SEPT. 28 I LESSONS LEARNED I BY GERSON ROSENBLOOM
The U.S. economy is under siege. An unfortunate confluence of factors and circumstances has brought financial hardship to this nation and around the world. Unthinkable failures have taken place, rattling us to the core and causing us to question our ability to ever pull out of this downward spiral.
But in the midst of that reality, some companies have flourished and soared to new levels of performance and profitability.
Why the disparity? Some companies subscribe to the concept that the sky is falling, and then it does. Others choose to use the weaknesses of scared companies as an opportunity to grow their businesses. Do you want to be the hunter or the prey?
As President Barack Obama tries to sell the American Jobs Act to our legislators, this is the perfect time to look at our own reactions to the woes of the economy and to take command of what is in our control. While I certainly hope Washington finds our magic pill, I know that the real recovery will happen when everyday people like you and me say, "Enough is enough. I'm moving on."
In a very tangible way, our destiny is in our own hands. While the government arm-wrestles over the best way to jolt the economy, we have it in our power to create our own stimulus plan. Here's how.
Dropping the Ball
I regularly visit dealers where there's only one person working the sales floor. Even in cases where there's more than the sole associate, there's still not enough people to handle the jobs at hand. I see customers walking out, phone calls going unanswered and potential buyers being left on their own. At the same time, I see dirty displays, torn posters, burned-out light fixtures and other telltale signs that balls are being dropped all over the place — all in the name of cutting costs.
This isn't an isolated problem. It's rampant. In times when business is supposedly so bad, I regularly watch in horror as customers receive terrible service. I know that business is off, times are tough and these dealers are doing what they think they need to do to contain costs. But going too far in cost-cutting becomes a classic case of the old self-fulfilling prophecy. You're understaffed because you got tired of looking at red ink during the downturn. But by cutting too far, you don't have adequate help to wait on the customers that do come into your store and have the potential to improve your business. And because you're stretched so thin, your store looks like a failing business. So guess what? Business never gets better because customers give up on you.
And just in case you don't believe me — or don't want to believe me — I'll point out that my retail store closed at the end of 2008. I don't want to oversimplify the factors that caused the closure, but I assure you that becoming overly conservative and disappointing my customers was part of it. How's that for a lesson learned?
Here's the biggest news flash: While you've tucked in your wings and made your business look like a shadow of its former self, there are competitors out there dying to grab your disappointed customers. The companies that are bold enough to improve during these hard times will soar to new heights, as they treat not only their own customers well but all of those customers that you unwittingly send to them.
OK, I get it. In difficult times that cause miserable cash flow, the last thing you want to do is to expand expenses. Here's the solution. There are countless qualified people who would do just about anything to find a job. With unemployment at about 9 percent and underemployment estimates bumping that number far higher, right now is the perfect time to find great new employees on your terms. Hire people to work the hours you want and need them to work, not the hours that are convenient for them. Great people who would've never considered part-time employment will now be grateful for any employment.
And when it comes time to talk about salary figures, structure your programs so potential employees are highly incentivized. This way, payroll costs are tied closely to employee performance. By bringing them on in this way, you almost guarantee that either your sales will go up because employees are hungry and anxious to bolster their paychecks, or you'll have little additional cost. It's a no-lose proposition.
It seems as if it takes a lot of guts to expand in what feels like a contracting world. But in the current economy, with a potential workforce chomping at the bit to do whatever it takes to return to gainful employment, there's no excuse for having an understaffed store.
You can wait for the feds to come bail you out. You can passively sit by hoping and wishing that things get better. Or you can wake up now and reclaim control of your own destiny with a stimulus plan that can be implemented today. Hey, if we do it and other industries do it, we might find ourselves looking back at the scary times we left behind. MI
Gerson Rosenbloom is managing director of Wechter Guitars. He's former president of Medley Music and a past NAMM chairman. Email him here.