We are GOOFED UP!

   A business owner told me the title to today's blog yesterday when I was in to see him.  He was frustrated because he was about to have a conversation with an acquaintance that bought an item he sells from an on line vendor, purportedly at 40% less cost than the business owner sells the same product.

    Here are the business owner's frustration points:

1. His acquaintance never talked to him about his purchase before he bought it on-line
2. The acquaintance said that "he heard" that the business owner was "expensive"
3. The acquaintance listened to "several other folks" who had heard the same thing

   The business owner asked how he might handle this matter.  Here is what we discussed---

A.  There is no   reason to go "viral" or negative with the acquaintance.  He bought the product on line and now has to live with his actions.  I suggested that he compliment him on his purchase, point out that his store carried similar products and say no more.

B.  We talked about discussing basic "market research" to find out the real reason why the acquaintance shopped on line as opposed to the local business owner.  Obviously, the acquaintance had some "buyer's remorse" because he talked to the local business owner about his on-line purchase.  It is always good to do market research and find out what the real reason is to shop on-line, or at another competitor, when you have the same product available in your store.  Here, my key point was to find out what was going on.

1. C.  The argument that "several other folks" had heard that the business owner was expensive is truly a red herring.  Why a red herring?  Well, were the products identical in shape, size, fit, function, form, construction, etc?  Just because it looks the same does not mean that it is the same.  You can always go to Wal Mart and find something cheaper than you can at the local hardware store-- always.  What is different is that although the products look identical, the material, construction and composition may be very, very different.  The real answer is are you comparing Apples to Apples?  In most cases, the answer is NO, you are comparing Apples to Kumquats-- which as any fruit farmer knows, is no comparison at all!
2.  
3.      Customer education is the key to repeat business.  As sad as this story is, I look forward to hearing what the business owner learns from his conversation with his acquaintance.  As a business owner, keep market research in the forefront of your mind.  Always bear in mind what the customer perception is of your business.  How do you find this out?  Ask!!  Not only your customers, but folks on the street.  You might be amazed at what you learn.

Are You Through with the Honey?

     I went to dinner with some friends from church today.  The little greasy spoon cafe where we go is close to the church, has good food and is reasonably priced.

     My friend asked for some honey.  The server brought the honey.  After about 10 minutes, she came back and asked if my friend was done with the honey-- another guest wanted it!!!  I asked if they only had one bottle of honey.  The server said, "Yes, there was only bottle of honey" at the cafe!

     Now, as I reflected on this, I was impressed with the inventory control of the cafe.  The manager must have recognized that they don't use much honey and needed only bottle to fulfill most diner needs.  In fact, I asked that question and that is what the server said--"We don't have many people who use honey."

     The key point here is two fold.  One, is inventory control.  There is no reason to tie up capital in inventory if you are not going to sell it.  You only need to have as much inventory as you are going to use.  In manufacturing terms, this is called Just in Time (JIT).  Now, if the honey runs out before somebody goes to the store, the cafe is out of honey.  However, probably not a deal breaker-- if you are hungry, you are probably going to eat, even if there is no honey!

      The second key point is obligation of excess capital.  Capital is the lifeline of any business.  The more capital that you have, the easier it is to run the operation.  In this case, there was only one bottle of honey--there we no others.  Hence, there was no excess capital tied up in inventory.

      Look at your business.  Do you have excess capital tied up in inventory?  If you do, you should strongly consider selling the excess inventory to recover additional operating capital.  Excess inventory allows for spoilage, shrinkage and obsolescence.  Buy only what you need and can use-- that is the best way to operate!  The little cafe figured that out with the honey!

Square Peg-- Round Hole-- It Does Not Fit!

     We met with a business owner the other day.  She was expanding her business and turning it over to her sons plus one hired man.  The business is in the construction industry.  Both of her sons and the hired man were all craftsmen in the industry, had minimal, if any business experience, but were now being thrust into the role of a business owner.
      As we talked about this new endeavor, the business owner was clear that she wanted to retire and have the sons and hired man run the business.  Her first question was how fast could we teach the employees basic business accounting, business terminology and the popular business accounting program, "Quick Books?"  
       Our team was taken back by this request and pointed out that although the concepts she wanted taught were easy to teach, the learning part is often times more difficult, especially if the employees did not have a business background.  For about 15 minutes, our team tried to hammer this point hard.  At the end of the time, we identified some training courses that Adult Education at the School District offers and suggested that may be a good place to begin.  Our team knew that this was a disaster, however, try as we might, we did not talk her out of her idea.
       This indeed was the classic square peg/round hold dilemma.  Granted, the employees COULD learn how to do basic bookkeeping and accounting, however, we identified that it may be much cheaper to outsource that part of the business to a trained bookkeeper than try and teach the employees.
        Interestingly, everyone has certain skills that they excel at.  We identified that her employees were excellent craftsmen (her own admission!), so it made more sense to us to have them performing the craft skills and outsource the bookkeeping to someone who was skilled in that trait.
        How will it go?  I don't know!  I hope well, however, expect that there will be large bumps in the road ahead.  My point is that there is no reason to force fit someone into doing something that either they don't want to do or don't have the skill set to do a good job.  It is much more efficient and effective to insure that you have the right employee doing the right task all the time.  This is also much cheaper as well.  We'll see how it goes-- I hope well.

