Bop a Bunny

I was waiting for my wife to shop at the mall the other day and began watching kids at an arcade. The game that intrigued me the most was something like Bob a Bunny. I used to play that with my kids and was surprised to see it still existed. The difference was this time I was an outsider, not involved with a mallet waiting for the next pesky bunny to rear its head so I could bop it on the head. As an outsider I could see the relevance of the game to small businesses with which we deal.

Many business owners operate their business like the bop a bunny. They come to work each morning armed with a mallet and then wait for the phone to ring or a shipment to be delayed. When it happens they spring into action with the hammer. Bop! Then the accountant sends the financial report for the month. Expenses are too high. Bop! We restrict everyone’s time and maybe let one person go. So then quality and service suffer so what do we do…. Bop! You would think that once you bop a bunny it would stay down but no, here it comes again. The same bunny you just bopped a second ago.

The fact is that without a strategy and a view of the business from an overall perspective, bopping one bunny will cause another to pop up somewhere else. Your business struggles to survive but you never really prosper. At some point your money runs out and it’s Game Over. Now you search your pockets to find another infusion of capital to keep stay in the game. If you don’t change something though, that quarter will run out after you bop a few more bunnies.

The problem is that if all you have is a mallet, every problem and issue is addressed like the bunny. Problem solving takes a real process, time, effort and diligence. When we see a crisis, we look for the underlying problem in order to find a solution to eliminate the problem. That’s one bunny that won’t pop up again.

In order to solve problems effectively we must first establish a strategy for the business. In bop a bunny the goal is to get as many points as possible. In business it is to get a certain revenue or profit. The problem in business is that it isn’t as simple as just taking a mallet and bopping a bunny. The bunnies have no interest in your success or failure. That isn’t true of the bunnies you are bopping in your business. Your bank, your employees and your customers all care about how you treat them and handle their concerns, issues and problems. They are willing to contribute to the success of the business IF you let them. Successful businesses have meaningful strategic plans and solve problems efficiently and effectively. Businesses that struggle seem to bop at problems just like the kids in that arcade.

Are you too user friendly?
By Evan Wise
Management One®

Computers and technology work to simplify a complicted technical world by making things more and more “user friendly”(UF). The business world, like other aspects of life, has become saturated with technology designed to be 'user friendly(UF).' Often, UF means that the choices have been simplified or eliminated and technology makes the decisions for you. This decreases the need to for expertise or professional judgment. Although there are many benefits to making things UF, like everything there are downsides too. Being aware of the downsides can help you stay ahead of the competition.

I began thinking about this during my early career as a papermaker. When I started, there were no computers and the sensor technology was in its infancy. A machine operator knew the paper was too dry when the hairs on his arm stood up from the static electricity as he walked by the huge reel of paper winding up at the end of the machine. He then went and manually adjusted some pressure control valves to lower the dryer temperature. Once computers came on the scene, all of this became automatic, which seemed to be a good thing. The problem arose when the automatic system failed to operate as it was designed to. The computer was handling all the adjustments and soon the newer operators didn’t know where the manual control valves were. Productivity in the plant was quickly becoming a slave to the new UF process.

You find the trade-offs between user friendliness and manual intervention all the time. Go to a restaurant and a waiter provides user friendly dining compared to a buffet where you get a chance to look at the food, quality and preparation before serving yourself. On your computer things get more and more user friendly all the time. Remember the days of DOS when every entry was manual and you told the computer what to do? The system was reliable and never “crashed”. Today, a PC is user friendly which means there are many programs running in the background automatically. You press a button and you really don’t know what is happening, but you hope it is doing what you want. Sometimes programs or even 'updates' conflict with one another, making our system unstable and prone to crashes. But who knows which programs are the cause, or whether its simply a bug in the program itself? We trade off user friendliness for control.

We approach businesses the same way. Retailers can find Open to Buy planning solutions that are user friendly. It might even be a part of the POS system. You will get a number and you can use that to run your business. Unfortunately, every business is different, every market is different, every vendor mix is different and every staff is different. A UF approach can’t take all of that into consideration so you lose control in order to make the process simple. On the other hand, UF means that the user can spend his valuable time elsewhere and that is important.

At Management One®, we accomplish the best of both worlds by implementing our planning processes (Winning@Retail™) through a team of professional experts in merchandise planning who we call affiliates. We maintain manual control of our process to maintain the highest degree of flexibility and usefulness. The affiliates then review every plan and make the results UF for the retailer. That way the retailer gets the action plan and can spend his time making the plan into reality.

We take the same approach with our Winning@Business™ process. Every client is put through our customized strategic planning process and the steering team learns a management process that is modified to fit the individual company’s team, clients, products and operation. An affiliate trained in the Winning@Business™ process then makes the processes user friendly. The key here is implementation. Processes can be streamlined or automated. Attitudes, motivations, commitments and dedication must be cultivated on a person to person level. There are no shortcuts here. There is no way to make changing attitudes, motivations, commitment and dedication a quick and easy process. It must be implemented carefully and over the long haul. The Management One® affiliate remains dedicated to the success of the business. Many companies have spent a lot of money looking for a shortcut to make this happen quickly. Shortcuts simply do not work.

Everyone wants simplicity but the irony is that simplicity only seems to make our world more complicated. Many owners would like processes that don't require skill on their part. In order to have an effective process, you need to have someone in the loop that understands the process and can 'adjust the knobs' when things don't work as they should. Being able to convert complicated data to simple, actionable goals is what business success is all about. Small business owners must already wear many hats so it's critical that the burden of analysis is not placed too directly on their shoulders. Don’t expect UF to make things simpler. Don’t give up control of your business. Don’t ignore important decisions because you don’t have time, they are too complicated or you don’t understand them. Get the professional help to make the right decisions and watch your business grow.

Order and Chaos
by Evan Wise
Managing Director of Management One®

Businessmen have always wanted to define their business as controlled, ordered and predictable. In reality, doing business involves chaos that is uncontrollable. Why does one sale work beautifully while the next is a bust? Why was production great last month but this month mechanical outages killed the totals? The truth is that as managers, we can influence the outcome but not control it. Don't ever think that you have control over the random events that add up to your business success or failure.

How does your organization deal with the chaos in business? The answer
to that question is often the difference between great profits and mediocre profits or even losses.

Business management can be thought of as a continuum. The spectrum
ranges from tight authoritarian control on the left to utter chaos on the right.

As with most approaches neither end represents the optimum. The ideal way to manage a business or any organization for optimal results is at the edge of chaos. Let's look at the differences.

control                                                                  edge of chaos                 chaos

When a change occurs, a problem is presented or an opportunity arises, the control oriented organization responds with a centrally developed plan of attack. Executives determine the tasks and directives for action that are sent to employees. Sometimes this can be the best approach when the result can be predicted. One example might be when a Winning@Retail client is found to be over stocked in a certain classification. The directive to cancel goods can be made at the top.

Too often, however, companies approach issues that are not black and
white with the same top down approach that is typical of the left of
the spectrum. Even though random events dictate the outcome, the
decisions are made and implemented like the outcome is assured if the right decision is made at the top.

When the outcome is not what the executive expected, often the people
implementing the decision are blamed. Sometimes even the decision is
blamed. The executive hopes outside change won't affect the business. Employees are left to cope as best they can and the company lacks direction and consistency. Often the real culprit is the process of decision making itself.

Winning@Business keeps a business at the edge of chaos. Executives develop the visions and values that employees need to make decisions that are internally consistent. Executives prioritize the problems and opportunities on which the company will work. Executives set the priorities for problem solving and achievement and determine how results will be measured and monitored.

These are the steps that executives and owners take to prevent the company from going too far into chaos. The executives recognize that the solutions must come from employees who are faced daily with decisions, obstacles and changes. Executives making decisions and solutions from above can't foresee all of the interactions and random events the business will face. Therefore, employees must be empowered to make decisions, solve problems, seize opportunities and take action on a day to day basis. This empowerment is what keeps the organization from moving too far toward the erroneous belief that events can be controlled.

Order in business is a myth. Business involves a series of unplanned events and
changes that result in success or failure. Chaos is when executives don't allow their employees to respond to these changes when the changes dictate. The edge of chaos is where the organization functions best. The challenges force employees and executives alike to create new directions, innovate new solutions and keep the company at the front of the pack. The executive sets the course but the organization must get there.

Winning@Business™ requires the company to be constantly solving problems and moving forward.

Since 1990, Winning@Business™ has proven to be an effective tool to help small and mid-size businesses to work together to solve problems, seize opportunity, manage change and grow a business. The simple tools and methodology help owners approach challenges with the right approach. The process trains employees how to make the right decisions that move the company toward the strategy. The bottom line is a more profitable bottom line.

Consultants and Small Businesses: Choosing a Consultant
By Evan Wise, Managing Director of Management One

The fear of making a mistake in choosing a consultant keeps many businesses from making the choice at all. That, in itself, is normally a big mistake. Just like a teenager doesn't quit dating because the first date was not a success, the search for the right consultant should not end with the wrong choice! There are some guidelines that you can use to choose the right person for you.

The first consideration is values. Your business values are the guidelines that you use to make decisions in business. If a consultant does not share your values you will probably end up not using his advice and guidance. To assess this, take the time to speak with and get to know the consultant. The topics may include family, friends, hobbies and especially work ethic. This is an important reason that Management One affiliates take the time to meet with each potential client. They understand that choosing a consultant is important to a business and the process works best when the consultant and the client can communicate and respect one another.

The next consideration is process. As a small business owner you have probably survived shooting from the hip on decisions long enough. The last thing you need is a sidekick that is shooting from the hip too. A good consultant has a process and methodology he has used successfully for many years. We use Ultimate Retail™, Winning@Retail™ or Winning@Business™ to bring success to businesses. These processes have been proven over the last 14 years. You don't want to be the test monkey for a consultant's new process.

When you hire a consultant you are hiring experience. Generally a good consultant has a network with which he communicates often. The larger and more available the network, the more varied and valuable the advice he will bring to the table. Management One® affiliates have a network of 40 professionals within the team to gather input, ideas and recommendations.

Set a timeframe for working with the consultant to give you a chance to evaluate the relationship. Generally a review at 4 and 8 months and an opportunity to end the relationship at 12 months is a prudent approach to providing a fair evaluation of a consulting relationship. Keep in mind that it will take 3 months for a consultant to get a good feel for your business. You don't want someone that feels they know all the answers and starts shooting out ideas on day one. That may be impressive however the solutions are generally based on a different business and not yours. Some patience is required for a positive experience. Once the consultant has a feel for you, your operation, your customers and your business, he can begin to lead you and your team toward solving problems and seizing opportunities. It will take 3 months or more to start seeing the effects of the changes. A year is probably the best timeframe to get a proper analysis.

