Monday, July 19, 2010
Invalid Excuses for Poor Business Results - The Ec
Note to Rite Aid and CVS: It's not about the economy
When Bill Clinton successfully unset the first President Bush, he focused on a sign in his Little Rock office: "It's the Economy, Stupid". His point was to focus his campaign on economical issues. Although the president has an impact on the economy of the nation as a whole, blaming the economy for poor sales or lost profits is nothing more than unmerited whining.
In the state of Michigan, unemployment was the highest in the nation. At the same time, job growth was the lowest. This is not an economic scenario that normally leads one to invest heavily in a market.
CVS and Rite Aid decided to ride out Michigan's economic storm, setting aside little capital to revitalize or grow their Michigan stores. Although seemingly an intelligent viewpoint, it does not display a passion to compete and grow over the long haul.
Walgreen's Pharmacy saw Michigan through a different paradigm. They saw the opportunity to invest heavily in the state, taking advantage of the weak economy and depressed prices. Rochester Hills, Michigan, is an example of Walgreen's strategy. Only a few years ago, this city of 70,000 did not have one of their stores. By 2006, Walgreen's will complete a strategy to have four stores within city limits. The strategy was to locate stores using a parameter mentality, and a merchandise mix recognizing the local economy.
Both CVS and Rite Aid have experienced lost market share, greater than the increase in competition. Neither chain is growing in Rochester Hills, although CVS did move one store from the center of a strip shopping center to a new location in the parking lot.
According to high-ranking sources in Walgreen's Michigan region, there is a strong belief that by moving in now with the right merchandise mix and locations, the chain will be strongly positioned once the Michigan economy rebounds.
Where CVS and Rite Aid see a need for cautious survival strategies, Walgreen's sees an opportunity to grow and thrive. The lesson is obvious. Instead of whining about the economy, looks for ways to adjust your product offering to the times, and position yourself to thrive once the economy rebounds, or your competition succumbs on their unsuccessful pathway of survival.
Many Michigan-based companies are finding ways to attract out-of-state customers. At Max Impact, a human potential development company has made two strategic moves to thrive despite local economic conditions. The company has aligned itself with Macomb Community College to offer online customized corporate training programs, carrying CEU credits for the participants. They have also increased marketing of executive and professional coaching, which is done via the telephone, outside of Michigan. While many of their competitors struggle, the Max Impact is seeing double digit sales and profit growth.
It's not about the economy. It is about seeing the total business environment and developing a strategy to position for the present and future.
Fill Out an Application For Walgreens Online - Or Should You?
What kind of economic engine does your small business have? Is it a powerful V8 or does it compare more to the engine on your push lawn mower that you have had since the mid 1980's? As a small business owner, do you even know what your economic engine is? Don't be alarmed if you don't. The vast majority of small business owners have no idea.
Your companies economic engine is the one key performance ratio that your small business can focus on that will have the most sustainable growth impact. The economic engine of a business varies from industry to industry and even from company to company within the same industry.
In his bestselling book, Good to Great, Jim Collins detailed how several of the Company's in his study used this concept to propel their businesses forward. Walgreen's dominating business strategy was convenience for their customers. They wanted to make it as convenient as possible for their customers to get to a Walgreen's and to shop there. Walgreen's switched its focus from profit per store to profit per customer visit. Because Walgreen's sometimes clustered their stores for customer convenience, using profit per store would not work. The easiest way to increase profit per store, is to have less stores within a geographic area. This would have been counterproductive to their customer convenience strategy. Profit per customer made much more sense because it was a true indicator of the overall customer experience. It was also much easier for Walgreen's to get store level employees to focus their efforts on the goal of profit per customer than profit per store. Each and every employee that comes into contact with a customer feels that they have the opportunity to influence this ratio.
As stated earlier, the best economic engine for your company may not be profit per customer - most likely, it is not. Some companies use a measure of employee productivity- such as profit per employee as their economic engine. Nucor uses profit per ton of finished steel. Kroger uses profit per local population and Southwest Airlines uses profit per place. Many restaurants use profit per square foot. The first step is to determine out what your key economic engine is and focus your efforts on it's continual improvement.
Chad Bordeaux is a Charlotte CPA who works with small business owners and individuals on a monthly basis to provide them with proactive guidance and advice on how to grow their business, minimize their tax liabilities and grow their bottom line. Contact Chad through his firm's website today so that they can help put your small business on track to meet its goals. Chad is also a primary contributor to the Beancounter Ramblings blog which focuses on issues important to small businesses.
Has Your Small Business Defined It's Economic Engine?
What kind of economic engine does your small business have? Is it a powerful V8 or does it compare more to the engine on your push lawn mower that you have had since the mid 1980's? As a small business owner, do you even know what your economic engine is? Don't be alarmed if you don't. The vast majority of small business owners have no idea.
Your companies economic engine is the one key performance ratio that your small business can focus on that will have the most sustainable growth impact. The economic engine of a business varies from industry to industry and even from company to company within the same industry.
In his bestselling book, Good to Great, Jim Collins detailed how several of the Company's in his study used this concept to propel their businesses forward. Walgreen's dominating business strategy was convenience for their customers. They wanted to make it as convenient as possible for their customers to get to a Walgreen's and to shop there. Walgreen's switched its focus from profit per store to profit per customer visit. Because Walgreen's sometimes clustered their stores for customer convenience, using profit per store would not work. The easiest way to increase profit per store, is to have less stores within a geographic area. This would have been counterproductive to their customer convenience strategy. Profit per customer made much more sense because it was a true indicator of the overall customer experience. It was also much easier for Walgreen's to get store level employees to focus their efforts on the goal of profit per customer than profit per store. Each and every employee that comes into contact with a customer feels that they have the opportunity to influence this ratio.
As stated earlier, the best economic engine for your company may not be profit per customer - most likely, it is not. Some companies use a measure of employee productivity- such as profit per employee as their economic engine. Nucor uses profit per ton of finished steel. Kroger uses profit per local population and Southwest Airlines uses profit per place. Many restaurants use profit per square foot. The first step is to determine out what your key economic engine is and focus your efforts on it's continual improvement.
Chad Bordeaux is a Charlotte CPA who works with small business owners and individuals on a monthly basis to provide them with proactive guidance and advice on how to grow their business, minimize their tax liabilities and grow their bottom line. Contact Chad through his firm's website today so that they can help put your small business on track to meet its goals. Chad is also a primary contributor to the Beancounter Ramblings blog which focuses on issues important to small businesses.