Al robson

In the beginning, owning your own business is all about the money. The money you invest, the money you borrow and that pot of money you hope will be at the other end of the rainbow when you’re ready to cash out.

As time goes on, the quality of your business life starts to become more important so you focus more on that than on the money. Then, just as you think you have it all figured out, the economy slows down.

There are many stages in the life cycle of a company. Organizing and facilitating management groups for drycleaners provides me with a window to view many companies at all stages of development.

Some of the members are fifth-generation owners and some are new to the industry. They range in age from their twenties to seventies. These are people committed to helping others by sharing their experiences (both positive and negative) in an effort to end the cycle of constantly trying to re-invent the wheel.

The younger members are learning how, on a daily basis, to better manage their employees and how to deal with the issues of cash flow. Whether second or fifth generation or, even new to the industry, they are all faced with paying off loans incurred when they bought the company.

The more seasoned members are faced with the dilemma of trying to cash out. Do they sell to their children? Which child/children? Can the children service the debt and feed their families at the same time? Do you sell just the business? Or the business with the real estate?

You thought it would get easier! These issues are everyday realities for owners.

One of the benefits of participating in a management group is learning that your situation is not unique. Others have been where you are and have survived.

Getting through tough times is a lot easier when you have business associates who care about your success and who are willing to share their knowledge.

Not just a social club

Some people think that management groups are for large drycleaners who like to travel and socialize. Some are — but Biz Builder members know different. Members work hard at improving their companies’ overall performance and improving the quality of life for their families and their employees.

So, what should you do in a slow economy? In a recent Wall Street Journal article, Michael Porter, professor at Harvard Business School, discusses four actions companies should take during a downturn.

• Create a positive agenda. In the consulting industry, we are taught that behind every business problem there is a hidden opportunity. Most owners get so distracted by the issue at hand — lower sales, poor cash flow, rising costs, etc. — that they miss opportunities.

This is a perfect time to retrain your employees and implement production standards. Those who want to contribute to the long-term success of the company will step up to the plate; those who can’t, will step out.

• Refocus. During the go-go years of the dot.coms, many owners allowed themselves to get distracted. The lure of striking it rich in the stock market took precious time away from the company. Now that everyone has had a good hard reality slap, it is time to focus on improving and marketing your competitive advantages.

Quality of service is key. There is less “personal” service in America than there has ever been. What we and our customer service employees lack is the ability to “read” the customer. If they want to tell you about a particular garment, listen. Most important, use the customers name when speaking to them. Excellent customer service goes a long way in overcoming an occasional problem garment.

• Do not over react. When business slows down, don’t panic. Too often, owners start laying off key people and cutting prices. These actions can be devastating in the long run. If you need to cut back, concentrate on those employees who contribute the least — the bottom 10 percent.

How to reduce payroll

Also, resist the temptation to eliminate managers and supervisors in hopes of cutting payroll costs. Instead, teach them to work more efficiently. A great deal of time is wasted every hour on duplicate actions and unnecessary walking. Become more efficient and reduce hours. Your employees would rather work 32 to 35 hours a week than not at all.

Some employers feel obligated to keep their employees working full time. To accomplish this, some will go as far as to cut prices in an attempt to increase piece volume.

Others will just let the employees ride the clock. This may work in the short run for companies with little debt to service, but it will not work long term.

• Restore the financial integrity of the company. The old saying is: “Watch the pennies and the dollars will take care of themselves.”

Some owners feel that the way to make money is by beating up their vendors to save a nickel. Start working smarter, not harder. Negotiate better terms. Ask for a 3 percent discount when you pay in ten days. Even a 2 percent discount is more than you will receive in interest on a money market account today.

Now is also an excellent time to refinance any outstanding loans. Talk to your bank and other creditors. If you are a tenant in a prime retail location, think about buying the real estate. Many drycleaners are finding landlords who are willing to sell at very good prices and who are willing to hold the note at competitive interest rates.

The drycleaning business is a lot of hard work, but it can be very rewarding. As I’ve said in these pages many times before… if it was easy, everyone would be successful!

Alan Robson is a private consultant dealing with the specialized needs of the drycleaning industry. For more information, contact him by telephone at (508) 753-6619 or send e-mail to him at: alan@bizbuilderonline.com or visit the Biz Builder web site: www.bizbuilderonline.com.