Home » Shop Local

Category: Shop Local

A New Beginning for Me, An Old Lesson for You

Today is an exciting day for me! Today I start a new job as the National Sales Manager for HABA USA, a wonderful toy and game company I used to sell at Toy House. I will be responsible for helping the sales reps get more HABA toys into more retailers.

What does that mean for this blog and the resources on this page? Not a whole lot.

I will be blogging less, but the resources will remain, and the insights will only increase as I expand my scope of understanding of all aspects of the retail market. I will still be available for presentations and workshops (albeit my schedule will be a lot tighter and less flexible). And I will always be looking for new ways to help indie retailers and small businesses succeed.

In fact, because of my new position, I had this experience happen last Saturday that we all can learn from.

SATURDAY AT THE MALL

I needed to updated my wardrobe. After years of wearing Toy House logo shirts, and two years of working at home 85% of the time, my wardrobe isn’t ready for trade shows and meeting with retailers and reps. That meant shopping.

I went to a large mall with several of my favorite stores. I used to be a Dockers guy, but have found Haggar pants to fit me a little better. The outlet store was having a sale on pants, too! Road trip.

Of course, when you study retail for a living, you don’t shop like a typical guy—run in, grab, and go. Don’t get me wrong. That’s exactly what I did at Haggar. But then I walked the rest of the mall to see what was happening. Plus, there was a toy store in the mall. I wanted to know if they had HABA in their store.

The store was nice. Decent traffic as would be expected midday on a Saturday. A sales clerk approached and asked if I was finding everything okay (cringe). I said, “I was wondering if you carry HABA toys?” I had seen a few of HABA’s competitors on the shelves but not HABA at that point.

She said, “I don’t know. Let me check.”

While I kept browsing, she went up to the registers and looked it up. A few minutes later she came back and said, “No we don’t.” Then she walked away never to be seen again.

In her mind she thinks she gave me good customer service. She approached me and answered my question.

In reality she missed the boat completely. I handed her the most perfect opening for starting a conversation and building the relationship that could lead to a sale. She could have asked me one of several questions …

  • What does HABA sell?
  • Why are you looking for HABA?
  • What product in particular were you hoping to find?
  • Who are you shopping for?
  • Can I show you some alternatives?

Instead she walked away. 

This is a problem we all have with our sales clerks. At best, they make an attempt at the low-hanging fruit, but never reach beyond that first branch. They shy away from actually helping a customer and making a sale. They back off at the first hint of rejection.

Last summer I created a new presentation for the Independent Garden Center Show called How to Push for Yes (Without Being Pushy) (click the hyperlink to download the FREE eBook) just to help with this situation.

If you want your sales team to go after the better fruit on the higher branches you have to first equip them with the tools to do so. Then you need to motivate them to step out onto the limb. That’s what HABA has hired me to do with their team. I am looking forward to it!

-Phil Wrzesinski
www.PhilsForum.com

PS I love the IGC Show! Last summer they challenged me to create five new presentations from scratch that collectively went on to become my half day workshop The Ultimate Selling Workshop. this summer they have challenged me to create five new presentations on selling. As always, I am looking forward to that challenge. As long as I live there will never be a shortage of new lessons (or takes on old lessons) for us to all collectively learn.

Don’t Just Go With the Tide

If you have ever studied the topography of Lake Erie, you’ll know it is one of the shallowest of the Great Lakes. It is shaped much like a swimming pool with a shallow end to the west (25-30 feet deep) and a deep end over near Buffalo, NY (210 feet deep).

When the winds come strong out of the west they blow that shallow end all down to Buffalo. Storer Camps used to have a sailboat docked at a marina on the west end and some days the boat would be resting on its keel at the dock because the water had drained completely out of the marina and blown east.

All boats rise with the tide. But also all boats fall.

Your business rides on several tides.

There is the tide of the economy. When the economy is booming, even the mediocre retailers can make money. When it is in the dumps, only the smart retailers who shored up their business rather than just rising with the tide are making any money. (This affects you both locally and globally.)

There is the tide of your sales team. The worst person on your sales team is blowing all the water to Buffalo. Hopefully you have enough good people pushing the water back.

There is the tide of products. A good fad or hot trend can fill the marina fast. You just never know when it will drain.

There is the tide of demographics. As they grow, so does your sales, but as they grow, so does your competition. The competition just doesn’t wash away as fast as the demographics might.

People who live or work along the shores of the Great Lakes and the coasts pay close attention to the tides. Their tides are predictable.

Your tides are not.

But you still need to be paying attention to them.

Are you tracking the local and global economy and adjusting your inventory to match?

Are you measuring your sales people and training up the lower producers?

Are you following the trends in your industry and comparing them to past trends to see how your store fares with each passing fad?

Are you measuring the demographics and watching for any major changes and how those would impact you?

All boats rise with the tide, but only the smart boats know when to set sail to take advantage of the rising (and lowering) tides.

Sometimes it is best to set sail and go get those sales before the tide falls too far.

-Phil Wrzesinski
www.PhilsForum.com

PS I’m channeling my oceanography degree and sailing background for this post. Just remember that when you’re rising, so are your competitors. In a sailboat race the lead boat always wants to do whatever the trailing boat does to keep that boat from gaining. The trailing boat, however, has their best chance to overtake the lead boat by following a different path.

