In recent columns I've described some make-a-difference habits that highly effective flooring retailers apply. So now might be a good time to ask: How are you doing in becoming a "more effective retailer." Not sure? Perhaps we should begin by defining the term "effective" and what that truly means to a retailer in the floor covering business.
An "effect," of course, is a result. So it follows that 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 have learned to 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 themselves). Which of these results have your retailing habits improved in the last quarter?
I describe these habits, because I firmly believe each of you deserve to enjoy the benefits you envisioned when you opened your business. What were they, again? Working independent of a boss? Doing work you enjoy? Receiving an income commensurate with your contributions? Time off for leisure activities? (Remember that one?) 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, this business has given me 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. It's just a question of developing the right habits.
In this column, I want to remind you of the habit that lays the foundation for effective retailing. I believe this is the habit that can help all retailers achieve their dream-and it is not even the most difficult one. It is the monthly habit of reviewing your dream. Take a moment to reflect on the ultimate business you envision and confirm 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 the foundational because, without vision, flooring stores languish or even perish. Without a destination, you could work hard, for years, yet not move your company one inch forward. Without it you don't really own a business, you just own a job. You need a heading, a destination, to know where to invest your resources and energies.
You may have a vision of your ultimate business but that does not mean you are applying this habit. That happens when you: (1) know the specific 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.
What type of features should you envision? Imagine your ideal business in five years. Imagine how you want to work in five years. As you conceptualize this, include your ideal mix of products and services, ideal customer groups, market borders, annual sales, profitability, the building itself, operating 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 I've seen who plan their vacations with greater precision that than their lives or businesses.
In your vision, include the projected 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 is likely to 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 finished, 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 alongside the 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 can than see 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 that you now work with more confidence, concentration, and hope. And you will greatly reduce stress. Why? Because you are no longer scratching to keep up with competitors. You are acting -not reacting. 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 rep who is asking 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 is a manager 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. Try it. You'll see.