Nordstroms

For years, Nordstrom’s Employee Handbook was a single 5×8” gray card containing these 75 words:

"  Welcome to Nordstrom

We’re glad to have you with our Company. Our number one goal is to provide outstanding customer service. Set both your personal and professional goals high. We have great confidence in your ability to achieve them.
Nordstrom Rules: Rule #1: Use best judgment in all situations. There will be no additional rules.
Please feel free to ask your department manager, store manager, or division general manager any question at any time."

During this time, Nordstrom had the highest sales per square foot performance in the retail industry – by almost double. (credit to 37Signals.com)

Tony DeSio - Founder of Mail Boxes Etc.

February 5, 2001

(FORTUNE Magazine) – Tony DeSio didn't set out to build the biggest nonfood franchise ever. As with many entrepreneurial ventures, it just sort of happened that way. Turn back the clock to 1980. DeSio, then 50 years old, was newly retired from 20 years in the aerospace industry, and his main priority was to hone his golf swing. Sure, he had always wanted to start his own business, but he had no ideas, and life at the 19th hole was much too comfortable.

FORTUNE talked with DeSio about what every small-business owner can learn from MBE, about squabbles with his former company, and about the prospects for his new franchise business. Here are some edited excerpts:

=>  Continue reading the Fortune Magazine article

I'll never forget the day when....

I'm interested in hearing your stories about memorable events that have happened in your store.  E-mail your stories to me (michaelhjoel@gmail.com) and let me post or just write it in the comments below.  Let me get it started. 

I'll never forget the day when...I was covering a day shift for an employee of the store when two Federal agents came in to speak with me.  The agents, a man and a woman both in their early 30's, were wearing sidearms and had a look of business about them that indicated they weren't customers.

They explained that one of our mailbox customers was suspected of passport fraud and they were there in an attempt to arrest him.  I didn't know this particular mailbox customer as I hadn't opened the box for him and had never met him.  Nevertheless, they asked me to call him and let him know he had a package arrive at the store for him.  After I made the call, it was just a game of waiting.

The agents decided to sit out in the parking lot in their car awaiting their man.  That must have been one long day for them because he didn't show all day.   Can you imagine anything more boring?  At the end of the day, they came in to let me know they planned on coming back the next day and do it all over again.

The next day, around mid-morning, a scraggly looking customer walked through my front door with a smile on his face.  He looked up at me as if I was a long lost friend and was making his way toward the mailboxes.  Without missing a beat, he said, "I think I have a package here."

Now, I couldn't be sure this was the guy.  I had never met him.  But I was facing the parking lot and could see the two agents making their way to the store very quickly.  There was no doubt they thought this was their man.

Before he made his way clear to the mailboxes, the agents stormed into the store, guns drawn! 

"John Smith!   Hands Up!  Federal Officers!  On your knees!  On your knees!"

It sure didn't feel like it looks in the movies.  They were using their loud voices.  You know; the voices they must learn in the academy that just scares the living bejeesus out of anyone not ready for it.  And it didn't dawn on me they would have their guns drawn, advancing on him.

One thing I immediately did was move to the opposite side of the store.  I sure has hell didn't want to get caught by a stray bullet.

In hindsight, the thing I found funny was that the female officer was all of 5'2" and maybe 130 pounds.  Pretty cute if I'm completely honest.   But in that moment, with her loud girl voice and gun drawn, I think I would rather have wrestled a grizzly.


Once they cuffed him and processed him in the parking lot, I never heard from the agents or Mailbox customer again.

Not just another day at the office.

(Reuters) - The U.S. Postal Service is in such bad financial condition that it may not be able to make a payment for future retiree health benefits due September 30, Postmaster General Patrick Donahoe said on Tuesday.
The U.S. agency has lost business to electronic mail and to private sector competitors like FedEx (FDX.N) and United Parcel Service (UPS.N).

http://www.reuters.com/article/2011/05/18/uk-usa-postal-idUSLNE74H00T20110518

" They are not new lessons. Never owe any money you can’t pay tomorrow morning. Never let the markets dictate your actions. Always be in a position to play your own game. Never take on more risks than you can handle…Good businesses, good management, plenty of liquidity, always having a loaded gun; if you play by those principles you will do fine no matter what happens. And you don’t ever know what’s going to happen…
I mean, when times are good, it is kind of like Cinderella at the ball. She knew at midnight that everything was going to turn into pumpkins and mice, but it was just so much damn fun, dancing there, the guys looked better and the drinks got more frequent and there were no clocks on the wall.
And that’s what happened with capitalism. We have a lot of fun as the bubble blows up, and we all think we are going to get out five minutes before midnight, but there are no clocks on the wall.  "

—

Warren Buffett’s answer to “What are the key lessons you took from the financial crisis?”