The corrolary to setting the timeframe is to set goals for the consulting relationship. That requires a measurement process to benchmark progress against those goals. You should be able to point to the cost benefit analysis of the consulting arrangement at the end of the year. This process must be established and agreed upon BEFORE the engagement starts. There are no guarantees in business or in consulting however measurement of success is important.

Finally, find a mentor and a teacher. A consultant that comes in and tells you, "Do this, move that, publish this," may help business today, but he has merely become the boss and not a consultant. A good consultant will mentor you and teach your organization how to be more effective. After the first year the consultant's role may change. He should have taught you and your staff to operate more effectively. He now can begin challenging the thinking, actions and goals you are setting. Just as business changes constantly, the role of a consultant changes too.

Problem Solving vs. Process Improvement
By Evan Wise, Managing Director of Management One

Many organizations focus on problem solving rather than improving the processes that make up the business. This is a key difference between Winning@Business™ and fads like six-sigma, TQM, ISO and other similar efforts. Quality is a necessity to stay in business today while process improvement is a competitive necessity to succeed in business.

In a traditional management position, an individual high in the hierarchy does the problem solving. Employees are then told how the solution is to unfold and what they are required to do to make it happen. There are many reasons that this approach is less and less effective every day. Among these are the emasculating and debilitating effect that being "told" what to do will have on employees that are creative, intelligent and able. In other words, any motivation is being taken away from the best employees. The solution lacks the robust character that can be achieved when a team or organization has input to solutions. The approach eliminates any flexibility that the employee may have to adjust and adapt to changing situations to keep a solution viable.

Problem solving in a traditional organization becomes very tactical. It results in a series of instructions to the employees instead of communicating an understanding of the problem and issues surrounding it. Often success reflects well on the manager that came up with the solution while failures are blamed on poor help, an individual that failed or other external reasons. In most organizations this problem solving process is reactionary rather than proactive. It focuses on urgent issues rather than taking a longer-term strategic view on what is important. These are among the reasons that this process is very costly and keeps a company from being as competitive as it could be.

Another characteristic of these traditional organizations is the fear of challenge and change. No one volunteers bad news or deteriorating situations so they go undetected at the top until it is too late. Meetings are generally a forum for the manager to download information. Sometimes the meeting gives employees an opportunity to confirm the decisions that the manager has already made.

Measurements and policy statements are normally critical in these organizations. Measurements are used to hold people accountable for getting the results that the manager’s decision was designed to achieve. Performance reviews are typically used to blame and deride instead of support and plan for the future. The policy statements are written to be certain that the 5% of people in the company that might cheat the system don’t cheat the system. In reality they prevent the 95% of the people that are, or could be, committed to the success of the company from having the flexibility that they need to make needed decisions. There is a fundamental lack of trust in these organizations. This lack of trust led to unions in the past but still exists in many organizations today.

Because of the situation described above, these managers focus on daily problems and react to them. They deal with what is urgent rather than what is important. Although this situation doesn’t make sense when you read it, there are countless companies big and small where this is the daily reality.

Winning@Business™ is a different model. It starts with a strategic plan that is one page long so that everyone in the company can understand it and use it in the course of making daily decisions. The strategy identifies the objectives the company will achieve but also the guidelines for making the decisions that will get the company there. These are the core values of the company.

The Winning@Business™ process leads a traditional company described above to one where executives don’t make the day-to-day decisions. Executives set the direction and the employees make the decisions. Measurements are used constructively to establish the priority of the problems and opportunities that will be addressed. The measurements are used to set the goals to be achieved in solving the problems. Measurements are used to confirm that the goals are achieved. Measurements are not used to place blame.

This brings us back to the issue of problem solving vs. process improvement. Problem solving can be reactive. A manager sees the obvious problem, develops a tactic and starts directing its implementation. Without a systematic approach, often the problem addressed is only a symptom of an underlying process defect. The Winning@Business™ process provides a process whereby others are brought into the process of determining the actions. Challenges to opinions are expected and creativity and innovation replace the single-minded approach of a traditional management philosophy. The team identifies the underlying process defects and goes to work on them.

Winning@Business™ is a simple process which is what makes it so effective. That doesn’t mean it is easy. When a company is mired in a traditional management system, moving it forward takes a tremendous outside influence.

The key to success is implementation. The key is using a process that people can understand and use every day.

The United States grew from an industrial base. It then moved to technology to lead the world. The service economy followed that. If we are to maintain our top place in the world’s economy, we must tap into the innovative spirit and creativity that has been locked within organizations. Sandra Black of UCLA studied the impact of team based organizations and concluded that “these firms experience higher labor productivity.” New levels of productivity, motivation, and achievement are possible but not when businesses continue to operate the way they have in the past.

At the end of the day, every fad depends on effective implementation to have a positive effect on the workplace. Winning@Business™ provides the direction and the methodology to successfully implement ideas, innovations and creativity, even if these come in the form of fads.

Where to go next?
By Evan Wise, Managing Director of Management One

Wander into the local bookstore and mosey over to the business section? You will find hundreds of titles and ideas on how to grow your business. You can find everything to help you easily make more money from becoming a Zen Businessman to get rich quick schemes with no money down. There are new fads coming on line all the time from Lean Manufacturing and Six Sigma to Kaizen, MBO and the ever-popular MBWA (management by walking around). Need better customer service or quality control? There are books promising to teach that too.

Add to the list of book titles to help a businessman succeed are the hundreds of consultants and management trainers professing the use of these fads. Just as most of the management tools don’t work to make success easier, faster or greater, many of these consultants don’t bring the results that are promised either. How do you know which one can help your business?

RULE 1: There is no free lunch. Buying a book or paying a consultant does not insure success. You must insure success. A good consultant can steer you in the right direction and help you work more effectively. You still must do the work.

A consultant or a book should be an investment like any other investment with a positive ROI. What is the cost and what does it bring to your bottom line? When implementing tools that are the old stand-bys like strategic planning, pay for performance, cycle time reduction or the newer six-sigma, lean manufacturing and other management methods, often success is never measured in dollars and cents!

RULE 2: In choosing a method to improve your company, find a way to measure success.

Success demands a long-term horizon. Success with any business process is a marathon and not a sprint. A consultant or trainer can teach a “willing” student how to use a tool relatively quickly depending on the complexity of the process. The paradox is that the more complicated the process, the less likely it is to succeed. Once the businessman knows how to use the tool, there is no guarantee that he will.

RULE 3: Find a process that is proven and simple.

The effort required to move the information from the brain to the heart is huge. Without that patience, the tool will become another management book on the shelf. Assume that the top person finally learns the new process and believes in it. Then he must live the process every day to convince the organization of his commitment. Then the entire organization must be taught how to use it. Then someone must work with the entire organization to get them to believe in using the process. The simpler the process, the easier and more assured success will be.

Finally the payback starts to hit the bottom line.

A book on management may cost $30 but a consultant will cost thousands. The value of a management consultant over a book is that he is hired to assure implementation.

RULE 4: Find a consultant that is with you for the long haul.

An organization needs a consistent and effective method to evaluate changes and identify those that will work for the organization.

Once a company can accomplish this, they must have a process to implement the changes needed. Make the right changes and the business grows. No changes and no improvement. The wrong changes and….

We have found many times over that implementing a change in the way a business operates takes at lease 9 months to a year. Without that commitment to a new tool or process, you are better off buying the book, reading it and putting it on the shelf where it won’t get in the way of your progress. To make real progress, grow your business, develop your people and get a very positive ROI on your investment, choose a consultant that is committed to your company.

Hiring the right consulting firm can have tremendous benefits to your company and its bottom line.

A billboard in Atlanta states, “What really matters never changes.” Often we just need to be reminded of the fundamentals and how to use them. For most businesses, success is not in technology or gimmicks or even the latest management fads. Success lies in people and getting them to work together to manage change, solve problems and grow your business.

Go back to the office and chances are there may be a consultant or two waiting to lure you into their latest method for reaching the top. Follow these four rules to help you find the consultant that is right for your company. Oh, then ask about the price.

Growing Pains

We constantly hear about small businesses, mid-size business and big business. We accept the delineations and pretend we know exactly to what the speaker is referring. The question that constantly exists is, “When does a business stop being a small business and start being a mid-size company?” The more important corrolary is, “how do I do that in my business!?”

Although there might be many definitions of a small vs. a mid-size business, the one that the owner has most control over is the management of the company. Most businesses start out small. Everything is small except the ideas and dreams. Normally money is limited, space is at a premium, staff sizes are small and the owner is an entrepreneur. One aspect of an entrepreneur in a small business is that he makes all the decisions himself and he normally carries out many of the required actions himself as well. Often he may be the only one in the business. This is truly a small business.

With hard work, a viable strategy that is implemented properly, a great product and a little luck, the business grows. That means moving out of the basement and into an office. It means hiring some people to help the owner carry out the required activities like sales, purchasing, bookkeeping, fulfillment and production. Often the owner continues to keep one aspect of control in his own realm and that is making decisions.

In many businesses the fact that the owner must approve or make all decisions hampers the ability of the company to grow to the next level. Slowly the growth curve flattens out and plateaus as a level commensurate with the capacity of the owner to make decisions that are critical to the growth of the company. The more micro managed the company, the lower the level at which revenue, market share and profits peak.

In order to become a mid-size company and orient the growth curve skyward once again, the company must change the way decisions are made. The culture of the management process must change from the top to the bottom. People must be trained to make decisions that are critical their success in their job. Employees must be privy to the information that is needed to make the right decisions without input from above. Sometimes the right people must be put into positions in the company to spur success.

The buzzwords and catch phrases like “empowerment” and “trust” must become reality throughout the organization. This is a difficult task. It requires a long-term commitments and a management process that works. Often that means outside guidance and help to stay on track to change the culture and become a mid-size instead of a small business.

Compensation

Compensation is becoming even more crucial in small businesses as more factory jobs go overseas and national companies move operations out of Tucson. Unemployment has lowered the bar on raises as many people are just happy to have a job.

With the compensation world changing, successful businesses need to take a broader look at compensation. The first question is “what are you trying to accomplish?” Certainly workers need to be able to feed their family and provide a standard of living that is acceptable. That is what is referred to as base pay.

Too often owners misinterpret the effects of base pay. They feel they are paying 10% or more of revenue to employees and in return they should get loyalty and motivated interested employees. When they don’t, they get jaded and disappointed. Their attitude transfers to employees and, over time, the whole organization decays into a situation of surviving day to day from 9-5.

