“What Goes Around Comes Around”

Posted on September 9, 2011 by Yale

As a young boy in my family business, Dolgin’s in Kansas City, my Father gave me three jobs: cleaning the silver hollowware display, displaying fountain pens, and straightening out the LAYAWAYS.   Oh … and in between those, I sold my first diamond ring!

I remember asking him, while I was straightening the toy layaways and then the jewelry layaways on a Saturday in September, what a layaway was and why he liked them.  He told me that it was a method to sell merchandise early in the season and get the customer committed to buying the item from us.  He said it gave him a good indication of how strong the Christmas business would be.  He also explained that the storage and handling of layaways was difficult and took a lot of time.

The selling concept of using LAYAWAYS disappeared almost altogether with the introduction of the credit cards in the late 60’s and 70’s. Wal-Mart finally discontinued them altogether five years ago. Neither merchants nor consumers have used the term LAYAWAY for many years.

Kmart introduced layaways during the fourth quarter of 2010 and today, Wal-Mart has re-introduced the option. This selling strategy may help them with their target audience and this slow economy. “What goes around comes around”!

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Hewlett Packard Delivers Inconsistent Message to Consumers

Posted on September 8, 2011 by Yale

Whether in your business or personal life, one must deliver a consistent message.  Careful thought must be given to our words; our family role models have all told us to “think before you speak.”

The business and IT community were taken back by the recent announcement that Hewlett Packard is discontinuing their PC and computer business. This was a shock for those who made a recent purchase from HP.  I am sure the senior management have good reasons for this decision; yet, 10 days later, in today’s Minneapolis Star Tribune (September 8, 2011, Page D3, Business Section), an announcement was made that, despite spinoff plans, HP is introducing 8 new desktop personal computers in the next two months.  It seems to me that their previous announcement may have been premature and not well thought out.

It is important to be ethical and to let customers know what you are doing in reference to warranty, etc., but it also seems to me that there is a breakdown in their message to potential customers who would be considering the purchase of a desktop without knowing where the company is going and who will service the product.  Realize that HP’s computer division may not go out of business but will ultimately have a new owner. This sure seems to be an inconsistent and flawed communication strategy.

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Spring is Here – You have Planned on it

Posted on April 19, 2011 by Yale

Spring is here, but snow continues to fall in the Midwest. The Twin Cities’ forecast warns of a “Winter alert” over the next 36 hours. In the middle of April, you would expect to see rains falling and flowers blooming; were you prepared for more snow and freezing temperatures?

The great majority of businesses prepare a plan. Some of these plans have been prepared in a vacuum by the CEO while others have been developed “from the bottom up.” When prepared with input from various levels, each team member is invested in making their plan work. Timing is also important; ideally, a plan is prepared months in advance, before the Company’s fiscal or calendar year begins.

But what happens if the unexpected takes place – either an “act of G_d,” competition announcement, economy change or, as we are now experiencing, inches of snowfall in the Spring?

If you are in the snow removal and landscape business, you are preparing the lawn mowers—the snow removal equipment has been stored. If you are in the golf business, you have uncovered the greens and have sent out direct mail brochures of your golf openings. Now we have outside influences affecting your business.

A company that spends quality time in the strategic planning process should develop alternative contingency plans for such unplanned events. Now, I realize no one could have planned the effect that 9-11 had on our businesses, but more predictable events need to be anticipated by those who believe in a strong planning process, and appropriate contingencies with alternative actions should be considered.

Kenneth Macke of Dayton-Hudson Corporation used to tell me, “A business plan is not a plan without an action plan.” We could add to that old adage by saying that “a business plan is not a plan without an action and contingency plan.”

We at Elanstrategic LLC understand the importance of a strategic plan with an action plan for execution, which includes alternative contingency planning to help you through such events as a Spring snowstorm.

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April 15 – It’s Time Again!

Posted on April 15, 2011 by Yale

Some think that April 15th is the time to file your taxes (or for this year, April 18th). For businesses, April 15th has a different significance. The end of March marks the close of the first quarter for most businesses. Now it’s time to review the first quarter and evaluate how you are doing.

Today is April 15th. The numbers are in. Are you tracking with your goals for 2011?

Strategic planning is about developing a plan. But the plan won’t do one bit of good if it’s not being put to work. Strategic management requires, not only the development of a plan, but the execution as well. The best laid plans will not get you one step closer to your goals if you’re not engaged in following up on your progress.

