For those of you who read my review of A & E’s We Mean Business last week, you know I was not impressed with the “experts.” I decided to give them another shot Saturday morning.
This week it was about Poka Dott, a party supply store in Newhall, California. We found out the owner Stephanie Weier is $270,000 in debt after four years, her beautiful tract home has been on the market a year and facing foreclosure. She has five full time employees.
Bill Rancic, the host and former Trump Apprentice asked what her highest profit items were. She stammered and kind of laughed, “I guess balloons and cards, everything is.” Bill rightly saw they had too much product. She guessed they had 10,000 products in the store.
What Bill missed was showing Stephanie how much of her money was sitting there on the floor. He should have had them do an inventory by category (at retail prices) and compare her sales to inventory to find her merchandise turn. It’s one of the most obvious basics to understanding retail profitability. It also could have helped viewers understand what an open-to-buy is.
But no time for that when Peter Gurski, the most obnoxious guy on a business program this side of Mad Money’s Jim Cramer enters the shop (at right.) He tells us in voiceover, “I wanted to leave. I couldn’t breath. I was having an anxiety attack. No flow. Crammed. A complete failure. I have to tip something over.” He took a few steps, pushed over a card display and sniffed, “There I’m happy.”
What a jerk. I guess that’s why he got the job on reality TV.
Katie Linendoll
Katie Linendoll (left,) the shill for the show’s sponsors Dell computers, tells Stephanie in her best Valley Girl accent, “The back room is filled with junk!” She went on to say she was going to, “Bring in the technology that will save this store.”
So the computer system is keeping sales from happening?
While she gets busy with the “50,000 wires,” the scene cuts to Peter throwing merchandise, Stephanie’s paid merchandise, out onto the parking lot like so much junk. He gets upset Stephanie doesn’t greet this with good cheer and yells at her in front of her store and employees, “Are you serious about change or not?”
Note to reader: what I recommend any retailer do with very old merchandise is put it on sale at 60-70% off for a week or two tops. Whatever doesn’t sell is cleaned up and given away as a free bonus to customers who make a purchase, donated to one of the hundreds of requests they get for silent auctions, or given to a charity.
Back to the show, the We Mean Business “experts” end up taking everything out of the store and we saw the crew painting the interior white – like the preceding episode –and the backs of the shelves a contrasting color – also like the preceding episode. When they are done it looks from the outside like an ice cream or kids’ candy store to me but it definitely doesn’t say “party.”
Inside it is less cluttered to be sure but don’t you think they could have increased the strips of flourescent lighting on the ceiling so it didn’t look so dark over the counter?
The amazing thing to me in all of this is that Bill, Mr. Apprentice, never breaks it down to the obvious. This store is $270,000 in debt. That means it looses about $70,000 a year or about $6,000 a month or about $34 an hour it is open. One month, Bill notes it has $40,000 in labor costs alone with sales of only $30,000. Yipes!
Side story: when I tried to help a woman owner who was “ok” that for the past 18 months she’d been losing $11,000 per month, she said, “You have to lose money to make money.” “Ok,” I said, “think of it this way. You are throwing away a brand new Mercedes Benz like you drive every four months.” That got her attention. There’s losing money and then there’s losing money. (This post is going to be long, if you want to know more about the metrics tools needed to not just stay in business, but thrive, send me an email and I’ll give you some ideas.)
But this new reality show from GRB Entertainment does not deal with the tools to see what is wrong like the turn of merchandise, open to buy or the appearance that this is a hobby, not an ongoing business.
No, just slap some white paint on the walls, give them a ton of Dell computer stuff, have Bill make them cower and voila – there’s the show. I get it, they have 70 or 80 hours to edit into a 22-minute episode but it rarely illuminates the real issues. .
At one point though, Katie was spot-on when she said, “It is a sorority in there.” We heard that the owner hadn’t ever fired anyone, couldn’t fire anyone and couldn’t accept she was not there to be everyone’s friend. Even with her house in foreclosure because of this belief in a failed business, she still didn’t fire anyone. That’s when the tears started – halfway through the episode.
Time for a commercial word from our sponsor. “Fact: 96% of businesses have PC’s but only 48% have their own server.” And the point to that was what exactly Dell? Do most people even know what a server does or why they’d need it for their business? It’s called features and benefits.
Next Bill had Stephanie pass out coupons at the park with balloons. The local store marketing flier aspect was right on, not sure it needed the discounts though. Personal contact is the promo.
The next day they had a grand re-opening with Bill Rancic making cotton candy out front and people coming into the shop. We saw that one of “Master Designer” Peter Gurski’s brilliant ideas was to put their phone number on both of the front windows like a Chinese takeout restaurant.
If you watch the online follow-up, you find out Stephanie’s home was foreclosed but that she thanks the show. In the exact same words as last week’s business owner, Stephanie said the best part was, “It gave me a kick in the butt.”
She went on, “We realized we have something here, let’s keep pushing.” Her advice to business owners? “If you think of it you can do it.” Nothing could be farther from the truth.
Field of Dreams only works in the movies and only for Kevin Costner. Just because you have the idea for a business, does not mean there is a market for it. The reason sales are low for many businesses that are struggling is there is not a sufficient need for their product or service. They have to develop a clientele that will grow or sit there in a storefront waiting. That leads to desperate and disparate ideas.
Case in point, the follow-up shows Stephanie’s crew putting labels on bottles of water with her logo to give out so they can “get leads and follow-up later.” No strategy as to how water fits in with party supplies or how or where these will be given out or the breakeven to pay for the water.
There is a big difference between doing “something” and doing the right thing.
The first rule I think is obvious for gift stores is to hold on to the people who know you; don’t lose the key to their wallet. Stephanie should have been instructed to create an email list from current and former customers so she could stay in contact with them using a web-based program on her new Dell laptop like Constant Contact. It costs far less to market to people who know you then try to woo new customers.
The second obvious thing is to be open when customers need you to be open, not when it is convenient for you. Their website says their hours are Monday thru Friday 9 a.m. – 5 p.m. and Saturday 9 a.m. to 12 p.m. I know of no successful business that is open for three hours on the largest shopping day of the week. Again, this shows it is more of a hobby, not a going concern. You want to be profitable? Be open when most of the community could shop there.
A third recommendation I would give is to do something with their website. One example, many categories of products have a place for “bestsellers” but at the bottom of those pages it says, “There are no best sellers.” The site has a lot of generalities without personality.
If you are one of those business owners who are enamored with the idea of owning your own business and are so far in debt you can’t see straight, consider the best thing to do could be to quit. But often our egos are attached and we don’t know when enough is enough.
You want real tools to change your business? Consider picking up a copy of my small business book, You Can Compete: Double Sales Without Discounting. It walks you through a business makeover based on reality. It won’t give you a new computer system, but it also won’t insult you like Peter Gurski.
Don’t forget, you can always bring my expertise to your next meeting, just come over and take a look.
