Interesting Business Perspective for Owners/Execs

[Cruisingdad]

Business owners, executives, and others who are interested,

I thought I would share some of this as I find it interesting. This is not meant to be doom-and-gloom, nor sunshine - simply my expereience as a business owner and involvement in it.

I am in the process of remodeling our offices. I expected that I might get a good deal on some things or at the very least, good service. What I have found is so totally the opposite I thought I would share some of that.

I went to the infamous Home Depot for 'business' carpet. They reluctantly helped me. I discussed what I wanted to do and was a bit shocked at the price. It has not fallen one bit. But never mind, I started the process of measurements and carpet selection. It all seemed fine until they told me that it was a MINIMUM 3 1/2 weeks to get someone to come out. Shocked, I asked how that could be since there is basically NO building here. How? They have one crew running all of East Texas, including Tyler, Minneola, Longview, Canton, etc. Basically anything East of Dallas AND their crew comes out of Dallas. They laid off all the rest.

I finally followed through with my PBX company (that is large phone system, etc for those that do not know). It is a very large company based out of Dallas. Six months ago, they offered to sell me the system AND come back out to my new office and re-install for free. Unfortunately we were tight on cash flow so I held off for a few months (and decided why move a PBX system twice???). At any rate, I followed through to complete the purchase last week and they almost DOUBLED the cost of the system. Let me tell you for those that are not business owners or have not purchased one of these systems - they are NOT cheap. SO at double the cost, I obviously had to ask why???? Because I was 15 minutes out of their new "zone" and they did not have the people to service me there. They have pulled in all their service to a very small area and push away any business outside of their area from (what I gathered) insufficient employees to handle it.

I went to order and began the buildout for new cubicles. Cubicles are VERY expensive, as many may know (more expensive than buildout). TO make a long story short, the build out for those was three weeks to even review the plans and who knows when to complete them? Again, no customer service and a very lean workforce.

I went to Office Depot and they were completely unaccomodating to anything I needed or any type of large furniture order (Many, many sets) and IT TOOK THEM OVER AN HOUR TO EVEN GET TO ME!! No one is there to service business owners.

Interesting?

My wife's company, a very large company (largest in the world at what they do and global), is under a hiring freeze - including replacements. Everything goes to the CEO. Can you imagine a company of enormous size requiring a CEO to approve a hire (which almost always declines). Her best co-worker just resigned and they cannot replace him. They were too lean as it was, now that means things will start falling off. She already had to workd weekends and nights periodically to make it work. If she went on vacation, she hated coming back because it would be MANY long nights to catch up from being gone. Again, lean is an understatement.

Without exception, the clients I am dealing with have scaled back the hiring at least 50% from last year, and I would venture 75% or better is what I am seeing right now. I also have, without exception, every one of them sending jobs to India or the Phillipenes or China (my wife's company now has equal employees in the Philipenes and US).

It seems I am pointing out only the bad, but that is primarly what I am seeing. The only exception to this is we have not seen salaries fall. In fact, they may have even gone up some?? How does that make sense??

What does all this mean? I do not have a clue. I am not an economist. But it is hard to plan right now as a business when you cannot even guess what tomorrow will bring. Credit is VERY tight for businesses, and we have perfect credit and are very profitable. I read today that prime mortgages defaults were rapidly increasing. That will screw up the housing market further and its fallout will surely have an impact on my business and other businesses.

Again, these are only observations. I do not profess to know the answers to them. However, I must confess, that I find them alarming. I have decided to scale back my entire expansion until I can make some sense of everything. I guess I am like all the other companies, standing on the sideline until there is some clear direction on where everything is going - for better or worse.

Thoughts? What are other business owners seeing?

- CD

[sailingdog]

Unfortunately, in most cases, customer service has gone out the window. However, the businesses I see doing better are the ones that have spent the money so they have decent customer service. Cutting the customer service staff to the bone strikes me as less than useful.

[Cruisingdad]

Originally Posted by sailingdog

Unfortunately, in most cases, customer service has gone out the window. However, the businesses I see doing better are the ones that have spent the money so they have decent customer service. Cutting the customer service staff to the bone strikes me as less than useful.

Customer service is often the second to go. What I see falling off (in order):

1) Administrative support,
2) Customer Service,
3) Sales,
4) Research & Development.

Sales and research may flip-flop depending on the company. But if you are not selling a lot of product, you do not need a lot of customer support.

- CD

[sailingdog]

Depending on the business... customer service and sales are often the same, or have a great deal of overlap. Without good customer service, it is often hard to keep the customers you do have. With many businesses, the customer service is a major revenue stream—and cutting or reducing the quality of it is just not a good idea.

[SailKing1]

My experience as a business consultant is those who manage their businesses well and are healthy going into the economic downturn are taking the necessary steps to not only stay healthy, but also take advantage of the opportunity's that are out there.