(Repost) What to Do with the First Quarter Blues

(Note: this is a repost from March 2, 2018)

I went for a walk/jog down the Falling Waters Trail a couple days ago. It was sunny and in the mid-50’s. My dog, Samantha, and I enjoyed getting out of the house. There is something about those early spring days when you get that sense of renewal, that rebirth of energy. Of course, today, I stare out at five inches of snow courtesy of our bipolar vortex. Just when you think you’ve turned the corner on winter, Mother Nature smothers you with another blanket of white. So much for that rebirth of energy.

It’s easy to get the blues.

Image result for cabin fever clip artEspecially if you’re a fourth-quarter retailer. January feels like a relief from the exhausting marathon of Christmas. But by February, when the bills have all been paid and it doesn’t seem like any new cash is coming in, it gets to be a drag.

If you’re a jeweler or florist, you get Valentine’s Day. If you’re a toy retailer or candy shop you get Easter. But that isn’t a lot to carry you through the First Quarter Blues.

Here is a list of different things you can do during the quiet times to combat the blues.

  • Paint the store. A fresh coat of paint brightens the mood and lifts the morale of the staff.
  • Re-do all your signs. Print new ones, change wording, make them more fun and in alignment with your Core Values.
  • Work on new selling techniques. Hold trainings, do role playing, practice new techniques.
  • Make displays for out-of-your-category gifts. For instance, January-March are big baby shower months (no one wants to hold them in November/December because of the holidays). Put together an endcap of great “baby shower” gifts – even if you don’t sell baby products! A hardware store could do a display of “build your nursery the right way”. You could also do “gifts for the mom/dad-to-be.” Get creative. The same is true for weddings. The bridal shows are January-February. Bridal showers are March-June. Put together “bridal/wedding gifts” like board games if you’re a toy store (the family that plays together, stays together), or tool kits. I got a drill as a wedding gift from a thoughtful friend.
  • Get creative with your social media. Post often about a wide variety of things (not all related to selling your products). Have a contest among your staff. Make them all admins. Allow them two posts a day. See who can get more comments and shares in a week. Pay the winner $20. Do it for five weeks. It will be the best $100 bucks you spend on social media this year because you’ll see what kind of posts move the needle.
  • Have a contest of some kind. Maybe a raffle for charity. Maybe a “taste-test” where you put two competing products side by side. (I can see this for tools, for toys, for shoes, for cleaning products, for foods, for strollers …) Maybe a competition. We did a five-week March Games Madness where we pitted four games against each other for four consecutive Friday nights. The game voted the best each week made it to the final four. The fifth week we crowned the champion.
  • Spend more time networking. Send everyone on your team to different networking events.
  • Rearrange the floor layout. Stand at the front door and look around. See what catches your eye. Redesign the store so that your customers can see farther into your store. And make sure something cool and compelling is in those sight lines.
  • Clean and fix everything. Everything.
  • Make your bathroom cool. When George Whalin wrote Retail Superstars: Inside the 25 Best independent Stores in America, he mentioned the really cool bathrooms for 14 of the 25 stores.
  • Make a list of your top 50 or 100 customers with phone numbers. Assign them to your staff to call each person and personally thank them for shopping in your store. No sales pitch. Just a simple, “I want to thank you for being a customer last year. We truly appreciate your business. Have a great day!”
  • Make a goodie-bag for those same top 50 or 100 and personally deliver them. Free. No questions asked. (Thank you Brandy & Eric for this idea!)

The customers will be back soon enough. You have new products rolling in. Take this time to plant the seeds for future sales by refreshing the store, training the staff, and getting creative with your marketing.

That’s how you beat the First Quarter Blues.

-Phil Wrzesinski
www.PhilsForum.com

PS I would love to hear your suggestions for additions to this list. I know there are some really good ideas out there. Help me share them with the world.

Self-Diagnosis Tool #2 – Market Potential

When my son was in Cub Scouts, his Den Master was the manager of one of our local Kmarts. He gave me some amazing insight into the world of big-box retail including numbers of what the big-box stores in Jackson were doing in sales both overall and for toys.

It was an eye-opener, especially when I learned we were doing more in toy sales than both Kmarts in town combined.

Knowledge like that is game-changing. Knowing where you stand in your market, and what is happening to your market is critical to your success. Heck, just knowing if your market is even viable is quite important.

If you were a start-up looking to get into business, I would actually put this Tool ahead of Tool #1 – Core Values. Let’s go find a viable market before we even begin with the other stuff. As it is, if you’ve made sure your business lines up with your Core Values, the next step is to look at what is happening with your market. How big is the pie and how big is your slice of it?

CALCULATING MARKET POTENTIAL

The best way to find out the potential amount of sales in your area for your industry is to follow this step-by-step formula.

  1. Find the total dollars spent in your industry in the US. Usually a quick Google search can find you this number. For instance, in 2015 the Toy Industry was $19.1 billion.
  2. Divide that number by the US Population. In 2015 there were 322 million people in the US. $19.1 billion divided by 322 million equals $59.32/person
  3. Multiply that number times the population in what you consider your Trade Area. For instance, we considered Jackson County our Trade Area. Population 158,000 people times $59.32 equals $9.4 million Market Potential

For years I did the calculations and stopped right there. It is a close approximation. But it isn’t accurate. I needed to add two more calculations to get a true picture.

ADJUST FOR HOUSEHOLD INCOME

We didn’t sell groceries. We didn’t sell commodities. We didn’t sell basics like clothing. I needed to adjust the Market Potential based on the local economy. The number I used was Average Household Income (AHI). Find out the AHI for your Trade Area and compare it to the national average.

Back in 2015 the national average was $55,775. Jackson County was $43,170 or 22.6% less.

That adjusted our Market Potential down to $7.3 million.

