The Smile Is the Shortest Distance Between Two People

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I have spoken all over the world. I have spoken to audiences that can't speak a word of English. I have been translated into 5 different languages at the same time. (That's dealing with 10 different interpreters--2 per language and is it fun and games when they all try to get your attention.) However, regardless of the language or culture, smiling and laughter are universal.

The title of this article is a variation from a quote from one the great humorists of the 20th Century, the late Victor Borge. Of course he is also said that "Laughter is the shortest distance between two people" as well.  

So what does that have to do with running a store during times like these?

EVERYTHING!

We are in the people business. Customers don't buy logically; they buy emotionally. Logic makes us shop BUT emotions make us buy. Many times, the biggest thing that differentiates our businesses is the "Likeability Factor" of our business. The fastest way to likeability is with the use of Fun, Humor and Playful Behavior. My biggest selling book is still "Laugh and Get Rich". It has been translated into 7 different languages and is a big hit in Asia. The book analyzes the power and applications of Fun, Humor and Playful Behavior. 

It is because of this book that I have been asked to speak at the most prestigious Humor Conference in the world,  "The Positive Power of Humor & Creativity Conference". It is the Humor Project's 53rd International Program on Humor and Creativity. The Humor Project is the most comprehensive resource, think tank, and authority of the use of Positive Humor and Creativity in the world today. The conference takes place in Lake George on June 11-13, 2010. This is a real honor for me and for recognition for the work I have done with retailers to adopt many of the principles of these tactics and strategies.

This week I had the privilege of interviewing the Founder and Director of The Humor Project, Dr. Joel Goodman. (I will be interviewing him in a webinar in April as well.) Let me share some of the wisdom from Dr. Goodman who is one of my humor mentors and a legend in this arena. But before I do, I also want to mention that Jeffery Zazlaw, the New York Times columnist who is the co-author of "The Last Lecture" with Randy Pausch, is also on the program at the conference.

Dr. Goodman shared that there is a point where the bottom line meets the funny line and that interception creates endless opportunities for businesses.  It is a powerful connection and a place where memories are made and attitudes are changed. He explained how we should be Service Professionals NOT Solemn Professionals.  He explained that by using humor we gain childlike abilities. Looking at the world through the eyes of child can sometimes give us a new perspective without being childish.

He explained that you don't have to be funny, act funny, or even think funny to utilize the benefits. I believe that when "we humorize, we humanize." We become more approachable. In case you haven't noticed, we are in the "approachability business" and laughter is the great social lubricant that breaks down sales resistance.

Understand that the greater the tension, the more humor is needed and works. Did you ever notice that when many people are nervous or scared, they relieve that tension with jokes or laughter? Think of all of the great comedians who came out the depression era. As Dr. Goodman said, these comics "Saved Society's Sanity".

There are some warnings about the use of humor. Sometimes it offends, so be careful who the focus of the joke is on. It must pass the ATT TEST.

A. Appropriate

T. Timely

T. Tasteful

The problem is that many people define those three categories very differently. What is appropriate humor to people in the health care industry, where any joke about bodily fluids is fair game, just doesn't work in a retail store.  That is why self-deprecating humor is so powerful. Don't make fun of other people, ethnicity, physical characteristics, or religion unless you own it. I used to tell lots of "fat jokes" but after I lost 90 pounds, they because insensitive.

I lost one of my closet friends for 12 years because of a comment I made the day of her mothers funeral. My wife and I went into the private room before the funeral and said, "So what's new?" I was just trying to deal with my own anxieties and try to give a little soft comic relief  (or so I thought) to a very serious and somber moment. Because our friend had an outgoing playful nature about her, I felt the comment was appropriate. 

Oh well, I was so very wrong. We didn't talk for 12 years and even to this day I am highly sensitive about anything I say, because I know I am just one line away from losing a friend. As I found out, people do not have the same sensitivity standards, and although I didn't mean any harm by that comment, the damage was done with just one inappropriate line.

Use humor, enjoy the benefits of fun, laughter, and playful behavior but remember the ATT Rule. It's OK if they laugh at you but to laugh with you is even better.

Have your bottom line meet your laugh lines.

(If you want more information on the conference, go to http://www.humorproject.com/conference/.)

Report from the National Retail Federation's Big Show

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Last week I traveled to New York City to attend the National Retail Federation's 99th annual trade show and conference. Retailers came from around the world came to see the latest and greatest technology, trends, ideas, and tools. Let me share my impressions and some of the tools of the future that are available today.

