Why Buy in Town When I Can Find It Cheaper on the Internet?

  A business owner was telling me the other day that he bought some materials for a new project that he was working on through the internet instead of giving the business to a local vendor!  My first question was "Why?"  His answer, unremarkably was "Why Not-- I am saving money and it is cheaper!"
  This was too good a discussion to drop, so we continued on!  My business owner friend said that he had worked on varying projects of a similar nature and always bought his supplies through the internet.  Not only were they cheaper, nobody in town could compete on price alone.
   I pointed out to my friend that if you do business in the town in which you are located, in my mind, you have a moral obligation to try and return that favor with other businesses located in the town, irrespective of cost, if cost becomes the key binding requirement!  What was even more sad, at least in my mind, was the fact that several local vendors were never given the opportunity to quote a price for the products the business owner bought from the internet. 
   The business owner "THOUGHT" that the internet prices were cheaper, however, without really checking and asking local vendors for a quotation, he really was not sure.  When I pointed this fact out, he did, reluctantly concede that I was right-- a probability did exist that the local vendor could indeed be cheaper than the internet.
    I have several friends who buy all of their travel airline tickets, hotels, rental cars through the web.  In some cases, this works!  I have done it myself when it is real easy, i.e.,  a one stop connection, nothing complicated and no complicated car or hotel requirements.  HOWEVER, I have also seen lots of folks try to check in at major hotels when getting reservations from big travel web providers.  In some cases, it was very sad to watch the hotel clerk tell the guest that the guest would have to call the web provider to resolve the problem, he/she could not help them.
    If price is the only factor in your decision calculus, then probably using web providers is acceptable.  However, my experience is that I am willing to pay a little more, have a fellow business person here in town provide what I need, even if the price is higher.  At the end of the day, is the price really higher?  Oh, Ostensibly it may be, however, when you factor in participation in various community fund raisers, community events, sponsorships and other local charitable events, the price is usually lower than the web.
    Unless the price is significantly and substantially cheaper on the same exact item as the local vendor, give strong consideration to shopping in town.  I think that you will find that in the end, local prices are always cheaper than going out of town!

We think that we need to move! Does that make sense?

  In the past several weeks, we have had several clients discuss moving their present location to another location.  Some of the moves are local, some out of town, state, region, etc.  Interestingly, there is always a whole host of questions that consultants want to know before providing counsel on the wisdom of the move.
   Some of the reasons for moving are simple-- the client has out grown their old location and needs more space.  The rent has gone up and the sales have gone down.  Everybody else is doing it, we don't want to be left out.  Everybody is moving to the other side of town, we need to have a presence there as well.
   All of these reasons sound rational and logical, however, from a business standpoint, the business owner should be looking hard at the data before making any decision about moving.  The data that I refer here to is sales data, expense data, new facility build out expense, car traffic count if your business depends on drive in traffic.  Now, this does not sound like a lot of fun, however, from a pure financial perspective, this is the only way in which to view the cost effectiveness of a move.
   I know one business that rented space in an industrial zone of a large city for many years.  The building was not fancy, nor were the offices or showroom.  This was an industrial manufacturer which did not need anything fancy.  I am sure that they had paid for the building several times over during the course of their many years in that location.  The business had done quite well and in 2007, the firm elected to build new facilities a couple of blocks away.  The new facilities were able to adequately house the larger machines, create very pleasant office spaces and present a very professional appearance to their customers.  Sadly, the crash of 2008 came and although the firm went ahead with the new offices, the decrease in business has really caused a stretch in cash flow and rent payment.  Good management allowed the firm to remain in their location, however, it has been much more difficult financially than when in the old location.  Of course, no one could predict what might happen in the future!
   Another business I am aware of was located in the downtown corridor of a city.  The business catered to a niche market and had excellent products for the particular niche in which they worked.  This business owner elected to move to a suburban location several miles from the downtown business corridor in direct competition with several large box stores.  The increased amount of hours to remain open, more expense owning their stand alone building as well as greater staff requirements has been much greater than initially imagined.  The fact that competition from many large box stores required that the store be open on Sunday, something that was not required or necessary when being in the heart of the downtown corridor.
   If you are thinking about moving or changing locations, careful thought must be considered before you take any action.  The data needs to be carefully examined and extensive sensitivity analysis should be completed before you undertake a move decision.  The costs of moving, being closed, re-establishing the new business should all be factored in before making a move decision.  Often times, the hidden costs not considered will negate any immediate move benefits.

If you offer-- be sure to deliver!

  I rode a discount airline a couple of weeks ago to a meeting out of state.  I had heard great things about the airline and decided to give it a try and see what might happen!  WELLLLLLLLLLLLLL--- if the price seems to be to good to be true, there is probably something wrong!
  In fact, the trip from home to the out of state location was uneventful.  No big deal.  About 2/3 of the way into the trip, the flight attendant came on the speaker system and announced that special shuttle service was available from the airport to the hotel corridor of this city.  Although I had elected not to take the airline arranged shuttle service initially, I reconsidered, gave the lady my credit card and had a voucher for a round trip from the airport to the hotel and back.  At least that was my initial thought.
    The plane lands, I get my bags and go to door 11 where the shuttle was supposed to be waiting.  Well, what was waiting were 567 other travellers, all believing like I, this was a great deal and sign up.  I asked one of the individuals in the line how long they had stood in line.  They said 1.5 hours!  Well, I elected to get my money back-- which was more challenging than it needed to be, however, did get it back.  I took another shuttle and was in my hotel within 1.4 hours, about 1 hour longer than it should have taken.
    What I found so amazing was that the staff at the shuttle dispatch had no idea where the shuttles were, when the last one had come and when the next one was arriving!  I asked about scheduling, radios, etc. etc.  Each question was answered by a blank stare-- they honestly did not know what was the answer!
    This little experience got me to thinking about other businesses.  How many times do you offer some service, product, benefit and then fail to deliver on it?  Most of you will say NEVER, such things never happen.  Oh, really------------- you don't say?
     Don't become complacent here.  Check out what is going on in your business.  If you say that you are going to do something, then do it!  Make sure that there are no surprises to the customer-- Never any surprises.  Sadly, there was no one in management around when the shuttle line formed; thus, the line continued to form until folks like I elected to balk and go elsewhere.  This is the same in your business if you are not paying attention-- customers/clients will balk and go elsewhere.  If you say you are going to do it, then make sure that you deliver on your promise!