These are reasonable statements.  Each of them holds a grain of truth.  But DHL (yes, that DHL) has a great website, their Business Resource Center,  with some interesting information for small businesses.  For example, "Benchmarking:  How You Stack Up Against the Competition" puts some of the misconceptions about benchmarking to rest.  in particular the article provides links to two on-line benchmarking sites.  One, BizMiner offers detailed information on a number of industries.  Unfortunately, there isn’t much coverage of retail.  And, the site charges for its information.

Another site, BizStats provides less detailed information but it has two advantages.  One, it does include retail businesses and two, it’s free.  While the information is somewhat generic, for example you won’t find specific categories like sewing machine retailers, or vacuum cleaner retailers, or lighting showrooms, you will find more broad classifications like Retailing-Furniture and Home Furnishings. 

BizStats has a lot of interesting information including sales per square foot, profitability, and safest and riskiest businesses. 

The second article, Building Business Benchmarks gets a little more into the "how to" of benchmarking.  For example, don’t get hung up on finding businesses that match yours exactly.  There is plenty to be learned from other industries.  As the article points out, an airline benchmarked an Indy 500 pit crew to learn about fast turnaround and hospitals benchmark pizza delivery companies to improve their response times and the Ritz-Carlton hotel chain to improve customer satisfaction.  One hospital system that I’m familiar with drastically improved their system of ordering and distributing medical supplies by studying a major retailer.

Another source for good benchmarking information is the Malcolm Baldrige Quality Award web site and the sites of the various state and local quality awards.  Winners are obliged to share their application information (except for confidential items).  Many of the winners have been small businesses.

No matter where you get your information, you can waste a lot of time reinventing the wheel.  By drawing on the experience of other successful businesses, you can improve your business without going through the pain of a trial-and-error approach.

Help With Strategic Planning

The U.S. Small Business Administration offers some good on-line courses to help you run your business.  They’re free (Well, not really.  You pay for them with your tax dollars so you might as well use them.) but they offer some good information. 

One course you might find useful is called "Creating a Strategic Plan."  If you’ve never done strategic planning, it’s a good place to start.  It uses a Power-Point style presentation that you can follow at your own pace and review as many times as you want.  If you just read and listen to the material, you can do the whole thing in about 15 minutes.  If you do the exercises they suggest, it will take longer.

The course describes a five-step process to creating a strategic plan:

1.  Create a mission statement.  (Hint, the examples given are too long.  You may want to try for something a little shorter.  For example, the Ritz Carlton Hotel chain’s mission is "Ladies and gentlemen serving ladies and gentlemen.")

2.  Take an "inventory".  Answer the question "Where are we now?"

3.  Outline your goals and objectives.

4.  Scenario planning-Where do you want to be?

5.  Design an action plan for reaching your goals and objectives.

Generally speaking, the larger the organization, the more complicated the strategic plan can be.  For smaller operations, the plan doesn’t have to be complicated at all.  Remember that any plan is better than no plan at all. You’d better believe that your big box competitors have a strategic plan and competing with you is part of it.  Can you afford to do any less?

Take the course by clicking on this link.  "Creating a Strategic Plan" is number 3 under the Business Planning category.  There is a short no-charge registration that you must fill in to proceed.

Spring Training

If you live in or anywhere near a Major League Baseball city, you’ve no doubt seen a steady stream of print and broadcast reports from spring training.  Ballplayers are  running and stretching and working on the fundamentals of the game.  These men are professionals.  Is it really necessary for them to go through such basic training every year when it’s just been a few months since the end of the season.  (Especially in St. Louis, where our world-championship team played well into October.  :-))?

The answer is "yes".  Even the best players have to constantly work on conditioning and the fundamental skills they need to play the game.  The real question is "Isn’t the same thing true for all of us?"  Whatever we do for a living, there are certain basic skills that must be executed well every time we come up "to bat".

Maybe a little "spring training" is in order for us, too.  An article in Monday’s Akron Beacon Journal lists some tips to help your business grow.  Some of them are very basic.  But, as we’ve said here many times, it’s easy to get so caught up in working in the business that we forget to work on the business.  Some of the Journal’s tips are:

  • Regularly review, update, and modify your business plan.
  • Visualize your business in three to five years.
  • Communicate your growth strategy and vision with others involved with your business.
  • Defend your competitive advantage.
  • Recruit and retain the right people.

There are a few others, but notice that these five all involve the long-term.  While it’s critical to give today’s customer the best possible shopping experience, it’s even more critical to plan for tomorrow’s customer.  To go back to the spring training analogy, it’s nice to win games in March, but spring training is all about building for the future, for those summer and fall games when it really counts.

Your Strategic Plan

This is the eighteenth, and final,  (hold your applause) installment in our series based on Challenges of the
Future: The Rebirth of Small Independent Retail in America
, a 64 page white paper by Jack Stanyon, underwritten by the George H. Baum
Community Charitable Trust, the Illinois Retail Merchants Association, and the
National Retail Federation Foundation. 

Over the course of this series we’ve looked at the eight trends and six challenges facing retailers according to Stanyon.  This time we’re looking at challenge #6, the limitation of management skills and capabilities. 

Stanyon isn’t implying, and I’m not either, that independent retailers lack management skill.  What he is saying is that the increasing pace of change (challenge #3) is making it hard for all of us to keep up.  He writes, "The increasing complexity of business and the speed of change place an increasing premium on financial knowledge, strategic planning, and leadership.  This is a critical area of focus for small independents because there is no longer the kind of margin for error that might have existed in the past."

You wear a lot of different hats every day.  You’re very busy.  Running a business is a full-time job, and then some.  There just don’t seem to be enough hours in the day.  Quoting Stanyon again, "Stepping back from the day-to-day operations to look at the business strategically is a common problem for small independents." 

You’re the CEO of your business.  Your most important job is making the big decisions that drive the dollars to the bottom line.  That, along with meeting and interacting with your customers and staff, is the most important thing you can do every day.  It makes perfect sense to hire someone, either internally or externally to do the routine tasks that really aren’t worth your time.

But, be careful!  Hiring an accountant, for example, doesn’t relieve you of the responsibility of overseeing the work.  An accountant may know numbers, but he doesn’t necessarily understand your business.  That’s your job.

None of us knows everything.  Every day there seems to be more to know and less time to learn.  You need a strategic plan and you need to delegate the less-important things so you can focus on that plan.  A good plan should include learning goals for you and everyone in your organization. 

There are excellent resources available to the independent retailer to help develop a strategic plan.  It shouldn’t be complicated and it shouldn’t be expensive.  Check out some of the "Useful Links" on the left, or do a Google search for "strategic planning". 

As we mentioned in an earlier post, the Small Business Administration offers on-line courses on planning on their web site. If you need help, contact your local small business development center.  The Association of Small Business Development Centers website will direct you to your local SBDC.

The beginning of the new year is an excellent time to put a new strategic plan into effect.  Updated at least every year, it should help you focus your time and energy in the areas where you’re most effective, and that’s a win/win for everyone.