Month: March 2006

The Hidden Costs of Employee Turnover

Mike Ullman, the CEO of J.C. Penny since late 2004, estimates the company has saved over $400 million annually by implementing programs to reduce the turnover of valuable talent. Mike has further quantified this cost per employee leaving. Each one costs J.C. Penny about one third of that employee’s annual salary to replace.

If J.C. Penny only loses one third of the cost of an employee’s annual salary when they leave and need to be replaced, they are fortunate. I have seen huge costs associated with employee turnover including the cost of recruiting, training and relocation. There are also the less obvious costs of lost productivity, lost sales and a loss of control of assets.

J.C. Penny operates fairly large format stores supported by district and regional managers. In theory, if a person leaves there is a backup to cover the business while a replacement is found. The reality is that even in that situation productivity is compromised and customer service standards are at risk.

Consider a smaller format store with local or regional retail chain. Often the only backup is none or maybe the owner. I have seen many instances where a store cannot open because of inadequate staffing. When this happens too often, the customer base loses confidence and the profits decline to a point where a store may have to close. Look at the transportation industry where there continues to be an acute shortage of drivers. How many freight companies are losing revenue because they simply do not have enough drivers for their equipment?

In each of these examples, the cost of replacing an employee is far greater than 30% of the departing employee’s annual salary.

In one of the modules of my FREE course How To Increase Profits by 30% or More in 90 Days or Less, I cover key ways to minimize the turnover of valuable people. One is to make sure you do not retain and nurture mediocre performers. That is a major negative influence on talented staff. Another is to clearly define and communicate company performance goals in terms of how they relate to a person’s job and then answer the question “WIIFM” or What Is In It For Me?

Mike Ullman is right on point focusing on the company’s number 2 asset. Employees in retail and many other industries are key to developing a company’s number 1 asset which, of course, is it’s customers. If you know Mike, please compliment him on J.C. Penny’s vastly improved performance and please ask him to visit www.localretailmarketing.com which is a program that will definitely help him grow profits by customer.

A reminder: the FREE course including the module on human resource development is offered at www.stevepohlit.com I wrote the course and the human resource section based on my experience helping numerous clients across a number of key industries including retail, recruit and retain key people.

Steve Pohlit is a CPA has his MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit www.StevePohlit.com All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.

Blogging Is An Essential Part of Business Development..Do It Right

Blogging is a communication tool that will help your business if you follow a couple basic guidelines.

The majority of blogs on the Internet are free services. The most popular one is Blogger by Google. I started blogging with a Blogger account and still have an active account. However, a number of blogs that I started were left alone for awhile and all of a sudden those blogs and content are gone. Fortunately, I have back-up on nearly everything I write, but the point is Google was in control and I was not.

Notice this blog: it sits on a distinct domain www.stevereports.com In this case I have chosen to use subject categories as a method of navigation. An alternative is to create separate blogs for each subject category. I have tried that and personally find it more difficult to manage over time. I recommend a distinct domain for your blog and a logical navigation based on the content you offering.

Every blog should have icons for the reader to add your blog to one of the popular RSS feeders. This will result in your blog entries being picked almost immediately by the news readers and people who want you content will receive it by way of their own news reader. There are a number of popular new readers including Yahoo, Pluck, Newsgator and more. As this is being written, the links for many of the popular news readers are being added to my blog.

In this article you will notice live links to a couple of my sites including www.stevereports.com and my main business consulting site www.stevepohlit.com You will also notice in my articles certain keywords being hyperlinked. Including these links is a very powerful feature of blogging since the RSS News Readers pick up your blog and the search engine spiders frequent blogs a lot especially when you are adding content regularly. This search engine news reader activity helps the flow of readers to your main web site and increases the back links to your sites which is an important search engine optimization tool.

You will find additional features being added to my blog over the next couple of weeks as I implement my blog development strategy. I developed a plan based on the objective I set out for the web sites I use to promote my consulting business. You should have a plan for your company’s blog that compliments your business development strategy. Of course you can develop a blog on a particular subject and use various techniques to monetize your blog. However, if monetization of content is your goal I continue to recommend a web site for that purpose and a blog designed to drive traffic to your web site.

It took some time to figure out some the features I wanted on my blog and I chose not to become a Word Press programming expert to achieve some of the goals of my blog. I have developed a team of people who can quickly set up a blog similar to this one. They can do it fast and economically. I recommend it and I am offering it because I had difficulty finding a one stop solution when I was starting. If you have an interest in this service, Email Me

Steve Pohlit, Business Consultant is the author of this article. This may be freely distributed intact and with this resource line.

