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.

Note the consumer information and the "free water for your dog".

At about the 3-mile mark for us, we came across an oasis… Lakeside Lemonade.  Oh, we had hiked past a lemonade stand earlier on our hike, but we weren’t compelled to stop.  This stand was different, though, as three energetic entrepreneurs (Cal, Beth, and Carter) had set up, not just a lemonade stand, but a business.  We pulled up a seat in the cushioned chairs they provided and soaked in the things that made this stand different.

These kids had put together a customer experience for the weary mountain trekker, so much so that they had created their own marketing buzz. As one family walked up, the father blurted out, “We’ve heard about you!”  What entrepreneur doesn’t cherish hearing those words?

I took note of the business principles that had been employed in this operation.  Of course, they had a desirable product in a great location.  But, they had also employed creative pricing practices, customer care services, and consumer information.  They had even “gone green” with their “Recycling” and “Compost” waste baskets.

Yet, even with all of these practices in place, one thing stood out that made their business very difficult to copy.

PASSION!

These entrepreneurs had an engaging energy that was fueled by their desire to make this business work, as evidenced by the tremendous pride they took in what they had accomplished.  They told us how they had added cookies to their product offering as a response to customers’ suggestions last year. Their faces beamed when they showed us the cash box they had invested in with part of their profits.

To all business owners…!!!

Remember the passion you had for your business when you first started it? The pride you felt in your product or services to your customers? The enthusiasm you had when you went to work each day, if you could even call it work?

Do you still have it?  If not, take a hike… around Pinecrest Lake, and get reenergized. Your business will thank you.

To Cal, Beth, and Carter… With your parents’ permission, I would love to add your picture to this article.  They can email me at mfox@gccpas.net and we’ll work it out. I wish you all the best and congratulate you on a successful venture.  I look forward to seeing what you have in store next year.  Who knows, maybe a franchise on the other side of the lake?

We started out on Highway 99, worrying only about watching the other drivers and paying attention to our own driving to make sure we were safe.  It didn’t take but a few hours, though, before we not only had to pay attention to other drivers and ourselves, but also make sure we were paying enough attention to the surroundings because there were now “jumping deer” added to the mix.  Jumping deer!  Jeez..I’m trying to learn to drive a new vehicle (big truck), I’m used to driving a little bitty car, so jumping animals weren’t welcome at this point.  However, my opinion wasn’t asked so I dealt with what I was given.

Not long after that, we added “jumping elk” to the mix.  (Jumping elk!  ”Really, jumping elk?!?  Oh man, kiss the vacation goodbye if that were to happen” was the thought that flashed at the first elk sign.  At 65-70 miles an hour, a Chevy Sierra + jumping elk = I’m going to be hurting when it’s all said and done.)

(Needless to say, I was thankful and simply smiled when I saw the “cow crossing” signs.  No big threat there, right?  At least you can see a cow coming at you.)

At this point, and we’re still only day one into our trip mind you, I’m wondering how I was going to manage:

a) watching ‘the other guy’,
b) paying close attention to my own driving in an unfamiliar vehicle (thank goodness for cruise control),
c) anticipating the moment that a deer was going to jump out at me, and finally
d) anticipating the same for the even larger jumping animal – but, still not worried about the cows

Day seven is here and it’s our last day on the road.  We had had a wonderful road trip so far - seen beautiful and awesome sites, and managed not to hit or be hit by a deer, elk or cow.  Driving through the Sierras, through storm clouds and rain, surrounded by majestic snow-covered mountains, we came upon a sign that scared the day-lights out of me and made me realize that jumping wildlife was a cake walk.

DO NOT STOP
AVALANCHE AREA

Yeah, sure, o.k.  Not a problem – NO stopping here – go faster! I got it!!

When I finally managed to get over my fear (well past the last DO NOT STOP sign as I’m a tad bit claustrophobic and ‘buried in snow’ wasn’t a look I was going for), I realized that all those signs along our journey had been reminding me of the messages that we send out in our blogs.

After all the miles (almost 2,000), we had continually been reminded to watch closely to what was going on around us at all times.  We were reminded that life, like business, tends to throw those “little” things at you that you must always watch out for to make it home safely.  From slow-moving cows that are easy to see and avoid, to an avalanche getting ready to drop and possibly bury you.  You may not always get lucky and get the cow, but you can be prepared to move, and move pretty quickly, should it be the other!