If you sell luxury items, this is a critical step for understanding your Market Potential.

ADJUST FOR INDUSTRY DEMOGRAPHICS

You may also need to adjust your numbers based on a demographic specific to your industry. Since we started with total US sales and total US population to get a sales/person amount, we get a number that might be skewed for your area.

For instance, if you sell boats, your market is much bigger in Michigan with the Great Lakes or Minnesota with ten thousand lakes than it might be in Nebraska or New Mexico. You might look into average boat ownership per population and compare your Trade Area to the national average.

If you sell books, you might want to look at the educational level in your Trade Area compared to the national average.

If you sell toys, you might want to look at the youth population in your Trade Area.

This number may be harder to find. I was able to cross-reference the US Census to find that Jackson County had 6% fewer children than the national average. That dropped our Market Potential down to $6.8 million. 

Notice how those two adjustments really changed our Market Potential?

CALCULATE YOUR SHARE OF THE MARKET

Once you know your Market Potential, it is easy to find your Market Share. Simply divide your sales by the Market Potential. In 2015 our sales were 15.7% of the Market Potential.

I used a spread sheet for all of these numbers. I put in the formulas for calculating percentage differences. All I had to do each year was find the raw numbers and plug them in.

The power of doing this math is two-fold.

Not only do you know exactly where you stand in your market at any given time, you also know how your market is changing.

WHERE YOU STAND

Walmart has 25% of the grocery market and around 10% of the entire retail market in America. As sobering as that may sound, at one point back in the 1950’s Sears had over 50% of the appliance market. That’s a mind-blowing number—especially when you consider where Sears is today.

The real Gold Standard for any retailer is to achieve 30% of your Market. It will likely take a perfect storm to get any higher than that. Back in the early 1980’s before we got a second Meijer, a Target, a Toys R Us, and a Walmart, we were pretty close to that mark. For most independent retailers the more likely expected number is 3-5%. Our 15.7% was a combination of store size and longevity in the market, along with all the other things we were trying to do right.

The interesting point here, though, is not in how many people shop with you but in how many people don’t shop with you. Almost 85% of our Market didn’t shop with us. That’s a lot of potential customers. If I wanted to grow my business by 10%, I only needed to convince another 1.57% of the 158,000 people in the county (2500 people) to walk through our doors. If you only had 5% of your Market, you would only need to convince another 0.5% of those people to shop with you to achieve 10% growth.

Trying to convince 2500 people is far easier and much different than trying to convince 158,000 people. You only need to find 2500 people who don’t yet know you, but share your Values.

CHANGING MARKET

The other critical piece of information you can gain is by doing this calculation year after year and watching how the numbers change. Is your Market Potential growing or shrinking? Is your share of the Market growing or shrinking?

We watched two critical numbers during the Great Recession. One was Average Household Income. One was Youth Population.

From 2007 to 2016 our Youth Population for Jackson County dropped over 40%. I drilled down into those numbers and saw even worse news. While national birth rates were dropping during that time, our birth rates were even lower than the national average except for one glaring segment—teen births. The city’s birth rates, thanks to this segment, were similar to national averages while county birth rates were well below average.

Average Household Income didn’t fare much better. At one point the AHI in the city limits was hovering around the poverty line at $27,000. Our closest customers had no money for toys. The outer areas of the county where the money was had no children. Not a good recipe.

Add into that mix, we watched the Sales per Person of toys in the US also decline from a peak of $75.17/person in 2004 to only $59.32 in 2015. People were spending their money on electronics like smart phones, tablets, and computers.

Over the years our Market Share didn’t change a whole lot, but our Market Potential did. In 2007 it was $11.9 million and we had 16.5% of it. In 2015 it was down to $6.8 million and we still had 15.7% of it (even though Amazon had become a major player in toys around 2011-2012). 

COMPETITION

The other barometer Market Potential and Market Share give you is your own business’s health compared to the competition. While top line sales are nice, the true question you need to ask is whether your Market Share is growing or shrinking. You could be up 10% in top line sales, but if your market grew by 15%, someone else is eating your lunch.

If you have done your spread sheet and have several years of data to analyze, plot into the data when major competitors came to town or made major changes to their businesses. See how that affected your numbers. For instance, I can see that when Walmart opened in Jackson in 2005 our share dipped from 16.5% down to 15.9%. I can also see how we jumped back up to 16.4% the following year after the novelty of the new store wore off. I can also see how we dipped down to 16.1% in 2011 and 15.8% in 2012 when Amazon became a serious player in the toy market.

All of these numbers tell a story far more compelling than whether your store’s sales are growing or shrinking. They help you understand your business on a far greater and more important level.

If your Market Potential is growing, there is money to be made, but be cautious. The big guys are tracking that number, too, and might be looking to expand into your market. If your Market Potential is shrinking, you might need to look at moving, changing, or finding an exit strategy.

If your Market Share is growing, you’re doing things right. If your Market Share is shrinking, you have work to do.

That’s why you should make this your second priority to diagnose and understand.

-Phil Wrzesinski
www.PhilsForum.com

PS Where does that 3-5% number come from? This comes from looking at average store sales for several different industries including toys, pet supplies, shoes, jewelry, photographic supplies, and flooring. While there are many outliers and the range is quite broad from large to small, the average store for most of these industries has enough sales to grab about 3-5% of their market. I use it purely as a benchmark for start-ups to be realistic about their business prospects in the first few years. Getting to 3% within two to three years is a realistic goal. If you’re in a town with a strong Shop Local movement that might be easier, but you might also have more indie competition. If there are no indie competitors, you have an unusually large store, and you’ve been the fixture in town setting the bar of expectation for over sixty years, your numbers should be much higher.