The General Motors Financial Staff Skipped Accounting 101

Don’t Worry, The Multi-millions Spent On Accounting and Board of Director Leadership Are Undoubtedly Well Spent. I can’t wait for The New York Times Best Selling Book in the fiction category titled “How General Motors Did Not Know They Were Screwing Up Their Numbers” This began, according to the press, in 2000. What about a sequel: “Our Latest Late Filing With The SEC Where We Explain Nothing” . Maybe FOX will pick it up as a reality TV show Titled “The Accounting Apprentice”

But wait, surely there Is a mistake. After all, we now have Sarbanes Oxley. Our political leaders spent hundreds of millions of dollars to protect the investors in public companies with this legislation. Wait there’s more…remember there are the outside experts hired to make sure the Sarbanes Oxley Act is followed and the numbers are materially correct. Certainly there can be no mistake here because they have been paid millions upon millions.

Do you think there is an adequate explanation? Do you think this is an ordinary part of doing business? I think this is another disgrace to the process of accounting for business. It really is not that hard to account for business transactions, no matter how large the company.

Sarbanes-Oxley is now about three years old. The accounting and legal firms particularly since the passage of that law have been put on notice regarding their responsibility for “signing off” off on management’s responsibility for a sound system of internal controls. How did they come to their conclusions everything was fine?

The mistake in accounting for a certain company’s earnings which is owned by General Motors is symptomatic of a material weakness in internal accounting controls. This is a direct violation of accounting 101 and Sarbanes Oxley. This is further exacerbated by the disclosure of other accounting errors dating back to 2000 and the entire five year period from 2000 to 2005.

Accurate reporting the results of operations cannot be legislated. If one of the largest companies in the world can have a system in place that results in the material misstatement of results, then that is proof positive misstatements can and will happen anywhere. Let the buyer beware.

Steve Pohlit
Business Development Consulting
www.StevePohlit.com

PS. Do you think this mess stated in 2000? I am thinking it goes back a lot furher

Steve Pohlit is a CPA has his MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit www.StevePohlit.com All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.

Cash Is King: If You Are Out of Cash, You Are Out of Business

Cash is the ultimate thermometer. The closer you get to $0.00, the more you sweat and the colder your business becomes. When you hit $0.00 for any length of time – you’re business is dead.

If your business is struggling, you are living the stressful impact of little or no liquidity. Even if you are in a more comfortable cash position, you never should take your eye of the cash position. It is the report card on how your business is doing.

Following well founded profit improvement business practices each day is difficult. It seems to go against the grain of most people’s nature. It is easy to “let the cash position analysis including the two month rolling cash flow position, forecast and financial flash slide today” and then before you realize it, a month has gone by, then more months.

One day you wake up and your business is in trouble. The successful companies follow a rationalized management system consistently. That is The Profit System. I work and coach you and your management team on the adoption of a management system for long term success. My six week course that you can receive for FREE gives you in-depth informaion and training on this process. Registration is easy – just visit The Profit System and registration is found on the main page.

You will find first module of The Profit System is the cash flow position, rolling two month forecast and financial flash. Start today with knowing your cash position. That means cash available to spend. Move onto this week’s cash receipts and disbursements forecast. Once you have that, take it out 8 weeks. What does it tell you? All of this detail and more is in the FREE Course.

All the best,
Steve Pohlit, Business Consultant
www.stevepohlit.com

Your Business Plan Could Be Worthless In A Second

Assuming You Have One, Your Business Plan Is Worthless Unless You Have Addressed This One Threat:

If you have an updated annual business plan and a management system in place to monitor the progress against that plan, you are in the top 10% of all companies operating today. Even if like most owners, the plan is largely in your head, what is your succession plan? More specifically, what person in your company is viewed as critical to your company’s viability? What happens if that person dies right now?

True Story:

In September 2004, on a bright sunny day in a fairly small southern town, a man who founded a business and grew it to more than $15 million in annual revenue was in his office following his normal routine. Then it happened. A sharp pain signaling a heart attack. 911 was called and in this town they actually answer the emergency line and the emergency squad was there shortly. He died within two hours.

He left the company to his wife. She is a very nice person, but she did not have the experience to manage a $15 million company with over 100 employees. Her life insurance proceeds were $1 million. During the next 10 months she infused most of that into the business. This included paying experts who told her they would help her make a lot of money. They wrote reports and made charts and graphs. One planned, while being paid to help her, on how he would take over the company.

