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Make Planning Adjustments NOW for a great 2010!

  With 25% of 2010 gone, now is the time for you to review your operating plan and see what changes, if any, need to be made.  Although this has been a rough year so far, all of the folks that I talk to tell me that things are going somewhat better than 2009.  That being said, now that the first quarter of 2010 is gone, let's review the operations plan and make changes for the next 3 quarters.
   I trust that you developed an operations plan in December 2009 for 2010.  Assuming that to be true, by taking a review of your firm's performance in Jan/Feb/March 2010, you have some idea of what changes you need to make.  For instance, you may wish to increase product forecasted sales if indeed you did experience a sales increase in Q1.  Analyzing each of the various product categories to determine how each category contributed to your overall sales process.  In some cases, you may need to reduce expected sales, in other cases, you may need to increase those forecasts based upon Q1.
   As we continue throughout the year, watching the plan and making quarterly adjustments will allow you to "come in on target" by December 31.  After all, now is not too early to be planning for the fall season.  Although your business may not have a seasonality component in it, i.e., a clothing store that has winter clothes, you still need to determine what you expect the businesses performance will be based upon the data collected in Q1.
   Most of our clients and many business people that I talk to, throughout the region and the country, are telling us that business has picked up.  In some cases, the pick up has been substantial, in others, a moderate amount, but an increase non the less.  We would not suggest that you reduce anything that you are currently doing, if anything, probably increase the marketing effort to try and make up for part of last year, 2009.
   Managing the plan, increasing your marketing and watching the till are the key measures needed to insure a profitable 2010.

Merging companies-- Is the cultural fit right?

  I was in a service business last week that had recently merged with another similar business which was larger and had a greater customer base.  Interestingly, I had used this smaller service business for several years, had got to know most of the staff, as well as the owner and general manager.
  The atmosphere when I walked in was different.  You know how that it is, it is just different.  Yes, the people were friendly, however, the business had been rearranged, some of the pictures were taken down, other pictures put up in their place.  I met with the general manager and told him why I was there and what kind of service I needed.  He told me that his staff would be happy to help me solve my problems!  I said great-- that is what I needed, solved problems.
   As we filled out the paperwork for the service staff to fix my problems, I asked how the change in new ownership was going.  Interestingly, he said that some days things are great, other days, it was not as much fun as it used to be.  Now, I wanted to know what would generate that kind of answer.  As we visited for several more minutes, it became clear to me that the cultural fit of each company was much different.
   The smaller company had a much more "family" type of atmosphere, where rules and regulations were in place, however, there was some degree of tolerance to be able to make "adjustments" if needed because of rules.  In the new company, everything was being done on the computer, and there was no tolerance for deviation.  If the computer said to do something, that was how it was done.  I clearly noticed that some of the staff from the smaller firm were having "learning challenges" with all of the new rules, policies and procedures.  Now, this is natural for change to happen in any type of new organization.  However, the real question that must be asked is "How are our two cultures going to merge successfully?"
    This is not the first time that I have addressed the subject of merging corporate cultures.  Interestingly, it makes no difference if we are talking about a 3 person office merging with a 39 person firm, or a 125 person store merging with a 400 person company-- the issues and concerns are the same.
    During these turbulent times, many business owners that we talk to are looking at merging with another firm.  The answers that we normally hear are the merger will be better for both firms, we will be able to provide services that neither firm is able to profitably provide, able to increase customer base, reduce inventories, etc.  The one element that I do not hear about is how the different cultures will integrate.
    If you are thinking about either buying another company, going into partnerships with another firm, you really need to spend some time on culture of each firm.
    Here are some questions that need to be addressed BEFORE the companies merge:
A.  Do we do things the same way?  Does one firm use automation almost exclusively and the other firm use manual methods?
B.  How will our various staff members integrate into the new combined firm?  What about skill duplication, overlap?
C.  Will more training be required for all staff because of the integration of both firms?
D.  Will more harm than good be done if we decide to merge?

   These are questions that many firms wish they would have considered before they merged.  In many instances, the merger did not work from the beginning.  In other cases, it took several years and much greater than anticipated expense expenditures before the combined firm worked as initially envisioned.
   If you are thinking about merging your firm with another, irrespective of the size of your firm, carefully consider the points above.  The cultural fit of two discrete companies has to be carefully considered in the overall merger process.

Customer Confidence-- Do you ensure it every day?