No, you’re not Jack Bauer… You’re an NFL quarterback.

Somewhere along the line, I read about the progression a quarterback must make in transitioning from high school to college and, finally, to the NFL.  In order to succeed, the quarterback must deal with changes in these four factors.

1. The increased size of the players (and, it so happens, the level of injury threat),
2. The speed of the game (imagine a 300-lb lineman who can close faster than a used-car salesman),
3. The complexity of the offensive and defensive plans (who knew Stephen Hawking designed game plans), and finally
4. The shrinking size of the target the quarterback must hit to complete a pass (high school – 5 feet, college – 3 feet, pros – 1 foot).

In recent discussions with business owners, these same factors have come to mind when talking about how business has changed with our shifting economy. 

1. The risk of being in business has definitely increased.  Our local unemployment rate hovers near 20% and we are smack in the middle of the foreclosure capital of the country.  Failed businesses line our main business districts.
2. The rate of change is faster than ever.  Technology advances open new opportunities (for both the business and its competitors), new products and services are constantly introduced, and banks have tightened their qualifications for small business financing.  Owners must pay more attention to what’s going on around them if they want to succeed.
3. The business and regulatory environment has become much more complex.  Owners must wade through complex health insurance regulations, labor laws, safety and environmental standards, municipal codes and regulations.
4. The margin of error continues to shrink.  Owners who succeeded “in spite of themselves” must now know exactly where to look for increases in efficiencies, new market opportunities, cash management strategies, etc.  They must pay attention to the details.

Over the past several months, we have had many opportunities to work with local business owners who have successfully weathered the toughest times and are now seeing opportunities open in front of them.  From our position, we have noticed that successful business owners…

• stay informed.
• use their advisors wisely.
• pay attention to details.
• know which things are critically important and closely monitor that information. 
• anticipate changes and plan for the future (both short-term and long-term).  
• stay fiscally fit so they are healthy enough to weather the tough times and take advantage of opportunities that arise.

In short, they act like a pro.

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.

“It’s designed to break your heart. The game begins in the spring, when everything is new again, and it blossoms in the summer, filling the afternoons and evenings, and then as soon as the chill rains comes, it stops, and leaves you to face the fall alone.”

A. Bartlett Giamatti, Former Commisioner of Major League Baseball

Ahhh, baseball.  Every year about this time I have a brand new love affair with the game.  They say, “Hope springs eternal,” and there couldn’t be a better case for that than the beginning of baseball season.  Whether you’re a New York Yankees fan, jaded by the expectation of pennants year after year, or a long-time Chicago Cubs fan, still waiting to see your team in the Fall Classic, April brings the promise of hope that “This could be the year!”

As a San Francisco Giants fan for nearly 50 years, I have endured my share of heartaches over the decades. 

The sixties, with a tremendous roster, but a string of 2nd place finishes.  How could a team of Mays, McCovey, Cepeda, and Marichal not win one pennant?

The seventies… orange softball shirts and orange bills on the caps.  ‘Nuf said. 

The eighties… I’ll never get rid of the image of right-fielder Candy Maldonado sliding on his rump, successfully turning an out into a game winning triple for the Cardinals.  Two years later, God personally stamped his seal on the Giants’ fate with a 6.9 earthquake in the middle of a four-game World Series sweep at the hands of the Oakland A’s.

In the nineties, things got interesting.  They couldn’t win the pennant with 103 wins, they were swept in the playoffs by a wild-card team, and they lost a one-game playoff to the even-more-snake-bitten Chicago Cubs.

A new decade, a new millennium, even a new ballpark was needed.  Alas, a 3-2 game lead in the World Series and a 5-0 lead in the 7th inning of Game 6 turned around quickly as the Giants lost to a stupid Rally Monkey!  Two years after that, yet another playoff loss to the Marlins.

Yet, here we are in 2010 and again I say, “This could be the year!”  Even though 52 years have gone by since the Giants moved to San Francisco and they still haven’t won a World Series crown, I am excited about the prospect.  I am re-energized by the fresh start, by the young new prospect who lit up AA in some town I only know as a Giants farm team, by the veteran whose glory days are behind him, but who will undoubtedly resurrect his career this year.