She ended up selling what was left for almost no money and is ultimately left with very little. I worked with the buyer and about 50% of the original business was salvaged. All of the 35 people originally in the office are gone. The business has no resemblance to its former self. All of this could have been avoided with a sound contingency plan. The business developed by the founder was fairly sound and could have moved forward with the right leadership. The founder died suddenly at a relatively young age and most of his business died with him. His family who supported him during the business building years is left with nearly nothing.

Can this happen to you? Absolutely! Is this story uncommon? Absolutely not!! Two years ago I worked with another company assisting the surviving son in selling the business. His father had started and grew the business to more than $12 million in revenue. At the time I met the son, the business was doing about $6 million annually. The son had no interest in running the type of business his father started. In this instance the business was successfully sold.

Nearly every privately held company I have consulted with is at risk of being eliminated should the key person in the company no longer be able to work. They all agree a succession plan is needed. Have they done it? No!

In my last article, I addressed the issue of a contingency plan when the bird flu pandemic starts. This type of planning applies to a pandemic, terrorist attack or natural disaster and now I add the death of a key person to the list. Businesses generally ignore preparing contingency plans for these types of events. It is human nature to ignore the possibility of death, disease and destruction. If you are an owner, take action. This type of planning does not require a great deal of time, effort or money. However, this part of your business plan ultimately may be the most valuable. If you are a spouse of a business owner or an employee whose livelihood and retirement is dependent on the long term success of the company, you need to ask the questions:

  • What is our plan if you die today?
  • What is our plan when the bird flu pandemic starts spreading?
  • What is our plan if a terrorist attack disrupts major traffic lanes or destroys commerce centers where our customers do business?
  • Do we have adequate insurance coverage in the event of a catastrophe?
  • What exactly is the coverage and how long will the business survive should we need to use that insurance?
  • Do we have an effective backup and recovery process in place for our systems?
  • Are all passwords for our systems and pc’s documented and kept in a safe place? Are they changed and updated on a regular basis?
  • What do we do if our office burns down tonight?

Maybe you have additional questions to this list. You get the idea and yes a disaster can happen to you. You are now advised and you are accountable for getting this done. Your business, your family and employees are at risk without an effective plan in place. What are you going to do about it? When?

Be well and prosper,

Steve Pohlit

www.stevepohlit.com
Email Contact

Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit www.StevePohlit.com All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.

Discover Three Programs Convenience Stores Can Implement Right Now and Win The Market Wars With Specialty Product Stores Like Starbucks and New Format Stores.

The key to success is winning customer loyalty before your competition has a chance to change buying behavior. How do you do that? Every retailer reading this article already has the answers. This short report will review those answers and provide a roadmap for implementation.

Roadmap To Successfully Compete With Specialty Stores and New Competitors:

Standards

Nearly every retailer I have worked with has a basic set of store operating procedures. Rarely is there a consistent management system in place to confirm the standards are being followed. So step number one, make sure your operating standards reflect how you must operate to compete with your neighboring Starbucks, Home Depot Convenience Store or whoever is your biggest threat. (For more detail on having the right management system in place, register for the complimentary Roadmap Course)

Staff

First discard the traditional financial measurements of labor costs as a percentage of revenue. Those numbers are completely distorted by the real costs of not having trained and motivated staff. They are further distorted by the costs of high turnover and the impact of turnover on the costs training and costs of failing to follow the operating standards. The operating standards having the biggest impact on profits are those dealing with inventory control, sale transactions and customer service.

Interim Summary:Have the right operating standards first then hire, train and reward staff for following your plan on how to operate your businesss.

Have the right operating standards first then hire, train and reward staff for following your plan on how to operate your businesss. Your Hidden Asset

The balance sheet for every business includes items like cash, inventory, property, accounts payable and equity. Nowhere on any balance sheet that I have ever prepared or read is there a number for the most valuable asset of the business…your customer.If you have followed my articles, you already know I am fanatical about developing a customer data base and implementing an effective communication strategy with customers and visitors to your business. I have developed this view after working with possibly the most notable and successful consultant in the world – Jay Abraham. I have further imbedded this concept into my business soul by working with a number of the most successful Internet marketers and direct response marketers who universally state their only asset is their list.

There is an entire website devoted to this issue which is www.localretailmarketing.com So I will avoid the temptation to lecture here. However, before moving off this point, the following are important:

  • Have as one of your primary missions to develop your customer and visitor list beginning now. This next sentence will seem self serving because in some respects it is, but let me assure you that you will never regret outsourcing this program. Of course you should hire me to get it done for you because I know how and I can do it much more economically than you can. And one more thing: if you say you are going to get it done, you won’t and you will be leaving tons of money on the table.
  • Do not attempt to implement a communication strategy using email with your own servers.
  • Integrate membership programs, email autoresponders, email broadcast and eCommerce at the same time.
  • Have a website and blog as a foundation for your customer and visitor list development program.
  • Have multiple secure backup points for your list – your most valuable asset.