Owners must realize that base pay is expected by the employees. Even a nice 10% raise is motivating for a very short time. The raise as part of base pay becomes part of what the employee expects in return for his or her services. Increases in base pay become permanent but the motivation is temporary. If you take it away it is de-motivating for a long time. In addition, annual raises means that it will be 11 more months before another raise which is disappointing in itself.

The purpose of base pay is not to motivate employees nor will it assure top-notch performance in return. Base pay is the cost of getting the employee to show up and do what he or she is told. There will always be a few that will not even show up on a regular basis and there will always be some with a tremendous personal work ethic that will transcend compensation but on average, don’t expect too much from base pay.

Base pay is important to provide employees a decent standard of living. Base pay is a part of keeping people on staff because hiring and training is so expensive. Don’t underestimate the importance of base pay but don’t expect too much from it either.

Achieving Excellence

Beyond base pay, compensation is often used to achieve the goals and objectives of the company. The owner or executives must first define excellence. Then you must motivate the staff to achieve it.

People perform to higher levels of achievement when they are motivated. How do you use compensation in your business to motivate employees to achieve more? One means that works with everyone from toddlers to geriatrics is “fun and games.” Work in itself can get routine and repetitive and the goals an owner constantly harps about can sound like a broken record. How do you change the receptivity of workers to the message? Contests and games with a monetary reward can be effective. Often the reward can be an experience like a trip, dinner, evening out etc.

There is another aspect of the game that is important. Recognition for the winner is as valuable as the monetary reward. Just as the winning football team prances around with one finger pointed skyward for days after a victory, the winner in a contest in the business reminds everyone that sees him or her for days of the importance of achieving the goal set by the owner.

Commission or pay for performance is another important part of compensation. Again, defining excellence is the first step. Finding a measurement that is reflective of that performance is the second critical step. Then setting the compensation or commission based on achievement of the desired goal. This assures that payment will be covered by improved results. Unlike base pay, the raise is not permanent and the motivation lasts as long as the compensation.

The right compensation plan for your business can be as important to success as having the right products or the right location.

Managing a Business vs. Controlling it
By Evan Wise, Managing Director of Management One

Is your business more frustrating than you thought it would be? It was exciting when you were doing the planning because on paper it all worked like it was supposed to work. Not any more! Getting control of your business and influencing your market can be the greatest nightmare or an exciting challenge, but what it cannot be is avoided.

We always start our process of consulting with a small business using a SWOT analysis. This is the acronym for a process we use to create long-term objectives that are part of the strategy for a company. The acronym stands for Strengths, Weaknesses, Opportunities and Threats. These areas provide the perspective for looking at where a business is and where it is heading. They can be summarized as follows;

Strengths and weaknesses are your present liabilities and assets, and are the only two of the four parts of the analysis of a business that are controllable. Opportunities and threats exist and are important to a business but the business has little of no control over an opportunity or threat. For example, employee turnover could be a strength if it is low or a weakness if it is high. It is controllable through training, benefits, pay, empowerment etc. An area like the economy would be an opportunity if the economy is expanding in your area or a threat if it is on a downward slide. These are not controllable by you but you should be aware of them and respond to them to take best advantage.

Management of a business since the industrial revolution has focused on control. Taylorism, the
invention of the assembly line, and American military success in World War II have all contributed to
a top down structure that gave more power to managers higher up in the chain of command. Small businesses emulated this structure. Despite research such as that done by Elton Mayo at Harvard in the 1930s revealing the intensely demotivating effects of hierarchical management, and the decreases in inefficiency that resulted, this system became the dominant system of management. Managers devoted their time to trying to control the present situation.

Because management has its hands full taking care of day to day business, managers tend to overlook the opportunities and threats facing them. Some managers are aware of them or even try to plan for them, but more often than not, they fail miserably and return to strong-arm control tactics.

Another facet of this business approach is the explosion of “science” in the 20th century. Before this time, science concerned the discerning of the physical laws of nature. These were validated because they could be repeated consistently. Then every discipline wanted to be a science. We had social science, military science, and business science. Managers wanted to run their business like a science which means they could make a decision and there would be a known cause and effect. The problem was that the effect only happened some of the time! This frustrates managers and employees alike as the executives then try to force adjustments and apply blame in the face of sub-optimal results.

At Management One® we have oriented away from the control aspects of management. We replaced the old style of management with a management process called Winning@Business™. This process involves everyone in the organization to give more robust solutions to the business. The buy-in that is achieved through this process results in greater motivation and better implementation of the solutions so that profits and success are enhanced.

We start with a strategy that defines the vision, values and objectives of the business. The management process is then implemented to turn the strategy into reality.

”Where does that leave me concerning opportunities and threats?” you ask. “What about the creative
aspects of a business? How do I change, adapt and grow?”

Opportunities and threats, by definition, are not controllable. One important way to achieve success in this arena, is to turn to your marketing person or team. Successful marketing isn't simply about selling what the business produces. It is responsible for dealing with opportunities and threats. It is responsible for creating a strong brand image which conveys a company's vision, it's "brand image", both within the company and outside it. We are developing the Winning@Imagination™ process to
develop a strong brand image.

The brand image is an all-encompassing concept that combines the vision of the company with the message to the world. It's creation requires a creative freethinking process that fully understands the company, the product, the market, the motivations -- and the threats and opportunities facing the business.

IBM had an organization that was strong on control and managed their internal strengths and weaknesses well. They lost out when their marketing arm decided to stay in big business and didn’t see the threat from the likes of Dell and Compaq which are now part of HP.

Small businesses are challenged to develop a productive discourse between the executives and
marketing team. Businesses that lack the influence of one aspect or the other can supplement
their business resources by hiring a consultant from the outside to supply the missing link. Businesses that are fortunate to have both influences often need a consultant to facilitate the process of bringing those two views together into a meaningful and logical consensus so that the business can move forward.

No one ever said small business is easy. Knowing where you are going, why you are going there and having your staff on the journey with you can be one of the most exhilarating and meaningful experiences. It sure beats the frustration many small businesses face today.

The Interview and the Hiring process
By Evan Wise, Managing Director of Management One

Hiring the right person for the job is one of the keys to the success of a business. Many small businesses that become clients have a hiring process designed to put a warm body in the organization as quickly as possible. That means a sign in the window or an ad in the paper and the first person through the door is hired. Many times this person proves to be the wrong person for the job. For most of us it is much easier to hire the right person than fire the wrong one. Although we have a detailed hiring process we implement with clients, a few of the key points of interviewing prospective employees may help.

Preparation is the key. Interviewing is not just asking questions but asking the right questions for the right reasons. Before asking the question you should know what information you are seeking and how it relates to performance of the job required. That means that the interviewer must have an intimate knowledge of the job to be done. Often, several people from different levels in the organization should interview to get a meaningful analysis of the candidates qualifications for THIS job.
The interview process and line of questioning should be developed before the interview so that every candidate gets the same line of questioning. Otherwise it will be impossible to compare various candidates. This will also keep you from spending your time in the interview preparing your next question instead of listening intently to the answers the applicant is providing. If, in the end, you found some key questions that you should have asked, DON’T hesitate to call the candidate back for a follow up interview to be sure you choose the right person.

Another reason to prepare the line of questioning before the interviews is to avoid illegal questions. Consult an attorney if you have questions about this but you can be fairly certain you should avoid questions pertaining to marital circumstances, age, disabilities, religion, gender/physical appearance, and national origin.

Try to group the interviews as much as possible. Time changes perception and you want to make the right choice. Also, once you interview 3-5 people for the job, you want to get back to the best prospect soon. If interviews are scattered over 2 weeks, the first person might be the best but by the time you get back to them, they have another job.

Getting the real story is the mark of a great interviewer. One way is to find out how the candidate handled similar work or decisions in the past. Many people are great at getting the job but not doing the job. You want someone that can do the job. The best way to identify that is to find someone that handled real situations to your level of expectation. Don’t let them off with a casual account of events. Dig into the situation for details as many times there is much more to the story than the initial spin the applicant puts on events. For example, a person claiming to have led a team to implement a $100mm project may have, upon further questioning, only participated in the project in a minor way.
Take notes on each candidate and record responses to each question. At the end of the day compare notes and analysis with other interviewers. It is amazing that without notes every candidate will become jumbled with others. “Was Cathy the one that blew the big sale or was that Carol?”
Don’t make your decision during the interview. Often times people find someone they like right off the bat and make a mental decision that this is the person. Liking someone is often different than finding someone that can do a good job. If you make a decision in the interview, you are too likely to spend the interview time selling the company and the job rather than interviewing and finding out if the candidate is right for the job.

There is a lot to the up front preparation to hire the right person. There is a lot to the offer and the actual hiring process. Doing the job right pays dividends for years. If you don’t have any hiring process now, getting the interview right will be a step in the right direction.

Upgrading the Management Process

Small business has as great a need to grow as larger companies. The difference is the drive comes from within instead of from investors and shareholders. That means that the most successful small businesses will be those whose owners and leaders have passion, drive and are willing to take prudent risks to grow. That doesn’t mean they have the capital to do so.

Many clients are constantly looking to buy a “system” that will answer all of their problems. “We need a new Point of Sale system” or “our accounting software is holding us back.” We need another production machine, scale, truck …. There is always a problem at which, by throwing money at it, we can grow to the next level.

Sometimes the need is financial. “If the bank would only increase our line of credit by 50% we could double production!”

The truth is that normally the growth never follows the expenditure. The simple, most straightforward reason I have seen is “People”. There is more productivity and capacity locked in the existing people than any new equipment or system could deliver. The problem is the leaders don’t know how to unlock that resource and use it. The finger that points to the solution must point back at them and they are not comfortable with that. It is easier to point the finger at the bank or at a vendor to bring the solution.

We have found that getting people to work together has tremendous benefits. In one case an electronics manufacturer was able to increase revenue 50%, reduce backlog from 3 weeks to two, work one shift instead of 2 in the course of a year. A folding carton manufacturer was considering a new die cutter since they worked for 15 years trying to get the old one from 50,000 impressions an hour to 70,000 without success. In six months, without any new equipment, the existing staff was able to get the die cutter to 90,000 impressions an hour.

The point is that throwing money at a problem is the easy way out. Sure many solutions take some cash to implement. The problem is that too often the leaders, owners or executives look to the outside for a solution before they garner the internal capabilities.

Training a team to work together to solve problems, seize opportunity, manage change and grow a business is a difficult process. Most of the time it requires outside help… throwing money at the problem. In this case the money is like a seed that grows to yield a lot of fruit, year after year.

An executive has trouble implementing the process because he is suspect. “What’s in it for him?” is a question in the back of everyone’s mind. “Why is he changing all of a sudden?” A neutral party is needed to bring the process, gain the credibility, teach and nurture the process and make the change happen.

