The Donald Cooper January Business Newsletter
Volume 6, Issue 1 - January 2007
Donald’s “Quote of the Month”
“Your profit is simply a measure of your ability to manage your business effectively. If your profit is unsatisfactory, your job is not to whine but to figure out what needs fixing...and then to fix it." |
Greetings. This month we have several timely, thought-provoking articles on growing your business, delivering your "Brand Promise", managing your people and growing your bottom line...all of which will take a total of about eight minutes to read.
If you are reading this Newsletter for the first time and would like to subscribe to receive future issues automatically, simply click here. You will be sent a verification email confirming your subscription.
We look forward to helping you grow your business with my thought-provoking, idea-generating insights.... Donald Cooper
1. Are you committed to improving your bottom line in 2007?
(time to read this article is about 2-1/2 minutes)
There are only three ways to grow your bottom line…
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Increase your sales, |
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Improve your Gross Margin by increasing your selling price or by buying sharper …or, |
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Reduce your expenses. |
The good news is that it doesn’t take much of an improvement any of those three to make a big difference on your bottom line. For example, depending on what type of business you’re in, just 5% more sales could grow your bottom line by as much as 40%, as long as you don’t cut your price or spend a lot more on advertising to do it.
Raising prices by just 5% could increase profits by as much as 80%, if you can maintain the same unit volume. And reducing expenses by 5% could deliver 25% more profit. Understanding the “math” of profitability in your business is critically important and most businesses don’t. Sit down with your accountant ASAP and get the exact percentages for your business. If you don’t understand your numbers, you don’t understand your business!
Improving your bottom line doesn’t happen accidentally. Profit improvement is the result of getting six things right…
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Understanding where there are opportunities to improve sales, raise prices, or become more efficient. Understanding what needs fixing in order to create compelling value, extraordinary customer experiences and world-class efficiency. |
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Taking responsibility for doing what needs to be done. |
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Knowing how to go about it. |
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Having the courage to do what needs to be done. |
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Taking specific and effective action…and finally, |
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Following up to make sure that what was supposed to be done…was done. |
Here are some tips on each of these six “steps”…
Clearly, understanding the opportunities, challenges and shortcomings of our business is the first step. Everything begins with “understanding”. And by “understanding” I mean understanding at a very real and basic level. For example, don’t just say, “The problem is that sales weren’t as high as they should have been.” That’s a surface problem.
When we, instead, say something like, “We missed our sales commitment because we failed to____________________________________________________.” we start to identify the real problem…and to take responsibility for it.
Not taking responsibility for what has gone wrong or what needs fixing in our business is much more common than you might think. We avoid taking responsibility by saying things like, “Sales are down because there’s no such thing as customer loyalty any more.” This is an easy “out” for you and your team…but it’s a lie and it’s preventing you from fixing the problem.
The truth is that people are loyal to what’s best for them, or what they assume is best for them. So, either we weren’t best for enough people to make our sales commitment…or we were best for a lot of people, but we did a lousy job of identifying them and then communicating our compelling value story to them. Either way, we need to take responsibility and then we need to fix it.
If part of our problem is that we don’t have the staff that we need, we can avoid responsibility by complaining that, ”You just can’t get good people any more.” But the best people have to work for someone and it will be much more useful to ask and answer two simple questions…
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What kind of business do the best people want to work for?…and, |
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What must we do to become that kind of business? |
The next step is knowing how to fix what needs fixing. For everything that needs fixing and every person who needs replacing in your business, there’s a low level, short-term “This will get us by.” solution and there’s an over-the-top, world-class, “This will get us where we need to be in three to five years.” solution. Which solution do you usually look for…and how’s that working out for you?
Where can you find the ideas and the help you need? You don’t have to “reinvent the wheel” here. Ask your staff at all levels for their ideas and suggestions. They know a lot more than you think and you honor them by asking.
Who, in your industry, is famous for doing an outstanding job in handling what you’re struggling with? And if you don’t know who in your industry, world-wide, is truly amazing, what they do well and how they do it…shame on you!