On many occasions in this column I have explained why I have been more bullish about retail business than some. That reason is that when I attend a conference and I do my unscientific survey of asking people how business is, I generally get a response such as, "not bad". The reason for that is the majority of the conferences I attend are specifically designed for independent specialty businesses who have fared much better during this recession. Couple that with the fact that the people who generally attend these conferences are the cream of the crop--the people who are always looking for an edge or an idea that will improve their business. In short, it's the winners who attend the conferences that I go to.

This show was different. It is the conference that primarily large stores attend. Their businesses had definitely experienced the recession and did not fare as well as their smaller colleagues did. So independents give yourself a pat on the back! Along with that observation, there was a theme that was repeated again and again and many of the sessions. That theme pertains to the concept of being "customer centric." Speaker after speaker talked about the importance on focusing on the customer more so than ever before. Duh? I don't get it. What were they focusing on before?

I suppose it seems silly to me because specialty businesses have always had to focus on the needs and wants of the customer. We have never been in a position to dictate to a customer in the way a larger business could. It's not that the larger stores ignored the wants of the customer but they just did not address them in the same way that an independent addresses the wants and needs.

One of the biggest trends that will be affecting all of us shortly is what is now called M. commerce, Mobile commerce or the use of the cell phone. The amount of applications using cell phones was staggering. I think the application that impressed me the most was the use of text messaging in ways that were both effective and cost conscious. Here is one application of text messaging that we all will be doing shortly. You walk by a store, receive an e-mail, or even read an ad in the newspaper, and you read a line that says TEXT 34553 and type in "specials" and within seconds you will receive all of the stores specials, featured products, or sale items sitting right on your cell phone. You can even get pictures and full descriptions.

Think about what happens when someone responds: you have just attracted a new customer that has opted in to your customer database list. Think how simple, seamless, and effective this tool can be. I can't think of another form of marketing/advertising that creates interest and captures customer data instantly. Obviously this tool should never be abused and the process to opt out must be as simple as possible, otherwise we run the risk of killing the goose that laid the golden egg. Remember texting is working now because we have already abused emails.

Some of the other applications that cell phones are being used for are as mini GPS devices in stores to help the customer find the department or items they are looking for. Obviously this is designed for larger businesses.

Cell phones are also now being used as remote credit card terminals. You can have a device attached to your cell phone that will allow you to swipe a credit card through. The implications of this technology are endless. You can eliminate long lines in the cash counter; you can close the sale much faster and eliminate that indecision time for customers who might be on the fence.

The other interesting use of a cell phone which can be used both by customers and store personnel is a barcode reading feature. From the retailer's point of view, a simple scan can unlock lots of information that can be useful in a sales presentation. From the customer's perspective, there are apps for the iPhone and Blackberry that allow you to scan a barcode and send you a report of stores and/or websites that sell the same product and report the various prices. This takes competitive shopping down to the size of your phone. That's scary and the reason why private labels are becoming more important than ever before.

The last cell phone application that is bursting onto the new retail horizon is the use of coupons delivered to your cell phone and used from your cell phone. Talk about saving paper! This is a powerhouse. Instead of carrying around an envelope with all the coupons, they are stored on your cell phone. Then you simply scan it from your phone into their computer system. If you happen to have a profile posted to the store's database system, that simple scan can process the sale using the credit card on file. Are you starting to get the picture that the cash counter of the future might start to look little different?

The next biggest WOW and trend that many of us will be adopting this year is the use of the flatscreen monitor for digital signage. The price of these screens is dropping to a point where they have become affordable to almost every size store. They can be used in so many different ways, from welcoming the customer into the store, to showing merchandise that you don't have a stock but it is deliverable within a day or so are. As powerful as this application is you might consider waiting before you jump in here. The reason for that is I believe vendors will start to see how powerful this tool could be to help promote their lines in stores and will start creating programs that will offer free flat screens to show their images and messages within your store. It's like years ago when manufactures would supply stores with fixtures. I haven't seen it yet but it's just too great an opportunity for any vendor to pass up.

I have to report about one display that everybody was talking about. It was a unique use of projected images that just WOWs you. The name of the company that created all of this is Potion. As you can see in the first picture, there is a table/platform that is a shoe display. It has spotlights above that highlight this but it appears to be nothing out of the ordinary. However, when you pick up the shoe, information about the shoe is now projected onto the platform as you can see in the second image. Of course if someone puts the shoe back in the wrong spot, the display won't work. But talk about signage that doesn't clutter your store! The third image just shows the way the camera is mounted above. Potion has many different applications for this technology and I could go on and on but this was breathtaking.

