Monday, August 4th, 2008

Nickels & Dimes:

Have you ever been told by your boss that you’re not allowed to wait on customers because, “You don’t have enough sense!”?

Many careers begin slowly. “Why should I pay you to learn the business?” was the mantra at one man’s first job. Being a young 21 year-old and the son of a farmer, the salesman worked for the first three months for free.

After six years of failing to satisfy his simpleton boss in Watertown, New York, he desperately wanted to be his “own man.” He had closely watched the merchandising techniques of his boss. He felt he had a breakthrough model idea. After bumming $300, on February 22, 1879 this budding retailer opened his first store in Utica.

Two weeks later it closed. Failure!

This wanna-be businessman would have none of it. In April 1879 he attempted to open a second store. This time he picked Lancaster, Pennsylvania. He tweaked his merchandising strategy and decided to bring on his brother to help. The brothers decided to double their price point assortment. They decided to merchandise at five cents as well as ten cents.

The Woolworth brothers incorporated and united the 586 stores they had opened under this format, then they built the world’s tallest building. It stood an amazing 792 feet and they paid for all $13,500,000 of it in cash.

Would you believe they hired the original employer and made him a partner?

117 years later, on August 4, 1997, the company announced it would close its 400 remaining locations. This marked the end of an American icon and wiped out $1,000,000,000 (yeah, billion) in variety store sales in one day.

Interestingly, this company continues to operate today under a new corporate name and a new stable of brands. You know them as Foot Locker and Champs Sports.

Sometimes a trip down memory lane brings important historical failures to light, and sometimes it’s just nostalgic.

It is our hope your independent family business still stands for something real. Today’s customer demands it.

We are here to help. Would you like to try?

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Friday, July 18th, 2008

Are you kidding me? 2,630,000 hits in .07 seconds

“Jack of all trades, master of none” turns up more than 2 ½ million hits with a Google search. The phrase is the title of a book, a CD, a blog, a TV sitcom, and I’m certain a number of other things.

Thinking about this old standby as it relates to small independent family business owners led me to the realization that being a jack of all trades is nothing to brag about. Remember the second half of the saying: “master of none.”

Haven’t you often wondered why you always feel one step ahead of the customer, the bill collector, the janitor, and one step behind a good night’s rest?

You should read The Technician’s Addiction. Any addict will tell you the cold turkey method of habit changing is painful at best, and deadly at its worst. The same is true for those addicted to small business ownership.

I know because I’m recovering daily from the illness.

Might I suggest you check yourself into recovery and let the game of life come to you?

Constant work in the trenches doesn’t make you a real business owner; it makes you, as the story goes, a dull-boy (or girl!)

What’s the boldest, most frightening move that a business owner can make? It is to stop being the “answer guy.”

It’s time to realize that in order to do necessary strategic work, you’ll have to break your addiction. Addicts often spend weeks away from the office, focused completely on resolving life’s most important problems.

I’ll bet that after you go through the DT’s of withdraw, you’ll realize your employees’ potential, be able to embrace your financial challenges, have a clear vision of your market, re-define productivity, and know for the first time in a long time the business you are really in.

Sometimes quickly, sometimes slowly these promises are being fulfilled among us every day.

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Thursday, July 10th, 2008

Soil and seed can be like the chicken or the egg.

What do you make of this? A farmer planted seed. As he scattered the seed, some of it fell on the road, and birds ate it. Some fell in the gravel; it sprouted quickly but didn’t put down roots, so when the sun came up it withered just as quickly. Some fell in the weeds; as it came up, it was strangled by the weeds. Some fell on good earth, and produced a harvest beyond his wildest dreams. This famous parable explains one of the most important laws of the universe. This parable holds true in baseball, marriage, advertising, and certainly business in general.

The story is typically known as “The Parable of the Sower.” But don’t you also believe it could be called “The Parable of the Soils.” As the story is being interpreted there is an emphasis the different kinds of soils and how differently they receive the seed, which seems to be a law of the universe.

In business I’ve seen the truth of the story played out again and again. Sowing the good news, people have received the exact same message in such different ways. Some reject it without a second thought. Some are excited, but soon lose their enthusiasm. Others respond with genuine interest, but their attachments to this world soon strangle their commitment. And then there are still others who hear, believe, and live a life others only imagine for themselves.

Perhaps the most crucial ingredient of good soil is openness to the laws of the universe, genuine desire for goodness and a willingness to do the right things in your life. Such openness comes as we recognize our need for God, and as we respond to the pull of God’s Spirit on our hearts.

So I’m wondering what kind of soil is your company and what kind of soil are you? Has your soil condition changed? Business conditions sure have. Is your business and your life producing the fruit?

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Saturday, June 28th, 2008

Poker, Furniture, and Life…

From the 1998 Matt Damon and Ed Norton movie “Rounders,” about the underground poker world of Boston, we can take to heart one of the best business quotes of all time: “A lion survives by being a lion and a mouse by being a mouse.”

It seems lately during almost every conversation this quote jumps to the sketchpad of my mind. Why? Because many independent business owners, feeling the pressure of the difficult economy, are flailing around looking for the miracle cure to what they believe ails them.

Joey Knish, the movie’s card-shark philosopher, was trying to explain to Mike McDermott (Damon’s character) that the only way to win at cards and in life is to be who you were designed to be.

You didn’t become the dumbest person in the world overnight just because your sales are down. However, the flip side of this coin means you probably weren’t the smartest person during your last growth cycle. Growth comes from somewhere outside of your control, but that is another post (one I’m looking forward to writing.)

Assuming you haven’t changed policy, procedure, product, or promotion of your company just before business got tough, I for one will say, “It must be some outside forces causing this decline.” Great. It’s not your fault. But the bank, your employees and your customers still want what they want and expect you to continue to deliver it.

Which leads me to what I believe is the single biggest problem facing independent retailers all of all types: inventory control. Inventory management in the furniture business (my area of expertise) is so out-of-whack that many store owners and merchandise managers have apparently forgotten the old adage that cash is king.

I know dealers who are over-inventoried by more than 20%, who have decided to cut their advertising, turn off some of their showroom lights and lay-off employees rather than do whatever it takes to reduce this inventory!

When offered consulting services that will cost $10-20k over a twelve month period of time focused exclusively on trading $275,000 of excess inventory for the same amount in cash, I’m told, “We can’t afford it.”

Back to Rounders. Knish explained to Mike, “In a heads up match, the size of your stack is almost as important as the quality of your cards.” This lesson could easily be rephrased, “The size of your cash reserves is more important than the size of your inventory.”

A little more sage advice from Rounders is this, “Throw in your cards the moment you know they can’t win…fold the hand.” For those of you who ARE NOT GOING OUT OF BUSINESS, I would tell you not to lay down and get you head beat in during this downturn! If you’ve decided this isn’t worth the work, then contact me to discuss how to get the most out of your going out of business sale.

The last bit of advice from Rounders comes from a conversation between the two lead characters, Mike and Worm, as they discuss the fallacy of a lifetime, that is, “People insist on calling it luck.” Winning at cards or making money at retail is almost never about luck!

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