Who outside your industry has done an outstanding job of dealing with the challenges and opportunities that you face? What has worked and what hasn’t? A tire dealer client of mine recently committed to creating an amazing customer lounge but needed to do so on a budget. He thought about which other businesses had already spent huge bucks coming up with a world-class design and color scheme and he immediately thought of Starbucks. They're world leaders at creating an amazing customer experience so he "borrowed" their color scheme.
Your industry Association and industry trade magazines can also be a big help. They likely have industry financial data to compare yourself to and “best practices” to learn from. They exist to serve you, so use them. Check with your suppliers too. They know what’s going on, they’re keen to help you…and it’s free! Then, there are industry consultants. Ask around and chose wisely. They can bring huge value to your business in a very short time.
The next step is having the courage to do what must be done. Often, doing what needs to be done to improve profitability takes real courage. Whether it’s terminating ineffective staff in a tight labor market or “firing” unprofitable customers, it’s not easy.
Raising prices by just 4% or 5% could transform your bottom line…but it takes courage to raise prices. Opening a new location, or closing one that isn’t producing both take courage. Ordering the next generation of high-tech equipment takes courage, even when the numbers show that it’s the right thing to do.
Going against the prevailing wisdom in your industry takes courage...but it could be the very best way to succeed. As a fashion retailer I broke all the “rules” with signs that invited customers to “Please take as many items in the change room as you wish!”. Then I put mirrors and four hooks in every change room, offered a choice of 7 free beverages, built a pirate ship play area for kids, put electric massage chairs throughout the store for husbands and installed change tables with free diapers wipes and cream in the customer washrooms.
It took guts to do this stuff. Nobody had ever done it and my competitors told me I was nuts! “Give them and inch and they’ll take a mile!” they told me. But I didn’t listen to them and thousands of women drove up to three hours for the amazing experience. Do you have the courage to tackle the tough stuff and to do the amazing stuff?
It’s at this next step where many businesses falter. They understand what needs to be done but when it comes to taking specific and effective action, it just doesn’t happen. The solution is so simple that it’s embarrassing. Just decide who will do what, by when, then document those commitments and make sure that they have the “tools”, the information and the resources to do the job.
The last step is to follow up, follow up and follow up! Failure to follow up is another huge problem in most business today. We move on to other things and everything “behind” us just dies. One of the most important things you can do in your business or department is to create a culture of accountability…a culture in which people actually do what they’re suppose to do, when they’re supposed to do it.
How do you achieve this incredible breakthrough? Once again, it’s simple. Every time you assign a project or require an improvement in performance, you simply ask the question, “By when can we agree that this will be completed?” Then, agree on a date, document it and follow up. If you’re not going to follow up, don’t bother asking the question. You’ll just look like an idiot.
Finally, acknowledge and reward performance…and deal with non-performance. Failure to deal with non-performance is another huge issue in business today. Wish it on your competitors!
So there you have it…three ways to grow your bottom line and a step-by-step process to make it happen. Now it’s up to you!
2. Five important lessons from the bird feeder:
(time to read this article is about one minute)
Note: I first ran this article a year ago but it’s so very relevant that we’re offering it again.
At the end of every year we retreat to our country place on Sparrow Lake for three wonderful and peaceful weeks to reflect, refresh and relax. Although it's only two hours north of Toronto, it feels like a million miles from anything 'city'...especially in winter! But, even here, one learns important business lessons.
As soon as we arrived this year, I hung a bird feeder right outside our kitchen window. Think of this as a new business start-up with a great product (ok, so peanuts from Bulk Barn), no customers, but great potential in the form of a nearby forest full of hungry birds. This new venture had 'success' written all over it!
But how, I wondered, do I promote my 'grand opening'? First, I thought of advertising but birds don't read newspapers, don't listen to the radio or watch TV. Then, I thought that maybe I should create a 'grand opening special' by lowering my price...but hell, I was giving my peanuts away. How much lower could I go than that? I even considered sampling, but didn't fancy standing outside, under the feeder, at minus 35 degrees, holding out a frozen handful of peanuts.
