I love business. I love being in business, starting businesses, running businesses, selling businesses and more than anything working with business owners. In fact, I love businesses so much that for many years I had a disease that consumed my every waking moment in life. It was probably a disease you have never heard of. It was called “Dealitus”. When I had this disease, it would not allow me to pass up a deal. When I came upon a business I found interesting and I liked I would buy it. It really didn’t matter what kind of business it was, because if it looked interesting to me and I could get the money or work the financing out with the seller I would buy the business. During the years of having “Dealitus” I bought a TV station, radio station, convenience store, motel, ladies clothing store, real estate companies, manufacturing, liquor store, video stores, restaurants, 10 national franchises, and this didn’t count the businesses I started. Overall, I ended up owning and operating more than 40 different businesses. One business I built to over 150 retail units throughout the U.S. and into Canada, before I did an IPO and took the company public. I ran the gambit from small mom & pop businesses to being a major player and being on the stock market. And it wasn’t until I learned to focus and when a vendor of mine told me the secret to how to make my business more successful did I see the light.
What I discovered was that I was not that good at operating a business. Sure, I made a lot of money with all the businesses I owned, and I lost a lot of money too learning how to find a good business, acquire a business, take care of the business and how to manage the business so that it will grow and be prosperous. And that is what I want to share with you is how increase the value of your business and continue to make it more valuable for you and your family.
The secret I am going to share with you is really not a secret at all. It is really more common sense than anything, but as Mark Twain said, “The thing about common sense is that it is not very common”. But unless you have had the opportunity to experience all the different things that can happen and go wrong with a business you will probably get blindsided and not know what to do and end up being reactive, therefore costing you time and money.
When I give presentations to business owners I like to talk about their businesses. If you have ever had to fill out a financial statement (and anyone who has ever went to a bank to ask for a loan will know what I am talking about) chances are the biggest financial asset you have on your financial statement will be your business. And if you fill out a financial statement on an annual basis you should be looking at how your business is doing. Is it becoming worth more or is decreasing in value? How has the business value been trending from year to year? Are we growing each year or are we up and down in what we think the value of our business is? Chances are you are not paying as close of attention to the value of your business as you should be. I know I didn’t because I was spending a lot of my time looking for new sites, finding new products to sell, addressing HR issues, having to contend with new government regulations that were being implemented to my industry, dealing with insurance quotes and claims. The list is endless.
And if you own multiple locations as I did it just made matters worse, because your time and attention is always drawn to the weakest link or the biggest problem of the day.
So, what was the secret my vendor shared with me? One day when I was talking with my vendor he asked me what I was doing, and I told him I had some stores that were terrible on sales and I was working to fix the situation. He didn’t hold back and came right out and said, Terry you have everything ass backwards! He said you know how to build and operate a successful business, because some of your stores are great stores and they throw off a lot of cash, but instead you are down in the cheap seats messing around with these underperforming stores. He said instead of trying to make your bad stores good you should be working on making your good stores great. There it was. A statement that was so simple, yet so profound that literally changed how I ran my business going forward. Instead of wasting time on a store that was not one of my best stores as I had done in the past I began investing my time focusing on my good stores doing all the things I could do to make them better and more profitable. I would enhance the building, I would hire better employees, I experimented with adding new products, different signage, more POP material in store, and worked on suggestive selling. I visited my competition who was operating successful stores to see what I could learn from them. I did everything I could think of to make my good stores great. And you know what? It worked.
You are now probably going to ask what did you do with the stores that were not your good stores? I did everything in my power to get rid of them. I would turn them into franchisees (or in the case of convenience stores they would be dealers), I would sell them, I would renegotiate a lease with a landlord to get my rent down, and some of them I closed. Because as they say “when you are in a hole and want to get out of the hole. Quit digging.”
Remember we are talking about your business and making your business more valuable. We want your business to be worth more every year when you fill out the new financial statement and we can’t increase the value of your business if we continue to operate and keep underperforming stores. It just won’t work. You can argue all you want about it, but it won’t work. I have heard about every reason in the world as to why a business owner wants to keep an underperforming store and none of them are very good reasons.
Some of the reasons I have heard are:
- The stores contribute to the corporate overhead. (So, I hang on to a breakeven store. I was taught that breaking even was for chumps. We are in business to make money not breakeven)
- They help me keep a competitor out. (OK, we think if we get rid of a bad store our competitor is going to come behind us and make the location great? If that is the case, then why don’t we make the store great if it is such a good location?)
- I need the gallons to maintain my quota. (Go make your good stores great and you will get the gallons)
- I like my employees and don’t want them to be without a job. (Who is running the show? You or your employees?)
- The store has sentimental value. (Yes, it was the first store your family built, but when it was built it wasn’t on a one-way street. If Dad was alive he would close the store.)
The reason I am so tough on getting rid of underperforming stores is that I have been there and made the same mistake of justifying why I should keep such a store when it is not in the best interest financially to do so.
Underperforming stores are liabilities. They open us up to lots of bad exposure we don’t need when we are working to build a strong and profitable company for ourselves and our family.
When you have underperforming stores, you open yourself and your company up to potential claims and lawsuits from employees and customers from all sorts of things that can go wrong in the store whether they be labor issues, thefts, environmental issues or slip and falls.
Underperforming stores employees will generally have low morale. Who wants to work at store that is not making any money or barely any money? The employees know it and it is generally reflected in their attitude towards the customers.
Do you have your best managers at the underperforming stores? No, of course not. You are going to put your best people at your best stores.
And most of all underperforming stores are a distraction. They distract us from what we do best and that is to own and operate profitable and successful stores, which is why we got into business in the first place. We didn’t get into business to lose money or breakeven. No, our goal is to strive to be the best we can possibly be and convey this message to everyone we come in contact within our organization.
I started out with sharing a brief bit of my background and it has become my goal over the years to do my best to help business owners such as the owners of convenience stores not to make the same mistakes I did so they will be more profitable and not have to endure some of the grief I did through bad decisions and ignorance.
My point is your business is probably the biggest asset you have on your financial statement and you should pay attention to it and nurture it and treat it with the respect it deserves and not take it for granted, because things can change in a flash. A lot of the business I have owned in the past are no longer in existence or if they are in existence they are not very profitable. However, the convenience store industry has what we call “long legs” meaning it is a great business model and will be around for a long time. I hope you continue to enjoy the ride and continue to work to make your good stores great and enjoy the success of owning your own business.