Audios and Videos and Books, Oh My!

Okay, so that’s a take off on Dorothy’s line from the Wizard of Oz. But this isn’t Oz, this is the 21st Century and audios and videos and books (especially e-books and audio books) are becoming a much bigger force then radio, television, cable and satellite radio and TV and the traditional bookstore trade book.

Sure, there are still millions of people who can’t/won’t give up the traditional ink on paper printed book. But, as the Baby Boomer generation is aging, the media the Baby Boomers grew up with are also aging. Technology has grown at an unprecedented rate since personal computers became a household word. The Internet has only been widely known and acknowledged for about 15 years. There are now over 1.5 billion brains around the world who are connected to and use the Internet in their daily work and personal lives. The Internet is the fastest growing and biggest networking opportunity that has ever been created. It grows exponentially by the day.

Broadcast radio, television and the cable and satellite services are finding competition with the Internet constantly eroding their market shares. The number of radio stations going off the air is growing each year. Smaller TV stations are following suit. The cable companies are in the Internet provider telecommunications businesses. The wired telephone companies are losing subscribers by the thousands to the wireless networks. And, of course, newspapers by the scores are turning off their presses and shutting the doors.

So, what does this mean for the home improvement industry? Very simple. While you still have some viable radio, TV, cable and newspaper advertising media, you should use them. However, as the population ages and the “new order” takes their place as the primary consumers of home improvements, you need to explore new approaches to reaching these upcoming generations. The use of podcasts and vidcasts, blogging and e-books and other forms of audio, video and reading materials for both wide broadcast and targeted narrowcasting on the Internet require your attention. People are learning, information gathering and being entertained in new ways. Having a Web site is not enough anymore.

At Dave Yoho Associates, we are using more and more of these new media and methodologies and seeing, not only growing acceptance by the public, but also measurable effectiveness.

To discuss how you can expand your outreach by applying these new methodologies and media for your business, contact Ed Helvey at DYA and explore how you might use these changes to grow your business.

Enthusiastically,
Ed Helvey
Audio, Video and Publishing Consultant/Producer

Making Your Day

In this time of economic uncertainty, more than ever you (and those around you) need to “start your day” with something stimulating.

The level of pessimism and negativity has become rampant. Daily newspapers and the airwaves are cluttered with headlines which do not bode well for positivity and without caution, you will respond to most of what you hear and see rather rapidly. The phrase GIGO (Garbage In, Garbage Out) was created by the computer industry with the implication that incorrect information projected into a system will remain incorrect information unless erased or overridden. The human mind is the greatest computer ever devised. Unfortunately, GIGO gets compromised here, i.e., Garbage In – remains in until neutralized or replaced by the person controlling this complex computer -- (you).

Scientific research has proven that the mind does not know the difference between the real and the imagined. Therefore what you are accepting as real or imagining will happen, creates the foundation for how you will react on any given day. Your mind will act as a compulsive “endorser” for whatever you want to believe and you are twice as likely to listen and respond to information which endorses the way you already feel.

So what is a positive alternative?? Consider affirmation.

Affirmations are the key to building relationships: in selling, management, even in your personal life. Begin today to affirm others. It’s not praise or manipulation. It’s acknowledging some unique quality in everyone you meet.

Start by affirming yourself. View this 4 1/2 minute video entitled The Power of Affirmation then forward it to your employees and associates. Have them construct their own personal affirmation utilizing the principle for at least 21 days, then measure the results.

Wrapping up a Successful 2009

As Christmas rounds the corner and the New Year beckons, I would like to be among many to wish everyone a happy and prosperous New Year.

2009 has been a remarkable year in the home improvement industry. While the press and naysayers will continue to report "newsworthy" items such as job losses we at Dave Yoho Associates tend to focus on the flattening of the downward economic trend and the many companies within our industry that posted their best years ever.

2010 is shaping up to be a monumental year within the industry and we are excited to be a part of it. We look forward to interacting with you next year - and - as always we appreciate your business!

Review from the Summit: Should You Acquire or Be Acquired? (Part 2)

Now I am going to continue to summarize Hobson Hogan's presentation on whether you should consider being acquired or whether you should acquire another company from Day 1 of the Summit. If you have not read part 1 please do so first.

Let's pick it up with your selling/liquidity options:

• Majority/controlling interest sale: To competitor or investment firm/private buyer
• Internal sales/transfers to next generation of management: Multi-year S-Corporation/LLC sale programs, management buyouts
• ESOP (Employee Stock Ownership Plan)
• Selling significant minority stakes with eventual control sale: Can solve difficult situations where buy-sell agreement undervalues firm, gives owner a ready buyer in cases of illness or death, transaction(s) completed at a discount

Next he discussed the key points to consider before making a corporate acquisition:

• All starts with strong business plan and big dose of humility
• Be honest about risks – most are related to executive hubris not quantitative failures of the CFO
• Plan early and implement slowly
• Maintain a strong balance sheet
• Manage assumed liabilities
• Manage risk as well as return
• Keep your hand in project selection/pricing
• Manage personal guarantees
• Just because you can borrow money does not mean you should
• Acquisitions should enhance or implement new strategy
  
• Acquisitions for acquisition sake will only distract management from its most important activities
  
• Acquisitions should support your marketing plan, enhance strengths, mitigate weaknesses, reduce threats
  

Before you jump into the acquisition plan you need to work on the business plan - and this entails:

• SWOT analysis
  
• Market strategies
  
• Product/service strategies
  
• Operational plans
  
• Management succession plans
  
• Financial projections
  
• Operating budget
  
• Projected earnings
  
• Cash flow and CAPEX budget

In the next posting I will finish the summary of Hobson Hogan's presentation.