Here’s what happened during the first five days of my new ‘business venture’…
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Day #1: |
No customers. Not one single bird. Our new business was a failure! |
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Things are looking up! We are visited by one chickadee, who apparently loves free, imported Spanish peanuts. He stays to shop the entire day. |
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Things are really looking up. We have dozens of chickadees and two kinds of nuthatches. Apparently birds tell other birds. |
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We have dozens more chickadees, endless nuthatches and two sizes of woodpeckers …both males and females. Apparently, peanuts are a “one-size-fits-all” item. |
Our “grand opening” is officially declared to be a huge success! We now have line-ups. It’s like an IKEA grand opening…our customers are actually fighting for the “merchandise”.
By the end of the day we're running out of peanuts and I make a special trip to town to replenish our inventory and purchase two additional feeders to expand our operation, eliminate line-ups and improve our customer service.
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Our customer base grows even more with the addition of one blue jay and a red squirrel. He doesn't fit our demographic, but we welcome him anyway, as long as he doesn't frighten away our primary target customers. |
So, here are five important business lessons that we can all learn from the bird feeder...
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You can't build a business in one day. Be in it for the long haul. |
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Word-of-mouth works! One delighted customer can profoundly affect the success of your business. Treat every customer like they’re worth a million bucks…and some day they might be. |
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Don't run out of what your customers want. |
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Expand your business only when you have lineups. Don’t get ahead of yourself. Too much inventory or too much overhead can kill you. |
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Have clearly defined target customers and know what they want. (in our case it was winter birds who like imported Spanish peanuts) You may get customers that you didn't expect. Welcome them! They create a whole new possibility to grow your business. |
Another thing we learn from this little adventure is that insights and ideas are all around us if we just remain curious, passionate and open to possibilities.
3. How to get dozens of business-improving ideas for about $5.00 each!
(time to read this article is about 40 seconds)
While speaking at a conference of Marina Operators recently, one gentleman shared with me his simple and brilliant technique for generating over 100 business-improving ideas a year at a cost of about $5.00 each. Here’s how it works…
As a part of each monthly staff meeting he puts a $50 bill in the center of the table and each employee suggests an idea to improve the business. It could be a customer service idea, a method improvement, a process or system suggestion or a thought about how the various departments could work together more effectively. At the end, everyone votes on which idea is best and the winner gets the $50.
So, the average meeting generates at least 10 good ideas at a total cost of $50.
But that’s not all. Here’s another very neat suggestion from this passionate entrepreneur. As part of these monthly staff meetings the whole team goes to one of the areas within the business where one of the people who works in that department has 10 minutes to explain to everyone else what they do there and how all of the other parts of the business can affect how they do their job.
Apparently, this has been a huge success in creating breakthroughs in understanding, collaboration and creativity. How could you make these two simple idea work for you?
4. A very short “plug” for making your 2007 company or Association conference the best ever:
(time to read this section is about 20 seconds)
Managing any business today is tough…and getting tougher. We’re all faced with more demanding customers, more and stronger competition, shrinking margins and a shortage of great staff. Mediocrity is no longer an option!
If your business or your industry association has a Conference coming up and you need the “straight goods” on how to rethink, refocus and re-energize your business to sell more, manage smarter, grow your bottom line…and have a life, I’m probably just what you need.
For more information on how to book me, contact the wonderful Sharen Skene lady at sharen@donaldcooper.com.
5. Everyone who works for you is either part of your value…or part of your problem!
(time to read this article is about 40 seconds)
Printable version.
All too often, business owners and managers keep tolerating mediocre performers because, they say, “They’re not bad enough to fire.” This is especially true when there’s a labor shortage as there is in many parts of the world today.
To help clarify my clients’ thinking on this subject I simply state that, “Everyone on your team is either part of your value…or part of your problem.” If they’re not creating value for your customers, for other team members or for your bottom line, they’re part of your problem and must be dealt with.
If they’re costing you money through mistakes, inefficiency or damaged customer relationships, they’re part of your problem. If their lack of energy, joy or commitment is hurting the morale of your team, they’re part of your problem. If they can’t help you get your business to where you’re committed to be in three to five years, they’re a big part of your problem.
