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Thursday, February 19, 2009

Surviival

Surviving a Recession

A recession, depression or any other down turn in business requires a leader to look introspectively at their business and determine the best way to move forward. Sometimes, a business simply cannot make it through tough times. Most, however, can survive. And with hard work and a well thought-out strategy, most will emerge stronger.

First, restructure immediately to meet the demands that exist today – not under your old business model. Take a good hard look at everything in your business and shed the items that are not completely necessary. In household budgets, families talk in terms of food, water and shelter to survive. Take care of those items first and lose everything else. The same is true in business. Don’t wait to see what happens tomorrow because tomorrow is too late. Start making changes and restructure your business model now. Scour your financial data and determine what vendors you can cut and which ones might offer you a discount to keep your business. A full day examination at your financials will reveal expenses that you had long forgotten about and may not be necessary anymore.

Second, bring all of you leaders together and develop a single action plan for all departments. The plan must set achievable goals and a realistic timeline for completion. Force all of your people to acknowledge hurdles and develop a plan to overcome all of the hurdles. Every department should find expenses that can be cut. Trimming expenses is the easiest way to increase your net profit or shrink your loss.

Third, own all of your processes. As a leader you have to be the single person in charge and delegate to your people. Keep your managers accountable and ensure that they stay on target with the timeline of progress. Hold daily or weekly updates to measure accomplishments. Don’t let anyone off the hook. The other managers are watching how everyone is kept on task. A single forgiving moment can allow chaos in the process.

Identify the key players. Every organization has key employees of every pay grade. Every organization also has a host of unproductive employees that take but don’t give back. Shed the employees who don’t help you or who hurt morale with negativity. Watch your key employees because every competitor is coming after your most productive employees.

Consistently communicate with employees. Employees smell fear and market conditions make all personnel afraid of losing their job. As a leader it is your responsibility to remind employee that while times are tough their jobs are secure. Ask them for input on cost saving measures and they, in turn, will own the process of a turn-around with you. Don’t lie to the employees. Be honest and they will respect you for that and help you emerge as a stronger company.

Communicate with customers. Customer service and customer retention become primary goals. Get out and meet with your customers and assure them that you can still provide the same high quality product and service. Remain enthusiastic and optimistic in front of all of your customers. Be honest but positive. Don’t give your customers a reason to buy elsewhere. Poor quality and bad customer service is the only excuse a customer needs to move their business to the guy down the street.

Don’t lose sight of the original vision that the company had when it started. Continue to set sales goals and mandate that your employees meet them. Goals may have to be scaled back but they should still be met.

Work every day. Entrepreneurs have no days off.

Thursday, February 5, 2009

Back to Basics

In a sales meeting the other day, the General Manager mentioned that “in good times people develop bad habits and in bad times people develop good habits.” Succinctly said, the key to success in today’s environment is nurturing good habits by going back to basics. I am fully aware that this is what every success coach is preaching right now. You cannot pick up a single article in any business magazine without getting bombarded with advice on how to get back to basics, or develop winning habits, or stay positive. The reason these messages are out there is because they are true.

If you don’t know already, these are some good habits to go back to.

Focus on Customer Service. Every customer is much more important now than they were a year ago. Selling was easy over the past few years. In 2006 thru 2008 customers were employed and flush with cash. Banks were giving money to anyone who was breathing and negative equity was not even a hiccup on the way to purchasing a new car. Now customers have to be cultivated and a salesman cannot let a customer walk without pulling out all of the stops.

Spend time with every customer and answer all of their questions. Listen – don’t talk. Talk after you are done listening and when the customer is done speaking. Be professional. Know your product better than anyone else that sells your product and know your competitor’s product better than they do. If you don’t, you can’t answer the customer’s comparison questions and objections.

Demonstrate the product. Train yourself to do the same demonstration every time. When sales are slow, do online training or train with other sales staff. Imagine if you were buying a car. What are the items you would like to see demonstrated? Now turn that around. What items would your spouse like to see demonstrated? What about your kids? Imagine all of that and then demonstrate them all.

Prospect. People are still buying and it is the sales staff’s job to find those people that want to buy. Call on cars for sale by owner on the side of the road or call on car ads out of the newspaper. If just one is tired of trying to sell their car by owner maybe you have a deal. Hand out your business card to everyone you meet. Wear your uniform and name tag everywhere. Customers will ask you about vehicles while waiting in line at the movies. Give them a card and set up an appointment right there. Tell everyone what you do for a living and ask if they know anyone looking for a car.

Maintain an healthy lifestyle. This means both physically and mentally. Physically, you should exercise a few times a week. Exercise is as simple as taking the stairs or walking to lunch down the block instead of driving. Mentally stay sharp by doing product training or reading. Every morning should start with reading the news on line or in a paper. Get away from negative people and surround yourself with positive people.

Advertise yourself and your business. There may not be a lot of money to advertise but there are many free ways to get the word out about what you do. Send e-mails and ask that they be forwarded. Call old friends. Connect on Facebook. Write a blog. Whatever you decide you have to get the word out about what you do every day.

Measure your results. How will you know where you are going if you do not know where you have been. How many people did you meet today? How many prospect calls did you make? Did you miss a sale? Why? If you measure all of these things and more your skills will improve as you become more proficient in the way you approach your job. Remember to hone your good habits.

I can guarantee you that others in your business are sitting at their desks all day every day saying “this sucks. There are no customers. I can’t make a living doing this.” How hard will it be for you to compete against those people if you are doing all of the things mentioned above? Your day will fly by, customers will flock to you and you will sell more cars.

