Sales were up 5%, profits were down-- what happened?

  I was talking to the owner of a  hardware store the other day while I was looking for a couple of items.  I asked how business was and he told me that Sales were up, profits were down!  I said what happened?  He said we got lazy.
   Um, lazy-- I had to know more.  I suspected that he experienced a labor cost issue and that is exactly what it turned out to be.  The store owner said that he paid too much overtime due to improper staff scheduling.  Now, that is interesting.  I was in a restaurant the other day and the executive chef was out working the floor, delivering orders and taking money.  Somebody asked him why he was not cooking and he said that it was his day off, business had been slow and they let the dishwasher and 2 waitresses go home.  The restaurant got real busy and he was called in to help man the store!!
   The hardware store owner said that the key that they failed to do was pay attention to detail!  In many previous posts, we have talked about attention to detail and how the little things can certainly make the big things get bigger.  In this case, not recognizing when additional staff was needed, or not sending extra staff home when the store was slow caused profits to decrease in a year when sales increased by 5%.
    Staffing in a small retail establishment is a tricky business-- however, having increased sales and decreased profits is even a trickier business.  Let's explore how this matter might be handled such that the sales increase and the profits correspondingly increase!
    You probably have a staffing model that has served you well if you have been in business for any time at all.  However, adjustments need to be made, both up and down, if indeed profits are to be increased.  Perhaps the initial model that you are using needs to be changed due to an increase in business.  If more customers are in the store and customer service is the key to small owner/operated businesses, then you will need to have staff available to service those new customers.  Conversely, if you have additional staff on the floor and there are no customers or decreased customer traffic count, then you need to correspondingly reduce staff in order to maintain profit levels.
    Data is the key here.  We have tools that we use with clients that help identify trends in customer flow that may be valuable if indeed you are experiencing such a challenge.  Using up to date and current data is important for making these types of decisions.  Perhaps a call to our firm may be of benefit to you.  After all, what are you in business to do-- make and retain green dollar bills!

I Like Any Business That Makes it Easy to do Business!

  I was visiting with a business owner the other day and she made the comment that is the title of this blog post.  I asked what she meant?  She said that she likes to do business with other businesses that are friendly, know their customers, are interested in their customers and really interested in resolving problems, if and when any might arise.
   As I sat and thought about her comment, I could clearly see what she was saying!  The question that came to me is "Is that how your business is perceived?"  Again, before you answer, think about the complications.
   Obviously, the answer that you wish to provide is "Sure, that is our business."  Well, how do you know?  Who said that?  Are you sure?
    I had a client the other day that told me that he had a negative experience with his bank.  He went and visited with the bank president and although felt that the meeting went better than he had originally expected, he is beginning to shop around to establish a new banking relationship.  WOW-- that is heavy!  Changing banks!
    In the 40 years that I have been in business, I have only had 4 banks that I have dealt with.  Sadly, I would not have changed the first time if the bank had not sold and the new owners were not interested in my account and type of business that I was in.  I found another bank and have been with them for almost 25 years.
   The point of this post is to insure that your policies and procedures are such that people want to come and use you.  If that is not the case, you may wish to revisit those policies and procedures.  Are you a business that is easy to do business with?  Is the staff friendly and helpful?  Are returns easy to do  OR  is it a real pain to address any matter that is, in the minds of the client/customer, a hassle?  Think about this-- is it really easy to deal with your firm?
    Cost, price or fee is normally NOT the number one factor in the business relationship.  I will pay more to a firm that has good products, good service and sticks to what they promise.  Now, I recognize and realize that some things cannot be avoided-- floods, hurricanes, natural disasters, big snow storms-- stuff happens.  However, barring anything unforseen happening, I expect that what you tell me will be the answer to whatever problem we are working on!
    Review and re-think your business policies and procedures if you don't make it easy to do business with you.  You might be surprised what you find. 
    If you bought an exisiting business, you may wish to change the former owner's policies to better comform with what you want.  Conversely, if you  are starting a new business, make sure that your policies are easy to understand and help a customer if there is a snag.  You may be surprised at the dividends that are paid.

Your company's name and its reputation!