All businesses are dynamic and are affected by economy, competition, and outside situations. The close of the first quarter is the time to take a real hard look at how your business is doing. Is your staff making progress toward meeting their goals? Each of their goals should have starting and completion dates. Some of these goals should have already been completed. Are they on schedule? Take a look and see how they’re doing. Accountability is important!

Now, as some of you are reading this, you will tell me, “Well… we didn’t get our strategic plan completed.” It is not too late to work on a plan with only three quarters left. You have time to discuss, document, assign, and pull the team together to make the difference in the year.

April 15 is a key date for individuals and also for companies. The date is a reminder for you to review and bring the team together to see if they are executing their plan. Remember, it takes “actions to create value” for your company. It’s time for action!

If you need help, call us. We know how to put together a plan.

Happy April 15th!

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Change Provides a Threat and an Opportunity

Posted on April 12, 2011 by Yale

Business needs “to go with the flow.” A mentor of mine used to say you have to “zig and zag” (Fred P Gattas, Gattas Company). Whatever a business owner calls it, you have to evaluate the Change and determine if you can turn a Threat into an Opportunity.

I know people who are sometimes “paralyzed” when a change affects their daily life. Business is the same way. What makes business a challenge is that no two days are alike. A strong executive has to keep attuned to what is happening in this “Flat World.” We are affected by blizzards, floods and heat. The astute executive and team have developed methods and processes, through their strategic planning, to handle such events. In my early days of being in business, we always said that one of our strengths was the ability to “change on a dime.” The big retailers took their time to capture new items for their stores but we, on the other hand, could monitor the marketplace, see the emerging items, and quickly have them on the store shelves. We became the place to shop.

It is important, as an operator and owner, to be able to accept change and to come up with a way to capitalize on the opportunity it creates. You must keep your eyes and ears open to what is going on. You need to understand your competitor. Ken Macke, chairman and CEO of Dayton Hudson, told me that you need to know as much about your competitor as you know about your own business. You need to watch what they are doing. They may already have the new item and you have to be able to change quickly to stay in the “hunt” for business.

Another current example of change—of turning a threat into an opportunity—is how Best Buy has changed their strategy for the consumer. They have recently announced their Buy Back Program that promises to “Future-Proof Your Technology.” They have analyzed that one of the drawbacks of consumers is their concern that “technology changes faster than the weather.” If this is the perception the consumer has, then Best Buy has done something very unique. Why not give a guarantee that, if you buy a product today and see a newer gadget in the future, they will buy it back (maybe not at full value but as much as you will get selling it on the internet or at a garage sale)? That is a positive CHANGE; it is taking advantage of a threat by making it an opportunity.

Business is fun and challenging. It is for the person who embraces CHANGE and knows how to execute a plan to turn threats into opportunities.

Remember, at Elanstrategic, we pride ourselves on “actions to create value.” We understand that threats, opportunities and change help to increase the value of our businesses.

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The Art of Timing

Posted on April 8, 2011 by Yale

“A shopping center has lost its anchor… its niche, and continues to struggle.” — This describes many shopping centers in the urban setting of the United States today. In fact, according to recent news, mall vacancies have climbed to their highest in the last decade as U.S. store closings persist.

I recently heard of a shopping center that lost its niche, largely due to an untimely action taken by its landlord which resulted in unintended consequences.  We can learn a valuable lesson from their errant timing.

The landlord had a long-term tenant popular with the community and successful at drawing traffic to their center.  This tenant had consistently paid their rent and common area maintenance (CAM) fees on a timely basis and was preparing to renew their lease.  Their business was good, especially considering the economy and the center’s occupancy percentage.  Instead of embracing and trying to retain this stable tenant, the landlord gave them notice of an increase in rent and CAM and was unwilling to negotiate with them to hold the rent at the same level. Perhaps the landlord felt they had to insist on an increase to mitigate the financial impact of the poor overall occupancy rate of the center.  The unfortunate result was another retail spot gone “dark.”

There is an appropriate time to raise your rent or your prices.  You need to use discernment, however, during a cycle such as we are now experiencing.  Fully understanding the market rate for rentals in your area and the incentives other leasers may be offering to fill their spaces will help a landlord to avoid the unintended consequences of poor timing and uninformed actions.  In a market that favors the leasee, appreciating what you have in a stable tenant is paramount.  This landlord would have been better off to hold the rate and renew the tenant.  Business people need to be attuned to the strategic timing of the execution of their plans.