Wednesday, February 4, 2009

Tax Break for Buying a Car - A Great Idea

On Tuesday, February 3, 2009 the United States Senate overwhelmingly approved a broader stimulus package which includes help for consumers who want to buy a vehicle. The passage of the amendment would make interest and sales taxes deductible on federal income tax returns for vehicle purchases made this year. The National Automobile Dealers Association says that a consumer will save approximately $1,500 for a $25,000 vehicle.

The measure is clearly intended to jumpstart automobile sales. Why is that important to the overall economy? One only needs to look at the impact of automobile sales and the revenue generated for states and local economies from sales taxes. In Rapides Parish alone, sales of new and used vehicles (i.e. anything with a title) generated more than $29 million in sales tax revenue to the parish over the last three years. While the sales taxes would be deductible, the measure would not affect the amount of taxes collected by the state or the community. Instead, additional sales generated by the incentive of having the interest and sales taxes deducted for the year would spur more sales. More sales, of course, mean more revenue for the parish.

Take the dollar amounts collected in Rapides Parish and multiply that over Louisiana’s 64 parishes and the total impact of automobile sales on the state’s economy is readily apparent. Multiply that number again by the total number of counties and states across the United States and the revenue collected is staggering.

Rapides Parish alone saw a 10% drop in sales tax revenue from 2007 to 2008. Sales tax revenue is expected to decline even farther in 2009 because total vehicle sales in the state are expected to decrease dramatically from 2008 and even more drastically from 2007. Experts expect that nationwide sales will be at their lowest since 1981. In 2007, sales nationwide were north of 15 million. In 2008 they dropped to below 12 million. Every manufacturer and retailers has seen sales decrease. More than 1,200 franchised dealerships closed their doors in 2008 and the estimate for 2009 is even more dealerships will vanish.

The fall in sales, dealerships and employment in the automobile sector has a direct and proportional impact on states, parishes (counties) and local governments. Without automobile sales’ tax revenue governments are forced to cut services. Stimulating automobile sales directly places sales tax revenue into local government coffers which, in turn, allows them to hire employees and continue servicing its constituents.

In 2007 (the most recent year data was available) Louisiana automobile dealerships employed more than 18,000 workers with an annual payroll of $785 million. The average dealership employee earned $43,342 per year among the 337 new vehicle dealers. These numbers do not include non-franchised dealers, boat dealers, ATV dealers or non-franchised repair facilities. However, the tax incentive currently attached to the Senate bill will stimulate sales, increase tax revenue, allow employees currently employed by dealerships to keep their positions and drive the economy. Contact your local legislator and express your support of the Senate Bill so that it may be carried back into the House version when it is amended.

Monday, February 2, 2009

Secret Ballot

Many Americans would be surprised to know that the right to cast a secret ballot in a national election is not found in the Constitution. Instead it was a method adopted from the Australian system. All states now have provisions in their Constitutions allowing for secret ballots and as such it has become an important way for Americans to choose their federal, state and local leaders. If you ask any American, you are sure to get the refrain that a secret ballot “is the American way.” The purpose was initially adopted to ensure the voter casts a sincere choice by forestalling attempts to influence the voter by intimidation or bribery. Such has been the case since Grover Cleveland was the first American President to be elected by secret ballot in 1892.

Since that date the confidential ballot has been used in everything from voting for grade school student council members to organizing labor unions. The right has always been available to go behind a curtain and cast a vote without threats or intimidation. Fast forward a 100 years and small business community is faced with federal provisions that would allow unions to organize without the benefit of secret elections.

How is this possible? Look at the misnamed Employee Free Choice Act. The bill would amend the National Labor Relations Act to allow employees who work for small businesses (whose gross sales exceed $500,000) to organize a labor union without a secret election. Here is how it works. Currently, a union can be organized if 30% of the employees sign a statement requesting a union. Then a secret vote is held and it must pass by a 50% majority. The EFCA, originally co-sponsored by President Obama, would only require 50% of the employees to sign cards (“card check”) expressing an intent to be unionized and there is no need for a vote or a secret ballot. A retail business only needs to sell $500,000 in gross sales per year and there is no employee minimum number of employees to be affected. With these requirements, almost every car dealer in the nation would be subjected to these rules. A unionized shop would increase costs, restrain productivity, and imperil competitive advantages over non-union shops.

What makes this so important is that the same measure almost passed in 2007. The house passed the Card Check provision but it died in the Senate. With the senate majority solidly in favor of the democrats this issue is sure to rear its head again. Organized labor has seen their ranks decline steadily over the years and they see Card Check as a way to get businesses to organize that might not do so under a secret ballot. In fact, in speeches to labor groups President Obama has promised to push the card check measure.

The intent of the secret ballot in the 1890’s was to prevent intimidation and bribery and a secret ballot for union elections does just that. Imagine a scenario where a union organizer can present a worker with a card to form a union and the worker has no secret alternative to vote against it.

Historically, there was a time for the unions and there is no doubt that organized labor led a great revolution for workers rights. The problem in the automotive industry, especially the American Auto industry, is that the unions have essentially bankrupted the industry. Even as the big three were receiving bailout money before Christmas 2008, they paid hundreds of millions of dollars to retirees as year end bonuses (not current employees, but retirees). At the same time, they were all paying workers at their “job banks” where union members are paid not to work. Moreover, workers continue to receive full benefits with no deductible insurance, antiquated work hours, and pay plans that cannot be supported in today’s economy. Why not let the free market prevail? Instead of unions the competitive advantage should be decided by the laws of Charles Darwin. Good employees who work hard will earn a top wage because they generate that much revenue for the company. Those employees who do not produce will fall to the bottom and be asked to seek employment elsewhere. There should be no requirement that employers keep unproductive employees. If however, a group of employees wants to unionize then put the matter to a vote in the same manner we have been handling elections since the election of Grover Cleveland – the secret ballot.

Call you congressman and senator and urge them to vote AGAINST “card Check.”