At Your Service: April 15, 2009
The first time we make an error, it is simply a mistake. The second time it is a big mistake and we comment, “I should have known better.” The third time we are developing a pattern, soon to be a habit that can only be broken with great effort. The potential to catch mistakes before they become bad habits is the primary value of assessing past performance.
With the worst of mud season behind us, it is the perfect time to look closely at the dust that may have settled on our operating practices and make critical changes that can improve our business.
The first time we do anything, we must learn from one of two sources: the experience of having done something similar before or the expertise of others. As long as we know that we do not know what we are doing, we are usually very willing to consult experts or anyone who might provide insight. The more often we have done that same thing without causing a major calamity, the more likely we are to assume we are doing it the “right” way.
One area storeowner has an annual sale. The first few years she conducted the sale, she merely sold off merchandise from the previous season. This enabled her to cover the original purchase cost and reduced the time spent counting items when she evaluated her inventory at year end. It was in the fifth year of the sale that she went back and assessed its profitability.
Much to her surprise, it was not a break-even operation. The sale attracted a higher volume of customers – a good thing – but it required that she hire someone else to work for those busy days – a money draw. She also gained new insights into her need to take a vacation right after the sale; she had worn herself out.
Looking at the sale as if it were the first time she was going to run it, she decided that she was going to make the sale itself profitable. As a secondary goal, she determined that she wanted to take advantage of the influx of new customers to introduce and test new product lines.
The next year, she placed small orders for several new product lines for arrival just in advance of the sale. She rearranged the shelf space that had been freed up by the sale of her regular inventory and created mini-displays of the new items. Old inventory was moved to a single location and identified by big “clearance” signs. The result: the days of the sale rivaled the success of holiday shopping in its profitability.
The reevaluation of the sale led to some permanent changes to her regular operations as well. She now keeps a small section of clearance items year round. Customers sometimes stop in just to check for a great bargain, often buying new inventory instead or additionally. Items showcased during the sale each year often become part of regular inventory the next year and their orders are based on the sale experience. She still takes her vacation after the sale, but she is no longer exhausted, because she can afford to hire even more help for the sale days and still turn a profit.
Life does not have a reverse gear, we can only move forward. We are, however, equipped with hindsight; its 20/20 clarity can help us to identify the precise moment when things went awry or recognize new ways to make our operations more effective. When we take a close look at some aspect of our business as if we were doing it for the first time, we can draw from our own experience and add it to the expertise of others. The result is likely to be a more prosperous business.