Priceless Opportunities

This is an edited version of an article I wrote for the July issue of Strictly Business magazine:

Recently, our family had the good fortune of sharing a wonderful dinner with some friends who have a beautiful house on Cumberland Head in Plattsburgh.  It was a gorgeous evening with the clouds shaded hues that ranged from bright orange to pink in contrast with the dark, blue water of Lake Champlain.   From our location, Clinton Community College, the former Champlain Hotel, looked majestic sitting on top of the hill on the other side of the lake from Valcour Island.  

Our gracious hosts grilled some sesame-encrusted tuna and served it with a nutty, Caribbean style rice and some blanched green beans in seasoned garlic butter sauce.  With our meal, we enjoyed a glass of a full bodied, Lodi Zinfandel and spent some time sharing stories of our history, travels and children’s follies.  To paraphrase the popular MasterCard commercial, Groceries - $40.00; Cookbooks - $40.00; bottle of wine - $18.00; a memorable evening – Priceless.

Why am I sharing this experience?  Because there is a price that we are willing to pay for memorable experiences and this fuels a major driver to our economy.  In New York State, the hospitality industry generates of $50.9 Billion in direct revenues.  It employs over 650,000 workers and pays over $26.4 Billion in salaries.   It is estimated that over $3.2 Billion in State and $3.5 Billion in local taxes are generated from this industry.  According to a NY Department of Labor report releases in 2008, the tourism industry accounted for 4.9% of local jobs in the North Country and 12.8% and 15.4% of the employment in Essex and Hamilton Counties respectively.   Similar ratios of what the hospitality industry contributes to the economy can be found in many other locales.

From an entrepreneur’s perspective, the attraction to the food and beverage, accommodation and recreation industries is very appealing.  The reason behind this is that many prospective small business owners believe that they have the culinary talents or they have built accommodations in a beautiful setting that any visitor would appreciate.  They may have detailed knowledge in their favorite recreational hobby and think they can be a guide or run a retail store selling and renting the supplies visiting enthusiasts need.   The thought of profiting from doing something we love in a beautiful setting is a very enticing draw to self employment in the tourism, hospitality and recreational industries.

Unfortunately, these industries also tend to have some very high failure rates.   There is much more to running a successful business than knowing how to cook, make up a room or providing recreational support. Successful business models require significant planning to develop effective pricing strategies, detailed market and competitive analyses and focused advertising strategies.  

Adding to the difficulty of successfully operating tourism related businesses is the fact that many of the experiences can be effected by unpredictable variables such as the weather, natural disaster, human disasters (oil spill) and even disease outbreaks (Alaska lost a huge chunk of visitor traffic with the SARS epidemic in 2003).   Tourists also tend to travel in groups, bringing different personalities, abilities and interests; many would agree with Jerry Seinfeld’s sentiment that, “There is no such thing as fun for the whole family.”

Despite these challenges, the opportunity remains for businesses to prosper from the wealth of hospitality and recreational opportunities in this country. The key to developing a plan that leads to sustainable success is to remain focused on creating exceptional guest experiences. Looking at some of the more successful restaurants, lodges and outfitters in the travel industry, there tends to be a bit more to success than just providing quality.  It takes some talent and thought to develop something that provides the intangible value to make a guest experience special.  

I can think of no person who best embodies the core to success in the hospitality industry than the great Walt Disney. There are certainly theme parks with better amusement rides, hotels with more comfortable accommodations and restaurants with higher quality food than what you can get at Disneyland and Disneyworld.   Still, the vision and imagination of Mr. Disney created a brand that revolves around delivering memorable family experiences. 

Walt Disney once said, “The era we are living in today is a dream of coming true.”   For small business owners, opportunity has no boundaries for those who can imagine ways to provide guests with priceless and indelible memories.

Intangible Productivity

I posted an interview the other day the Becky McRay had with Bob Phibbs, the Retail Doctor. Becky McRay is one of the contributors to Small Business Survival, a great rural and small town business resource website. One of the questions Ms. McRay asked was, "Limited workforce is another big issue in small towns. Are there special techniques retailers can use to manage their smaller workforce?"

I would like to take an unsolicited opportunity at share my thoughts on this question. I think many small business owners in rural regions often look at their labor pools as being a challenge due to the limited number of workers. I prefer to look at this as more of an opportunity.

There is an old saying used by HR professionals to "hire for talent, train for skills." In rural regions, there may be some limits to the number of workers to choose from, but there is a tremendous amount of talent to be found in remote regions. Talents include things like being polite, taking initiative and determination to exceed expectations.