The reality, however, is that the number itself doesn’t matter nearly as much as what is happening with that number. Is it going up or down? If it is going down you need to find out why.

 

The Right Measuring Cups

When the recipe calls for 1 cup Vegetable Oil do you reach for a teaspoon? When it says 16 ounces Sour Cream do you grab a scale? Of course not. Sure, you can get close with those tools, but it won’t be as accurate nor as handy.

Yet we do that in retail all the time. We use the wrong tools to measure our business.

For instance, most businesses look at Sales Growth as a barometer of their business health. If sales went up, business is good. If sales went down, business is bad.

The problem with that tool is that it doesn’t take into account what happened in your local marketplace. If your sales went up 5% but your market grew by 10%, then your business is not on the right path. If your sales were down 2% but your market shrunk by 5%, you captured a larger share of your market.

You have to know how to calculate Market Share to truly know the health of your business.

RECIPE FOR MARKET SHARE

Market Share: your percentage of the Market Potential for your trade area. Calculate Market Potential by finding the Annual Sales for your entire industry, divide that by the population of the United States and multiply that answer times your own trade area population. Then adjust for income levels. The math looks like this …

  • Industry Sales = $20.2 billion
  • US Population = 325 million people
  • Your Trade Area = 150,000 people
  • US Average Household Income = $59,039
  • Your Area Household Income = $63,026 (6.75% higher than US average)

$20.2 billion / 325 million = $62.15/person

$62.15 x 150,000 = $9.3 million

$9.3 million x 1.0675 = $9.9 million Market Potential

(Note: that number can be adjusted again for one other factor dependent on your industry. For instance, if you’re in the toy industry you can adjust for the number of children in your area compared to the national average. If you’re in the boat industry, look for something along the lines of percentage of boat owners nationally and in your area.)

Figure out your percentage or share of that market and whether it is growing or shrinking. That will be a more accurate measurement than your top line sales.

CUSTOMER SERVICE MEASUREMENT

How do you measure something as abstract as Customer Service? One tool is Units Per Transaction (UPT). While several factors can influence this number including your merchandising skill of impulse items and whether the items you’re selling have more or less accessories than last year, the largest influence on this number is your sales force. Are they taking care of the customer properly? Are they completing the sale? Are they making the customer feel welcome, comfortable, and happy? Are they building trust?

The calculation for UPT is simple. Take the total units sold during the year and divide that by the number of transactions.

75,000 units sold / 22,000 transactions = 3.4 Units Per Transaction

If that number is going up, your team is doing their job.

Another measuring tool that is slightly harder to quantify, but equally effective in telling the true tale of your customer service is Repeat and Referral Business.

Repeat Business is a sign of Good Customer Service. Referral Business is a sign of WOW Customer Service. Your service was so good they had to bring their friends back with them. If you’re tracking transactions by name in your POS, you’ll know your Repeat Business. You can also ask when you enter someone new into your POS how they heard of you. If they say “from a friend” mark them as Referral.

The ideal business has a majority of their customers as Repeat and Referral. The raw number of Repeat and Referral Customers should hopefully be growing and should be a larger percentage of your traffic. The larger, the better.

MARKETING AND ADVERTISING MEASUREMENT

Sure, you can run a coupon or a Call to Action in every ad to see how many people it drives to the store. But if you have been reading this blog or following the wisdom of people smarter than me like Roy H. Williams or Seth Godin, then you know that kind of advertisement leads to short term gain and long term pain.

One other way to measure the effectiveness of your advertising is from your Repeat and Referral Business. Add those two numbers together. The remainder of your traffic is your marketing-driven business.

Yes, some of that traffic is based purely on your location. Your location is part of your marketing. Your signs on your building are part of your marketing. Your parking situation is part of your marketing. Your advertising is also part of your marketing. If the raw numbers of people coming through your doors for the first time and not by Referral are growing, your marketing is working.

Which part of your marketing is working? That is a little bit harder to measure. As famed retailer John Wanamaker said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

At least you have a tool to see if it is working in general. (Check the Free Resources for Making Your Ads More Effective to figure out how to make all halves work.)

When you use the right measuring tool, you get a better result. That’s true for cooks, bakers, and small business owners. 

-Phil Wrzesinski
www.PhilsForum.com

PS Before you plan for 2019, you really need to know what happened in 2018. Even if your top line sales rocked the world and your bank account is fatter than usual, if your Market Share decreased or your Repeat and Referral Business fell off, you have important issues you need to address sooner rather than later. I’d love to help you address those issues.

Looking Back at the “Top” Ten Blog Posts From 2018

Somewhere around the first of the year a lot of writers like to publish their “Top Ten” list of most viewed posts from the previous year. Wouldn’t it be smarter to post the least-viewed posts, the ones most people missed? Give people a second-chance to read your wisdom. As it is, just because a post is the most-viewed doesn’t make it the best.

This year I’m going to give you a variety pack of posts from 2018 and why you should read them (again).

The post you didn’t miss: Yes, I have Heard About Toys R Us. This was the post with the most views last year. I made a prediction in the PS of that post that has turned out to be right. Go read the post to see what I predicted.

The post you missed: Few Things Go as Planned. This was the post with the fewest views. I wrote this at the beginning of the year to remind you to plan, but to also understand that things don’t always work out the way you plan them and that you have to be able to adjust on the fly. Ask yourself, “Did 2018 happen the way you planned?” I’m betting right now your answer is No. Go read this post.