Customer Dis-satisfaction Selling

One of our long-time employees told me a story this afternoon that shocked me - although it probably shouldn't have.

He is a Chinese food fanatic and probably eats it at least three times a week. He is also intensely loyal and when he finds a product or service that he enjoys he sticks with it.

He has been frequenting the same Chinese restaurant for almost 15 years. He loves the food and most importantly the large portions that are incredibly inexpensive.

The other day he went in to get one of their usual lunch specials and the following conversation took place:

Customer: I ordered the lunch special
Employee: Here you go
Customer: (hands employee $7.30)
Employee: The egg roll does not come with the special anymore. $8.30
Customer: Well, you did not inform me of that over the phone. I only have $8.00

At this point the employee reached into the box, took out the egg roll, put it on the counter and proceeded to hand him the box.

Now I must say that if this had happened to me I would have had some choice words for her, but he happens to be more mild mannered than I am. So he simply proceeded to walk out of the restaurant and go down the street to eat elsewhere. He has been eating at the new restaurant for a week now and it turns out that he likes the food there even more than at the original place.

What the employee failed to realize was that she was not in the business of serving food, but serving customers.

Now at this point you might see where I am going with this and are saying to yourself, "That example doesn't apply to my business. They don't teach their employees customer service like I do." My response would be, "Just because you teach them to satisfy your customer base does not mean they are doing it effectively."

Think about how asinine this example is. Let's estimate how much money that our employee spent over the course of the 15 years he frequented this restaurant:

Average price ($7) x No. of Times Eaten per Year: (165) x No. of Years (15) = $17,325

This means that our employee's Customer Lifetime Value was $17,325 and this was thrown away over a measly eggroll!

No matter how strong your hiring practices are and how well trained your employees are, there are always situations similar to this that arise. Ask yourself, do your employees care about your customers? Do they care about your business? And make sure to take precautionary steps to avoid these damaging incidents by involving yourself in every facet of the business.

That was one expensive eggroll!

Review from the Summit: Should You Acquire or Be Acquired?

Day 1 of the Summit continued with Hobson Hogan who is a member of FMI’s investment banking practice. He specializes in building products manufacturers and distributors, as well as other construction industry firms, focusing on mergers and acquisitions, ownership transfer issues and strategy development. He has an extensive background in finance, strategic planning, consulting and engineering. His experience provides him with an understanding of difficult organizational, operational and strategic issues facing the building and construction industry.

Due to the nature of the economy the topic of whether you should acquire another company or be acquired is highly relevant and a summary of what Mr. Hogan covered included:

• Can your company be sold? If, so do you have competent management and are they a potential buyer?
• The decision to sell is typically driven by outside forces: Health and/or personal issues, desire to retire, desire to focus on another business or poor financial performance.
• Everyone is a seller at some point: You may not be alive to see it, but it will happen. The question is where are you in your personal journey – closer to the beginning or end.
• Evaluate the opportunity to buy: At attractive valuations
• Acquisitions should fit within overall strategic plan: Is it strategically driven or ego driven? Are you properly capitalized?
• Strategy should drive acquisitions and your overall personal balance sheet should drive whether you are a seller
• Investment in your company should be seen as part of personal balance sheet: Are you properly diversified? Is your risk appropriate for your age? Can you live off the proceeds of a sale? Are you truly ready to retire and pursue other interests?
• Take a rational view of the business as part of your portfolio: Do not ignore the personal impact a sale would have on your finances, lifestyle and standing in the community.
• Your business is likely one of the more risky investments you have
• As you move closer to retirement you should ensure that you remove risk from your balance sheet: The unexpected can happen and typically does.
• Valuations are down significantly: Not likely to return to where they were in the near future. PV of selling in 5 years is $33.7MM or simply put, for the risk of operating your business you would be indifferent between getting $91 MM in 5 years vs. $33.7 MM today.
• Recovery is likely to be slow
• Taxes are rising
• Waiting for a better pricing environment may not yield the results you think: If you sold today and invested in a basket of less risky assets growing at 8%, you have $80.8MM in 5 years – around $10MM less than selling in 5 years, but at a much lower risk threshold.

In the next posting I will review the second part of Mr. Hogan's presentation.

Review from the Summit: Why Most Sales Training Ultimately Fails

Day 1 of the Summit continued as Brian Smith discussed the most common reasons that lead to the failure of sales training within most organizations. These included:

• Training the wrong person
• Typical training is not the right type of training
• No in-place field training or supervision
• No lead controls in-place

Examine your own sales training and if you are not getting the results that you should be, it is likely a result of one or more of these factors being askew.

Make sure to listen to the free preview of The Successful Science of In-Home Selling, which gives up-to-date methodological steps for dealing with these issues.

The next summary from the Summit will feature Hobson Hogan's presentation on "The Opportunity to Acquire Other Businesses".