Over Promise; Under Deliver

I’ve had a security camera in our house for a couple years now. I won’t mention the company name (they’re local) as the main subject of this memo is about their announcement that while their cameras came with free storage for their person detection feature, they’ve realized it is way too expensive to provide it (to over 1 million customers). They’re not going back on their agreement but rather asking customers to voluntarily pay for it.

My first thoughts included the title of this memo, over promise and under deliver, plus didn’t they see Apple, Amazon Photo (for videos), and Google Drive offer some free storage and then charge, and did they get caught up in the creative process and not pay attention to the budget?

So, what can and should businesses do? Here are five tips:

  • Plan – a good plan will cover things like this and put them to the stress test, i.e. what if people use a lot of storage?
  • Budget – here’s where I’m a bit baffled by my above example because this company has raised over $35 million and much of it from some pretty savvy investment firms. Didn’t somebody catch this? A good budget will run different scenarios from slow to fast growth and usage.
  • Realize, growth sucks cash – super fast growth can be as bad to a company, especially a new company, as slow growth. 
  • Know your market – as mentioned, if the big players like Apple, Google and Amazon don’t offer unlimited free storage why should this firm. It reminds me of something about 10 years ago in my Rotary Club. When expanding our fun run from a 5K to also have a 10K we discussed pricing. One of the number cruncher types said (and I’m not making this up) we should figure out how much we want to raise and divide it by how many people we think will run. That would have given us a fee 2-3 times the market rate and Econ 101 says price elasticity would have driven those numbers way down.
  • Get help – pilots don’t fly solo the first time out and neither should any of us with a (new) business.

The above is speculation as I’m not privy to all the inner workings of the company. But when a business has to retreat from a promise, which was probably a selling point to some customers, it warrants comment. As always, it often comes down to paying attention to the basics.

“To err is human – but it feels divine.” Mae West

Be Like Oliver; Do a Little Extra

My wife and I were having dinner last week on the new deck at the Wallingford Tutta Bella along with Joe Fugere, the owner (not name dropping, him being there is integral to the story). It was a beautiful evening and as we shared a dessert and had an espresso, we noticed a young man, Oliver, walking around outside the restaurant.

He eventually went in and then came out to the deck. After a while one of us asked if he needed some help. He didn’t, it turned out he was there looking for a job. He finally met with the manager who must have told him the owner was outside because he came over to Joe to tell him how much he’d like a job at Tutta Bella as he really wants to work in a restaurant.

After he left, we talked about how he did what he did. He didn’t just apply online. He went out of his way to take advantage of the owner being there. And the benefit was Joe gave him some tips and actually went online to write on the application that he (Joe) recommended Oliver. I commented I hope he’s as good an employee as he is being aggressive to get a job.

Six months ago, Tutta Bella and most other businesses were clamoring for employees. Now, the prospective employees have to take action. And it’s not much different for most of our businesses. We have to be aggressive and creative to generate business (or get a job). What worked 6, 12, 18 months ago doesn’t necessarily work now.

We are constantly trying new and different strategies to keep our name in front of referral sources and prospective clients. Like many businesses I see, every potential customer is valuable.

“One of the difficulties of being alive today is that everything is absurd but fewer and fewer things are funny.” (Humorist) Alexandria Petri

Pivoting Isn’t Just for Basketball Players

Basketball players pivot on one foot so they can move their body around to see in all directions. But if they lift up their pivot foot it’s a traveling violation and the ball is turned over to the other team.

Many businesses have needed to pivot due to Covid-19, some have done it successfully, some have lifted their foot, and some have not done anything different.

At the Bellevue Breakfast Rotary Club last week our speaker was Joe Fugere, founder of Tutta Bella. He talked about how they’ve pivoted to more takeout, delivery, a streamlined menu, and a partnership with QFC. The latter has them in over 30 QFC stores with a “take and go” section of their foods, which has been so successful they’ve expanded their Bellevue location’s kitchen to cover the demand.

Starbucks has pivoted. A mailer from Fred Meyer last week featured some new products including Cold Brew coffee concentrate and Fresh Brew Cup, which are airtight sealed cans of ground coffee, each making 4-6 cups. They’ve recognized it’s going to be a while before customers flock back to their shops so they’re making it easier to have their product at home.

On a larger scale, big pharma companies are pivoting away from their normal pricing to cutting deals with the government for Covid vaccines at a lower price than they would get on the open market. Just imagine the bad PR if they didn’t pivot on this issue.

If your business hasn’t been affected by Covid, you’re lucky. If it has, what have you been doing? Or, perhaps a better question is, what should you be doing?

“What do we live for, if it is not to make life less difficult for each other?” George Eliot

Time for Thinking

s you may know from my email signature, website, the bottom of this newsletter, and elsewhere I have trademarked the term, “The Escape Artist®” for the work we do helping our clients escape their business, their job, or plan for that escape.

But I’m not the real escape artist and I’m not referring to Houdini. I’m referring to the little fuzzball in the picture below. Coco is 10 weeks old and is half Lab and half Siberian Husky. She can escape from almost anywhere. Kid gates, no problem. Backyard gates are now lined with bricks. Furniture barricades, they’ll only slow her down. She seemingly can get anywhere there’s a cord, a backpack, or paper to chew.