Find a person that has the right process for your organization. Use the same diligence as you would in choosing new equipment for your business. Find a person that will be committed to your team for the long haul.

Change

In the many years of consulting, managing and running businesses we tend to believe that we have heard it all. I have found that many of you may not have heard it all and might benefit from a list of reasons why your company should not change. Here is my list. I would be happy to hear about any others that I haven’t heard yet.

We’ve never done that before.
We’ve done that and it didn’t work.
No one else is doing that.
That is what everyone else is doing.
We’ve done it this way for XX years.
It won’t work in a (small, private, specialty, rural, urban, our etc) company.
We need more study and information.
It is too much trouble to change.
This company is different
The boss would never buy it.
The employees would never accept it.
The marketing people won’t buy it.
Sales can’t sell it.
Production can’t produce it.
Finance says it costs too much.
Customers won’t buy it.
The janitor won’t accept it.
We don’t have the personnel.
We don’t have the capacity or equipment.
We don’t have the time.
It’s not my job.
We aren’t ready for it. Wait until…
It’s impossible.

The interesting thing about this list is there are normally no facts, data, study or solid information to accompany any of these responses. Any one might be true. Most of them most likely are not based on fact but only serve to keep the company from moving forward. People fear change because it challenges their security in how things are working today.

Great businesses both large and small must change to stay alive. Plan on it and plan for it. When a person opens a small shop and he is doing the managing and the work to serve the customer he is in control. The trouble is he doesn’t have a business like he thought but rather, he has bought himself a job. Soon, providing the concept, product and service are valid, customers come. More customers come. Soon he needs a helper, a bookkeeper and an accountant. The business grows and this owner must learn to manage and guide the business instead of just serving customers.

This is natural change and many small businesses fail because they don’t plan for this change. If this natural change doesn’t occur, the business will die. It means more customers aren’t coming. It means that you are the only one in the shop. It will be difficult for you, alone, to do the job to provide enough revenue to pay the rent, utilities, taxes, supplies, advertising and your own salary. Sure you can struggle to make ends meet. Some stay around longer than others. Some have more stamina or stubbornness. The inevitable end is burnout, sellout or bankruptcy.

The bottom line is “grow or die”. Growth brings change. Plan for change. Have a strategy that looks for ways to change and to grow. Make sure that you don’t find yourself grabbing a quick line from the list above to send your business down the tubes.

Add to the list of book titles to help a businessman succeed are the hundreds of consultants and management trainers professing the use of these fads. Just as most of the management tools don’t work to make success easier, faster or greater, many of these consultants don’t bring the results that are promised either. How do you know which one can help your business?

RULE 1: There is no free lunch. Buying a book or paying a consultant does not insure success. You must insure success. A good consultant can steer you in the right direction and help you work more effectively. You still must do the work.

A consultant or a book should be an investment like any other investment with a positive ROI. What is the cost and what does it bring to your bottom line? When implementing tools that are the old stand-bys like strategic planning, pay for performance, cycle time reduction or the newer six-sigma, lean manufacturing and other management methods, often success is never measured in dollars and cents!

RULE 2: In choosing a method to improve your company, find a way to measure success.

Success demands a long-term horizon. Success with any business process is a marathon and not a sprint. A consultant or trainer can teach a “willing” student how to use a tool relatively quickly depending on the complexity of the process. The paradox is that the more complicated the process, the less likely it is to succeed. Once the businessman knows how to use the tool, there is no guarantee that he will.

RULE 3: Find a process that is proven and simple.

The effort required to move the information from the brain to the heart is huge. Without that patience, the tool will become another management book on the shelf. Assume that the top person finally learns the new process and believes in it. Then he must live the process every day to convince the organization of his commitment. Then the entire organization must be taught how to use it. Then someone must work with the entire organization to get them to believe in using the process. The simpler the process, the easier and more assured success will be.

Finally the payback starts to hit the bottom line.

A book on management may cost $30 but a consultant will cost thousands. The value of a management consultant over a book is that he is hired to assure implementation.

RULE 4: Find a consultant that is with you for the long haul.

An organization needs a consistent and effective method to evaluate changes and identify those that will work for the organization.

Once a company can accomplish this, they must have a process to implement the changes needed. Make the right changes and the business grows. No changes and no improvement. The wrong changes and….

We have found many times over that implementing a change in the way a business operates takes at lease 9 months to a year. Without that commitment to a new tool or process, you are better off buying the book, reading it and putting it on the shelf where it won’t get in the way of your progress. To make real progress, grow your business, develop your people and get a very positive ROI on your investment, choose a consultant that is committed to your company.

Hiring the right consulting firm can have tremendous benefits to your company and its bottom line.

A billboard in Atlanta states, “What really matters never changes.” Often we just need to be reminded of the fundamentals and how to use them. For most businesses, success is not in technology or gimmicks or even the latest management fads. Success lies in people and getting them to work together to manage change, solve problems and grow your business.

Go back to the office and chances are there may be a consultant or two waiting to lure you into their latest method for reaching the top. Follow these four rules to help you find the consultant that is right for your company. Oh, then ask about the price.

Family Businesses and how they survive

Did you know that 177 of the S&P 500 companies are family owned (FO) and run? The performance of these companies shows a 15.6% ROI compared to an 11.2% ROI for the non-family owned (NFO) companies. The FO companies are growing revenue at a 23% clip while the NFO companies are growing at less than 11%. When you stop and think about it, aren’t the oldest businesses in your own hometown the family owned and operated business?

So what do the best FO businesses have that others don’t have? Is there a formula for success hidden behind their doors? Like most mysteries, once you define the right question and see the answer, you will probably realize that you knew the answer all along.

First and foremost, the families of FO companies more often share passion, agility, drive and decision-making ability. These companies have a genetic team at the top and many times, throughout the organization. They know that the gold at the end of the rainbow is theirs. They recognize that succession planning is important and often train the next generation early in their career to work their way to the top to learn the business. When they fail, one of two problems can usually be identified. Often they have a younger generation that is not capable of taking over so there is conflict with the generation in control about levels of responsibility and authority. Just as often, however, there is a conservative traditionalist at the top who doesn’t know how to share responsibility and authority. They have a hard time trusting the younger generation, even those that are highly educated and very capable.

Most often, family members have unquestioned loyalty. Many FO businesses that experience conflict between generations bristle when an outsider mentions that conflict. The family run businesses seems to be able to make faster decisions than other businesses. Even when the decision is not the best, the loyalty and dedication to make it work overcomes the obstacles.

Why don’t all family businesses succeed? The reason is leadership and teamwork. A family business has a natural divide that must be bridged. It is impossible for an outsider to become a family member unless, like Robert Duvall as Tom Hagen the trusted consigliari in the Godfather, you can become a part of the family . How do you make employees who are not family, part of the team? How do you instill loyalty and drive when they know the road to the top is blocked by a family member?

The key is to make the employee feel like a part of the family-- the business family. Include them on decisions and discussions. Take their input and support their ideas. In short, a good management process headed by a good leader is the key. This is the same formula for success that can lead to prosperity for every business. It just works a little better when there is a whole family of loyal, driven supporters.

Once the team is established, a good leader can take the team to places they never dreamed they could go. We often see that in sports when the underdog wins the championship. When the leader gets the team to believe in themselves and lets the team become true partners in setting the direction, all things are possible. What happens when the leader tries to force the team to go where they don’t want to go? That is dictatorial and authoritarian and destroys the drive and energy that are the keys to success.

How do I know this works? We have been successful at bringing 40 affiliates from around the country into our business family. Each one shares the goals, drive and enthusiasm to move the team forward. Most are reaching goals that they never dreamed they could reach. They are helping their client businesses accomplish the same thing. The Winning@Business™ process has been the key to our success for our little family of 40.

Where have all the family businesses gone?
Used to be the men’s store in town was a small family affair. The women’s store where your mom shopped had been there for years. The shoe salesman knew you by name. Ever want to shop at a place where “everybody knows your name” just like the Cheers song depicts? Most people answer a hearty, “yes” to that question.

So why are so many of the family run businesses that you grew up with closing their doors? The answer is growth or, more accurately, lack thereof. Today a successful business needs to continue to grow. As competition increases from big box stores, the Internet, catalogues and other sources, there is more pressure to continually add new customers. The competition puts pressure on prices as well while at the same time, rents, goods and services are all increasing in price.

Thirty years ago it was much easier to do business. My father had a small men’s store in Ohio. He would buy merchandise without much of a plan. If he and mom saw it and liked it, they would buy a few smalls, mediums and more larges. The business was based on selling what they bought. If they had goods left over at the end of the season, everything went to 20% off. If it didn’t sell at 20% off, it was stored for next year. (Somehow the aging process brought new life and it was regular price next year)

The prescription was pretty simple and it worked. There was only one other men’s store in town so the choices were few. Dad knew everyone in town personally. Like many other family owned businesses, my brother and I went on to other endeavors and when Dad died, so did the business.

Many family businesses are struggling to succeed but the business model is different today. A successful business must pick the goods that are right for the target market. While relationships and sales ability are important, they won’t help if the merchandise is wrong.. The quantities of each classification of goods must be determined so that there is enough on the shelf to satisfy demand. Excess merchandise is marked down at the end of the season, which cuts into profits, but all the merchandise must be sold because it will just lose value by next season. Today, mistakes are more costly.

I have seen many businesses where the transfer of ownership to the next generation was a critical issue. In one example, the father retired but never let go. In theory, his two sons ran the business but no decision went unscathed by the father. This men’s store chain that had 35 stores at one time but they had shrunk to 23 stores before we got involved in trying to get them to accept current methods of inventory and business management. During one memorable meeting, the sons argued to adopt our methodology while the father screamed, “The key is to work harder and buy blue button down shirts!” Obviously, the succession to new generations brings new insights to the business.

Another example is a small packaging business in Chicago. The father retired and left the business to his son. The son bought new equipment, shed the large accounts and reoriented to fill a fast turnaround specialty niche. The business skyrocketed and is doing better than it ever did. This scenario is more common than not. In the 1960’s, Michael Smurfit took over a small paper mill and box plant in Dublin, Ohio from his father, Jefferson Smurfit. Michael grew the business to a $20 billion company before retiring and leaving his son Tony with a major portion of the business. Tony will likely move the business in other directions as well.

The key is growth and change. In one instance, the business was stuck in the past and failed. In the other examples, the businesses continued to grow and there was a very bright future. Unfortunately, many of the small family owned businesses in your hometown are stuck in 1985. The competition is changing continuously and that tells the tale.