The milestone you didn’t know about: Christmas Quick Tip #3 – Sign ‘Em Up Before Checkout. This was post #1000. To some people, those numbers are kinda cool. I didn’t make a big deal about it then because it was the busy holiday season and those posts were designed to be short and sweet. by the way, this isn’t just a Christmas time tip. It is a smart business practice.

My favorite post of 2018: Five Proven Recipes. In this post I give you Paul Harvey’s recipe for a backyard mosquito spray, an all-natural weed-killer that works (if you spray regularly), and simple, tech-free recipes for raising the bar on your Hiring, Advertising, and Customer Service. Sometimes the simple ways are the best.

The post that got the most social media interest: So You Got a Bad Review? This post had the most comments on social media and was the first post of mine that was “shared” on LinkedIn (a new feature they’ve added). Best of all, it had no negative reviews, lol. If you’ve had a negative review, you might want to read this.

The best question you will ask your staff all year: How to Learn From the Best. This was actually the second least viewed post, yet the most telling about where you stand in your local retail marketplace and what you need to work on the most. Ask your staff this question and listen to their replies.

The post I wished you had commented on: This “Free” is Really Free. The site stats counter tells me I get hundreds of downloads of the different Free Resources each year. I’d love to know how you’re using them and what success you might be seeing because of them. Go ahead and leave some comments there (or here).

That’s your lucky seven posts you should have read (and hopefully did). I’m going to leave three more links in the PS below for the adventurous souls among you to round out the “Top Ten”.

Happy New Year!

-Phil Wrzesinski
www.PhilsForum.com

PS I triple dog dare you …

How to Use Humor in Your Advertising the Right Way

Quit Making it So Hard for People to Buy From You

“Customer Service” is Dead

Small Business Academy Homework Part 2

I am taking a class to work on my business. It is a class for startups, primarily, but the exercises will not only help me with my business as a speaker, writer, and business coach, they will help me help you become a better business.

My instructor, Frances Schagen, has granted me permission to do all my homework worksheets live here on this blog. You can read the first worksheet here. Time for Part 2.

DISCOVERY DANCE – WHO?

The previous step was about me, what I wanted to do and why I wanted to do it. This next exercise is for me to think more about who I want to work with. I have three questions to answer …

  • What problem are you solving?
  • What are the characteristics of the people you most want to work with? What is it about them that makes them a fit for your solution?
  • List 20 people who have those characteristics and who you think might need your solution.
Don’t adjust your monitor. This is Alpine Soccer – a real thing!

What problem are you solving?

Giving tools other than the markdown gun to retailers and small businesses to help them create successful businesses that can compete on a field slanted against them.

What are the characteristics of the people you most want to work with? What is it about them that makes them a fit for your solution?

Business Owners and Managers of small, independent businesses who:

  • Can make their own decisions
  • Want to learn new and better ways to run their businesses
  • Believe in continuing education
  • Are open to trying new things
  • Care about their customers
  • Care about their community
  • Want a push in the right direction
  • Want to learn new skills

Notice that these characteristics align with my Core Values of Having Fun, Helping Others, and Education. Your answer should align with your Core Values, too.

Notice also that I did not limit myself to just retailers. I go back and forth on this part of the answer. Although my background is in retail and some of my presentations are strongly retailer-focused, the characteristics listed above are not just limited to retailers. Nor are all my programs and teachings just limited to retailers.

My book Hiring and the Potter’s Wheel: Turning Your Staff Into a Work of Art works with any business that must hire people. I have a couple Fortune 500 companies that use this book and its teachings. I have a couple international companies doing the same.

There is something to be said for narrowing your focus so tightly that you become the known expert in a narrow field. There is also something to be said for keeping the net more broadly focused not on any single type of business or individual, but on the characteristics. I love that part of this question. If you own a non-retail business and have the characteristics listed above, I am sure I can help you.

There are still a couple problems with my original answer of “Business Owners and Managers of small, independent businesses.” Most of those people cannot afford my services on an individual basis and I prefer to work with large groups of these people at once.

Therefore, to truly reach them in the ways I can help most, I have a secondary customer that is in many ways my primary customer. I have to go through the gatekeeper.

My true customers are typically Trade and Business Organization Leaders who, along with the mindset above, also:

  • Plan learning events for their members
  • Hire people from outside their echo chambers to give fresh perspective, new insights, and sharper tools to their members

Those organization leaders are the gatekeepers to the first group because A) they have the money to plan learning events, and B) they can corral a number of businesses into a group setting.

Therefore, to reach my preferred customers, I have to find these gatekeepers who share these characteristics and reach them.

This is an important understanding and distinction. I write this blog and create the content on my website for you, the small business owner. I have to find another avenue to convince the gatekeepers to hire me. This blog isn’t for them, nor will it ever get me hired by them*.

When you understand your customers at this level, it changes the way you look at how and where to find them.

List 20 people who have those characteristics and who you think might need your solution.

I think Frances wants me to list specific people or businesses here. I’m going to take a slightly different approach in my answer.

I think the following businesses need my solution …

  • Independent Retailers & Restaurants
  • Locally Owned Franchise Retailers & Restaurants
  • Service-based businesses such as insurance agencies and beauty salons
  • Anyone involved in Sales

who belong to …

  • Downtown Development Authority districts
  • Chambers of Commerce
  • Shop Local Organizations
  • Industry Buying Groups
  • Industry Trade Associations
  • Main Street Programs
  • Merchant Cooperatives

and/or attend …

  • Industry Workshops
  • Educational Conferences
  • Local Seminars

I also think the following people need my solution because it can help strengthen their members, which strengthens their organization …

  • DDA Directors
  • Chamber of Commerce Directors
  • Main Street Program Directors
  • Shop Local Directors
  • Economic Development Directors
  • Trade Association Educational Committee Directors

One of the first questions I always ask when I meet this last group of people is,

“Do you offer or have you considered offering any training programs for your members?”

