Archive for the ‘Operations’ Category
The Lakeside Lemonade stand at Pinecrest Lake has employed many business practices that are universal. What is it about selling lemonade that brings you back to the fundamentals? Even Donald Trump used the lemonade stand in 2004 as the very first test on the premier of The Apprentice.
As a business, it’s pretty easy to get started. There’s plenty of time during summer vacation, Mom provides the equipment and the inventory, and the location is generally in your front yard. A piece of paper quickly makes a sign and, voilà, you’re in business.
So, what makes Lakeside Lemonade stand out from the crowd? Here are 10 things I observed first-hand during my five-minute rest.
1) Be passionate – As I previously discussed, the owners showed passion about their business. With energy and enthusiasm, they took pride in what they had done and the opportunities that were ahead.
2) Location, location, location – The business was in a beautiful lakeside setting, in the heart of one of the most heavily-travelled parts of the trail. Another stand we had passed was set up in a more remote setting, up the hill from the lake. Needless to say, sales were not brisk.
3) Invest in your facilities – The business looked successful. Signs clearly displayed prices, ice was close at hand, a new cash box made handling money much more efficient, and the “Recycling” and “Compost” waste bins were clearly marked to show the customer how to keep things “green”.
4) Engage your customer – They were eager to engage people in conversation and lead customers into making more of a purchase than they probably intended.
5) Educate your customers – Nutritional information was clearly displayed for those who may have had concerns about what was in their Country Time Lemonade or Chips Ahoy cookies.
6) Listen to your customers – As a result of listening to their customers, Lakeside Lemonade had added cookies to their previous single offering of lemonade.
7) Provide an experience – Chairs and benches, complete with seat cushions, were available for hikers to take a brief rest while enjoying their refreshments. The enthusiastic banter from the owners welcomed each new customer and helped create buzz among people passing by. One customer even commented, “This time I brought my wallet with me.”
8) Give people options – Lemonade was available in two sizes, with or without ice. Cookies were priced at 25 cents each, but you got one free with the purchase of four.
9) Provide employee incentives – One of the business operators commented that he had just arrived 10 minutes ago from back east. To my comment that he had already been put to work, one of the owners responded, “Hey! I’m giving him part of the profits.”
10) Look for expansion opportunities – Just as these entrepreneurs had used customer feedback to add cookies to their product line, they were also enthusiastic enough to think there were more opportunities available (new products, new locations, etc.)
I’m sure there are other bits of business insight that you could take away from a visit to Lakeside Lemonade. I encourage you to stop by on your next visit to Pinecrest. But hurry, school starts in a few weeks and these business owners will be in recess.
As I’ve previously established, I’m a rabid baseball fan and have been for nearly half a century. (Oh, that hurt!) I love the pace of the game, the finesse skills of the athletes, and the strategy involved in pitch selection, positioning, player substitutions, etc. Don’t even get me started about the designated hitter rules.
I’ve always loved reading and analyzing baseball statistics. Each day when I open the newspaper (I’ve already established my age so, yes, I do read a newspaper), I’ll skim the front page to make sure that global annihilation is not imminent and then I’ll peruse the sports page, particularly, the box scores and stats leaders. Baseball is loaded with measurable statistics. At Bats, Runs, Hits, Runs Batted In, Home Runs, Strikeouts, Walks, Earned Runs, Innings Pitched. (In short hand, AB, R, H, RBI, HR, K, BB, ER, IP.) These measurements are then used to create other stats, such as Batting Average, On-Base Percentage, Slugging Percentage, Earned Run Average (ERA), Walks + Hits per Inning Pitched (WHIP), and on and on.
The obsession with statistics in baseball has led to an entire field known as sabermetrics, “the search for objective knowledge about baseball.” It is the quest for the holy grail when comparing players from different eras or different leagues (“Who was better, Willie Mays or Mickey Mantle?”) or to predict the future value of current players (“What is Pablo Sandoval’s future value based on his current production?”) Sabermetricians have even come up with new statistics, such as OPS (On-base + Slugging) and Runs Produced.