The truth is that as the market accelerates and competition thrives, everyone is looking for a “place where everybody knows your name”. The impersonal shopping malls are losing business to thriving downtown areas that are being revitalized by small, family owned shops. There is a huge future for small businesses with a well-defined niche. The key is that they must keep a finger on the pulse of change and have a strategy and management process that allows them to adapt quickly. They need a team of individuals committed to both customer and business success.

Recently I was reading about Henry Ford and how he started the Ford Motor Company.

In short; He was an engineer working for the Edison Light Company in Detroit. In his spare time he built a motorized car in his garage. He was promoted at Edison until he was offered the job to manage the entire plant “if” he would give up wasting his time tinkering on automobiles. He quit the company and got some investors together to build a car company. They bought the engines from Dodge and the rest of the production was outsourced. The company was making money but Ford saw that the cars were too expensive. He saw an opportunity to fill an empty niche by making a cheaper car so everyone could buy it. He bought out the others and experimented with his assembly line. This was not a new concept but no one had ever done it on anything as complicated as a car. The line started at one end of the shop and a winch pulled the chassis through the shop. Six workers traveled with the car and assembled the parts from each station they passed. Soon they upgraded the process to a moving belt and different workers manned each station. The Ford Motor Car Company was born.

The true genius of Ford’s innovation was applying a delivery system to a market. He didn’t invent the car or the assembly line. He did see the need in a market and devised a way to deliver the product to that market.

Look at another example. Ray Kroc walked into a hamburger joint to sell them a milk shake machine. What he saw was a fast food restaurant that operated like clockwork. Students were moving product out the door with speed, efficiency and consistency. He bought the rights to the process and later he bought the company called McDonalds. He recognized that the process was possible to duplicate and he could grow by franchising. He was not in the hamburger business but rather, he was in the business of selling franchises. The world didn’t need more burgers. The world did need a way for ambitious people with some cash to get involved in a successful operation that could make them wealthy. He didn’t invent the franchising process. He did recognize that the success of the franchises depended on consistent product, training, and delivery.

Again, Ray Kroc recognized that the product did not make the business. The product was necessary but his method to deliver the product to the niche that needed it was the innovation.

This leads us to your business. These companies were large companies because the niche they filled were national and international in scope. Most small businesses target a narrower niche that Ray Kroc or Henry Ford. The laws of business still hold true. A great product does not make a great business.

A great business requires an innovative entrepreneur to see the right niche and devise the right method to fill that niche effectively. If your business is selling doughnuts, how can you make the process of delivering doughnuts to your target audience more effective. In my hometown many years ago the local doughnut shop had a van with doughnuts and coffee that went to every construction site in the town first thing in the morning.
The movie Field of Dreams had the tag line, “build it and they will come.” Many small business owners believe that philosophy for their own business. They believe if they buy merchandise it will sell. They believe if they open the shop people will come there because they opened the shop. “Build it and they will come” is a dream! It takes more than product to have a successful business.

It all starts with innovation. Then you must get to work to make it happen. That is where strategic planning leads to execution which leads to change and more innovation. Success in business is not hard if you do the right things. You don’t need to be a Henry Ford or a Ray Kroc. After all, they were a factory worker and a milk shake salesman before they began to innovate.

Then the Internet changed that. Now a customer has unlimited choices. He can shop the product the world over instantly. A new product or concept for a retailer becomes a commodity in weeks rather than years. The customer can buy from a local retailer; have the product shipped from a competitor you don’t even know exists in any part of the world and in many cases buy directly from the factory. Information is obtained quickly and easily without the help of a salesman. Often the customer has more information than the salesman. With low interest rates, available capital, the Internet, faxes, phones your competitor might even be a person operating out of his basement or a garage.

Edward Yardeni, chief economist with Deutsche Bank, talked about perfect competition on the Internet. “There are no barriers to entry, no protection from failure for unprofitable firms and everyone has easy and free access to all information. The Internet lowers the cost of comparison-shopping to zero. Increasingly the consumer can easily and quickly find the lowest price for any product or service. …The low-cost producer will offer the lowest price and provide this information at no cost to any and all potential customers anywhere on the planet.”

Now the new system starts with the customer. With unlimited choices, a retailer must have what the customer is looking for at a competitive price. Manufacturers must produce what the customers want. Merchandising has become more important to a retailer than selling. Selling is getting rid of the merchandise that you bought. Merchandising is buying the merchandise that you can get rid of.

The bottom line is that success of your business depends more today on your inventory planning and your analysis of customer’s needs and wants than ever before. A successful retailer must find new and effective ways to listen to customers!

When we work with retailers we start by analyzing the needs of customers and grouping those needs into classifications. Those classifications allow us to analyze and control each classification individually rather than trying to look at the business as whole.

Once we have identified the classification structure that makes the most sense for the customer, we begin to look at the history of each classification and analyze the data. It is important to figure out what the customer is telling the retailer he wants. The retail operation is still the best point in the process to gather that information. We find that marketing studies are often very misleading because people will tell you how they think they would behave. They tell you how they would like to behave. Problem is that when it comes time to open their wallet, the convictions change. The retailers themselves have a warped view of customer demands. The last sales looms much larger in their mind than the total picture for the season. We have learned that you must look at the information on how people are actually spending money and, through sophisticated trending analysis and statistical analysis, develop sales forecasts for each classification many months into the future.

These sales forecasts are the beginning to planning for inventory levels and cash flows for the business. Critical information is wrapped up in turn rates, gross margin return on investment (GMROI), performance factors, inventory levels and much more. Not only the amount of inventory is important but also the quality of the underlying inventory must be analyzed. All of this information points to the OTB (open to buy) number or the amount of money that should be spent in each classification.

This analysis must be performed every month and carried forward through the season and at least through the season for which you are buying merchandise. That will then allow you to plan your cash flows and needs and be sure you can pay your bills in a timely manner. It assures you are buying enough merchandise to meet the needs of customers in each need classification. It prevents you from buying too much merchandise so that it must be marked down at the end of the season, reducing profit.

Many retailers are capable of doing this analysis themselves. Large retailers have a staff that does this analysis in-house. We deal with many small retailers that hire us to do this analysis each month and help them turn the information into action. Regardless of how you get the information, it is critical for every retailer, big or small, to know what the customer will buy and have it ready for him. Buy too much and you will give away all the profits in markdowns. Don’t buy enough and you will introduce potential customers to the competition as they look elsewhere for the merchandise.

We always start our process of consulting with a small business using a SWOT analysis. This is the acronym for a process we use to create long-term objectives that are part of the strategy for a company. The acronym stands for Strengths, Weaknesses, Opportunities and Threats. These areas provide the perspective for looking at where a business is and where it is heading. They can be summarized as follows;

Strengths and weaknesses are your present liabilities and assets, and are the only two of the four parts of the analysis of a business that are controllable. Opportunities and threats exist and are important to a business but the business has little of no control over an opportunity or threat. For example, employee turnover could be a strength if it is low or a weakness if it is high. It is controllable through training, benefits, pay, empowerment etc. An area like the economy would be an opportunity if the economy is expanding in your area or a threat if it is on a downward slide. These are not controllable by you but you should be aware of them and respond to them to take best advantage.

Management of a business since the industrial revolution has focused on control. Taylorism, the
invention of the assembly line, and American military success in World War II have all contributed to
a top down structure that gave more power to managers higher up in the chain of command. Small businesses emulated this structure. Despite research such as that done by Elton Mayo at Harvard in the 1930s revealing the intensely demotivating effects of hierarchical management, and the decreases in inefficiency that resulted, this system became the dominant system of management. Managers devoted their time to trying to control the present situation.

Because management has its hands full taking care of day to day business, managers tend to overlook the opportunities and threats facing them. Some managers are aware of them or even try to plan for them, but more often than not, they fail miserably and return to strong-arm control tactics.

Another facet of this business approach is the explosion of “science” in the 20th century. Before this time, science concerned the discerning of the physical laws of nature. These were validated because they could be repeated consistently. Then every discipline wanted to be a science. We had social science, military science, and business science. Managers wanted to run their business like a science which means they could make a decision and there would be a known cause and effect. The problem was that the effect only happened some of the time! This frustrates managers and employees alike as the executives then try to force adjustments and apply blame in the face of sub-optimal results.

At Management One® we have oriented away from the control aspects of management. We replaced the old style of management with a management process called Winning@Business™. This process involves everyone in the organization to give more robust solutions to the business. The buy-in that is achieved through this process results in greater motivation and better implementation of the solutions so that profits and success are enhanced.

We start with a strategy that defines the vision, values and objectives of the business. The management process is then implemented to turn the strategy into reality.

”Where does that leave me concerning opportunities and threats?” you ask. “What about the creative
aspects of a business? How do I change, adapt and grow?”

Opportunities and threats, by definition, are not controllable. One important way to achieve success in this arena, is to turn to your marketing person or team. Successful marketing isn't simply about selling what the business produces. It is responsible for dealing with opportunities and threats. It is responsible for creating a strong brand image which conveys a company's vision, it's "brand image", both within the company and outside it. We are developing the Winning@Imagination™ process to
develop a strong brand image.

The brand image is an all-encompassing concept that combines the vision of the company with the message to the world. It's creation requires a creative freethinking process that fully understands the company, the product, the market, the motivations -- and the threats and opportunities facing the business.

IBM had an organization that was strong on control and managed their internal strengths and weaknesses well. They lost out when their marketing arm decided to stay in big business and didn’t see the threat from the likes of Dell and Compaq which are now part of HP.

Small businesses are challenged to develop a productive discourse between the executives and
marketing team. Businesses that lack the influence of one aspect or the other can supplement
their business resources by hiring a consultant from the outside to supply the missing link. Businesses that are fortunate to have both influences often need a consultant to facilitate the process of bringing those two views together into a meaningful and logical consensus so that the business can move forward.

No one ever said small business is easy. Knowing where you are going, why you are going there and having your staff on the journey with you can be one of the most exhilarating and meaningful experiences. It sure beats the frustration many small businesses face today.

Any business must continue to grow by adding new customers to the list of current customers. I run into small business owners that lament the fact that they can’t afford a marketing budget but still need to boost sales. They simply can’t see around this conflicting set of needs. The problem is that they associate a marketing budget with expensive advertising. Without help, the result is they do nothing and struggle or eventually go out of business.

Marketing for any company is a strategy to find new clients and get them interested in your product of service. There have been many books written about the process of identifying your target market, establishing what you bring to that market, finding your uniqueness and developing your message. All of these are critical and we work with clients to develop these. The issue I want to address is getting the message out. That is the barrier that many small businesses see as the expensive barrier to growth and prosperity.

There is a hierarchy of methods based on the breadth of your target market and the depth of your pockets. Certainly many companies can benefit by advertising in magazines, media and other methods if it is done correctly. Every company, regardless of size, must have a marketing strategy in order to succeed.