I mention this because while her attention span is short and she’s easily distracted, she is super creative. And in today’s world creativity is needed. The same old, same old doesn’t usually work. I don’t consider myself to be very creative. Not like an artist, designer, serial entrepreneur, etc. 

But in today’s world my business has to change. One might say we are “forced” into trying to be of help to our clients in different ways. Creative in finding matches, financing, and deal structures – and in some cases, help our clients survive. There’s no alternative; we, like a lot of companies, have to find new ways to attract customers, deliver our product, etc.

Questions

  • What creativity have you used over the last few months? 
  • Have you brainstormed for new ideas for things not working like they used to? 
  • What happens if you don’t do things differently (out of the box)?

“You have to love a nation that celebrates its independence every July 4th, not with a parade of guns, tanks, and soldiers who file by the White House in a show of strength and muscle, but with family picnics where kids throw Frisbees, the potato salad gets iffy, and the flies die from happiness. You may think you have overeaten, but it is patriotism.” – Erma Bombeck

“The United States is the only country with a known birthday.” – James G. Blaine

Don’t Assume a Universal Based on Your Situation

I was on an online discussion event recently when a lady said (and I summarize), “Nobody will want a car anymore because we’ve shown we can work from home and have things delivered.” My reaction was, that’s really stupid. She took her situation and applied it to everybody (both all people being able to work from home and about the need for cars). And someone, somewhere is paying her for insight like this?

How wrong was she (about the cars)? It seems very wrong given on May 16 the Wall Street Journal had an article about how auto manufacturers are gearing up. They’re assuming, and hoping, the rest of the world emulates China where auto sales are skyrocketing because people don’t want to ride buses, subways, trains, or be in an Uber, Lyft, taxi. (There have also been articles about how car rental companies may flood the market with cars for sale given their industry was hit so hard.)

The business point here is, don’t rush to judgment, especially based on an isolated instance. At this time, we have people predicting a slow recovery, V shaped recovery, and everything in between. And the stock market is its own animal. My comment is the recovery will be different for different industries. I do think it safe to say storefront businesses will really have to depend on how comfortable customers are returning (versus it being about the business owner wanting to open).

What’s Going On*

Over the last couple months I’ve been on a lot of webinars, Zoom meetings, and other online events, as I’m sure many of you have. Besides my Zoom Business Social & Happy Hour events I’ve attended ones hosted by Business Brokerage Press, Mark Cuban, Alan Weiss, Ted Leverette, Patricia Fripp, and others. Here are my take-aways from them, in no particular order.

  • Make a great first impression, including on social media. Be polite and appear better than others.
  • The best thing to do with employees is communicate and make them feel comfortable. More communication than ever as it will create trust.
  • Ask your employees! And don’t use language of war and fear.
  • What would you do different if starting your business now?
  • It’s important what business buyers say to sellers and brokers (first impression). It’s equally important what business sellers and brokers say to buyers, especially qualified ones.
  • We all need direction not conditions. You have to be for something (which reminds me of the verse from Hamilton, “If you stand for nothing, Burr, what’ll you fall for?”).
  • Be a sounding board and authentic.
  • There’s more “checking out” others than ever. What do people see when they Google your name?
  • People are terrified and scared.
  • Be a resource; write a lot of content.
  • Internet marketing will stay strong.
  • What’s going on should make us willing to look at different ways to do thing.
  • An upside to Zoom, Teams, WebEx, etc. is you get to see people as they live, not as they present themselves for business. Their kids, dogs, cats, etc. let you get to know them better.
  • We (our clients, customers, and ourselves) seek validation.
  • Any company can do well in a boom.
  • Ask, what will change forever?
  • Some owners won’t have the stomach to keep going (and will want to sell).
  • If you’re not changing your marketing be prepared to do so.
  • You will recover.
  • Errors are seldom fatal.
  • People crave confidence.
  • Don’t use this situation for procrastination.
  • Be present online with 60% tips and 40% sales related.
  • Block people on LinkedIn who ask to connect and then try to sell you something.
  • From an insightful PE guy before it really hit the fan – expect GDP to decline by 10% or more, unemployment to hit 15% or more, and it will be really tough for many people for 18-36 months.
  • He also said entertainment won’t return soon and as an example noted Taylor Swift cancelled her tour even though 15-31-year old people don’t seem to care about anything (like the virus).

* Thanks to Marvin Gaye for the title. J

Make a Decision

One could write a long essay on businesses lessons from the virus crisis, there are so many, both good and bad. One of the top lessons is about making decisions.

Here in Washington, our governor does not like having to make decisions (other than, it seems, to be in charge of everything). He waffles, postpones, is forming committees (and we know how efficient and effective government committees can be), and is creating backlash.

While I’m not in New York, Georgia, or California, it seems those governors are much better at making decisions. Whether you agree with those decisions (or if their decisions worked out okay) is not the point. They’re taking action. 

