Monday, October 28, 2013

Love What You Do!

A Friend recently recommended a book to me called The Element.  After reading, it I too would recommend the book.  First, I love stories about people's lives.  Stories about people that are famous, but he tells the story of how they got there!  The book is very inspirational because it teaches us to depend upon the God given talents, imagination, and passions that we have.  As my youngest son is in the process of graduating from High School, our family is faced with many of the things he discusses in his book.

Our world puts way too much emphasis on formal education and takes way to much stock in the standardized testing in determining anyone's success in college and life.  I have always tried to teach my kids that school is something that you must do.  Always try your hardest, but success in school is a very poor indicator for life.  So many of us are not "traditionally" intelligent.  That is, we may have just sneaked through school.  But sadly, because the world judges us for 13-17 years based upon how well we can pass tests, people who are not intelligent in that way are taking away that they are not smart.  And because they are not "smart", the sense is they will not succeed in life.

Wow is that a horrible way to start kids.  As many have written, our schooling system was designed to educate the masses to go from a life of farming to a life in the city.  We were preparing our citizens to take their place in the industrial revolution.  By having this many people trained in the skills for writing, math, and reading; our world developed a labor force designed to make the companies they worked for successful.  And we became the world power that we are today. 

But the world is a different place today!

I am not suggesting that all education is bad.  Rather, it obviously teaches our kids many great skills.  But just because you are not particularly good at sitting still in a classroom for 6 hours a day, that should not make our kids think for a moment that they will not have the ability to contribute significantly to our world.

I have spent my entire adult life with hair stylists.  Most of these people were considered failures for their school careers.  But today, they are earning a living making people feel beautiful.  And most of them are doing something that they absolutely LOVE!

And that is the message I have for my 17 year old. 
  • No, you don't have to decide the rest of your life right now. 
  • It doesn't matter which school you do or don't get into.  Take these years to find what you love.  It might take more than a 4 year degree to do that.  It might take working in several different jobs in several different fields before you know.  But don't let that bother you, it's the journey! 
  • Enjoy what path God puts you on.  Don't get frustrated or disappointed along the way.  Just keep trying your best in each situation you find yourself. 
  • Show up on time.  Keep your eyes and your heart open to whatever possibilities that come along your path.
  • Put a smile on your face and enjoy today.  It was not an accident that God has you here.
Perhaps that is a good message for you to hear as well!

Monday, October 14, 2013

Small business is SO much harder than Big business!

My career has been spent within the salon industry.  Most of this industry is owned by and individual with one salon.  Today that still represents 90% of the industry.  These are small businesses.  Over time I have heard many people complain about salon owners and their lack of business sophistication. 

Though most of these salon owners have never had any formal business training, that does not mean there are not plenty of very sophisticated business owners in this group.  But the big misconception within business is that it should be easier to run a small business compared to a large business.

I think that concept is DEAD WRONG.

When I came to California to run our family business in 1989, we had sales of $900,000 and 24 employees.  Over the next 18 years, the business grew to $200,000,000 with 1,000 employees.  The funny thing was that it was much easier at the end than at the beginning. 

Running a business requires a certain number of things that have to get done in any business.  For example:
  • Bills need to get paid
  • Taxes need to be submitted
  • Employees need to be hired, trained, and developed
  • Payroll needs to be completed
  • Marketing and sales needs to be done
  • Someone needs to keep up with all the government regulations
  • Deposits need to be made
  • Website, social media management
  • Operations management; keeping the place looking great
  • Developing the plan for tomorrow, next month and next year
All of these hats plus many more are handled by the business owner.  With a small organization, all of these hats are worn by the business owner.  In a larger organization these hats all fall on different people or even different departments.

So each time someone talks about how flaky an owner of a small business is, I have to roll my eyes.  It is so hard to juggle all of these responsibilities.  And in the case of a salon owner, these tasks can only happen AFTER they are done doing services on guests 40-60 hours per week!

So if you are going to have a business, make it big!  Just joking.  Small business is very rewarding because you can change the direction of the boat so quickly.  The challenge is that you have to be at the steering wheel to make these changes.  Then you have to be there to handle the new waters the boat is traveling in.

Compare this to running a huge organization.  It will take years to implement change throughout an organization.  As an owner, it is much more difficult to affect the culture in the way you would like in a larger organization.

But either way, business is so fun!  It is like sports, it has a competitive element to it.  There is a scoreboard, sales and profits.   There is a clock; the day, month or year.

Play to win!

Monday, October 7, 2013

Stars, dogs and question marks!

Retailing is not a risk free business.  If you represent Coke, they are constantly coming up with the next new soda.  Some of them turn into Diet Coke.  And some of them turn into New Coke.  How do you know which one to carry?

As a retailer, you have three categories of products that you carry.  First and most exciting is your stars.  These products represent the products that sell very well.  They likely represent 20% of your inventory yet account for 80% of your sales!  The key to stars is to NEVER run out!  If you have a product that your clients like, make sure that you have plenty.  Frankly, you can almost not have too many of the stars.  Some people break this category down between stars and cash cows.  But I keep them together for simplicity.

I used to own a chain of beauty supplies.  When I learned of this concept, we increased our top sellers by 300%.  By tripling our stock, we sold an additional 30%!  The tripling of stock was a one time expense.  But the 30% was an increase across the board! 

The next category is dogs.  These are products that every retailer has.  In many cases, you HAVE to have dogs.  For example, Coke now sells dozens of different types of sodas.  If you represent Coke, you have to carry them all.  The same is true with your retail.  The key is you don't carry the same number of dogs as you do stars.  You would likely have 4 facings of a star to 1 facing of a dog or perhaps many more!  In the case of Mirabella, our lightest and darkest foundations don't sell very well.  But to be in the makeup business, you need to service every skin type. 

Sometimes dogs are mistakes.  You take on a new product line and it doesn't sell.  Or perhaps this dog was a star years ago.  But fashion and trends have moved this product out! 

And finally, the question mark is the last category of retail.  These products are the items that you take on that you just don't know.  This could be a new line, a promotion within a line, or a line extension within an existing line.  Question marks are a risk.
Mirabella within a Cobella Salon in New England. 
  In retail, you have to always be taking risks.  You are constantly looking for that next star!  And trying to avoid the next dog.

Question marks are part experience and part guess.  Over time within an industry, you will get a really good idea what your client will buy.  After being in business taking risks making buying decisions, hopefully you can begin to pick the winners.  But sometimes you take a risk because you are trying something completely NEW.  These risks can be either the most profitable or the biggest losers.  However, if you are in retail and want to grow, you HAVE to take these types of risks.

So what do you do with all these products?

Feed the stars-- as I said you cannot run out of these.  You need to make sure that you are well stocked and that these products get good shelf space.  You don't want your clients to miss their favorite products.  And THIS is where you make your money. 

Exercise your dogs-- These products don't make you money.  Limit the capital you have tied up in these products.  Frankly, you are better off turning these products into cash for your business by helping promote other products.  Clients ALWAYS love free stuff.  Give these away to generate excitement and sales.  Some of these dogs are a necessary part of business, but limit your exposure by keeping your inventory low as possible.

Bet on the question marks-- These are your future.  You need to be constantly taking risks on new and exciting promotions, interesting new brands or inventive line extensions.  After you have given these question marks 90 days of selling time, you can generally start to categorize them into stars or dogs.  As quickly as you can, stock up and promote the stars.  Or blow out the dogs to create more cash to take more risks!