The two reasons most small business owners don’t market themselves is that they don’t have the money to advertise. The other reason is time and motivation. Unfortunately they just associate marketing with advertising and advertising with money. There are answers to both, however money seems to be the barrier many can’t get over. Let’s look at some of the inexpensive ways that small business owners can get their message out to the community.

Question number one is where do your potential customers hang out. What do they do? Learn everything you can about your current customers and then learn from the information. Once you know your customer’s habits and activities you can use that to begin your marketing process. Some of the best ways to get your message out inexpensively involve networking.

Networking
Step one is the make a list of everyone you know. This includes people from church, people in business, customers, your barber and realtor, friends and relatives. How many of these people know what you do? How many know how to contact you if they need what you do? How many people on your list know who your target market is and what would be a good lead for you? Do they know how to help you grow your business?

Develop a plan to start calling and seeing those on the list. By telling them about your business you will build your business. By telling them about your mission to find customers and asking for their help you will build your list of prospects to call. Calling five people a day will bring in 10 customers a week and 500 over the course of the year if only 40% of the people you call actually come in.

If 20% of those new customers get someone else to come in you now have another 100 customers.

Go where your customers hang out to find new leads. If you sell to businesses, join the chamber of commerce and get to know your target market personally. If you sell to contractors, find out the local association of contractors and get involved. People buy from people they like, know and trust. Advertising won’t accomplish that as easily as will personal contact. As you meet new people add them to your list of contacts.

As you work through your list of contacts, rate them as A, B or C contacts for your business. “A” contacts are the ones that are prime candidates, use your product of service but from a competitor or should be using your product or service. “B” contacts are those that show an interest or know others and are willing to recommend you. “C” contacts are those that wish you never called and can’t wait to get off the phone.

Develop a plan to mine the “A” and “B” prospects to raise them to the level of customer. Send them promotions, call them regularly and build the relationship. Add the “C” contacts to your mailing list but don’t worry about calling again. All three should be asked if they would agree to be on your email list. This email list becomes a very inexpensive way to get information about your business out to potential clients. Every customer you deal with should be asked if they would like to be on your email list.

There are hundreds of ways to market a small business without investing a lot of money. Not having money is no excuse for not having a marketing plan.

Roger Blackwell, professor of marketing at Ohio State University and author of “From Mind to Market” estimates:
20% of businesses are doing the right things.
30% of businesses are struggling
50% of businesses are in various phases of going out of businesses

Planning, strategy and execution are keys to getting into the 20% bracket. Don’t wait until you move from the 30% bracket to the 50% bracket.

Count Those Votes!
By Cathy Wagner, President—Result One

Election time is coming up soon, isn’t it? You can see the parties jockeying for position. You know all the TV ads are soon to follow. The first Tuesday in November will be here before we know it. But did you know that there is voting already going on. Right Now. In your store. Customers come in every day and vote with their dollars for what they want to see in your store. Your job is to tally those votes and make sure the winners are always in stock.

Most retailers think of those winners in terms of individual items. Certainly, every store has a short list of “Must Always Have In Stock Items”. But one mistake retailers often make is that they don’t look at these votes in any other way. When we start to work with retailers, we start by analyzing the needs of the customers. We look at what the customers are telling us that they want. And then we group those needs into classifications of merchandise called classes.

Why Classifications?

The benefits of looking at your inventory at a class level are many. Most importantly, it allows you to grow your business. Buying items does not grow your business for the long term. Certainly, there will always be a hot item. However, looking at your inventory at a class level will allow you to identify trends. And within those trends are opportunities for sustained sales growth. Look at the dress-up/pretend play class right now in toy stores. Sales in this class are trending dramatically up over last year. There is no specific hot item within the class, but our clients have been tracking their customers’ needs – or votes. Those votes have indicated an increased need and so we have responded and increased inventory to match. Sales have gone up. Profits have gone up. That is the way it is supposed to work.

This example illustrates another benefit of utilizing class structures. You are able to balance your inventory. At the class level, you are able to look at the sales by class and the inventory by class and make sure that the percentages of each class to the total are equal. Then your inventory is balanced. You are providing the right amount of inventory to match the sales and needs of the customers. On the other hand, if you find that the numbers aren’t matching up, you now know what classes specifically need to be attacked. And you can work on either driving up sales in those areas or decreasing the inventory by taking markdowns or other actions. (If you need ideas for this, please just ask us!) When you balance your inventory, you reduce markdowns and create cash by not over buying. It assures that you are buying enough merchandise to meet the needs of customers in each need classification. It prevents you from buying too much merchandise so that it must be marked down at the end of the season, which reduces profits. You need information at the class level to accomplish this. Sales on track. No excess inventory. Cash flow improved. That is the way it is supposed to work.

Let’s say that your business is trending down. Cash flow is getting tight….tighter…..tighter. You pull all your open orders, call the vendors and cancel every order. You resolve to sell through the inventory that you already own until cash flow gets better. Those kind of sweeping cuts can destroy a business. You might be starving the one area of your business that is actually growing. If you had information on a class level, you could analyze each class and determine which one actually needs more inventory to maintain sales and which class does not.

Creating a Class Structure

Because every store has its’ own personality, classification structures often vary. The key is to create a structure that represents the strengths and opportunities of your store. There are three basic considerations. First, the class should contain similar types of merchandise. A good example of this would be sport coats in a men’s store. Second, the class must have a manageable inventory volume. It’s important that your sales are spread out among the classes. You do not want the majority of your sales to be represented by just a few classes. Third, group together items with similar profit margins. For example, take hardcover books, paperbacks, early readers, board books, activity books, music tapes, music compact discs and videos. Those items all tend to have the same initial mark up. They could all be pulled together into one class.

The quantity of classes is important. A good number is to have between 12 – 20 classes. Make sure that you have a functional structure that divides your business into a series of manageable sections. Too few classes will not give you the details you need and too many will be difficult to manage.
Setting up the right classification structure is important. Professional help is often needed to give you the right look into the heart of your business. Don’t hesitate to contact us if you would like more information or other suggestions about class structure. Now, you should think of each individual class as if it was a stand-alone business. You can analyze the information in a meaningful way. Your customers have spent their dollars and voted. You can tally up the votes and make sure that you have the winner!

Cathy Wagner, Result ONE, A Management One affiliate

With over 20 years of experience in retail as both an owner and a consultant, Cathy Wagner has the unique position of having worked on both sides of the counter. She began with one store and grew her retail business to multi-store operation. As such, she has a working knowledge of what a store needs to be successful. She has seen first hand the tremendous benefits that the strategic planning and inventory management processes bring to a business. Implementing these processes, uncovering opportunities and encouraging business growth are her specialties. According to a current client, "The results surpassed my expectations. She worked in a hands-on manner that successfully impacted many of the day-to-day aspects of my store." Cathy Wagner works closely with business owners to develop action plans that increase sales, improve cash flow and create success.
Cathy Wagner did 2 popular and powerful presentations at the ASTRA convention - The Art and Science Of Buying and Be Your Own B.O.S.S. – Time Management for Retailers.

Retaining Your Customers

There has been much written about customer satisfaction, loyalty and business success. Marketing is an industry based on communicating how a business is unique and better than the competition. There are three basic elements to success in business:

• Attracting customers
  
• Serving customers
  
• Keeping customers

Attracting customers is traditional marketing. It includes everything from your location, advertising, promotions and appearance to word of mouth. Serving customers includes your product, quality, service, reliability and everything tangible a customer sees in your operation. It is your
operational reality. If your operational reality is not excellent then your business will fail.

Keeping customers is the challenge that seems to change constantly. Keeping customers years ago meant having the best product. Most businesses today make or sell a product that can be purchased elsewhere, especially with access to the world market through the Internet which made that
strategy obsolete.

Subsequently the requirement to keep customers has changed to focus on service. Companies fall over each other trying to improve customer service and increase the value a customer receives. Keeping customers changed a few years ago with entertainment as the way to keep customers. In our world of 104 channels on TV, video games, the Internet etc., entertainment is no longer unique, memorable or even different. Marketing people go crazy trying to find unique aspects of a business on which to launch a successful campaign because everyone is offering great service.

The key to success today still is in keeping customers. Keeping customers is now about developing a relationship, not just supplying a product, service or entertainment. The only thing you can't get on the intent, TV or by opening your wallet is a relationship. Relationship marketing, selling AND nurturing is the only way to succeed today in small business short of developing a Wal-Mart system
of driving suppliers to near bankruptcy levels to compete on price. It is the only viable way to differentiate your company in the market.

That means traditional marketing is replaced by relationship building. Selling is about building and nurturing the relationship. Customer service means treating customers as you would friends. And nurturing the relationship means using today's technology to stay in touch and be there for your customers. One reason that business is getting more complex and difficult is that we keep adding new ways to compete. We never leave the old ways of excellent product, dynamite service or catchy entertainment behind; they just get so common they are meaningless. They only have meaning
if you don't do them!

I like the commercial where a woman is going nuts over a kid playing soccer. The viewer finds out the mother is quietly sitting on the sideline while her financial planner is actively nurturing the relationship. The old adage that people buy from people they like was never truer than today.

We work with clients to lower the marketing budget and start a relationship budget. Winning@Business™ requires building the relationship inside and outside of the company that leads to success. As business success gets more complex, new ways to organize, manage and lead your company are required

a.Beginning inventory at cost
b.+Purchases at cost
c.-Ending inventory at cost
d.=Cost of good sold

Kick the Extra Point
By Evan Wise, Managing Director of Management One

A simple 1% increase in Initial Mark Up results in a substantial increase in Gross Profit.

We can get additional extra points by reducing markdowns. A reduction in markdowns by as little as 2% can increase your gross profit by 1% based on a reduction of markdowns from 20% to 18%.

Great to say but, how do we do that? Success in retail is following the fundamentals. Managing markdowns is best served by playing by the rules.

1. Do not receive goods late. Accepting late deliveries not only increases the risk of higher markdowns it also squeezes cash flow. Follow the advice of your affiliate on landing merchandise. Receiving merchandise on a timely basis generates revenue by receipts of fresh goods and gives ample opportunity to sell within a season.

2. Take early markdowns. If styles are not selling after enough time on the floor, remerchandising and effort by your sales staff, then slice the price. A smaller markdown today is better than half off or more tomorrow.

3. Talk to your vendor about slow selling product. Sometimes they will take it back or swap it out for something new. Do not be afraid to ask for markdown money as well, even if you are a small specialty retailer. The squeaky wheel gets attention. Next time you go to market armed with your vendor analysis show the sales rep the performance and ask for an incentive before you place your order. Consider it a markdown allowance and an opportunity to make back some profit.