Listing 20 people can be challenging. For your benefit, I thought about my business at Toy House and came up with this list:

  • Parents
  • Grandparents
  • Children
  • Aunts & Uncles
  • Teachers
  • Home Schoolers
  • Hobbyists
  • Gamers
  • Librarians
  • Interior Decorators
  • Coaches
  • Athletes
  • Event Organizers
  • Daycare Workers
  • Therapists
  • Pediatricians
  • Dentists
  • Anyone with a waiting room with kids
  • Musicians
  • Entertainers

I’m sure with enough thought you can come up with a list like this for your business.

Here are my takeaways from this exercise for you.

If you can clearly identify the problem you are trying to solve and clearly identify the characteristics of the person with this problem you would most like to work with, you’ll understand more clearly the advertising and marketing you need to do to get more of the customers you want (and less of the ones you don’t want).

(Having read ahead in the course work, I think Frances will take this info to send us in a slightly different and more fascinating direction than that. Sit tight. I’ll explain it when we get there.)

Thanks, Frances!

-Phil Wrzesinski
www.PhilsForum.com

PS *This blog actually can get me hired by “them,” but it involves YOU. When you tell your DDA/Chamber/Shop Local/Trade Association person about wanting opportunities to learn more and having educational programming available to you, then they are more likely to hire me to do that. Tell your organization directors about me. Send them to this page.

Why, Why, Why, Why, Why – A Simple 3×5 Question We All Need to Answer

You know me. I like to learn. When a friend of mine offered me the chance to sign up for her new six-week online tutorial for launching a new business, I jumped at the chance.

Frances Schagen has helped over a thousand businesses get started. That’s an impressive number. You might remember her name because I quote her at the beginning of the Free eBook Reading Your Financial Statements.

“What gets measured gets done.” -Frances Schagen

Frances was instrumental in proofing and helping me get the math and concepts right in that eBook and also a bigger financial statements book I wrote for the toy industry. She is a smart lady and I’m lucky to get to learn from her.

You can join Frances’ club, too!

Her new project is “Six Stages to Building Your Effortless Business.” Earlier today she had an online chat with those of us in the current class. She also gave us homework.

With her permission, I am going to do my homework throughout the class live on this blog. 

Not only will you get to see how I am building my business, you’ll get ideas that will help you with your own business.

THE OWNER’S STORY

The first stage is The Owner’s Story. The first worksheet and homework for me to do is the 3×5 Whys Project. I have three questions I need to answer. For each question, however, I need to answer five “whys.” The purpose of this sheet is to really dig deep to uncover my story, why I want to start this business, why I want to go into this field, and what I hope to accomplish. Here are my answers:

Why are you starting a business? Why have you chosen this way to make your living?

Why #1 – I have chosen this way to make a living because of my Core Values of Having Fun, Helping Others, and Education. I find writing and speaking to be incredibly fun, helpful and educational.

Why #2 – I am starting a business because I like being my own boss, calling my own shots, being responsible and accountable for my own mistakes, and choosing my own schedule. As a single parent, it gives me flexibility to be the parent I want to be, too.

Why #3 – I have chosen this way to make a living because I like travel and meeting new people.

Why #4 – I am starting a business because I need to make money. I have one child in college and another starting college next year. I have living expenses and not enough retirement money saved up.

Why #5 – I have chosen this way to make a living because I see a decent income potential. While I don’t ever expect to be one of those high-profile speakers who gets tens of thousands of dollars every time he steps on stage, if I can find two or three opportunities to speak or lead a workshop each month I can make a decent living. I also believe I can do this type of job long past the typical retirement age, which not only gives me more income potential, but also keeps me active and fulfills my own needs for a long time.

Why have you chosen this field? Why are you doing this work?

Why #1 – I have chosen writing a blog and books, and doing workshops and presentations for small business owners because it is the topic I know best and have the most personal experience.

Why #2 – I have chosen this field because I know how little true help there is out there for indie retailers. I have belonged to several retail owner groups over the years and have heard the questions. We all bring some expertise to the arena, but running a retail business requires you to wear so many different hats that it is impossible to know everything. Too much of our learning as business owners is done on the fly, often the hard way through trial & error and learning from our mistakes.

Why #3 – I am doing this work because I believe I have a talent in both the writing and the presenting. I have been told several times that my super power is the ability to break down seemingly complex ideas into understandable thoughts.

Why #4 – I am doing this work because it satisfies me. I take more pride in hearing how something I said or wrote made a difference for your business than I do in just hearing, “Nice job,” or “You did good out there.” My favorite testimonial to date came from a guy at SuperZoo a few years ago who said, “You’ve saved my business AND my marriage!”

Why #5 – I have chosen this field because I have been on the other side of the equation, asking the questions small business owners ask, searching for the resources and answers. I know a lot of the answers from making the mistakes and learning from them. I also know where to go to find more answers because I have done those searches. I want to be that resource for others.

What global problem do you want to solve? (however you define that) What change do you want to make?

Why #1 – I want to help small businesses, primarily indie retailers and entrepreneurs, to find their success.