As you say CD many company's are cutting back. This is in turn effecting their business relationship and creating disgruntled customers or causing some like yourself to take a hard look at your plans. Your wifes company for example being one of the largest in the word at what they do would lead me to believe like any large company they have a lot of FAT to cut out. Many company's when things are good tend to be over staffed in areas while understaffed in others. Therefore creating a hiring freeze to get things under control.

Administrative support in typically none income producing and one of the first for cutbacks.

Research and development are usually paired back do to expenses to just priorities.

Customer service is where many company's make a mistake in their failure to maintain or even add to as retaining customers should become a priority.

And even though sales may drop do to the economic conditions the department has to be maintained as it is the driving force behind the business. What generally happens is managements focus is shifted from training and motivation to demotivation driving their sales in the opposite direction.

The positive side is that these circumstances cause to things that are encouraging to a quality run business.

First it thins out the poorly managed company's that effect everyones bottom line.

Second it creates new (yet sometimes disgruntled ) customers for those businesses that operate a quality healthy customer oriented business.

Sorry for the long rant but the point is that there are some quality company's out there making concessions such as you are looking for and would live to be of service. A box store like Home Depot is a corporate store that hires people that are prohibited from stepping outside the box. Kind of like dealing with a bank for business financing. When one fails to give you what you need you don't give up, you go to another bank. Eventually you get what you want.

Anyway, take advantage of the situation and good luck to you.

[Cruisingdad]

Originally Posted by SailKing1

My experience as a business consultant is those who manage their businesses well and are healthy going into the economic downturn are taking the necessary steps to not only stay healthy, but also take advantage of the opportunity's that are out there.

As you say CD many company's are cutting back. This is in turn effecting their business relationship and creating disgruntled customers or causing some like yourself to take a hard look at your plans. Your wifes company for example being one of the largest in the word at what they do would lead me to believe like any large company they have a lot of FAT to cut out. Many company's when things are good tend to be over staffed in areas while understaffed in others. Therefore creating a hiring freeze to get things under control.

Administrative support in typically none income producing and one of the first for cutbacks.

Research and development are usually paired back do to expenses to just priorities.

Customer service is where many company's make a mistake in their failure to maintain or even add to as retaining customers should become a priority.

And even though sales may drop do to the economic conditions the department has to be maintained as it is the driving force behind the business. What generally happens is managements focus is shifted from training and motivation to demotivation driving their sales in the opposite direction.

The positive side is that these circumstances cause to things that are encouraging to a quality run business.

First it thins out the poorly managed company's that effect everyones bottom line.

Second it creates new (yet sometimes disgruntled ) customers for those businesses that operate a quality healthy customer oriented business.

Sorry for the long rant but the point is that there are some quality company's out there making concessions such as you are looking for and would live to be of service. A box store like Home Depot is a corporate store that hires people that are prohibited from stepping outside the box. Kind of like dealing with a bank for business financing. When one fails to give you what you need you don't give up, you go to another bank. Eventually you get what you want.

Anyway, take advantage of the situation and good luck to you.

That was a very nice response, SK.

- CD

[artbyjody]

I think a majority of it has to do more with the burgeoning costs of doing business with the gas / energy cost hikes we have had. Every aspect of doing business is inflated now.

I know for me that all around it costs us 50% more to do business than it did same time last year and we are a lean machine - hard to keep a profit margin when one can't control supplier costs due to the underlying costs of energy.

The sad thing is that it will take a very long time even with energy prices dropping for companies to adjust prices to lower values because so many had to creatively adjust their margins...and by slowly doing it allows them to recoup some of the losses...

Just my two cents worth. I find the same going on here locally for the most part with some marine suppliers as well.

[T34C]

CD- I don't know if I agree with some of the assessments thus far. In all the examples you mentioned, I can't help but notice one single common denominator....(wait for it...)..... YOU!

[retclt]

I was at West Marine in Dallas the other day . . . okay . . . I'm there almost every day. I love boating supply stores! Anyway, there was a guy from Ft Worth talking about losing their store. He'll have to drive 50 miles to ours from now on. 10 years ago we had a Boat US, West, and Boaters World within 10 minutes of my house . . . all gone now. I hear rumors the Mesquite, and look out CD; Lake Texoma West’s are next on the chopping block. Times are a changin’.

I’d hate to be trying to ramp up a business today, maybe when the economy swings back but not now. I owned a successful business for several years and took a considerable pay cut to be at the Company I’m in now. There were personal reasons for my move . . . but . . . I’m very happy here. One ironic thing just happened though; After all of the jobs I see going to Asia, we just got a big contract making stuff for a Chinese company. Back to the subject . . . companies sure have tightened up. All of the fat we had here has been long since cut out. We’re on the verge of cutting out flesh now.

I wish you well CD! Let me know if you need help gluing that carpet down at the new business. I’ll bring a 12 pack. BTW . . . I just drove by you on the way to Hawkins. You need to bring the kids out and tube behind the old stink pot.

[Cruisingdad]

Originally Posted by T34C

CD- I don't know if I agree with some of the assessments thus far. In all the examples you mentioned, I can't help but notice one single common denominator....(wait for it...)..... YOU!

Bite me!

- CD