3 Steps to Better Managing Cash Flow


A friend of mine, who is a construction contractor, was able to share an interesting story with me recently.  In his marriage, he and his wife keep completely separate checking accounts.  They are each responsible for part of the household expenses, but money rarely flows between the two checking accounts.  Right or wrong, this is how they've done it for years.

One day, my friend comes home to find his wife had "accidentally" opened up his bank statement showing a large amount of cash in his savings.  She was irate.  She was scraping by and having to use her credit cards when there was more month left than money.

The reason for the large savings balance, though, was that he was a contractor and small business owner.  He had employees.  He had equipment to buy.  He had invoices from the lumber yard that needed paid.  In short, this was his working capital for the business and it wasn't money he could just go spend.

I've been fortunate enough to work in other businesses that are substantial in size and see first hand how they manage their cash flows.  What I've learned:

1.  Working Capital is a must for our business.  Or as I explained it to my contractor friend, Grease Money.  Having some money in the checking account greases the wheels of the business.  When sales are slow for 2 or 3 days in a row and then Royalties and the weekly UPS Invoice get pulled on the same day, it can cause temporary cash flow issues in the business.  I would think at minimum, one weeks worth of sales in the checking account at all times would be needed.  Another large franchisee I worked with maintained, between cash and an open line of credit, 4 weeks worth of sales.

2.  Managing your house accounts.  When I first opened for business, I tried to open as many house accounts as I could, thinking that with open lines of credit at my store, we'd be the first stop instead of the post office or another shipping location.  In many cases, that worked.  In many other cases, the customer took up to 60 days to pay me while I had to pay the shipping invoice from his packages almost immediately.  Good for reported sales, horrible for cash flow.  I've since had to cancel some of those late paying accounts and limit the opening of new accounts to established businesses.

3.  Forecasting sales.  Stores that are three years or past have a decent historical record of their sales.  Our Admin System tools allow us to download those sales and/or slice and dice the information extremely well.  I've started forecasting sales using a spreadsheet that allows me to predict and then compare sales from the same month last year.  You can download it here.  It may need tweaked a little bit depending on your particular profit centers, but it's proven very useful.

The 80/20 Principle:

From author Richard Koch

CEO Checklist: The Seven Secrets of the 80/20 Leader

1. It’s almost certainly true that 80% of your profits are made in chunks of your business that comprise less than 20% of your revenues. The ‘chunks’ may be particular products, customers, channels of distribution, geographies, stages of value added, or combinations of these. Do you know where your critical 20% lies?
2. Once you know your critical 20%, you can try to multiply this type of business. It’s worth it --- because adding another 20% of critical revenues could add another 80% of profits. Do you have a plan to double the critical 20%? Is it working?
3. Probably 50% of your customers, products, components, suppliers, and stages of value added add less than 5% to your revenues and profits. I call this the ‘weedy 50%’, because they are weeds that just get in the way. Do you know what your weedy 50% is? Are you acting to get rid of it?
4. Review all your growth initiatives and new projects. Almost certainly 20% or fewer of them will add 80% of the extra future value. Prune the bottom 50% of initiatives and give the resources to the top 20%. 
5. Who are the 20% of super-stars in your organization who will add 80% of the future human value? Do these few people get 80% of your time and attention spent leading, monitoring, mentoring, training and developing people?
6. What is the 20% or less of your time that adds 80% or more of your value? Could you double the time on this? What is the bottom 50% of your time in terms of value? Stop doing these things yourself delegate them, or just quit them altogether.
7. Organizations are successful when they are different from all competitors, provided that customers like what the corporation does when it’s different! Make a list of all the customer-pleasing things that are different about your company. What are the top 20% of these differences, the few really important differences that make a world of difference? How can you accentuate these differences, and multiply their impact?

 Does this apply to our business?  According to Koch, if my skill set and customers run toward printing, it would be beneficial to try to grow that printing business instead of struggling with the weaker profit centers.

The book is an excellent read.

=>  The 80/20 Principle: The Secret to Achieving More with Less