As 2006 comes to a close, it’s natural to reflect on the past 12 months and ponder the new year ahead. What have we accomplished? What might we do differently in the future? What untapped opportunities might we find as we go forward? What are our short-term and long-term goals? How will we get from here to there?
I launched this column in February. I was inspired by the National Automatic Merchandising Association’s Executive Development Program that I had attended a month earlier at Michigan State University. One of my objectives was (and is) to get to know my readers better and become more visible as a publisher. I thought attending the EDP program and writing a monthly column would be a good way to get started.
Another short-term goal of mine was to get my arms around the “financials” at Vending Times, and streamline the business to adapt to a consolidating industry. These are steps I’m taking daily to work toward the goal of increasing cash flow, not only staying in business but also becoming more profitable! Sound familiar?
Most of us who have been in business a long time do these things instinctively. However, whether you are new to the industry or a veteran, it’s a good idea to evaluate and re-evaluate your tactical and strategic goals now and then. And what better time than the New Year to make some resolutions.
I know we are all busy and time is a luxury. Perhaps you’ve been working for so long you don’t think it’s necessary to analyze your goals – you’re perfectly content right where you are. But if you’re not forward-thinking, if you’re comfortable with the status quo, then you may actually be moving backward! Complacency can be dangerous to your business. The old rules may no longer apply. In fact, perhaps they never did...
There are, of course, rules of different sorts. The basic variety, like “You have to spend money to make money,” are almost always true, and very seldom are overtaken by circumstances. A younger (more rebellious) version of myself would have argued that all rules were meant to be broken. Today, I’ll strongly suggest reviewing doctrines frequently, and rewriting them when necessary. One reason is, simply, that a competitive innovation that succeeds inspires both imitation and supersession; it is a wasting asset.
With that in mind, here are a few principles I plan to keep in mind over the next 12 months. I think they have wide application, and not only in our industry:
1. Market “domination” is not a safety net if you’re not paying attention to your customers. This is because failure to pay attention is the surest way to lose dominance. In any case, it’s not as valuable to be the biggest as it is to be the best at what you do, and so the most durably profitable. Customer service is the key to that excellence.
2. If you’re not externally focused, you can really lose your edge. Get out there, get to know your customers and watch consumers in action. Don’t get so wrapped up in the daily grind that you forget why you’re in business in the first place. This is very important in vending, as all experienced operators know. The only way to find out what’s going on in the vending areas of your locations is to visit them periodically.
3. Stay informed. Listen, learn, participate and interact with your peers. Our trade associations have a variety of educational programs available to industry members. It has become a truism – one of those basic rules I mentioned above – that information sharing always produces a win for the sharers. A great man once said, “If you and I have a dollar and we swap them, we walk away with a dollar each. But if each of us has an idea and we swap them, we both walk away with two ideas.” This is worth keeping in mind!
4. Don’t knock the competition. We all may not be on the same team, but we play in the same league. Fair play and mutual respect improve the image of the entire industry by emphasizing professionalism, integrity and concern for customers. Short-sighted ploys designed only to build market share in the next quarter, without regard for next year or the next decade, are harmful to every business. Competition keeps us alert and fosters innovation; cooperation builds our industry over the long haul.
5. Keep an open mind. The risks we now face become more alarming if we try to apply old solutions (even “time-proven” ones) to new problems. Many CEOs are following a playbook based on assumptions that were true at one time, but are so no longer.
6. The “make or buy” decision also is affected by the passage of time. The balance between the merits of doing something in house or contracting it out probably varies over time, but whether or not the process is cyclical, it’s important to review your decisions every so often. Consider outsourcing or partnering alliances with other specialty firms. There always is value on concentrating on what one does best – in fact, that is the central argument we use in persuading locations to contract with a professional rather than buying their own vending machines or pool tables or coffee brewers. And keeping in-house diversification costs down will free up resources better used for direct selling!
7. Plan an exit strategy, both for major initiatives and for the business overall. When undertaking a new venture, prudent operators always have a good idea of what they will do if it doesn’t work. And it’s important to protect your investment of time and effort by looking at your business through the eyes of a prospective buyer. Have a succession plan in mind from day one. Prepare your business for sale, even if retirement is not in the immediate future – what would be good for a purchaser also will be good for your heirs or other successors. The business is the marketable commodity; there’s danger in a “cult of personality” in which no one can imagine the enterprise going forward without the genius who founded it. Your company must be survivable and sellable, even if you don’t intend to sell it. This is a good reason to train good managers, and to delegate.
I look forward to stronger industry performance in the year ahead, as we apply new tools to the changing marketplace. And I wish you all a happy New Year!