Entrepreneurial News®

The Cavalry is Coming?

This is a favorite phrase of my favorite TV host, Larry Kudlow, on his daily show on Fox Business.

But, for those of us in the small business community, what does it mean?

First, I think Larry would say that the House and the Senate revert to Republican control.

But, but, but, to use Larry’s favorite phrase, what does that mean? We’ve still got Biden in the White House.

I think we could say there will be a reduction in oil drilling impediments, which will lower gasoline and other petroleum costs, which will slowly take some of the pressure off those costs continuing to rise. Crude prices have dropped a bit in just a week after we announced a cessation of buying oil from Russia.

If you depend on your goods from China, as many retailers and drug companies do, you might continue to have problems; most of our clients have sourced formerly China-produced goods into other countries, such as Thailand, India and Mexico.

I think there will be some decrease in silly regulations, but Dems are still running the agencies such as FERC, EPA, OHSA and DHS that impact your business lives.

What will happen to the millions of unfilled jobs? I find that number rather illusory, since we did a hiring campaign for 12 security guards, and got all the positions filled in two weeks, albeit by offering a somewhat higher wage than others. We’ve written elsewhere of using Indeed and Zip Recruiter, and the fact that we thought the latter was better. There’s another online job board, Monster, from which I’ve received some solicitations to be President of this or that, and that seems to work for higher level positions.

But, you will probably see some unavoidable increases in your raw materials costs, or your service costs, which you might not be able to recoup through price increases, despite what the pundits say. We’ve also written in this blog about how you can mitigate price increases.

So, and we will probably update this blogpost down the road, as we’re updating the one on stagflation, as the way becomes more clear.

 

 

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Gotta Know Your Limitations

To paraphrase the Clint Eastwood movie, ‘A man’s gotta know his limitations’.

What does that mean for you, as an owner of a company?

It means don’t get ahead of your organization’s ability to execute what you want to do.

It’s fine to have buy-in from your organization on your plans (we recommend it), but you might task your organization with more than it can do in the time frame you’d like it done.

An example: in one of my companies, we were adding production capacity, expanding eastward in the United States, and adding English and Australian distributors, and I and my plating manager got the idea for a completely new metal coating process for our exhaust parts on a Friday afternoon.

We were also improving our shipping times, which required a fairly major commitment to more inventory.

I discussed the new pr my partner, who had blessed the idea previously but who had expressed valid concerns about going beyond our capacity, So Monday, I and my partner held an all hands meeting with my staff, front office and warehouse, as well as production. My CFO missed the meeting, but she would have asked me what additional strain I would be putting on our financial resources.

Frankly, I didn’t know, and I admitted as much. My name was on the building, but I discovered it was ok to not know something. At Wharton and Ford, you were expected to know the answers.

So, we kept implementing the other expansion plans, and I started the process of doing market research and actual testing of the parts in the worst climates where we had discrete distributors. I might have otherwise skipped the market research test because the initial response from a couple of key distributors was overwhelmingly positive.

We digested the plans already in the works, and then tested the parts in places like Seattle, Houston (for marine uses) and Denver. All positive.

The tests took about six months, during which time our competitors might have found out what we were up to, but they didn’t.

So, we stayed within our limitations, kept the financial wheels on the business and had a very successful product launch.

And the staff was happy, because they didn’t get pushed beyond their limits.

Financially, we added nearly 30% to our sales in a year in the middle of a recession, which we didn’t think we could do, but it worked.

Gotta know your limitations so you can exceed them

 

Indeed vs. Zip Recruiter

We recently did a hiring campaign for one of our clients for security guards, and we used both Indeed and Zip Recruiter.

Of the two, we preferred Zip Recruiter, because it turned out to be cheaper for the client, and we found Indeed a little deceptive in their claims.

First, both sites do offer free periods, and we were able to find enough qualified candidates inside the free period.

