I am sure that you have suffered through an experience of poor customer service. One doesn’t have to look far these days to realize that many businesses put low value on treating customers well.
It was serious business! My brothers and I were neck deep in it. We were digging to China when we were interrupted by the sound of our mother calling us for dinner.
Digging holes is something that boys do. As kids, we would dig holes for forts, holes for adventures, and holes in search of gold. At the age of three, my son dug a hole to trap bears.
In business however, when we dig holes – unless we are in the construction business – they are usually not good. I have dug myself some holes as a businessman over the years. The biggest hole that I dug was hundreds of thousands of dollars deep. These types of holes don’t happen overnight: they take lots of planning and many hours of making mistakes, and sometimes years to get out of.
The most common holes in business are profit holes. Profit holes are those costs that build up over time and eat away at the owner’s profits. According to the National Federation of Independent Business in the USA, 60 per cent of small businesses are either not profitable or are only marginally profitable. To be clear, the profit in a business is what is left over after paying all of your expenses. In a small business, there are many expenses: the cost of goods, labour, insurance, supplies, utilities, computer equipment, etc. The list is almost endless it seems. Unless we are careful operators of our business, we may find ourselves among the 60 per cent of businesses where the owners receive very little to speak of in terms of money at the end of the day.
One of my clients, we will call him Paul for the sake of this story, owned a health food store that he ran for several decades. As he was thinking of selling the business, he realized that new owners would probably like a business that was a little more profitable. Paul started examining his income and expense statement with a fine-tooth comb. He discovered several areas in which some of his costs had crept up over the year. In one case, he found that he had originally employed a cleaning company on a contract for a small job for $50 per week. Over time, they had gradually raised their prices to $100 per week. He consulted his employees concerning this job, and was told that they thought that they had time to do the contractor’s work as he was only spending 15 minutes a week in the building. Profit hole filled = $5,200!!!
Paul kept digging. One day he got a call from a service provider for debit machines. They told him that he would save $400 per month if he switched over. Paul didn’t switch, but he used that call to ask his current provider to match their rates. When they agreed, Paul saved an additional $4,800 being lost through a profit hole.
When Paul plugged these two profit holes, he saved himself $10,000 per year. For a small business owner, $10,000 a year can be very significant. Not only did Paul enjoy that money immediately, but he increased the value of his business at the same time. Potential buyers always want a profitable business!
When we are looking for ways to reduce our expenses and plug profit holes, we need to look through each and every area of the business. We must ask ourselves how we can reduce our costs in this area. In my book Profit Yourself Healthy, I identified 107 different ways that small business owners can reduce their expenses. These include reducing costs in areas such as labour, energy, consulting fees, insurance, travel expenses, maintenance, and more. Sometimes we can eliminate an expense. Often times by putting the product or service out for tender again, we can lower our costs. The trick is to look at the largest expense areas first, and figure out ways that we can create efficiencies.
The longer we have been in business, the more profit holes we can find. Like Paul, we let little expenses build up over time and the result is an erosion of our profits. It’s easy to dig holes but sometimes it’s much easier to fill them.
Many retailers are stressed at the thought of what is happening in the health food industry right now. Amazon buying Whole Foods, the erosion of margins with online shopping, and more and more products showing up in the mass market.
If you want to survive as a health food retailer in the next couple decades, you are going to need to do things differently than you did in the past.
To survive, health food stores are going to need to have their own brands that are not available everywhere. To have access to this, health food retailers will need to have a supplier that is giving them brands of products that are not available in the mass market. While you may feel you need some mass market products, your customers are coming to you because you are the trusted advisor. If you have the knowledge to help them address their problems and concerns, they will buy what you put in their hands.
Health food stores who survive the change in the retail environment will have to have specialty niches where they are able to identify their potential customers and offer them specific products to satisfy their needs. Perhaps this is an anti-aging clinic, the men’s testosterone stop, or the skin care centre. This may mean that you will have to do things that you didn’t do in the past: offering services that are difficult to do, or products that are hard to get. Health food retailing will be getting harder, but the creative will thrive.
Millennials, Generation Xers and upcoming generations are going to want the human aspect of retailing that baby boomers had and then some. While we all might be on the computer more, we all crave to be touched, spoken with and humoured. Physical touch and real human presence is hard to experience over the computer. Brick and mortar health food stores will be around as long as they can offer this. Store owners are going to have to encourage their staff to develop meaningful relationships because this is what customers want.