Practical Examples:

My business is based on the theme “no reports…just results”. So let’s look at a couple topical items based on what seems to be a hot topic in the trade journals.

First Example: Can a C-Store successfully compete With Starbucks?

Answer: yes

Second Example: Can an older C-Store successfully compete with a new format store like those being opened by Rally’s or Home Depot?

Answer: yes

In each case the answer is in your people, your offer and your management of your customer list. Attempting to win on price won’t work. In the Starbucks’ example, their target audiance is not that price sensitive. So you have to offer a competing or even better product (not hard to do) with a higher perceived value. How do you know what to do? You test your ideas. In the case of Home Depot or some of the other major players coming out with new and exciting formats, you cannot compete on price because they have deeper pockets. You have to be prepared to take a bit of a hit when a new store opens and then win back your traffic plus add new customers with your service level, your product offer and your customer communication strategy. The big players will have a tough time competing with your local retail marketing strategy. They won’t be as nimble as you can be.

Now if you are a national chain leader reading this then you need to be implementing local retail marketing because the facts are most of the local merchants will not take action on this and when you do you will take major market share.

Let the games begin and remember the game is always won in the details.

Steve Pohlit, Business Consultant
www.stevepohlit.com

PS. This article and a growing list of all articles developed by Steve Pohlit can be found at www.stevereports.com

Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue and profits by at least 30% in the next 90 days, please visit www.StevePohlit.com All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.

 

Increase Restaurant Revenue With Controversial Ads: CKE Filmed Paris Hilton

Have you seen the Paris Hilton ad for Carl Jr’s Too Hot BBQ $6.00 burger? I have and I received it as a link in an email from my brother. Did I watch it? Yes and in addition to the very nice visuals I noticed there is a link for a screen saver, photos you can save, coupons for $1.00 off the burger (nice tracking device) and an easy to use link for forwarding the commercial to anyone you want. That commercial is already speeding around the Internet getting more exposure than if the networks ran it. Plus the fact it is being banned on commercial TV makes the ad that much hotter.

There are many lessons to take from this campaign and no you don’t need to produce something near pornographic.

Now look at the sales results of their advertising strategy: a 40% increase in sales and 25 consecutive quarters of same store sales increases.

Here are several excerpts from the news story:

CKE Restaurants, which has a reputation for politically incorrect advertising, tapped the sexy socialite for a new Carl’s Jr. TV spot. The problem, according to a source, is the spot is meeting with some resistance from network executives. “It couldn’t be more pornographic,” said the source. “It’s about as racy as I’ve seen.” …..

Set to the song “I Love Paris in the Springtime,” the 30-second spot, via Mendelsohn/Zien in Los Angeles, shows Hilton washing a car “with hoses shooting everywhere and her soaping everything up,” said the source. Touting the BBQ Six Dollar Burger, it plays off her catch phrase, “That’s hot.”

“We liken our advertising to more of what the beer brands do,” said Brad Haley, evp of marketing at Carl’s Jr. (which targets men 18-34) in an interview with Brandweek earlier this year. “There’s a lot of male attitude, personality and edge. Sometimes sex appeal enters into it on occasion. It’s something younger guys are interested in.”

The strategy appears to be working. The 959-unit chain rang up $1.4 billion in sales last year, up from $1 billion, per Technomic, Chicago. It also has reported 25 consecutive months of same-store sales increases.

Developing Effective Marketing Programs and Tracking Return on Investment Is A Key Part of The Retail Profit System (www.retailprofitsystem.com)

Aricle Comments and Compilation by Steve Pohlit www.stevepohlit.com This article may be republished in its entirety with the inclusion of all information to this point.

Section 404 of Sarbanes-Oxley Should Not Be Exempt For Smaller Companies

Section 404 of Sarbanes-Oxley Should Not Be Exempt For Smaller Companies

Section 404 should be expanded to include privately held companies with bank debt.

Section 4040 should be modified for smaller companies to delete the requirement for external auditors to attest to management’s report.