However, there was a qualifier: Indeed tried to charge us for each resume submitted, regardless of qualifications, which they didn’t disclose on their website, and $99 per resume passed through to the client. These two charges make Indeed quite pricey relative to Zip. Indeed did, however, refund the per resume charges when questioned, because they agreed they didn’t disclose them

Zip said straight away that their cost was $16 per day, regardless of how many resumes the site found for us. And they stuck to that. Using the same ad on Zip, results weren’t quite as good as Indeed, but there wasn’t enough difference to justify Indeed’s higher price.

As it turned out, our client also recruited from his existing employees, which produced as many applicants as either Zip or Indeed.

So, if you’re using one of the recruiting sites, read the fine print!

Market Positioning Oops: Lucid Motors

We see where Lucid Motors stock as hit a new low, amid problems in meeting its sales targets.

We think we know why: to us, the Lucid looks like current Lincoln MKZ models, with little differentiation on the part of the manufacturer on its products.

And the $75,000 Lucid might be $10-15k more expensive than an electric Lincoln when it arrives.

That’s not a good place to be in these days.

Going back to the drawing board to redesign the car is time consuming and expensive.

We suggest Lucid talk to Ford and make their car the electric Lincoln that we’re sure Ford has under development but probably not scheduled for launch for a couple of years.

Better to pivot and live to fight another day. Besides, Ford is a good place to work.

Our Two Cents on Crypto Currency

  1. It’s often associated with shady dark web transactions, but that’s not necessarily true. You can’t counterfeit it, so it’s a good exchange medium, theoretically good around the world, but the currency risk remains, since the value fluctuates wildly.
  2. Bitcoin is the major crypto currency, but not every company has transactions in the $35,000 range, so where can you use it?
  3. Even Elon Musk joked on Saturday night live that cryptocurrency seemed to be a ‘hustle’, and if an opinion leader like Musk thinks that, crypto won’t get wide circulation.
  4. Crypto can be moved around without intermediaries, such as credit cards, banks and forex, so it is efficient.
  5. The list of businesses that allow payment in crypto is growing, but so far it’s limited to those who deal in high-priced goods. I can’t see going to my local Ace Hardware or Home Depot to use it for their goods.
  6. We’re not going to opine on the investment potential of crypto, because that’s not the focus of this blog.

Know When It’s Time to Pass the Torch

I have two clients where the founders are struggling with passing the torch to the next generation.

In one case, the founder was ready to pass the torch: he had worked leading the business for close to 30 years, had brought two of his three children into the business at a relatively early age and knew what he wanted to do after he sold the business. We helped him develop his kids and did reviewed the MOU for the transfer (the legalized transfer was done by the lawyers after the fact), so this transfer went smoothly.

In the other case, we’re somewhat stuck on what one child will do after assuming the Presidency. He will run the company differently, but all the other kids agree that he should run the company, since he’s been the operating head for the last couple of years. The problem is the founder is having a hard time accepting that there might be more than one way to run his business. And one division has been somewhat neglected, but we’ve got a plan to fix it. We’ve proposed a unique stock  ownership structure where at least two of the kids, and the founder, have to agree on a major decision. And it’s actually in the buy/sell that the company has to remain in Solutions Forum.

The answer, in our opinion, is to leap off the bridge, go ahead with the buy/sell and see how it works.

Nothing is irreversible.

Pass the torch!

Home Depot Horror Story

I’ve been looking around for a bad customer service story for awhile, and Home Depot has provided one.

Back in January, we ordered 14 boxes of wall tile to tile the peeling walls of our garage from Home Depot online.

Tile arrived, but when we examined the packages, about half the tiles were broken, possibly from being thrown onto our front patio for delivery. No one from the delivery service (NDS)  rang the bell and said they had 14 boxes of tile to be delivered, and where would be like it?

Then the wrangling began on the return for the next two months. Home Depot Customer Service actually claimed at one point that they had nothing to do with Home Depot. Meanwhile, our installation is delayed and we’ve got a $790 charge at Home Depot for broken tile.

Finally, an enterprising customer service representative agreed that they whole matter should have been quickly resolved, and took out one of the small Home Depot flatbed trucks and with a female driver, came to our house and loaded the broken tile. Once the store had the tile, they reversed the charge.

