In recent columns I’ve described some make-a-difference habits that highly effective flooring retailers apply. How are you doing in becoming a “more effective retailer”.
An “effect” is a result, so more effective retailers produce more results. These retailers are not just busy all day. Their work-habits produce more sales, and reduce wasted effort and money. Their employees work with their heads and hearts, not just arms and legs. Their customers tell friends, “I wouldn’t buy my flooring anywhere else!” They hand out higher pay-checks for everyone, including the owners! Which results have your retailing habits improved in the last quarter?
I describe these habits for you, because each of you deserve to enjoy the benefits you envisioned when you opened your business. What were they, again? Working independent of a boss? Enjoying work? Receiving an income commensurate with your contributions? Time for leisure activities? Sufficient income to provide a home for the family, education for the children, and money for retirement?
The floor covering industry has allowed me to enjoy such benefits. For 50-plus years, I have found in it opportunities to earn sufficient income for my family and to enjoy a good life. Developing the opportunities was not easy, but I am living my dream. Among the retailers I work with, many are living their dreams and enjoying their lives. I believe opportunities still abound in our industry.
In this article, I would remind you of the foundation-habit for effective retailing, because I believe this habit can help all retailers achieve their dream. It is the monthly habit of reviewing your dream – the ultimate business you envision – and confirming that your allocation of resources is efficiently carrying you to that dream destination. Like all effective habits, this one promises remarkable rewards to retailers who commit to it and discipline themselves to live it.
This vision-strategy habit is foundational because, “Without vision, flooring stores perish.” Without a destination, you could work hard, for years, yet not move your company one inch forward. Without it you won’t ever own a business, you will just own a job. You need a heading, a destination, to know where to invest your resources and energies.
I know you have a vision of your ultimate business. You’re not applying this habit, however, until you: (1) know the features of your ideal business, (2) have written them down, and (3) can describe the whole vision clearly enough that someone else “gets it” and recognizes its value.
Which features should you envision? Imagine your ideal business in five years. Imagine how you want to work in five years. In your imagining, include your ideal mix of products and services, ideal customer groups, market borders, annual sales, profitability, the building itself, systems, staffing, skills, management structure, and shared values. If you have only a vague notion of these, discuss them with your spouse and a trusted friend or consultant. Don’t be like dealers who plan their vacations better than they plan their lives or businesses.
In your vision, include the market-value of your company on the day you walk away!! How much do you want someone to pay you for the company, to fund your next life-stage, perhaps retirement?
(Then, you’ll want to contrast this future market-value to your company’s present value. The gap between the two values is your challenge. How much must you grow the company’s value each year until you retire?)
This value-calculation is a great reality check. It reminds you to nurture this second income-source (the first being your current take-home pay). Few storeowners, in my interviews around the country, start early enough to build their company’s value. If you are not increasing your company value each year (measured by the amount of cash your company generates), you own not a business, but only a job. In that case, a future buyer would pay only the depreciated value of your hard assets. (My standard for effective retailers: the company compensates you duly for the responsibilities you bear, the risks you take, and the value you add, and still it earns double-digit net profit that builds its market-value.)
As you select each feature of your dream business, write it down. When you have written all features, imagine that your ultimate store sits on a street across a chasm and above you. That picture reminds you to plan a bridge that spans the gap between today’s real store and tomorrow’s dream business. It reminds you to build vehicles that will drive your company uphill and across the bridge. The vehicles are called business strategies. To our clients, we recommend a Strategy Map that displays each feature of your dream business along side specific strategies that will drive you to achieve that feature. (We provide them a model Strategy Map, to start their planning.)
Together, your goals and strategies catalyze growth. Perhaps the greatest benefit of a strategy map is that you, your employees and vendors can see, usually for the first time, how your strategies create certain outcomes, and how they push toward one end. Everyone sees the vision and strategies as a cohesive and integrated system.
When everyone embraces this integration, you will notice amazing results. Your minds, clearly picturing the ultimate outcome, will create better solutions. You may notice you work with more confidence, concentration, and hope. These may dissipate stress, because you are no longer reacting -- scratching to keep up with competitors. You are driving your own race. You initiate action of your own design, and at your own pace. You create the future you desire. Driving offers a happier life than being driven to react to every new challenge.
Strategic means we act by plan and purpose. A sales person who makes a sales call on a dealer, who says to himself, “What should I show this dealer?” is reacting to his sales call. But the territory manager who thinks, “let’s see, what are my goals with this dealer?” What can I do to bring my goal to fruition with this account? What would be my best strategy? This salesperson is acting strategically.
One of my first clients said, “If I could sell $2 million of floorcoverings a year, I’d be so happy. I think that would be the ultimate.” We wrote the goal down and started implementing strategies for its accomplishment. In just three years, he hit that goal. He later told me that it was a stretch to believe he could ever sell that much. Even though I believe in the habit of vision and strategy, I’m still amazed by the exciting results this habit brings to effective retailers.
Sam Allman, September 2006