There was one other interesting thing that happened during the Retailer Awards Luncheon. There is an annual People's choice awards for the stores with the best customer service. Out of the 10 best stores selected by over 80,000 shoppers, five of those businesses are online businesses. The winners were:

10th Place Tie-Nordstrom's & Kohl's
9th Place-- JCPenney's
8th Place-Lands' End
7th Place-- Home Shopping Network
6th Place--Coldwater Creek
5th Place--QVC
4th Place--Amazon
3rd Place-Zappo's
2nd Place-- Overstock.com
1st Place-- L.L. Bean

When you look at this list, you realize that there are only four traditional retailers: Nordstrom's, Kohl's, JCPenney, and Coldwater Creek. The world is changing.

Zappo's also won the award for the most Creative Retailer of the year and the Retailer of the Year went to Ralph Lauren. That's interesting in the fact that Ralph Lauren is a manufacturer that sells to retailers and also has hundreds of his own stores, in all different varieties around the world. There was a time that any vendor selling to retailers and competing with retailers would never even be considered for an award. The times, they are a-changing.

Needless to say, the show was inundated with sessions pertaining to social media and its many uses. The conversation focused primarily around Twitter and Facebook. I finally saw the power of Twitter in the example of when a customer complained about Saks on Twitter. Within six minutes, the complaint was handled and the customer was satisfied. Twitter is starting to find its home.

There were many applications for Facebook but the one takeaway was that Facebook is not a one-sided conversation. Stores that look at it as traditional advertising are making a big mistake. It is social media and it must be interactive.

Let me just end with the line that I heard from the CEO of Saks. It's been a rough year but let's not waste a good recession. We have all learned some very valuable lessons from the economic climate we have lived and are living through. We have learned to do more with less. Those values will make us stronger and better in 2010 and beyond. They are right-- it is about the customer and no one understands it better than the independent. We have a lot to look forward to!

What do you do when you can't pay your bills?

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OR What do you do when you are paying your bills late most of the time?
As bad as those two scenarios might be, there are even worse conditions. Such as paying your bills with your credit cards and carrying large balances so that you are being charged 18% interest (or even more from some of these money hungry banks that are trying to cover their losses from other areas). Hardly any retailer earns 18% profit out of their business so what makes them think this concept is going to work? I know-it's because the payments are smaller at the beginning but it's just a delayed agony.

I started to write this piece with the title "The Dark Side of The Recession", BUT that would have been the worst thing I could ever do. Why? Because managing your debt is just part of running your business.

Sure that's easy to say until you have received a collection call from a vendor or collection agency who are the subtle masters in intimidation (many times not so subtle.) We can say to ourselves, "It's just business." However, we know it eats us up inside. It ruins our self-esteem, we feel like failures, and try to avoid taking these calls. And when we do take the call, we make promises for payment that are nothing more than wishful thinking.

Many times the financial condition you find yourself in might not be your fault at all. I once owned a very successful (and extremely profitable) apparel store in New Hampshire that had a great team of people running it and a wonderful customer base. It was a 2200 square foot store with sales between $400,000 to $450,000 annually. Everything was going great for 9 years until two things happened. First, a new mall opened up across the street. We knew it was coming so that was no big deal. What I never took into account was the automobile traffic that a new mall can generate. What made matters worse was the roads getting to the mall were just NOT equipped to handle this traffic increase, so bumper to bumper grid lock would occur during busy days making it almost impossible for customers to get into my parking lot.

Our Saturday sales which averaged around $3000 dropped to a staggering $300 to $400 per day. That was only for about 6 months but of course it occurred at Christmas time as well.

Then when you think things can't get worse... they did. My landlord rented out the store beside us to an Eastern Food Mart/convenience store. Shortly after they opened they had delivered 5000 pounds of curry powder. The problem was that we shared the same air conditioning system. Needless to say the odor made it impossible for customers to shop and employees to work. After lots of efforts to correct the problems, I was forced to just close the business. Did I do anything wrong? Not really, but it created late payments and lots of sleepless nights.

So what should a business owner do when unexpected events occur? Where do you turn to? Since October I have received a number of calls and emails seeking advice. So I wrote up a piece about retailer options when events like this occur and I am including these ideas in this article. There is an old Chinese proverb that says, "When the student is ready, the teacher will appear." My teacher has appeared and my eyes were opened wide to a part of an industry I knew very little about.

I work for many associations representing all kinds of industries. There is an association for every job type or type of business you can think of, but I had never heard of The Turnaround Management Association. A group of (here comes another new phrase) Payable Management Specialists. These people are NOT debt consolidators or credit counselors. Some consumer credit consolidators don't have the best of reputations--they go under the guise of a non-profit organization thinking they are there to help you and some do. However, some of these companies are not always the most ethical companies you can work with and their needs are served first.