Kudos to the employee (Frank) who showed the initiative to take a truck and pick up the tile, but a real brick to the rest of Home Depot customer service for being unresponsive.

As a result, we’ve ordered the tile from Floor and Decor, who has been very accommodative, and we’ll pick it up ourselves.

The morale of this tale is to empower your employees to make decisions in the best interests of the customer.

We hope that Home Depot reviews the recorded conversations of this travesty and fires most of the customer service reps who were involved.

Whip Inflation in Your Business

Year over year price inflation is something like 7/5%, depending on what your mix of costs are. OK, we’re gonna point out some things you can do to not only whip inflation but expand your business at the same time.

These things work, too. I’ve done them.

First, figure out what your competitors are doing. Odds are they’re raising their prices, but you need to know, because it will to some extent dictate your strategy. Most businesses will raise prices because their owners and management are lazy.

You’re not lazy.

So, if you observe the dicta I’m laying out, you might even cut prices.

Second, start producing or ordering in larger quantities if you can. Given supply chain problems, this might not work, but order more where you can. Most suppliers will give you a price break, even now.

If you’re a manufacturer, produce more; your unit costs will go down because of more amortization of fixed costs, even if your variable costs, e.g., labor and raw materials, don’t go down. If the variables go down, so much the better.

Third, don’t run yourself out of money while you’re ordering or producing more, either. Talk to your banker, tell him or her what you want to do, and they’ll probably be accommodative. You might need an increase in your credit line. If you get static, let us know. We know people.

A word about energy costs. It’s hard to predict if or when the Washington Wizards will open up our energy sources. Electricity is going up somewhat. Solar power might be an option but it’s capital intensive. Leases with options to buy might be available.

Your variable labor costs might go up due to wage inflation, but it’s not much if you’re increasing production. Add variable labor costs into your equation.

Fourth, you might find that you will need more distributors or retailers of your product but wake up your sales force and get them busy. Or go recruit some more manufacturer’s agents…they’re out there, and they’re usually hungry to take on new lines. You might even find some agents coming over from your competition.

If you do all of the above, you’ll not only whip inflation in your business, but you might also expand it.

If you want any help with any of this, log into our Zoom Room 819-907-3230, passcode solutionsf on Wednesdays at 4 pm MST and we’ll talk it over.

Rethinking Remote

Our local Business Journal had a good article recently about rethinking remote working for your employees.

Our local upsurge in Omicron cases has probably influenced some firms to keep more employees remote or be more lenient in allowing remote work.

It’s a fact that many companies’ workforce decided that they liked to work from home, software could be redesigned to accommodate working from home, and many workers say that if they can work from home, they are less likely to change jobs.

Among our clients, one large civil engineering firm remoted all of its employees to cope with COVID, and has changed to keep employees remote if they want to be.

A large mortgage company allows its employees to go back and forth between working in the office and working remotely.

Employees of an investment firm in New York all want to return to the office.

So, be sensitive to what your workers want before you make any non-reversible decisions about working remotely.

Disrupt Yourself

It’s now late January, and maybe, just maybe you’re still thinking about what you want to do in 2022.

Courtesy of CEO Magazine, one of their more original ideas is to disrupt yourself. And, of course, they have several ideas about what you might do to rethink what you do in ’22.

  1. Think like a new business. Maybe what you’re doing as a company or as the CEO/owner is the same things you’ve done for years (I encounter people like this all the time). What did you do as a startup that you’re not doing now?
  2.   Commit to an experiment, whether it’s a new product/service line of a new way of doing something in your business. Maybe it’s a new service. Set a time line to get the service launched and evaluated.
  3. Be generous with your team, and not just your senior management. Not necessarily with monty, but maybe survey them all to see if they’re happy. Happy people make a happy company, and happy customers which means growth.
  4. Get some of your most enthusiastic employees to lead the rethinking…. it’s not necessarily just your responsibility.  If they know they’re driving the project, they might work harder, better and smarter.