So, what is the connection to business or accounting?  Is it that we have an opportunity to put the dismal year of 2009 behind us, throw off the bad news of the recession, and start 2010 feeling inspired that we have a chance to make a fresh start, that “This could be the year?”

No.  I just love baseball.

I stopped by Lowe’s one evening after work with a fairly simple mission: get the part I need to fix a broken plug on our vacuum cleaner’s electrical cord. Being the power-tool-inhibited accountant that I am, I knew there was a chance that things could get a little dicey once inside the store… but I was able to find the electrical aisle successfully on my own. I noticed a Lowe’s employee in the aisle and headed over to him with my simple request.

Me: “I’m looking for something to fix the end of a power cord.”

Employee: Blank look.

Me [realizing that this isn’t coming out quite as smoothly as I intended]: “Uh, you know, like where you plug a cord into a wall. I need something to fix that.”

Employee: Blank look, with hint of nervousness.

Me [wondering if I should talk louder, slower, or both]: “You know where the prongs are that go into a wall, and one of the prongs came out so I need to fix it…”

Employee: “Uh, this really isn’t my main area. I’ll get someone else to come over here.” [Exits rather quickly]

Ok, I’ll admit that while I could picture what I needed, I didn’t have a clue how to describe it. Actually, I should have been using the phrase “replacement plug” (which, for the record, I discovered on my own in the next aisle).

So maybe that communication thing isn’t always as easy as it sounds. Think about your customers. How can you help them communicate their needs and questions? Is industry jargon too often a barrier to your customer’s understanding? Sometimes it helps to look past the question to the motivation behind it. What are the unasked questions under the surface? While you may not have all the answers, your customers will appreciate your attempt to speak and understand their language.

More at http://bit.ly/dtEKtC

Mort

For the last month, we have been feasting on our backyard citrus crop.  Harvesting the abundant bounty got me to thinking about the ordeal I went through in early fall.  I had the burdensome task of pruning five citrus trees, all in various states of disrepair.  All of them had been pruned a year earlier, but in that short amount of time they had put on anywhere from three to five feet of new growth.  The trees certainly appeared much larger than when they had last been pruned, but their shapes had lost that nice rounded “pure Florida orange juice” logo on the carton look.  They more closely resembled a silhouette of Mort from the original Bazooka Joe comics.

What I was impressed with, though, other than the size and number of thorns on citrus trees, was the fact that, on all that new growth, there was no fruit to be found at all.  Oh, there was plenty of fruit on the trees, but it was all on the old growth.  Not only that, but the uncontrolled new growth made it much more difficult to get to the fruit.  While the new growth was what everyone saw when looking at the trees, most of the fruit was concealed behind the façade of productive branches.

That got me thinking about businesses I have seen.  Lots of growth, plenty of show, but no profit or cash to show for it.

• Has unproductive growth gotten out of hand in your business?
• Have you added new products, employees, and sales revenues only to see flat or declining profits?
• Are you busier than ever, but without an increase in cash flow to show for it?
• Is the productive core of your business being choked out by the new and greatest thing?

Perhaps it’s time to put on the gloves, the long-sleeved shirt, hat, and other protective gear, and get to pruning out the non-productive fluff.  You’ll have a better-looking business, more production, and profits that are much easier to reach.  Check out the “Seeing is Believing” blog to see how we can help.

Hoping to see what we could expect from our efforts, we attended a graduation ceremony at the Guide Dogs for the Blind campus before we agreed to raise Zoria.  It opened my eyes not only to the puppy raising program, but to my perception of blind people as well.  I was characterizing the recipient of a guide dog as “blind.”  These graduates were so much more than that.  They were forest service workers, musicians, college students, fathers, grandmothers and many other things.  In addition, they happened to be visually impaired.  This guide dog was going to help them navigate through the world they lived in – not be their lasting impact on the world.

Business is a lot like this.  Sometimes we need a “guide dog” to help us navigate through a narrow area of our business.  We may be experts in business, but that one area of “blindness” or “near-sightedness” is holding us back.  Find yourself a trained guide dog and open up the opportunities around you.