When evaluating your staff, don’t let anyone fall into what I call “the muddy middle”. Force yourself to put each person in either the “value” or the “problem” column. Then, the people in the “problem” column fall into one of two categories…
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Those who can be rescued with a reasonable amount of effort…and, |
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Those who can’t. |
Make a commitment, right now, to make a list of all the people who work for you and put beside each name a V for “Value” or a P for “Problem”. Then, cherish, acknowledge, develop and reward your “V’s” and either rescue or deal with your “P’s”.
6. Bits & Pieces:
(time to read this section about one minute)
Item #1: China is now Rolls Royce’s third largest market after the USA and Britain. With duty and taxes added, a Rolls Royce Phantom sells for $800,000 (US) in China compared to just $350,000 in the USA.
Item #2: Here’s a great example of “ancient custom meets new technology”. Arranged marriages are a centuries old tradition in India, throughout all levels of their society. More and more, these arranged marriages are being facilitated through the internet. The website Bharatmatrimony.com has helped arrange over 700,000 marriages since its inception and has nine million "listings".
Because of the very strict caste system in India, there’s a separate portal on the website for each caste…just another example of niche marketing. And these are not young peasant girls being discarded by their parents. Most of the “brides in waiting” are mature, educated, professional women. For example one of the “candidates” listed is a 28 year old lady from India who is currently studying for her PHD somewhere in Pennsylvania.
Item #3: In 2006 GM and Chrysler slashed more than $100 million from their advertising budgets with the Time Inc magazine group. Time Inc. is America’s largest magazine publisher with titles that include Time, People and Sports Illustrated.
Like many other businesses, the auto companies are cutting costs while seeking more direct, interactive and effective connections with their target customers. So, don’t feel badly about not being able to afford a big, glossy advertising campaign for your products or services. The “big guys” are finding that this stuff just isn’t cost-effective any more.
Item #4: The Canadian government recently spent a ton of money on a survey that shows that people over 65 with a car get around more than people of the same age without a car.
Aren’t you just thrilled that they’ve cleared up any uncertainty that may have existed on that subject?
Item #5: Not to be outdone in the “OOPS” Department, apparently the US Government has failed to collect about $10 billion in production royalties from US oil companies over the past few years… due to a clerical error.
7. Are you delivering a consistent, amazing, customer-owning “Brand Experience” in every part of your business?
(time to read this article is about 90 seconds)
There are lots of definitions of what a “Brand” is. Here’s mine…
Your “Brand” is your promise to deliver a consistent and compelling set of values, standards and experiences that your target customers want in their lives.
You need to create and communicate a compelling promise…and then keep that promise, every customer, every time.
So how is it that I report two vastly different “Brand Experiences” in Canadian Tire Stores here in Ontario over a period of just five days?
Note for our many non-Canadian readers: Canadian Tire is Canada’s largest retailer of automotive aftermarket products and one of the country’s biggest sellers of hardware, tools, sporting goods, electrical and plumbing supplies, small appliances and house wares. They’re huge and they’re a Canadian retail icon.
Each Canadian Tire Store is independently owned and operated and there is supposedly a rigorous system in place to ensure that only those operators who have proven themselves in smaller markets, get to open a store in a large metropolitan area.
Well, apparently that system has broken down somewhere along the line. Just before Christmas I walked into a Canadian Tire store in Toronto, advertising flyer in hand, and asked one of the staff where I might find a particular item on page two. This young man looked me straight in the eye and said, “Mister, we don’t know sh_t around here!” and he walked away. Hey, I don’t make this stuff up.
Who hired this guy? Who communicated the Brand Promise, the company history, culture and values in his first week of employment, before he was ever allowed within 10 feet of a customer? Where was the ongoing training on “where stuff is”? Which experienced employee was he partnered with for his first week on the job so that he’d know how things are to be done and how customers are to be treated? Where is his department manager who should be monitoring employees to see if they’re doing and saying the right things? And, where is the store owner while all of this is NOT going on? There’s an old Viennese expression, “The fish stinks from the head.”
