I love to observe successful businesses in any industry to understand what makes them successful. I find that businesses of most any type often have more similarities than differences. Whether a small home-based business or a large Fortune 500 company, we all are conducting business, which means that small businesses that make up the workroom industry can learn how to survive and even thrive by assimilating the good and avoiding the bad that we see in other areas of commerce.
I am always heartened when I can watch big business and understand what is going on and can relate it to what I know to be true about business in general. For example, when Enron collapsed I was able to recognize what I thought was the problem. It may sound simplistic, but from my viewpoint they spent more money than they brought in. That seems to be a common problem in businesses that fail and one that should be avoided. Granted, the dollar amounts in comparing giant corporations and small workrooms are worlds apart, but the principle is the same. As a workroom, if you spend more than you bring in, you will not succeed.
SOME THINGS WORK, SOME DON’T
Years ago, I watched as Coca-Cola Bottling Co. tried to introduce New Coke. Loyal customers rebelled vehemently. The rolling out of New Coke was a very public blunder by a huge company. Surely they had teams of experts, marketing surveys and MBAs out the wazoo who thought it was a good idea. But, alas, all indications that New Coke would succeed were wrong. Which brings us to the principle of “If it ain’t broke, don’t fix it.”
Even the experts can be wrong. As a workroom, it’s comforting to know when we make a bad business decision that even high-paid, well-educated, highly experienced experts sometimes do the same. As workrooms if something we are doing is highly successful, we shouldn’t change just for the sake of change. And we should listen to our customer base.
One day I was having a business discussion with one of my customers who had been vice president of marketing for a well-known national company. I told him that the Coca-Cola blunder was something that made me think that even the big guys made mistakes sometimes, so I didn’t feel so bad when a little guy like me tried something that failed. My customer laughed. He told me that the saying at his company was, “Sometimes we make money in spite of ourselves.”
He further explained that all businesses try things, and if they don’t work out they try something else. The point is not to give up. Workrooms can learn from that conversation. All companies make educated guesses, sometimes they work out, but sometimes you just have to back up and try again.
BIG TIME MISTAKES
In the 1970s I worked for AT&T Longlines in the marketing department. I worked with a national team of people who set up data and phone lines for Braniff Airlines. Braniff had decided to take on a huge growth campaign and hoped that business would develop to pay for it. It took a team of 10 people at AT&T to just place orders for phone and data lines to keep up with the demands of Braniff as it expanded quickly into more and more markets. Within a very short time Braniff was history. They grew themselves right into non-existence.
As workrooms, we need to understand that business growth is a two-edged sword. While it can be a good and necessary thing, it also can be a fatal thing if not controlled.
While working for AT&T, I also worked with a team that was dedicated to data services for Southland Corp. Southland had been highly successful in the convenience store market during the 1970s. So successful, in fact, that they decided to build a huge state-of-the-art multi-story headquarters in Dallas, TX. The company leveraged itself with a huge debt load in order to build the office tower. While individual stores were very profitable, the debt load was a millstone around the company’s neck. The fortunes of Southland went from excellent to extremely strained in a hurry while it tried to service the debt.
As workrooms, we need to understand the pitfalls of excessive debt, even if that debt is made to buy equipment and real estate. Our debt-to-income ratio must remain healthy to succeed.
During the heady dot-com days before the tech bubble burst, I often would see investor money spent on nonsensical marketing campaigns. I remember one Super Bowl season that my husband and I watched multi-million dollar television ads during the game and looked at each other and scratched our heads. None of these ads made sense. Consequently, in hindsight these ads were a symptom of the industry and, ultimately, that became known.
Workrooms need to understand that marketing efforts and money spent for advertising need to be well thought out. Many of the dot-coms had never made a profit, but they were advertising as if they had unlimited funds. A company that does not create enough business to sustain the advertising dollars spent will not survive.
SOME GOOD EXAMPLES
However, there is a positive side to the coin. Wal-Mart and Target are both companies that have prospered. Both companies have done a lot of things right, but the outstanding thing they have done from my perspective is knowing who their market is. They both have understood their specific markets and shaped their companies around those markets. Unlike Kmart, which was also in the discount store segment, Wal-Mart and Target understood their customers and met needs that had nothing to do with merchandise or pricing. I have often thought that Kmart had better products; they just failed to meet the need of their customers to be treated with respect. The corporate culture that was glaringly different between Wal-mart and Kmart was something as simple as a greeter at the door welcoming in small town/lower income and rural customers with respect and Kmart’s culture of treating the same market with distain.
The middle and lower middle class customer has proven that they may not have as much money as upper class customers, but as a group they have enough money to change the way business is done in this country forever. They also have proven that less money doesn’t equate to less need for respect.
Workrooms can benefit from understanding the need to determine their specific market and tailor their business practices to match the expectations of that market. Not all markets are upper end. Customers lower down on the food chain are viable as well. Workrooms need to understand how to go after a market when it is being underserved by following the example of Wal-mart and Target. Both companies learned to shape the markets that they serve even though a formidable competitor had already staked out a large claim. They read their customers and gave them what they wanted while still making a profit.
As workrooms, even though many of us are little guys, we’re still in business. And business is business. Let’s don’t overlook lessons right there in front of us.
Mary Ann Plumlee is the owner of a retail and wholesale workroom. Starting with only $50 and a home sewing machine in 1985, her business has expanded to include a showroom, 12 employees and two locations. She firmly believes that in this business only the tough survive. Finding the humor in the everyday life of a “curtainlady” is how she not only has survived, but thrived in this industry. Plumlee is often seen traveling around the country teaching classes and seminars. She is the author of The Adventures of Curtain Lady and has launched a workroom related blog: www.workroomintelligence.com