On January 20th I will be interviewing Mr. Jim Herst, one of the pioneers of the Turnaround Management Association and the Winner of the Turn Around Specialist of the Year in 2008. He is regarded as this country's leading authority in Payable Management.

So what do they do? Why should you know what they do?

First, understand the signs of retailers in need of a turn around specialist:

1. Sales off or less than anticipated
2. Selling, general, and administrative expenses are rising
3. Gross margins declining
4. Decreasing inventories because you can't get credit or don't have the money to replace the sold merchandise
5. You are writing and holding checks
6. Receiving collection calls from Vendors
7. Increase in employee turnover
8. Larger customers not buying

What YOU can do, what are your choices when you start to experience these symptoms:

1. Start extreme cost cutting
2. Refinance all of your debt
3. Seek new money to invest or find new partners (with money)
4. Debt resolution-Settle your debt with vendors
5. Sell the business
6. Liquidate
7. Hire a professional Payable Management company to start your turn around

So what does the professional Payables Management actually do? "It is the process whereby a debtor in financial CRISIS retains the services of an authoritative third party to professionally represent that debtor's relationship with its selected creditors." You turn your problems over to an experienced pro.

They perform the following services:

1. Stop all the calls and demands from vendors, collection firms and attorneys
2. Perform all creditor contact so you can focus on running your business
3. Eliminate court appearances
4. Protects the retailer's assets from lawsuits
5. Satisfies the creditors within your financial need
6. Works to rebuild your credit rating
7. Creates strategies for long term profitability
8. Facilitates profitable sales of inventory

How do Payable Management people get paid? They are paid on performance only. They receive a percentage of the money they save the retailer.

This is more than just about saving a business. It's more than just savings jobs. It's more than just helping to save a community. It's about saving someone's self-respect and takes a horrible burden off the retailer's back.

I believe this is such an important topic that on January 20th I will hosting Jim Herst to discuss this topic in detail and have open lines for you to ask the pro. This will be a FREE teleseminar for everyone. (It is free if you listen in during the live event but we will be charging $19.95 to download the event for people who are not members of The Retailer's Advantage.) We are doing that so that we can have as many of you ask Jim as many questions as you like. It is a rare opportunity--not to be missed!

Actually I am looking forward to hearing about the success stories that this program generates. Have a great week.

TAKING the Scare Out of the Business Plan

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I don't know about you, but I hate planning. However, the older and wiser that I get, the more I appreciate the good business plan and the execution of that plan. I suppose you could call the appreciation of the business plan an acquired taste. Considering that this is the first article of the year, I think it's appropriate that we talk about business plans. (Actually it will reinforce the webinar I will be doing on Wednesday night about business plans. Plus I write about what is on my mind and that's all I've been thinking about for the past week!)

So the first question is what is a business plan? I like to look at a business plan as your story about your business. Have you ever gotten a stock tip? They tell you the name of the company and the reason why you should buy the stock. They also tell you that the company does this or that, they don't have a lot of competition, they are innovative, and of course the price is always right. That's what a business plan really is and does. The difference is that the business plan goes more in depth into the story. One word of caution. My business plans have a very definite marketing focus. There are plenty of business plans with a financial focus or a production focus.

What the business plan is supposed to do is answer the following questions:

1. Who are you?
2. What do you sell?
3. What's your method of selling it?
4. What makes you different?
5. Who is your customer?
6. How we are going to attract a customer to buy from you?
7. How much will this cost?

Before I answer all of these questions, understand that many people create business plans because it's a requirement by a bank or lending institution. The sad part about it is after they do the business plan, they place it on the shelf and never look at it again. Your business plan should be your Bible or map that your business is going to follow. My advice is create a business plan and then review it, at a minimum, monthly. Let's get started.

Structurally, most business plans will begin with an executive summary which is merely the seven questions I listed above, each answered in a brief sentence and a closing paragraph that sums it all up. That's followed by repeating the same questions and including more detail.

1. The first question is Who are you? In the executive summary you might answer it by saying, "We are a husband and wife team with 15 years experience with corporations and have a desire to run our own (gift) business.

On the more detailed business plan you would describe the actual management experience by company name and responsibility. The size of the company and the sales volume will also be important. This is also the spot that you add your vision, mission statement, and/or positioning statement. The vision statement tells us where you see the potential of the company. The mission statement states who you are and what values are important to you. The positioning statement, or as I sometimes refer to it as the signature line, just narrows the vision and mission statement into a workable slogan to live by.