Is It The Truth?

    Our title today is first rule of the 4 way Rotary International Test.  We recite the Four Way test each and every week at Rotary.

    A business owner was telling me the other day that his business has increased significantly because his competitor fails to follow the first rule of the Rotary Four Way Test!  This business owner told me that he has had customer's of his competitor come and buy a similar product from his store because after having bought from the competitor, they review the product, the manufacturer's documentation and decide that what they were told they were buying and what they actually were sold were different!

    Now, with business and competition as strong as it is today, I think that you have to be careful about what you tell a prospective customer.  There is nothing wrong in pointing out all of the strength's of the product, the benefits of the product, but to not tell the truth is something that is not only unethical, but is also not honest.

      Interestingly, some people will believe what they are told and will not do any follow up work to be sure to verify and be certain what they bought was indeed what they thought the product was as described.  However, many people will read carefully all of the manufacturer's paperwork, review the specifications carefully and return the product if what they thought they bought and what was actually was delivered are materially different.

      As a business owner, you have a duty and obligation to tell the truth.  There is nothing wrong in telling the truth.  If the product is of inferior quality, then so be it.  If you cannot honestly say that the product is not as superior as other products, perhaps finding a new job is the best solution for you.

      Many business owners today are willing not to tell the truth to make the sale.  Albeit, this is normally a "one time" sale.  Many business owners are very willing to fore go a sale today, in hopes that the customer will return and buy something later, hopefully establishing a long term customer relationship.

     We always recommend a long term customer relationship.  Always tell the truth about the product.  Many times you are able to address what appears to be a negative point in a positive manner.  For example, if your product is indeed of lesser quality than another product, you can cite that your product does not have all of the features that a bigger, more expensive product possesses, but will fulfill the intended need in the same way, probably at lower cost.

    Always tell the truth.  If you tell the truth, you never have to remember what was told.  In the end, it is well worth hearing the truth every time.  After all, is that not what you want, a long term customer that repeats his/her business many times over?  I know that we do!

See You at the Flag Pole

   Our team was in Georgia last week working with clients.  My good friend, Coach Alfred Hiers, asked me to join him and many of his teaching colleagues at a ceremony named, "See You at the Flag Pole."

    This ceremony was held on Wednesday, September 28, 2011 at Valwood School, Hahira, Georgia.  This is a national event, sponsored by the Fellowship of Christian Athletes (FCA).

     There were over 50 parents, students from grade 3 to high school, along with teachers, administrators and community members such as I that participated.  Two short Bible verses were read, then Coach Hiers and the Middle School Huddle Leader, had all participants join hands and pray out loud.  If one did not wish to pray, he/she just squeezed the hand of the next individual.
       I was very appreciative that I was asked, as a retired senior military officer, to participate in the prayer and the lead the group in the Pledge of Allegiance to the flag of our country.  This was chilling!

      Here is what I found most fascinating-- there were many different people attending.  Everyone was positive and respectful of each other, their school, their community and most of all, what the future held for many of the students.  Each student manifested a strong degree of  trust, hope, drive, dedication, desire,  honor, pride and privilege in their faith experience, their school, city, county, state and our country.

     Even more interesting was the fact that I saw real executive coaching in action!  Each teacher and coach that I watched was very encouraging to the many students that participated--giving each student the direction and counsel they so eagerly sought in today's turbulent world.

     OK, we were in the Heart of the Bible Belt and participating at a private school.  I get that--- however, what was exciting for me was the fact that the kids, parents, school staff were excited to be supporting each other,  their school, their community and their nation. 

      Often times in life in general, we sometimes think that nobody cares.  That sure was not what I saw on Wednesday!  I was very, very impressed with Coach Hiers and his colleagues.  Don't loose faith in the upcoming generation-- we have some wonderful human beings that are preparing and planning to take our places.  We have done well.