4. Do not overbuy. Your merchandise plan has markdowns built into the plan receiving. We know there are no perfect buyers out there. Overbuying opens the door for additional markdowns.

5. SELL THE EXTRA ITEM ! Every time you and your staff sell an extra item you reduce the opportunity for a markdown.

Two simple tactics of lowering your markdowns and raising your initial markup can return profits.

REMEMBER-

RETAIL IS DETAIL….

THE SUM OF DOING A LOT OF LITTLE THINGS RIGHT

THE MARKDOWN BLUES
By Ed Cloeter
An affiliate of Management One®

It seems that the first months of the calendar year always bear a lot of markdowns, not just because of the mistakes you made from Holiday but also the over reaction for the insatiable want of Spring business. Matter of fact, there really isn’t a month or a quarter that comes along that retailers don’t accumulate goods that haven’t sold. It is often regarded as “a fact of a Retailer’s life”. No buyer is capable of being right 100% of the time. However, most Retailers are habitually fighting excessive markdowns that have been brought upon them because of poor timing and over buying merchandise categories. And, oh, how it has hurt their cash flow. There isn’t much these retailers can do but to begin clearing the goods through markdown incentives that will take a big bite out of the profit line. These were mistakes made months ago.

The good news is that you do have control of future quarters. Most of you to whom I write do very little planning or any at all. If you do plan, you say “Oh well, I’ll aim for an increase of 5% over LY”. I see some stores with categories, or classifications running above 10% and more. The opposite is true for a few other classifications that can’t meet the expectation of beating last year’s figures. So, you can toss those plans. They seldom produce anything but more pain, more markdowns and sidewalk sale fodder.

Let me illustrate with an actual example. I have just witnessed a store whose Annual Rate climbed $80,000 during the last 2 months. How, would you begin planning increases of that sort? How would you approach the remaining 10 months to go for the year? Likewise, I have seen a store that may easily not see last years figures as a goal. Should this store be buying in order to meet last year’s goals or worse, yet, an added 5%? My hope is that it will be profitable with fewer sales.

So, what should you small retailers do to prevent this constant crisis of markdowns and more markdowns? Planning! And, what exactly should a small retailer be planning? How should he /she go about preparing these plans? What should he/or she do with them once they are completed? Because most of you don’t wish to spend a buck to make more bucks here are a few tips:

PLAN SALES: In order to effectively manage your inventory, you need to know what you expect to sell. For all you “do it yourself” retailers, develop a simple spreadsheet listing your sales history, by month, by category (classification). You’ll start, mistakenly, with last year’s sales history because that is all that is available to you, and then make adjustments for events and promotions. How do I know? I did it, years ago. Most retailers would give up already because there is much more factoring involved in forecasting sales than what the retailer’s glorified mind would wish for. Is your time valuable? Why not seek out scientific planning from MANAGEMENT ONE?

Your business will only be as profitable as the accuracy of your sales forecast. Forecasting experts go way beyond the spreadsheet to look at trending models and statistical forecasts to achieve better accuracy. Getting a sales forecast is not the goal; getting the right sales forecast is essential.

PLAN INVENTORIES: It makes little sense to bring in more inventory at any given time than you need to support your planned sales. Committing to inventory too far in advance, and then bringing it in all in one shot is one of the surest ways to find yourself over-stocked down the road. The difficulty is in determining how many months of inventory are needed to support your planned sales. In slower moving categories, you may need on hand 3 or 4 months of goods for a beginning inventory. Fast moving merchandise could be anywhere between 2 and 3 months. Do you still want to do your own planning?

PLAN RECEIVING OF PURCHASES: Here is the basic formula to calculate how much inventory to bring in every month. You need to bring in enough to cover that month’s sales plan, the markdowns to be taken and ending inventory of that month, less the prior month’s ending inventory. Are you still with me?

PLAN MARKDOWNS: I know some retailers who would plan nothing. But, how much should you plan. To know helps you calculate your purchases. After all, a markdown is the thief in your store.

Once you have completed your preseason planning, don’t put it in a drawer never to be seen again. This should be your tool and, done correctly, it should be updated and adjusted at least monthly by each category (classification) because some will be growing while others will be sluggish and need to be drawn back. The most important skill is the ability to use the plan to make the right decisions. That is where an outside expert brings the most value. Peter Drucker said, “every good idea degenerates into work.” The same goes for good planning.

The above is truly a brief outline. If you are sincere about doing it, call on an expert to stumble through it with you and help you decide if you will really commit yourself to planning.

The root cause of excessive markdowns can almost always be traced back to the lack of adequate preseason as well as in season planning. Many of you will find that it is “no fun”, a luxury that you just can’t afford. In reality, it is a critical necessity, a very vital investment in the financial health of your store.

MANAGEMENT ONE has a web site, www.managment-one.com with similar articles on successful retailing, called Winning @ Retail. They are also leaders in Inventory Planning and business management (Winning@Business™).

Hiring a new employee is an important process for any company. A small company must hire the right people since every employee usually is expected to wear many hats and accomplish many roles. We work with clients to help them hire the right people for their organization. During that process, most companies want a “team player” on their staff.

One of the important determinations for most companies looking to hire a new employee is how to evaluate whether a candidate is a “team player”. The problem is that there is confusion about what a team player does. Many managers get the concept wrong.

One definition of a team player is often thought to be the guy that relinquishes his own ideas and opportunity for the good of the organization. He is willing to sacrifice for the good of the team. Although that is true, a common interpretation is that the new hire will not buck the system. The new employee will learn the systems, the job and the organization and then fit in. He or she will take direction from the boss and do his job without question. The new employee won’t make waves. That definition lacks an important element.

A team player must do everything possible to move the team forward. The best employee is an aggressive team player, not a passive team player. A team player motivates others to excel while excelling himself. Sometimes a team player moves the team forward “in spite of the organization. Sometimes he challenges the boss to find a better way to reach the strategy and vision.

A team player must learn the new system and question every part of it to make the organization better. A team improves when there is tension and healthy change occurring continuously. The team player exhibits two common traits:

1. Questions everything
2. Is willing to compromise to reach consensus for the betterment of the organization.

The team player is able to adopt the strategy of the company and work toward making it into reality selflessly. He does not have his own agenda or a hidden agenda that competes with the goals of the team. He is aggressive in fighting to make the vision and strategy into part of his daily routine. He is constantly looking for a better way to accomplish the goal rather than accepting the current way as the only way or the right way.

The tension a team player creates in an organization can wake up a complacent team and spark them to greater accomplishment. So the next time you are looking for a team player, get ready for the challenge; get ready for the questions; and enjoy the results.

The Interview

Hiring the right person for the job is one of the keys to the success of a business. Many small businesses that become clients have a hiring process designed to put a warm body in the organization as quickly as possible. That means a sign in the window or an ad in the paper and the first person through the door is hired. Many times this person proves to be the wrong person for the job. For most of us it is much easier to hire the right person than fire the wrong one. Although we have a detailed hiring process we implement with clients, a few of the key points of interviewing prospective employees may help.

Preparation is the key. Interviewing is not just asking questions but asking the right questions for the right reasons. Before asking the question you should know what information you are seeking and how it relates to performance of the job required. That means that the interviewer must have an intimate knowledge of the job to be done. Often, several people from different levels in the organization should interview to get a meaningful analysis of the candidates qualifications for THIS job.
The interview process and line of questioning should be developed before the interview so that every candidate gets the same line of questioning. Otherwise it will be impossible to compare various candidates. This will also keep you from spending your time in the interview preparing your next question instead of listening intently to the answers the applicant is providing. If, in the end, you found some key questions that you should have asked, DON’T hesitate to call the candidate back for a follow up interview to be sure you choose the right person.

Another reason to prepare the line of questioning before the interviews is to avoid illegal questions. Consult an attorney if you have questions about this but you can be fairly certain you should avoid questions pertaining to marital circumstances, age, disabilities, religion, gender/physical appearance, and national origin.

Try to group the interviews as much as possible. Time changes perception and you want to make the right choice. Also, once you interview 3-5 people for the job, you want to get back to the best prospect soon. If interviews are scattered over 2 weeks, the first person might be the best but by the time you get back to them, they have another job.

Getting the real story is the mark of a great interviewer. One way is to find out how the candidate handled similar work or decisions in the past. Many people are great at getting the job but not doing the job. You want someone that can do the job. The best way to identify that is to find someone that handled real situations to your level of expectation. Don’t let them off with a casual account of events. Dig into the situation for details as many times there is much more to the story than the initial spin the applicant puts on events. For example, a person claiming to have led a team to implement a $100mm project may have, upon further questioning, only participated in the project in a minor way.
Take notes on each candidate and record responses to each question. At the end of the day compare notes and analysis with other interviewers. It is amazing that without notes every candidate will become jumbled with others. “Was Cathy the one that blew the big sale or was that Carol?”
Don’t make your decision during the interview. Often times people find someone they like right off the bat and make a mental decision that this is the person. Liking someone is often different than finding someone that can do a good job. If you make a decision in the interview, you are too likely to spend the interview time selling the company and the job rather than interviewing and finding out if the candidate is right for the job.

There is a lot to the up front preparation to hire the right person. There is a lot to the offer and the actual hiring process. Doing the job right pays dividends for years. If you don’t have any hiring process now, getting the interview right will be a step in the right direction.

Training

Training is an important part of any employer’s process of improvement. Unfortunately the smaller the company the less training gets done. Regardless of the size of your company, there are training issues that must be addressed. Here are a few rules that many believe and the experiences I can share:

Rule 1: New employees must get thorough training to orient them to a new job.

On-The-Job-Training (OJT) is probably the most common form of training for small companies. This is the process where one employee works with another to learn new skills. Problem is the owner never knows what skills are being taught. Bad habits get perpetuated and the employee also learns ways to “cheat” the system. “ When the owner is here you need to work on these aisles so he can see you working. When he is gone you need to quickly straighten the other aisles but don’t kill yourself”
Then you finally have a great employee that knows the job. Can’t waste his time training the new guy since he is too valuable on the job. “Let’s let Joe train him. He is kind of useless for anything else.” Sounds nuts but it happens.

Lesson: Decide how each job SHOULD be done, document it and then provide OTJ proficiency tests.

Rule 2: When buying new equipment, hardware, software or systems, negotiate for the most features your money will buy.