You can see how the longer business plan basically says the same thing as the executive summary. It just has more detail. Or at least it should say the same thing. I have seen business plans with these wonderful executive summaries written but then when you get into the detailed plan, the business goes off in another direction. Why? The debate goes on-- do you write executive summary first or write the detailed business plan first? My feelings are the detailed report comes first and executive summary later. It tends to avoid mistakes.

Here is the interesting part about the first question, Who are you? In the executive summary, it's easy or it least it should be easy to write and is always short. But in the business plan, the Who are you question is the largest part of the business plan. This is because it also goes into detail about your beliefs--towards employees, service, customers, merchandise, price, and anything else that is important to you. Most business plans also include the SWOT questions in this section: Strengths, Weaknesses, Opportunities.

2. What Do Sell? Is the much easier question to answer. It covers usage, quality level, category, price levels, and looks. Again these are short questions that generate much longer answers.

3. What is your Method of Selling Your Products? Are you going to be selling it at retail, online, what is the business going to look like, what is your business model and who are you emulating? That's a nice way of saying who do you look up to or who are you copying? Instead of copying I like to say what practices are we adopting or adapting.

4. What Makes You Different? What is your special sauce? Why are you different than the rest of your competition? Don't ever just say price. Why would you want to make your customers loyal to price? If someone were five cents cheaper, then the customer will go there. So I automatically throw away business plans that proceed to say that they are the cheapest in the state unless they have other differentiators that make them stand out in a crowded market place.

I want to know what benefit the customer will have in doing business with you. I want to know what ability you have that you are the most proud of? I also want to know why your best customers keep coming back and why new customers are attracted to the business. Answer these two questions in this section:

We enhance customer's lives by _______________________________.

If a newspaper would write a story about you and your business what would it be about?

5. Who is your customer? Know as much about your prospective customer and existing customers as possible. I want to know the demographic information such as age, sex, marital status, income level, homeownership, education and children. I also want to know the lifestyle information, a.k.a. psychographics.

That's a fancy way of saying what type of social activity are they into--such as gardening, home décor, reading, golf, travel, etc. This information is much easier to get than you realize. Just ask your customer what activities they are into and find the corresponding magazine that caters to that audience. Then contact a list broker and purchase contact information for prospective customers in your target area.

6. How we are going to attract a customer to buy from you? Another way of asking this question might be how are you going to market and advertise to your existing and prospective customer? Today there are so many different options from the traditional radio, television, and direct mail. These include billboards, websites, and all of the new social media options available today. Many times the true business differentiator rests in the way the business markets and advertises itself. It is not the best product or the best price that wins, if nobody knows who they are or what they're selling.

In this section it's advisable to list all of the possible advertising options, your choices on each one, and the choices that you have decided to use. I believe it's important to include a Calendar of Events in this section because you want to show as many events as possible. Events are important because you are giving the customer a reason to come into the store. These events do not have to be sale events. They can be classes, workshops, book signings, or any type of activity that brings people for the front door.

It is important that you address how you are going to market to your current customers and what strategies you can to adopt to attract new customers to your store.

7. How much will this cost? Here's the part that's not as much fun-- trying to figure out how much all these initiatives will cost and then putting them into a projected budget format. This is a good spot to employ my 40/55/5 Rule: The Profitability Formula. What that means is that in the average retail business, 40% of every dollar of sales will go to expenses. That is anything except the cost of the merchandise and the principal amount of a loan. It does include the interest charges on a loan and your salary. Then 55% of sales will go toward merchandise. The 5% left over is considered a positive cash flow. Any principal payments you have on loans will come out of the 5%.

Different industries will vary percentagewise, but every industry has a formula for profitability. In the jewelry business the expense percentage jumps up to 43%, but the cost of merchandise drops down to 52%. This is because in most jewelry stores payrolls are higher but the margins are better.

I explained all that because I have seen business plans that are brilliant from the first to the sixth question and then they blow it by having totally unrealistic costs and projections. I recently had a store owner tell me that 90% of every dollar that came into that store went to merchandise. Then she proceeded to tell me that she is very profitable. That is possible but highly unlikely. If I were asked by a bank to render an opinion on whether this business should or should not received a loan, I would have to deny the loan. The bottom line is to make sure your numbers make sense.

Finally end your business plan with a closing statement about how you plan on utilizing this business plan and updating it in a timely manner. It's even advisable to list the dates the plan will be reviewed and updated. Business conditions change quickly these days and business plans cannot be cut in stone. Remember it is a guideline and a map and even the best of maps can't take into account the detours life brings us.

I know that I have given you a lot of information in this article and I will be going over it in more detail in this week's Wednesday night event for The Retailer's Advantage. This program is also available for purchase as a single event for my readers who are not members at the following link:

Have a great week and remember planning does pay off.