And it wasn’t just the staff experience that broke the “Brand Promise”. Half the plastic shopping baskets piled up just inside the front door had no handles and in the Tool Department there was no button beside the sign that said “Press button for service.” There were just two bare wires sticking out of the wall…and they sell those same buttons in their electrical department.
Fast forward to early Boxing Day morning (the day after Christmas for those who don’t have “Boxing Day” in your culture) and the Canadian Tire store in the town of Bracebridge, two hours north of Toronto.
Staff who, theoretically, should be bloated with turkey and eggnog and grumpy about having to work the day after Christmas are lined up just inside the front door greeting customers with huge smiles and asking how they can be helpful. I thought I had died and gone to retail heaven!
The store was packed with Boxing Day bargain hunters and the staff were amazing, knowledgeable and helpful. What they didn’t know, they quickly went and found out. They checked in the back for out of stock specials, gave out “Rain Checks” for items that were sold out, assured me that they’d call to let me know when they were back in stock…and they did.
So, there it is. Two stores in the same chain with the same “Brand Promise”…but with very different Brand experiences. How does that work in your business? Whether you’re a retailer, an accounting firm, travel agency, wholesaler or manufacturer, what’s your clear and compelling “Brand Promise” and what are you doing to deliver that consistently with every customer, every time, at every touch point? Something to think about.
8. Our quiz of the month:
(time to read this section is about 40 seconds)
Thanks to all of you who answered our December Quiz Question, which was…“What attraction in the USA draws more visitors each year than Disney World, Graceland and the Grand Canyon combined?”
Believe it or not, the answer is The Mall of America in Minneapolis, Minnesota…the largest shopping mall in the USA.
Note: A mall is currently under construction in China that will be three times the size of the Mall of America.
Congratulations to Marla McAlpine of Aird & Berlis LLP, this month’s winner who selected one of our DVD Seminars as her prize.
This month’s Quiz: As I look around for examples of simple, successful and sustainable business models, I came across a quote from Robert Brooks, the former CEO of Hooters restaurants. He said, “Good food, cold beer and pretty girls will never go out of style!”
Hooters has grown from one to 435 restaurants since 1983 based on that simple 13 word business model. But what wacky shift in that business model did Hooters Restaurants introduce in 2003 and then shut down in 2006? That’s this month’s quiz.
Send your guess to Sharen Skene, our wonderful Director of Marketing, at sharen@donaldcooper.com. Each correct answer received within 10 days will go into the ‘pot’ and one winner will be randomly selected. The winner will receive their choice of any of our excellent Video Seminars worth $60 to $80.
9. Here’s a travel tip about “code share” flights that could save you a fortune!
(time to read this section is about 15 seconds)
Many international flights are now “code share” flights which means that two partner airlines sell tickets for the same flight although only one of them operates the aircraft. The thing is that each of the two airlines involved in the “code share” could have very different ticket prices.
For example, while both Delta and Royal Air Moroc were selling tickets on the same flight from New York to Morocco, it was actually an Air Moroc flight. Delta charged $4,519 for a business class ticket while Air Moroc was selling the same seat for only $1,545.
Sometimes the operator of the flight has the lower fare and sometimes it’s the code share partner. To make sure that you’re getting the best price, you need to check with both.
10. That’s all for this month!
(time to read this section is about 15 seconds)
"Thanks" for all of your great feedback and suggestions! We especially love to hear of your successes using our insights.
Don't forget to visit our Free Articles section on our website for lots more valuable info on how to sell more, manage smarter and make more money in your business.
Also, let us know what you'd like to hear more about...or less about. And, do send us your stories and examples of great, horrible or just plain bizarre business practices that you find in your travels.
Finally, if you know of others, anywhere in the world, who will find value in this E-Newsletter, we'll appreciate your sending this along to them and inviting them to sign up at www.donaldcooper.com.
Donald Cooper, MBA
Canadian Speaking Professional
Member of the Canadian Speaking Hall of Fame
For information about booking Donald for your company or Association, contact Sharen Skene our wonderful Director of Marketing at Sharen@donaldcooper.com.
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