Why #2 – I recognize that the field is slanted toward big businesses with deep pockets and strong lobbies, but I believe there are plenty of ways for small businesses to compete and thrive. The tools are available, but sometimes we need people to show us how to use those tools. I want to be that person.

Why #3 – I want to encourage shopping local. I have seen enough studies to know a strong local retail presence will further strengthen the local economy. But I also believe local businesses need to be better than they have been if they want to keep the local dollars in town.

Why #4 – I believe small business owners care more than large corporate CEO’s. CEO’s focus solely on the shareholder. Small business owners don’t have shareholders, so they care more deeply about their employees, their customers, their community, and even the environment. If I can help small business owners develop, grow, and find success, I can bring caring back to this world.

Why #5 – I believe in generosity. When we give more of ourselves, we encourage others to give. Whether they pay it forward or pay it back. I want to live in a world where generosity is the default, not an outlier. It starts with me. That’s why I have this blog and the Free Resources page. That’s why I answer every question emailed to me.

 

Whew! That was a little harder than I thought. Coming up with five answers to each of those questions was not as easy as I originally thought. But I can see the importance of this exercise. In our online chat today, Frances helped us try to clarify what we want to do and why we want to do it. Some of those answers above have helped me realize what I really want to do.

I would encourage you to answer these same questions for you and your business. Often we get into business because of one reason, but once we get there and have to juggle all the day-to-day problems and wear the many hats, we forget why we’re here in the first place. That’s when business is no longer fun and you’re merely in the game for survival. As you can see from the above answers, I don’t want that for you.

-Phil Wrzesinski
www.PhilsForum.com

PS You can still get in on this class if you want. We only just started today. The real meat begins next week. Contact Frances if you want to play along.

PPS Now you also know a little more about what drives me to do what I do. The ultimate goal for me would be to have two or three paid events each month where I am presenting or leading a workshop, leaving the rest of my time to write and mentor other business owners. If you know of any organizations such as your Chamber of Commerce, DDA, Main Street, Shop Local, or trade association looking for a professional speaker, please let me know. I’d love to do a live event in your town or at your next event.

Reviews: Good, Bad, Necessary Evil?

I remember the first presentation I saw about the power of online reviews. The speaker instructed us how to use our smartphones to take quick testimonials right on the sales floor whenever we had a happy customers. I looked at my notes from the presentation and read …

“Get them to post their reviews before they even checkout. That’s when they are happiest.”

I also remember around the same time reading about Yelp and the problems with reviews there. Yelp was accused of suppressing good reviews and only showing an equal mix of both good and bad reviews. Yelp’s argument was that most good reviews were false anyway and that the people reading the reviews needed to see both the good and the bad.

I had never even looked at Yelp because I thought it was only for restaurants and west coast businesses. I immediately checked out our listing. To my surprise (and delight), there were no negative reviews posted, mainly because we didn’t have any negative reviews.

Then I got the extortion letter from Yelp. If I signed up for advertising with them I could control (somewhat) my negative reviews. I remember thinking three things at that time.

First, I didn’t have any negative reviews to control on Yelp.

Second, I didn’t see the return on investment for running ads on Yelp, partly because I didn’t and still don’t see much return on investment for any brick & mortar running online ads, and partly because I didn’t see Yelp as a big deal for indie retail.

Third, anyone that was already looking me up or finding me on Yelp was either going to visit me because I was an indie toy store or not visit me because I was an indie toy store. The reviews were a minor part of the decision process. More importantly, anyone who didn’t know me, then found me on Yelp, and was debating whether to visit was basing their decision on every single interaction they had ever had with an indie toy store.

The reviews were just the reinforcement of their already-established bias.

That’s the reality of how we read reviews. We first have an established bias based on our own beliefs and previous experiences. We look at reviews to reinforce those beliefs. We’ll justify away negative reviews for places we expect to love, and discount the reviewer’s opinion when it is at odds with what we expect.

In the back of our mind, we’ll also wonder how many of these reviews—good and bad—are simply made up.

About the only time we’ll heed the reviews is when they are heavily slanted to the negative. When everyone is saying something bad, we’ll decide the business is an outlier and shun them.

(Note: I talked about how to deal with negative reviews here.)

Does this mean you should ignore reviews for your business? Absolutely not! You should always be checking your reviews. If they slant negative then you have a problem you need to address with how you run your business. Even one bad review might be enough to warrant a change in policy to make the experience better for your customers.

If they slant positive, great! Keep up the good work!

Only if you don’t have any reviews (because you’re a new business or have only recently claimed your online profile) should you actually go after getting them. If you’re running your business correctly, the good reviews will take care of themselves.

Because of confirmation bias, though, you don’t have to lose sleep over your reviews. Just keep an eye on them from time to time and make sure you run your business so well that the positive organic reviews outweigh the negative ones.

At the end of the day the most important “review” is the one-to-one where your current customers talk about you to their friends.

-Phil Wrzesinski
www.PhilsForum.com

PS Of all the reviews online, pay most attention to your Google reviews. These are the ones that most people will see because A) Google is the top search engine. B) Google Maps is the top Map App.

PPS If you are a restaurant, reviews are much more critical than if you’re a retailer. How you respond to each review goes a long way to how people will view your restaurant. Read this about negative reviews.

Two Forks in the Road for Sears

In 1988 Walmart opened their first Supercenter in Washington, Missouri. The Supercenter concept heralded Walmart’s entry into the highly-competitive, low-profit, huge cash flow, repeat-traffic driver grocery business.

Two years later Walmart surpassed Sears in total sales to become the largest retailer in America.