In small towns, talents are often easier to recognize. As it is difficult to judge whether someone has talents from just a quick interview, the benefit of knowing a little background on a candidate prior the interview provides a huge benefit. Talents are often best recognized by some level of familiarity with the person and small business owners in rural communities should always keep their eyes open for those who display talents. Sometimes the best way to recognize talent is to notice that special teammate on a sporting team who may not have had the been the best athlete, but who always gave 100% effort and tried to be a helpful contributor to the team. Talent can be found in that Boy/Girl Scout, 4H club member or Key Club member who took the initiative to develop a special project for the county fair. Maybe you will recognize talent in that special volunteer at the local picnic who was cleaning up long after most others left. If you are not familiar with a particular employee candidate, it's not hard to find someone who is in a small community.

Once you recognize talent, making your company the employer of choice is the next task. While larger employers often have access to more resources and better comprehensive benefit plans, the intangible benefits of working for an employer that cares will often attract the best employees. You may not be able to offer all of the benefits that they offer, but by creating more pleasant worker friendly atmosphere, offering flexible scheduling and more personalized training your company stands a good chance of attracting that talent. Of course, should you attract that talent, personal recognition for a job well done and offering opportunities for growth within your organization may be necessary to retain those talented individuals.

I can't emphasize enough the dividends that talented employees offer an organization. Another competitive advantage small employers often have is that they don't manage by just the numbers. There is a recognition of what I refer to as intangible productivity.

With the five businesses that my wife and I have owned, we have had the pleasure to have many very talented employees and the success of our businesses was greatly attributed to their efforts. Productivity is something that can be measured fairly easily. At our bagel stores or taco restaurant, we could measure production times for various kitchen duties or sales per labor hour for our cashiers like other large corporations do.

Yet, beyond those measures, there are many intangible levels of productivity. How do you quantify the value of that worker that is willing to go the extra mile to make a customer feel special? Hidden in the gross sales of your income statement may be the sales from that one customer who patronizes your business over and over again because they like that special employee. The financial statements can't accurately measure opportunity lost when a customer walks out of a store simply because they found the atmosphere cold and impersonal. Small businesses have the competitive advantage in paying attention to these details and in training their workers to utilize those talents to help grow the business.

Furthermore, there is a team dynamic that often can't be measured. I compliment my wife for her ability to recognize the strengths of her workers and adjust the roles within the organization to get the most out who she has available for a more productive day. Large companies make the employees do the task at hand and rarely flex the tasks that need to be done to build a base of loyal customers around the strengths of the employees available at a given time.

As with many of my posts, the onus is on the small business owner to take responsibility for the leadership of their own company. Building a team that gives tangible results from the intangible productivity takes effort to coordinate the talents available and give them a clear direction. As H. Jackson Brown, Jr. once said, “Talent without discipline is like an octopus on roller skates. There's plenty of movement, but you never know if it's going to be forward, backwards, or sideways.”

Move your company forward by finding the the best workers and giving them the guidance necessary to enhance the profitability of your business.

Hometown Retailers

I just want to repost this interview with Bob Phibbs, as I think he offers some excellent advice - http://bit.ly/d2v0C8

I will be adding a follow up response to one of the interviewer's questions in a later post, as it really made me think about some past experiences I have had with my small town businesses. I promise to write sooner!

Fool Me Once

I made a very expensive mistake in helping my wife with her business. It is embarrassing to admit my foolishness, but hopefully my lesson learned may benefit some other small business owners out who will heed my advice to be very selective when choosing a merchant service provider.

Last year, I helped my wife choose her merchant service provider for her business. Unfortunately, I did not read our agreement carefully enough and recently had to pay some unexpected fees when she closed her account upon selling the business.

The reason I say unexpected, is because I thought I carefully questioned the salesperson on the phone about the terms of their merchant services. I asked very specific questions about discount rates, monthly fees and terms of service. He verbally told me that it was only a one year agreement (which we fulfilled), he clearly outlined the monthly fee for service, provided the discount rates and assured me that there would no fee for cancellation if we completed one full year of service. Unfortunately, what he said and what was written in the contract that my wife signed did not match up.

The reality is that I was not thorough enough in reading all the documents that he sent to my wife to sign after our discussion. I have no legal recourse and I have no one to blame but myself for not paying attention to the details in this merchant agreement.

If your business is considering choosing merchant services, I suggest reading this article of some fees you can expect to encounter when choosing a merchant service. 7 Merchant Fees to Look Out For. I provide the disclaimer that this is not an endorsement of any particular merchant account service provider.

Remember that a merchant service agreement is a legal contract and no legal document should be signed without some due diligence. When choosing merchant services, you should never feel pressured to make a quick decision. While not all salespeople are disingenuous, the reality is that most merchant service representatives get paid to sell services, not to help you understand the details in the contracts that you sign.

In my case, by not thoroughly reviewing the details in our merchant agreement, I cost my wife and I our planned summer vacation for this year. It was expensive, but this fool learned one more important life lesson. Sacha Guitry once said, "Our wisdom comes from our experience, and our experience comes from our foolishness." At least I can say that I gained some more wisdom.