  I had to buy some tires last week for my car.  I went to a local tire store that I had been recommended to go to by local medial professional.  According to this medical professional, this tire store was the best in town.  Taking that advice, I stopped at the store, ascertained that the correct size tires were available, the price was competitive and the service time was acceptable.  I left my car, attended to other business matters and returned several hours later, ostensibly ready to drive home.  However, we began to encounter a series of "glitches"!
  The first glitch was that the computer would not accept the serial numbers of the tires.  After a few minutes, the manager came to me, red faced, and said that they had installed the wrong size tires on the car.  OK, glitches happen, what did we need to do to fix it.  Leave the car for another hour and the correct tires would be put on the car.  Well, OK, I needed the tires, people make mistakes, go ahead and fix the problem.  While I was there, the tire shop manager said that the brakes were in need of repair as well. 
   I did know that the brakes were needing repair, however, what I did not know was that, according to the shop, I needed not only brake pads, but new rotors and calipers as well.  Swallowing hard after hearing the price, I said go ahead, knowing that the car needed the brakes.
    Now, it was 7 PM when I returned to get the car.  After I paid the bill, I got into the car.  I instantly knew that we had problems.  The car sounded like an old International Harvester truck that we used to have on the farm.  Something was not correct.  I drove the car home, frustrated that something was wrong. 
    I took the car back a couple of days later  for "checking".  What the shop told me was that they had improperly put the car on the lift, bent a piece of metal underneath the car, knocked the muffler out of the bracket and had to replace the real brake pads with Original Equipment Manufacturer parts.  WOW!  Whatever confidence I had in this shop completely dissipated.  Tomorrow, I am going to the dealer to see what other damage might have been caused by this shop.
   What if this shop was yours.  How would you handle this matter?  How do you handle matters when the shop made grievous errors of procedure?  Interestingly, the shop was very willing to admit that they goofed up, but did not seem how to "fix" the problem.  The shop foreman told me that they had quality control checks all around and he was surprised that this challenge happened to me.  My unspoken question was how did the shop function in the first place?  Are you out on the floor each and every day watching what your employees are doing?  Do you hear customer complaints immediately?  Do you try to resolve these complaints as soon as possible?
   The shop manager was proud of the work being "guaranteed".  Of course, it really makes no difference now, I will never go back to invoke the "guarantee".  I have lost full faith and confidence in this business.  Sadly, I should not have lost that faith.
   I would strongly suggest that you review your policies and procedures when glitches inevitably occur.  After all, we are all humans.  However, I think that the glitches at the tire store are representative of a much greater challenge.  Business is hard to keep.  Forcing customers away from your business after you have tried everything to get customers to come in is futile.  A good procedure check is necessary in times such as these.

 

Employee Empowerment-- What is your employee's role?

  I met the other day with an airport fixed base operator (FBO).  He was extremely frustrated by the challenges he continues to experience with "service providers" in his community, especially regarding catering for aircraft that purchase fuel and then continuing on to their ultimate destination.
  The FBO manager told me a story about a deli that he prefers to use and has had excellent service from in the past.  However, last week, he called, on short notice and asked that 7 complete sandwiches, i.e., sandwich, chips, apple, drink be made for an inbound aircraft that needed fuel to continue on their journey.  The clerk at the deli told him that the "grill was off" and the sandwich  preparation area was being cleaned before closing.  The FBO manager asked, "What time do you close?"  He was told the deli would close in an hour and a half!
   Now, no matter of reasoning with the clerk to get the sandwiches made did any good.  In the end, the manager ended up "working the phones" trying to find someone or some cafe to make his 7 sandwiches for him to fulfill the incoming aircraft's meal needs.
   As we talked about this, the FBO Manager told me that cost was no object.  He did not care what the cost was, the client wanted the sandwiches and was willing to pay whatever!  Wow, when/where do you ever hear that, in today's constrained market?
   As business owners, it is important for you to insure that your staff is empowered to make decisions that will enhance/increase your business sales and business opportunities.  This requires that you provide your staff with the requisite training and understanding of their role in the overall operation of the business.  After all, you cannot be there 24/7/365, however, if you have trained your employees well, they will know exactly what they are authorized to do and how you expect it to be done.
   In the example above, we don't have enough information to ascertain what the deli cleaning  and closing policy was.  However, shutting the grill down and cleaning the sandwich preparation area 1.5 hours before closing does not seem to allow for "last minute" calls that can be very profitable.  In today's environment, one wants to insure that your business is taking advantage of all available opportunities, no matter how they are presented.  In this case, this was a lost opportunity that resulted in profit going down the drain.
   Have you trained all of your employees to be "customer service friendly?"  Do your employees know how much latitude they have in making decisions when you are not physically present on the premises?  Do your employees know that the customer is the individual who pays the bills?
   Although this may seem somewhat simplistic, it is not.  Each employee should have an "Owner" attitude-- insuring that they run the business just like you, the owner, has taught them to do.  Of course, if you have not taught them, then they have no idea of what is acceptable or unacceptable.
   In the case of the FBO Manager, I suggested to him that he visit with the deli owner and explain what happened and how he ultimately resolved his dilemna--- he ended up using a competitor that was not as good as his original deli choice.
   Employee empowerment is the key to great customer satisfaction.  The Ritz Carlton hotel chain empowers their employees to expend up to $2,000, no questions asked, to insure total guest satisfaction.  It makes no difference if the employee is the chamber maid, the bellman or the cocktail waitress, customer satisfaction is the key to Ritz Carlton.
   Although your business may not be in hospitality, the customer service attitude that your firm embodies will tell alot about how you do business.
   Give your staff the tools and training needed to insure that they are able to fulfill any customer requests, within reason, of course!  This is another way in which your business can enhance profitability!