By 2004 Walmart was capturing one out of every four dollars spent on groceries and remains the biggest player in the grocery industry.

Walmart ad in Vogue Magazine

In May 2005 Walmart did something completely unexpected. They ran a full-page ad of their new fashion launch in Vogue Magazine. Yes, Walmart and Vogue. No, it wasn’t a designer pajama line to wear when you visited a Walmart. Walmart wanted to do to fashion what it had done with grocery.

There was only one problem. Fashion isn’t a commodity like groceries. One year later Walmart reported declining sales for the first time (at a time when most retailers and the economy were booming). By 2007 they scrapped their foray into fashion and went back to what they did best—sell mass-produced items at cheap prices. When the economy tanked in 2008, Walmart found itself back on top with sales growth and cash flow.

I tell you this story in our discussion of the lessons from Sears filing bankruptcy (part 1 and part 2because it illustrates what can happen when a company tries to diversify the right way and the wrong way. Walmart’s model is built on selling cheap goods cheaper than anyone else.

Their foray into groceries made sense. Fashion, not so much. When Walmart began selling groceries it vaulted them to the top of the retail mountain. When they got away from what they did best, it caused them to falter.

Sears made the same mistake in the 1980’s and never recovered.

Sears made its living in the same style as Walmart—selling lower-priced items. One difference, however, was that Sears sold “value” more than price. The well-trained staff* would talk you out of the most and least-expensive versions of their appliances by showing you the “value” you got from buying something in-between with a lot of bells and whistles.

Sears also made its living by having stores near urban centers, but also a catalog to serve the less-represented rural areas.

This recipe put them on top of the world.

COMPETITION

While Sears had made a living selling to rural markets through their catalog, Walmart was quickly encroaching their territory with actual stores. Walmart went after the rural markets that didn’t have the retail glut of the urban locations, the same rural markets where the Sears catalog was most popular.

Walmart also used its growing power with vendors to bully them into better pricing to undercut the competition and define the sales in terms of “price”, not “value.”

Whether through hubris or ignorance, Sears ignored this threat and instead focused on diversifying their portfolio.

CORE VALUES

Back in 1930 Sears had launched Allstate Insurance, a value-based insurance company. The success of that led Sears to get into three other industries in the 1980’s—financial planning (Dean Witter), real estate (Coldwell Banker), and credit (Discover Card). 

Like Walmart and grocery, Sears and insurance was a fit. Insurance is a product people have to buy but want to buy it affordably (value). Like Walmart and fashion, financial planning and real estate were not a good fit for Sears because they aren’t sold the same way. Sears was sinking valuable time and resources into ventures that weren’t consistent with their Core Values or their primary business model.

Sears divested themselves of those entities in the 1990’s but by then the damage was done.

Walmart and Kmart surpassed Sears in sales in 1990. Walmart had redefined the lower-priced goods market, begun the serious race to the bottom, and infiltrated the rural neighborhoods where the Sears Catalog had been the lifesaver for so many families.

MAIL-ORDER BUSINESS

In 1993 Sears discontinued the catalog. The catalog business had shifted dramatically in the 1980’s because of the fanatical growth of retail stores in America. Why order it from a catalog when you can pop into a nearby store and get it today? The glut of retail, the cost of shipping, and the 7-10 business days shipping time was enough to kill the commodity catalog shopping that was the Sears catalog.

The only catalogs making it were for specialized companies selling specialized goods not found in stores (LL Bean, Eddie Bauer, REI, Signals, Orvis, etc.).

Then along came Amazon.

In 1994 Amazon launched their site. While there were a small handful of people who recognized the power of the Internet and what it could become (my buddy, Hans, actually pitched Borders Bookstore on the idea of selling online before Amazon launched and was laughed out of the room), I’ll forgive Sears for not seeing the potential.

Kinda …

Sears already had the mail-order business infrastructure set up. Sears already had the cataloging of hundreds of thousands of items done. Sears already had enough stores around the country at that time to set up a BOPIS system that even Amazon can’t yet match. Sears was part of a joint venture with IBM called Prodigy, so it was even involved in the Internet in its infancy!

This isn’t to say that Amazon wouldn’t have eventually cleaned their clock through better data, better customer-centric focus, and better operations, but just imagine if instead of trying to diversify, Sears was instead looking at new ways to do what they already did, only better and with the full use of the newest and latest technologies?

The lesson in all of this is simple.

First, understand fully and clearly who you are and what you do.

Second, don’t let anyone else do it better than you.

Sears let Walmart and Amazon do Sears better than Sears while Sears was busy trying to be someone else. Because of their size, it is a slow, painful death, but the choices that led to the bankruptcy were made in the 1980’s and 1990’s when Sears chose the wrong forks in the road and stayed on those paths too long.

-Phil Wrzesinski
www.PhilsForum.com

PS *I don’t know when it happened, probably in the 1980’s, but at some point Sears got away from their “well-trained staff.” Whether it was a cut in money for training programs, a shift in management away from training as a whole, a cut in payroll, or simply a belief that sales-training didn’t matter (a common thought in the 1980’s when everyone was selling at a high clip), Sears lost this competitive edge it held over the competition, especially Walmart.

PPS I did this exercise a couple times with my staff, but it was a question I asked of myself several times a year. “If I was going to open a store to compete with Toy House, what would I do?” When you ask and answer this question, you find the weaknesses in your model that can be exploited. You find where your competitive advantage is thinnest. Not only does this question help you find where competition could hurt you and shore those areas up before the competition strikes, it helps you constantly explore options for doing what you do better.