Then there is the training process when you get new equipment. You shop around with many vendors trying to find the perfect system. “This one costs a little more but look at all the features!!” Then you take out the old equipment and install the new. The supplier sends a technician to install it and show your staff how to use it. The technician leaves. Time to crank up that shiny new system with all the bells and whistles. No one knows how to run it. We are down. Call the supplier. Scream at them. They talk you through the process of getting the system running the minimal features so you can at least do what you did before. Whew, we’re back to running. Let’s go home. And there it stays. We never learn to use the bells and whistles we paid for.

Lesson: Don’t buy the features you like, buy the ones you need. If you don’t need it you won’t use it.

Rule 3. Always be sure there is an instruction manual with any new equipment you buy.

Yeah right! First, most of these instruction manuals aren’t written in English. Once you take the rs232 and connect it to the USB through the terminal bus and… Put the book on the shelf and let’s get this thing running! Look at all of the manuals you have for cash registers and POS systems; for vehicles and equipment… See how many are dog eared. Measure the dust on the top of the book.

Lesson: Review the instruction manual BEFORE you buy the system.

Rule 4: Always provide training to improve the skills of those who work for you.

Constant training is the hallmark of a successful company. There are many internal sources of training due to the talents within the company. There are also many external sources of training designed for small companies. The key is to keep these training sessions targeted and useful Avoid the theories. Find trainers or consultants that have prepared training that is based on real experiences that pertain to your business. Sit down and find out the background and philosophy of the training. What are the effects expected? How will you measure the impact? What is the investment in money, time and commitment? How long will you need to wait to see the results? Will you get a training manual so others in the company can be trained in the future?

Lesson: Training does not need to be fancy or complicated. It must be meaningful and useful.

Continuous improvement is a buzzword for big companies. We insist that our small and midsize clients make it a reality in their business too. Training is a significant part of motivating employees, keeping them interested in the job and communicating their skills. You’re never to old to learn and never to small

Upgrading the management process

Small business has as great a need to grow as larger companies. The difference is the drive comes from within instead of from investors and shareholders. That means that the most successful small businesses will be those whose owners and leaders have passion, drive and are willing to take prudent risks to grow. That doesn’t mean they have the capital to do so.

Many clients are constantly looking to buy a “system” that will answer all of their problems. “We need a new Point of Sale system” or “our accounting software is holding us back.” We need another production machine, scale, truck …. There is always a problem at which, by throwing money at it, we can grow to the next level.

Sometimes the need is financial. “If the bank would only increase our line of credit by 50% we could double production!”

The truth is that normally the growth never follows the expenditure. The simple, most straightforward reason I have seen is “People”. There is more productivity and capacity locked in the existing people than any new equipment or system could deliver. The problem is the leaders don’t know how to unlock that resource and use it. The finger that points to the solution must point back at them and they are not comfortable with that. It is easier to point the finger at the bank or at a vendor to bring the solution.

We have found that getting people to work together has tremendous benefits. In one case an electronics manufacturer was able to increase revenue 50%, reduce backlog from 3 weeks to two, work one shift instead of 2 in the course of a year. A folding carton manufacturer was considering a new die cutter since they worked for 15 years trying to get the old one from 50,000 impressions an hour to 70,000 without success. In six months, without any new equipment, the existing staff was able to get the die cutter to 90,000 impressions an hour.

The point is that throwing money at a problem is the easy way out. Sure many solutions take some cash to implement. The problem is that too often the leaders, owners or executives look to the outside for a solution before they garner the internal capabilities.

Training a team to work together to solve problems, seize opportunity, manage change and grow a business is a difficult process. Most of the time it requires outside help… throwing money at the problem. In this case the money is like a seed that grows to yield a lot of fruit, year after year.

An executive has trouble implementing the process because he is suspect. “What’s in it for him?” is a question in the back of everyone’s mind. “Why is he changing all of a sudden?” A neutral party is needed to bring the process, gain the credibility, teach and nurture the process and make the change happen.

Find a person that has the right process for your organization. Use the same diligence as you would in choosing new equipment for your business. Find a person that will be committed to your team for the long haul.

Where is the weakest link?

Retailers tend to find much to complain about, but that is not a new phenomenon. Forty years ago I remember my father coming home from a day at his menswear store and complaining about this vendor or that customer. A bigger difference today is the stressful effect of chain stores on the independent retailer. Many don’t know how to cope and get despondent or just end up closing the business.

Winning@Business™ includes the methods to solve problems rather than complaining about them. By putting the situation into perspective, you can begin to fight back instead of just lamenting about your unfortunate situations.

The first step is to take a comparative look at the different advantages the two types of retail stores may have. The typical chain probably has these advantages:

1. Megabucks to throw at the physical facility
2. A national marketing budget
3. A highly efficient management process
4. Tight control over expenses
5. Information with which to target buys and eliminate waste
6. Ability to use other store inventory for internal transfers

It may seem pretty daunting at first glance. Many retailers get stopped at this first view of the mountain to cross. However, there are some advantages that a specialty retailer has as well:

1. An onsite owner to assure consistent service and quality
2. A focused and targeted understanding of the local market
3. A close tie to the community
4. A history with customers
5. Flexible policy to serve customers

The next step in solving the problem is to look at the disconnects between advantages they seem to possess and the potential opportunities there are to exploit. Three of the five advantages the chain has are attainable by the specialty retailer. In fact, if they are to survive they must adopt a highly efficient management process, a tight control over expenses and the same quality of sales forecasting, classification planning and open-to-buy guidelines by which the chain operates. That is where a consultant can guide a specialty retailer to success in fighting the chain for market share.

The fact is that when it comes to inventory planning, most chains use top down planning which means they start with a sales goal, buy nationally, and then distribute to local stores based on revenue generated at that store. The local retailer can do bottom up planning which looks at the local trends and then determines the open-to-buy based on the local market. When a retailer has the right goods for the right market, they have a better chance at having the right numbers on the bottom line. A sales forecasting and inventory planning tool must be able to look at the latest figures and project the customer needs accurately. Working off of last year’s figures or making guesses on inventory needs will not work in today’s dynamic and competitive environment. A planning system like Winning@Retail™ is the best way to achieve inventory planning that surpasses the information that the chain receives. This is critical for a specialty retailer since he doesn’t have the other stores to rely on for supplemental inventory.

When it comes to efficient management of the operation, a management process like Winning@Business™ has proven to be an essential tool for specialty retailers to rival the management systems of larger chains. This brings a method to identify the strategy and direction, get everyone involved in identifying the problems and opportunities and then addressing them quickly and efficiently. Even the chains have trouble doing this efficiently.

Another key to specialty success is efficient marketing. Unless a customer comes into the store to shop, he will never know the improved service, flexibility in policy or greater level of selection and targeted inventory. Developing a marketing plan that identifies the differences and publicizes them in the marketplace is required to combat the national marketing approach.

The New York Times Management Reader (2001 Henry Holt & Co.) tells of Polly’s Gourmet Coffee’s response to two Starbucks moving into the neighborhood. After the initial drop in business, they managed to grow 40% then 30% the next year. They found a weakness in Starbucks; they can’t roast their coffee on site and they have a selection limited by their national distribution system. Polly’s portrayed the pre-roasted coffee at Starbucks as the “ordinary brew” and hyped their greater selection. In addition, they implemented a new management process, tightened cash management, trained employees in new skills and became more efficient than Starbucks!

Sophisticated inventory planning combined with a management process that quickly implements action is the key to success. Expense management, cash flow planning, marketing, sales, merchandising, promotions and a whole list of other skills and processes are needed to optimize bottom line results. Every specialty retailer needs to improve the handling of these critical tasks to grow, despite national competition, big box competitors or regional specialty stores.

The best retailers use all of these advantages to fight back when sophisticated national competitors threaten their business. Some of the retailers just complain about the situation and the rest just quietly go out of business.

Where to go next?

Wander into the local bookstore and mosey over to the business section? You will find hundreds of titles and ideas on how to grow your business. You can find everything to help you easily make more money from becoming a Zen Businessman to get rich quick schemes with no money down. There are new fads coming on line all the time from Lean Manufacturing and Six Sigma to Kaizen, MBO and the ever-popular MBWA (management by walking around). Need better customer service or quality control? There are books promising to teach that too.

Add to the list of book titles to help a businessman succeed are the hundreds of consultants and management trainers professing the use of these fads. Just as most of the management tools don’t work to make success easier, faster or greater, many of these consultants don’t bring the results that are promised either. How do you know which one can help your business?

RULE 1: There is no free lunch. Buying a book or paying a consultant does not insure success. You must insure success. A good consultant can steer you in the right direction and help you work more effectively. You still must do the work.

A consultant or a book should be an investment like any other investment with a positive ROI. What is the cost and what does it bring to your bottom line? When implementing tools that are the old stand-bys like strategic planning, pay for performance, cycle time reduction or the newer six-sigma, lean manufacturing and other management methods, often success is never measured in dollars and cents!

RULE 2: In choosing a method to improve your company, find a way to measure success.

Success demands a long-term horizon. Success with any business process is a marathon and not a sprint. A consultant or trainer can teach a “willing” student how to use a tool relatively quickly depending on the complexity of the process. The paradox is that the more complicated the process, the less likely it is to succeed. Once the businessman knows how to use the tool, there is no guarantee that he will.

RULE 3: Find a process that is proven and simple.

The effort required to move the information from the brain to the heart is huge. Without that patience, the tool will become another management book on the shelf. Assume that the top person finally learns the new process and believes in it. Then he must live the process every day to convince the organization of his commitment. Then the entire organization must be taught how to use it. Then someone must work with the entire organization to get them to believe in using the process. The simpler the process, the easier and more assured success will be.

Finally the payback starts to hit the bottom line.

A book on management may cost $30 but a consultant will cost thousands. The value of a management consultant over a book is that he is hired to assure implementation.

RULE 4: Find a consultant that is with you for the long haul.

An organization needs a consistent and effective method to evaluate changes and identify those that will work for the organization.

Once a company can accomplish this, they must have a process to implement the changes needed. Make the right changes and the business grows. No changes and no improvement. The wrong changes and….

We have found many times over that implementing a change in the way a business operates takes at lease 9 months to a year. Without that commitment to a new tool or process, you are better off buying the book, reading it and putting it on the shelf where it won’t get in the way of your progress. To make real progress, grow your business, develop your people and get a very positive ROI on your investment, choose a consultant that is committed to your company.

Hiring the right consulting firm can have tremendous benefits to your company and its bottom line.

A billboard in Atlanta states, “What really matters never changes.” Often we just need to be reminded of the fundamentals and how to use them. For most businesses, success is not in technology or gimmicks or even the latest management fads. Success lies in people and getting them to work together to manage change, solve problems and grow your business.

Go back to the office and chances are there may be a consultant or two waiting to lure you into their latest method for reaching the top. Follow these four rules to help you find the consultant that is right for your company. Oh, then ask about the price.