   I was talking with a business owner the other day that was very, very frustrated.  He was coming from his architect's office, after reviewing a set of plans for a building that he was having constructed.  His contractor, a firm that he had used for the past 35 years had changed owners 3 times in the past 35 years.
   The original owner had his name on the firm and the firm still operates with that same name.  After the firm was originally sold to the second owner, the original owner stayed and helped through the ownership transition.  After the owner retired and subsequently died, the second owner sold the business to yet a third owner who did not know the original owner.
    The challenge arose when the business owner I talked with told me he was used to asking for something and the work was completed.  He was used to having the "owner's word as his bond"-- if he said he was going to take care of it, the matter was handled in a professional and timely manner.
    Sadly, the problem today is that the third owner is not aware of the reputation of the original business and as such, has begun to alienate his many original clients.  As I listened to the business owner tell this story, I began to think about the many consequences that occur.
    If you are the owner of a business that has a long time family name associated with it, most people probably remember the ethos of the orginal owner, good or bad.  We hope good!!  If you have bought a business that has a long time family name, there is probably some goodwill associated with the name.  You paid for that goodwill when you bought the business, you sure don't want to loose it now.
    In the above mentiond case, the 3rd business owner still maintains the original family name, however, it seems that he has gone away from some of the customer care attributes that were characteristic of the original owner.
    Think about your business.  Did you buy an original family business?  If yes, I suspect that you probably bought some "blue sky", good will and reputation of the firm.  If this is the case, you certainly don't want to ruin any of that.  If you do, you are wasting money.
     If you have recently lost several orders, we suggest that you spend some time exploring how that occurred.  Price may be one factor, material selection may be one factor, however, a factor that you may not have considered is that your professional reputation has been damaged and you don't know it.  This is tricky and not surprisingly, may be more common than you might imagine.
     In the case of the business owner that I visited with, I suspect that he will not use this contractor again, once his building is complete.  I might be wrong, however, if this happens in your business, you may wish to find out why.  You will have to ask some hard questions, the answers you receive may be painful, however, if you have answers, you now know what you need to do to turn around a negative reputation.  Food for thought in today's competitive business climate!

The Competent Salesperson--Is this your employee?

  Our firm is currently seeking vendors and bids for new stationary products.  I met with a salesperson the other day to see what her firm might be able to do regarding our need.  Sadly, I was disappointed with what I learned. Here is why---
   I asked what I thought were simple product knowledge questions-- what is the color of the paper, how heavy is it, what is linen content?  In each case, my salesperson did not know the answer, however was excited to go and check for me.  Now, what I had expected was that she would know these basic, fundamental product knowledge questions without having to go check.  After all, she was the representative selliing the product.
   Here is what probably happened.  She was hired to sell the product and put "on the street" without any formal product knowledge training.  Now, selling paper is simple, right?  Well, perhaps not.  Knowing the plethora of questions and factors that are involved in paper is just as important as knowing the many different facets of buying a new car.  However, what I suspect was that she was sent on the road with an order book and told to call the home office if there were any questions.
   Staff training and development are points that cannot be taken for granted.  The more time that you spend with the new staffer on the front end will pay you greater and richer dividends on the back end.  In this instant case, I am not sure that we'll buy from this salesperson.  Oh, I don't know that-- we have yet to hear the final sales presentation, however, I suspect that in the end, the order will be earned elsewhere.
   What about your staff?  Do they have basic product knowledge down cold?  Are they able to answer many different product questions without having to check every time a new question is raised?  This phase is called product knowledge development.  Yes, it costs money to have a new employee learn all of the products and know them.  Do you test your employees on his/her knowledge?  Do you reward them with additional compensation or bonus if they learn the complete product line?  I am familiar with car dealers that have their sales staff become "certified" if they are able to pass tests on basic and advanced product knowledge.  This may be something that you may wish to implement at your store.
    The impression that I left with with this salesperson was that although she was trying hard, she was put in a "no-win" position.  She could not win by not knowing the products she was selling, however, her boss failed to invest the time necessary and required to insure that she would represent the firm in a positive manner.
    Don't let one of your sales staff fly "solo" if you have not taken the time to develop them into trained professionals. Yes, this costs money, however, the money invested now is small compared to the cost of a lost sale later when the salesperson fails to know more about the product than the client to whom she/he is trying to sell.

What has changed? Something is different in here!

  The words in the blog title were what I heard the other morning when I walked into the Bagel shop!  It took me a minute to re-orient, however, I recognized that the new owners had completely painted the shop, added new colors, installed an ATM machine, reduced their prices on some products and enhanced the overall shopping experience by accepting credit cards!  Now, is this really unique and special?  Oh, I don't think so--however, what a world of difference it did make.

   As I sat there eating my bagel and drinking my coffee, another client commented on how nice the cosmetic refresh looked.  I also commented on how nice it looked.  The new owner then said that carpet was coming, they had just not yet had time to have the company come and install the new carpet.

   Now, as I was sitting there, I wondered about businesses which did not have new owners.  What is the customer experience in your store?  Is the store clean, bright and sharp?  Are the colors "in vogue" with today's various color palettes?  What is interesting here at the Bagel shop is that this business has been in the same location for many years.  The previous owner had done a great business, however, was ready to sell and move on.  As he sold to the new owners, they wanted to "make it their own" and improve some things that were relatively easy to do, but made a big impact on the clientele.

    Perhaps your business needs a  "cosmetic refresh"!  Maybe you need to think about repainting the showroom, customer service space, dining area, depending upon what your business type is.  A decorator can give you some great ideas on how to make the changes you need to impress the customers that come to your place of business.  In the case of the bagel shop, I am sure that not much more money was spent than the cost of the paint.  I would suspect that the labor was the owner and partner, maybe one of the staff, but I doubt it.

   Sometimes, you don't need to do too much to make a strong impression on your clients.   Painting, new carpet and some new art work may be all that is required to give your store a complete new look and attract more new customers.

   As we begin 2011, think about how your place of business presents to your customer base.  I bet that a coat of paint, new carpet or flooring and a rearrangement of the shelves/desks/counters may go a long way in improving not only how the store looks, but also being able to attract new customers to your business.