It’s true that 3D is coming to retailing online, but you can’t taste food, feel fabric or smell scents online. Health food retailing is going to need to give customers even more experiences that fill the senses.
It was once the case that you could open a health food store because you wanted to help people have a chance of success. The chance of success now has been significantly reduced. In the past, store owners would spend money in advertising without measuring the results and set margins and price products upon a whim. Look at financials once a year and rely on your accountant to interpret them. Future store owners are going to need to be strategic, cunning and knowledgeable to thrive. Those that understand how business works and how they can create value for their customers, are going to be successful.
Health food retailing is changing but those who can adapt will be able to feed their families, hire great staff, help their customers and contribute to their communities for years to come.
Which silver car is it? Tony Kibonge shouted, as I tagged a car and he raced by. This race to the silver car was a re-match of another race I had won one cold morning in Stuart Lake. We had raced through the water up to my chest and Tony’s neck! While I had won both races, the truth of the matter is that Tony – who is 13 years old – is a much faster runner than I am. In fact I think he might be one of the fastest 13 year olds in the country. However, in both races, I made sure that I had distinct advantages. I really had no intention of losing, although in both races it was a real possibility. More on that later.
But what about you? Are you intent on winning with your store? Do you have a strategy or are you going up against, quicker, faster, better competition and just hoping that you are going to win, without really even a hope? So often we are going against competition that is so stiff that our goal is just to keep our heads above water and pay the bills.
So why don’t we change the game? When I raced against Tony Kibonge and his class the first time in a lake, I knew I had a clear advantage. I knew that I weighed 100 lbs more and was a good eight inches taller than Tony and this would help me as I moved against the water in the lake to the finish line. In business, we often think that we have to run the race that our competitor has already established an advantage in. I knew that if I was to race Tony in the 100, 200 or 400 meters that he so loves to race, I would be left in the dust. So I don’t race those races.
In the health food business, we too need to change the odds so that they are in our favour. We need to think about what we are better at than our competition, both online and mass. If our competition has better prices than us, then, we better focus in an area where we can add value and price is less of an issue. This may be great service or exclusive products. To distinguish ourselves, we need to really be different and find customers who are willing to pay for that difference.
And what does winning mean? In every race, there is a finish line and a goal that we are striving for. However, most small retail health food stores don’t have real goals. We are just plodding along hoping that our store is going to grow without having any real plans, any targets for sales or marketing, profit, or any other measurable outcome.
For example, “Sales Target: by 2020, we will have two million dollars in sales.”
Focus only on areas where you have an advantage. Know where the finish line is, and celebrate each and every accomplishment. Make your health food store a winner! •
My friend Aaron likes to tell the story about how he arrived at a hotel and how they greeted him at the car. Shortly after, a staff member said, “Aaron, you’re a Manchester United fan, aren’t you?
One of the keys to a business’s success, and a factor that needs to be paramount in the success of many small businesses, is the ability to relate to customers and sell his products and services. While selling seems to come natural to a few people, to most of us entrepreneurs, it takes work and we need to understand that there is a science to it. Below are the steps to being successful in selling.
News, Views and Happenings in the world of Canadian Natural Health.
An early show requires early messaging. Get your Spring sales message out early with an ad in CNHR. Reach the key retailers well before CHFA West. Here’s what your ad can do for you:
• share your spring promotional plan with all retailers
• help your sales team reach sales targets
• introduce your new products BEFORE the show
• tell retailers about your show specials early
• help open doors for your sales team
• create traffic at your booth
• solidify brand loyalty
• tell retailers about your new services, too!
• support all of your in-store, digital and consumer marketing efforts
Advertisers: FREE value-added features As an advertiser, you’ll be in one of our biggest issues of the year. (There will be loads of bonus circulation during CHFA West.) Along with your ad being viewed by more than 10,000 owners, managers, buyers, product recommenders and floor sales staff, you also get some great free editorial opportunities, including Trade Talk, Product Profiles and Pre-Show Buzz. Here are the details: Trade Talk is one of the highest read sections of CNHR and your vital link with retailers. Keep current and potential new customers updated on your new products, new staff, new website, new promotions, etc. Deadline for Trade Talk: November 7
We have lots of advertising options at many price points. Tell me what ad size you’re considering or what your budget is, and I will personally customize a proposal just for you. I’ll explain all of the value-added features CNHR has to offer your company!