My interest in baseball stats comes from the same curiosity that drives me to look at business metrics. Every business has certain measurements or statistics that can be used to measure the performance of the company or individuals within the company. There are also measurements that can help predict the future profitability of the company. The key is to find the right metrics. Sabermetrics for business. It’s not quite the search for the holy grail, but it is critical to find the right mix of drivers.
You see, by identifying the business’ key performance indicators (KPIs), we can address several critical questions, similar to the Mays vs. Mantle question above. How does this period stack up against last period? What trends can we spot in revenue and expenses? How do we compare to the industry as a whole?
While these are interesting questions, KPIs can be even more useful as predictors of future outcomes. Just as baseball owners look at critical stats to see which areas need the most improvement, business owners need to know which KPIs to improve in order to give them a better chance of improving profits and cash flow.
We are fortunate to have several tools that allow us to analyze KPIs across multiple periods against industry averages and to use that analysis to predict and plan for future outcomes. Whether we’re looking to improve cash flow from operations, net profit before taxes, or debt-to-equity ratios, we can analyze a company’s performance to determine where to focus the business owner’s attention and to develop strategies to implement the necessary tactics.
My parents probably thought I was wasting my time reading the sports page so much. Little did they know I was building my professional tool chest.
I confess… I’m a geek.
“Confess?” you say, “You’re an accountant. We already knew you were a geek.”
Now, I like to think I hide it most of the time, but I have a passion for math problems, puzzles, and technology. So it’s good to know that there is now a TV show dedicated to people like me.
“Big Bang Theory” is about a group of friends who are physicists at Cal Tech, but they resonate with this accountant’s nerdy side. But, as a business consultant, I laughed my head off during a recent episode that featured process mapping as an instructional method for making friends.
Here’s the setup. Sheldon, the most anal-retentive of the bunch, decides that he needs to make friends with the guy who schedules access to a certain lab. He proceeds to research the art of making friends and ends up using a children’s book to create a flowchart (or process map) to follow during his phone call to the scheduler. While his friends are watching, he calls and follows the process step by step, smugly nodding as the discussion flows right along with his chart. As he reaches the final stage of setting up a common activity to share, the would-be friend declines several offers. Panic sets in for Sheldon until one of the friends in the room recognizes that he’s stuck in an infinite loop, changes the chart, and allows Sheldon to operate outside his predetermined plan.
Needless to say, in business things often don’t go as we planned. We set up a wonderful strategic plan, come up with the tactics to use, and, yes, when we’re firing on all cylinders, we even create a map detailing the process.
What happens, though, when either the situation changes or the “standard process” just isn’t all that great?
- Do people stick to the process or do they work around it?
- Do they tell anyone that they’ve gone around the process?
- Are they allowed to go around the standard process?
- Are they free to suggest changes or improvements?
- Does anyone listen to the suggestions?
- Ultimately, are improvements made to the process as needed?
Process mapping is a wonderful way to capture the current reality of how things are done and identify wastes, but it’s extremely important to have the honest input of those performing the tasks. Only when you know your current process can you create improvements that reduce waste, eliminate redundancies, and allow people the flexibility to provide maximum value to your customers.
Ask your people, let them be honest, and figure out how to improve what they do. Your customers (and closet geeks) will thank you for it.
Last night I ate at the Mesa Grill in Las Vegas, a wonderful restaurant owned by Food Network Star and Iron Chef, Bobby Flay. I was curious and was keen on keeping my consulting eye open to what makes him one of the country’s most famous restaurateurs. In addition to the fabulous food, two things stood out immediately.
Team members know their numbers. In a brief, informal exchange with the hostess, I found out that the restaurant has 217 seats, breaks even at two table turns per evening, has a goal of three turns per evening, and once served a record 732 dinners in one evening.
Employees know their products. The waitress was very quick to recommend only a few items on the menu, but described them in great detail. She told us which dishes were spicier and exactly how they were prepared. She also asked us exactly how we wanted our steak cooked, so she could properly communicate with the chef. The steak was excellent and perfectly prepared.
Your employees crave information about your business and your products. Give them numbers. Let them know how the business makes money. Give them samples of your products and allow them to describe their personal experiences with your customer. You like to do business with real people. So do your customers.
Subscribe to our Blog
Entries RSS