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Still a Great Strategy – “The Razor & The Blade”

Posted on March 15, 2011 by Yale

Even small businesses can learn something from the proven marketing strategies of large companies. Over a century ago, the Gillette Razor Company invented the safety razor and pioneered a great business model. They sold their razor at a remarkably low price while requiring the customer to buy the blades at a huge profit. This marketing approach became known as the “Razor & The Blade”.

We now see this strategy being used by many companies.  Of course, Gillette is still selling their razors and pushing replacement blades to their retail customers.  Hewlett Packard sells their laser and inkjet printers to us, supposedly for almost no profit to them, but requiring us to buy the ink cartridges at huge profits to HP.  A recent entry to this type of marketing is Green Mountain Coffee, the owner of Keurig – the single cup coffee maker.  The customer buys the coffee maker but has to buy the coffee pods from their web-based store, grocery store, or big box mass merchandisers.  Green Mountain supposedly sells the coffee makers at very low profit to them but makes a huge profit on the coffee pods (razor and blade strategy).

Starbucks Coffee also recognized the value of this profitable add-on sales strategy. In the last few days, they announced a joint venture with Green Mountain Coffee to sell the single pod coffee at their stores. (Read more.) The market reaction reinforces the wisdom of this marketing technique. On the day the deal was announced, Green Mountain Coffee Roasters shares surged 41 percent in Nasdaq trading, the most in almost 18 years, and Starbucks jumped 9.9 percent. (Read more.)

Last week, Wal-Mart announced a similar strategy of accepting orders on line which “ship to store”.  This is nothing new, as Best Buy, JC Penney and others already do it, but Wal-Mart is a much bigger retailer. They are quoted as saying “Not only do we see it as a nice convenience for customers.  But we also saw it as a way to drive incremental traffic to the stores” (Star Tribune). This approach is slightly different from “razor and blade” but is synergistic buying nonetheless, resulting in increased average sales with the retail customer.

What is important for all entrepreneurial business people to understand is how to increase your business.  Go after the “low hanging fruit.” This may simply mean getting your existing customer base to expand their project or to increase their shopping basket with you. You might use a razor-and-blade strategy or convenience shopping. These are all effective actions to create value for your business.



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A Call to Action for Business Owners

Posted on March 10, 2011 by Yale

A number of months ago, I visited with a well known potential client who I felt was having problems with his business.  He told me that I was wrong, with a lot of reasons.  I continued to visit the business at various times of the day and various days of the week.  I still read the business as deteriorating.

I again went to the owner and told him he still had the chance to do something about my read on his destiny. He told me that he would think about it.  I continued attempting to meet with him, but with no avail.

Today he is quoted as saying, “We’re bummed, but the reality is that nothing in business lasts forever”.  Maybe this owner is correct, but I believe that CAN’T should not be in our vocabulary as sophisticated business people.  One needs to understand their business, their target customer, and to take these principles and develop a plan.  It may call for a re-engineering of one’s business—the brand, the marketing, the physical layout of the business, the repositioning of the product—but you can’t allow yourself to do nothing.  The need for addressing the issues and developing the plan is paramount to managing a business.  One cannot just continue running the business or you too will “be bummed” and saying “the reality is that nothing in business lasts forever.”

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Fortnight & Half into January

Posted on January 27, 2011 by Yale

January is not over yet. Whether your company is run on a fiscal year or calendar year end, you should be able to get a sense of how your business is doing. It is not too late to compare the results for the month of December and, if you are calendar year, compare preliminary results for the year to previous year and to your plan. Remember: if you do not know where you have been, it is hard to determine where you are going.

Business planning is a very important tool for managing your business. Call us for thoughts on how to move your company to the next level. We help provide actions to create value!

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We Are Going to be in the Pink of Things

Posted on December 15, 2010 by Yale

Many of us are not aware but it is a subtle thing which takes place when the design world picks the color or hue of the year.  This past week, Pantone Inc. announced that the new color selected for 2011 is Honeysuckle – a form of pink!  So we should all be aware of an “onslaught” of new products, from clothes to white goods, electronics, and office products, using this as the primary color.

Even if we are not in the fashion mode, this will influence many of our decisions.  Now you can be aware and on the cusp of things.  It affects us strategically in each of our businesses.  If you want to read more about it, check out the “Wall Street Journal,” page D1, December 9, 2010.

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