Background: What Is Section 404?
 From the SEC’s Final Report: “SUMMARY: As directed by Section 404 of the Sarbanes-Oxley Act of 2002, we are adopting rules requiring companies subject to the reporting requirements of the Securities Exchange Act of 1934, other than registered investment companies, to include in their annual reports a report of management on the company’s internal control over financial reporting. The internal control report must include: a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the company; management’s assessment of the effectiveness of the company’s internal control over financial reporting as of the end of the company’s most recent fiscal year; a statement identifying the framework used by management to evaluate the effectiveness of the company’s internal control over financial reporting; and a statement that the registered public accounting firm that audited the company’s financial statements included in the annual report has issued an attestation report on management’s assessment of the company’s internal control over financial reporting….”

When I was studying internal controls first for the Certified Internal Auditors exam and then for the CPA exam (both certificates earned) I learned the fundamental principles of internal control. One of the key tenants of an effective system of internal controls is management’s (owner’s) attitude toward how business is to be conducted. I also learned that if two or more people colluded, most systems of internal control could be successfully violated.

Bob Greifield, president of Nasdaq, in an editorial published in the Wall Street Journal on Monday March 6, 2006, discussing the anguish continuing over the burden of complying with SOX. He states:” when it comes to SOX, …the burden of compliance is onerous, the cost is significant and it falls disproportionately on smaller companies that are least able to pay.”

Mr. Greifield does not advocate abandoning SOX but agrees their should be and exemption for smaller companies. I completely disagree with any movement to allow and exemption. The core reason for an escalating cost of SOX compliance is the interpretation of outside experts including accounting firms and lawyers as to what is required to support their attestation opinion. Now before the public accountants and lawyers conclude that I am saying the cost of SOX is their fault, I am not at all. The accountants and lawyers are responding appropriately in a best effort to avoid litigation. Remove their responsibilities for Section 404 and place sole responsibility for the report with management where it belongs.

SOX legislation is fundamental internal controls practice. It is unfortunate that our government had to implement this legislation. From a practical point of view it has no choice considering the corporate scandals and huge financial losses from those scandals. However I have maintained for years that SOX should be a contributor to increased profits and not increased costs. Few agree but that is OK. Now I go further and advocate the expansion of SOX to privately held companies with material third party debt. I advocate SOX be amended to remove the outside auditor’s and outside lawyer’s responsibility for attestation for companies below a certain size if they are public.

Steve Pohlit is a CPA has his MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit www.StevePohlit.com All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.

Develop A Customer Data Base, Communicate With Them And Beat 85% of Your Competition!

Maybe you don’t want to work that hard, or maybe you have been burned by consultants or maybe you already have a measure of success. No matter what position you are in, if you Do This One Thing you will beat 85% of your competition. If you are in the 15% category already, please email me with a sentence or two confirming how well this works for you. 

What we are about to discuss applies to every business large or small and in every industry. Next, this is easy to do, but it does require some work. Finally, when you do this consistently, you will make more money than you ever imagined. This action is at the core of what makes people happy.

OK, here it is: every business has customers. if you are a professional service business, your customers may be called clients or patients. At the transaction level they are customers. They buy something from you. Some people cross the path of your business and don’t buy. Others you call on and some buy and some don’t. With each action there is a contact and when you have contact you have an opportunity to make a record of that customer or prospect’ s contact information. That record can be as simple as a first name and email address. It may be comprehensive including complete contact information, biographical sketch, business history and so on.

The one thing you must do if you are in business is obtain the contact information of people doing business with you and people who visit with you but have not yet purchased. You must then use this information and let them know you are thankful and you are sincerely interested in continuing the business relationship. Yes, this applies to every business.

One of the questions I consistently receive is the concern of contacting customers using email. Think of it this way, for most people they are going to business to buy something they want. They will welcome properly positioned messages from you. When you communicate with them regularly with messages containing valuable information and offers, they will continue to support your business and tell all their friends about you.

In assisting clients with implementing a customer development plan I have confirmed the importance of a couple very important points: First you must have a clear privacy policy, next you must use a registration process that confirms their interest in receiving information from you (opt-in) and finally they must be able to easily unsubscribe from your mailing list at anytime. I do not recommend telemarketing to your customers. However, an email alerting them to be listening for an important voice mail broadcast can work and should be tested. Email should not be relied upon exclusively. It should be part of a comprehensive marketing strategy.

I offer all potential clients a complimentary call for up to one hour and most prospective clients walk away with five or more ideas they can use right now to grow their business profits. I highly recommend you take advantage of this offer before time constraints make it impossible to continue.

Be well and prosper,

Steve Pohlit

www.stevepohlit.com  

 

P.S. For more information visit www.localretailmarketing.com

Steve Pohlit is a CPA has his MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit www.StevePohlit.com  All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.