Many years ago, a very wise and experienced businessperson told me one of his best attributes was to make a decision and move on it. He said even if half of his decisions were right, he was way ahead, versus not making a decision. And then there’s Grantland Rice who said, “A wise man makes his own decisions, an ignorant man follows the public opinion.”

Tying it to my business, during buy-sell due diligence, some buyers get analysis-paralysis. They need to make a decision and move.

Deficits and Protection

The May 5, 2020 of the Wall Street Journal was, not unexpectedly, filled with articles on the virus. The ones standing out were the headlines on the front page discussing the massive amount of new debt and the risk workers and companies face as businesses reopen. 

I wrote a few months ago about how we’ve been running huge deficits in a booming economy instead of reducing the deficits. Now we’re looking at borrowing $4.5 trillion this fiscal year so the economy had better get super-healthy pretty darn quick.

But the above falls into the, “That was then, this is now” category. One of the best lines was from a director at the Committee for a Responsible Federal Budget (which seems to be a bi-partisan organization) who said, “When your farm is burning you don’t worry if you have enough water to make through the next three crop seasons. You put out the fire and then you worry about it later.”

So it’s all-aboard to pump up the economy. But, as I wrote in a recent Random Thoughts memo, what if the customers are too scared to come back? We’re already getting reports of customers and employees being scared to return to work in states that started opening up two weeks ago.

Which brings us to the second subject, the dispute about the government giving businesses liability protection against worker lawsuits in regard to getting COVID on-the-job. The meat packing industry (vegetarians can laugh here) is at the forefront of this. The President has ordered them to stay open, workers are scared, many can’t work as they have the virus, so it’s the proverbial “can of worms.”

The Republicans want full protection for businesses, the Democrats don’t, fearing companies will take advantage of workers, and the U.S. Chamber of Commerce is in the middle, wanting protection for firms that follow federal and state guidelines. I can see both sides. A business, especially when ordered to be open or considered essential, won’t want the risk of lawsuits. Employees have good reason to fear bosses will not prioritize their safety to meet production numbers. The Chamber’s position seems to be a good compromise.

Again, a couple interesting situations with no easily agreed to solutions.

“You may glory in a team triumphant, but you fall in love with a team in defeat.” (Sportswriter) Roger Kahn

One Bad Apple

In college basketball there are players known as being, “one-and-done,” as in playing one year for the college team and then going off to the NBA (because of rules preventing them from going to the NBA straight out of high school).

As a casual fan, I’ve come to appreciate the job certain coaches do with these players (aka prima donnas), not to mention their parents. Most of these players don’t want to be in college, it’s only a steppingstone, and often they tend to be culture disrupters. This appreciation comes from seeing all the other teams where these one-and-done players cause the team to underperform.

It’s just like in business, isn’t it? You strive to build a culture for growth, profits, advancement, and an enjoyable workplace and yet one person can damage, if not destroy, this. In an owner group I’m in I’ve heard about employees who:

  • Refuse to cooperate with others, it’s their way or no way.
  • Exhibit inappropriate behavior, sexist (sexual) in nature.
  • Bully co-workers.
  • Leverage special-class status (threatening that any action towards the employee would result in a legal action based on said status).

The above and other situations are why there’s constant interest from owners and managers on culture, employee relationships, managing all the HR regulations, etc. It’s a balancing act whether you manage single digits of people or hundreds. Unfortunately, there’s no easy, quick-fix solution; it takes patience and skill.

“Anything can happen, but it usually doesn’t.” (Humorist) Robert Benchley 

Your Business is Really a Community

I wrote this in Antigua, West Indies on another Rotary service project installing computers and Wi-Fi networks in schools, training teachers how to teach more effectively, with and without technology, and setting up our eighth sewing center.

As we were organizing the latest sewing center it really hit me how big community is on the island. While US cities from New York, to Seattle, to many others have neighborhoods and those neighborhoods have organizations, in Antigua it just seems they are tighter.

Main reasons for this are many people don’t have cars, they often stay in the area they were born, and so very much of their lives center around church (many, many types of churches, most of them small given the lack of mobility). They help each other on a regular basis. Ladies we would not consider to be “well off” sew clothes for those less fortunate because they care.

Think about this in regard to your business (or, for advisors, your client’s businesses). Community is like teams within a business. Most business buyers I meet tell me they are good at team building. Given a business is its people, both employees and customers, being able to bring employees together for a common goal is incredibly important. 

I recently wrote about our most recent Getting the Deal Done Breakfast Conference and guest speaker Bob Donegan, president of Ivar’s. Ivar’s has employee turnover less than 1/3 the industry average. Why? Because they value their people, give them advancement opportunities, and decision-making authority, especially if there’s an unhappy customer (from management down to maintenance people they can offer unhappy customers remediation). 

In a recent meeting with a roomful of business owners the following was asked, by an owner looking to buy another company, “What do I do first after closing?” The common answer was, talk to your people, ask them what they would do to grow the business, and, above all, listen. Good advice whether after an acquisition or any other time.

“Man’s character is his life.” Heraclitus