Having an established hierarchy in your business can be helpful when it comes to handling disputes. A word of caution on this…if you intend to build a true team where each member feels equally valued for his or her contributions, you must never, ever ask your employees to do something you are not willing to do yourself.
Most well run businesses have a good team effort that is created by each individual knowing what their job is, and how to do it. One of the very best team efforts is demonstrated by Trader Joe's grocery markets. Each person on the team is expected to multi-task without regard to specific job descriptions. If a job needs to be done, then whoever sees it should be expected to do it. Even the managers are seen sweeping the floor, bagging groceries, and straightening the inventory. This collaborative working environment is something that is valued by employees, and gives the customer the feeling of teamwork and job satisfaction.
Remember, happy employees = happy customers.
Mentoring rather than supervising is a good analysis of your position as a store owner or manager. By giving good constructive feedback in a positive way, your employee is more likely to want to improve performance. By expecting the same type of effort out of every employee shows how much you value teamwork. By proving that you are a team member, you are demonstrating that you believe your own words.
The most effective training tools are to give your employees specific instructions on what their job is, how to do it, and then providing immediate feedback. It is imperative that you recognize an employee for doing something especially well. If someone is doing something that is not in the training manual, or possibly detrimental to your business, it might be appropriate to step in, but you must manage to do this without making your employee feel denigrated in any way.
Remember the Bible's Golden Rule, "Do unto others as you would have them do unto you." If you would not like to be chastised or corrected in front of someone, then do not do that to your employees. Find phrases to use like: "How can I help you?" "Is there something I can do to make this right for you?" The use of such phrases from the owner or manager gets your employee off the hook in your customer's eyes, and it lets the customer know that you are interested in fixing the problem.
Use words and gestures that you want your employees to emulate. Just as it is with children imitating their parents, your employees will do as you do.
Using the Employee Manual
Writing an employee manual, like writing a business plan, forces you to sit down and write out in as much detail as possible the job description and duties of your employee.
You should also include Learning Objectives and appropriate time frames for your new hires to achieve. This sets the expectation that their paycheck is dependent on learning specific skills within a specific time frame. If they are not willing to put in the extra effort to do this, they are likely not the appropriate employee for you.
Having considered that he might need to hire employees at some point in the future, Wendell decides to write his employee manual while he learns the business himself. This way he is able to assure himself that his employee manual will have enough information in it for his new employees to be successful. The following are some of the items that Wendell considers important for his business with a point system (out of 100) that gives the level of importance for each duty:
Ø Greet customers within 20 seconds of arrival; greet them with a warm and friendly smile saying "Good morning" or "Good afternoon". (10 points)
Ø Find out how your customer needs to be helped. Ask open-ended questions like, "What do you need for your garden today?" "How is that red-bud tree that you bought last week doing?" "Are you looking for something specific?" (15 points)
Ø Know the merchandise and be able to answer most general questions knowledgeably, using benefit statements that explain how your customer's needs are being met. (15 points)
Ø Practice suggestive selling techniques that might complete a purchase that the customer is already making, to help boost sales. "Planting three perennials together will give you a more complete look and make an impact in your garden sooner." "Azaleas need acidic soil; do you have any _______ fertilizer at home that will help this plant to better acclimate to her new home?" (30 points)
Ø Anticipate objections, and have responses ready that are not perceived as resistant. "You don't want three of the same plant? Have you considered planting ________ with these two, it makes a terrific focal point in your garden because of the foliage contrasts." (5 points)
Ø Thank customers once the sale is concluded and ask them to return to you for all their future gardening needs. Also offer to answer any questions about their purchase once they get home. (10 points)
Ø Keep the store clean, stocked, visually appealing, and other duties as needed or as indicated by the store manager. (15 points)
A very clear expectation of job duties and responsibilities enables your employees to perform well and understand what is expected of them. The lack of clear expectations leads to miscommunication, misunderstanding, frustration, and the possible loss of a valuable employee.
This is a form of training that is encouraging and empowering rather than denigrating and negative. When you use more of a coaching method in training your employees, you avoid the use of any negatives.
Rather than saying, "I didn't like how you handled Mrs. Johnson's complaint about the light fixture" you might say instead, "Rather than telling Mrs. Johnson that she might have broken the light fixture when she installed it, you might have said that the installation process is sometimes tricky and she might consider hiring one of our installers next time."
In order to coach effectively, you must know exactly how to model it for your employees. Be sure to praise in the right manner and avoid the use of the word but. Try never to praise an action then negate it by saying: "I especially liked how you greeted Mr. Baker, but next time I want you to say the store name as you welcome him." All your employee will hear is that he did it wrong. Look back on all the people you have worked for in the past. They all have the ability to discover something that you did wrong. None of us likes to have this pointed out. Your employees do not like it either. They will not feel motivated to try to do it better.
Instead, find the things that they are doing right, and praise them on the spot for it, in front of other employees. This models the correct behavior for other employees and reinforces it in the one you just praised. As a business owner, you need to work hard to make this trait a habit. As a human being, we seem to automatically gravitate to the negative, so you may have to work at changing this.
Effective coaching requires six steps:
1) Set Goals that are measurable, observable, and have a specific time frame. Discuss the goal on a regular basis so that it is clear and current. The best thing is to actually put the goal on paper.
2) Teach Skills or behaviors that your employee needs to learn in order to perform her job well. Most people do not know how to interact positively with people, nor do they know how to sell easily. These must be modeled and discussed regularly. Invite your sales associates to ask questions when they have experienced a particularly difficult situation. Then you can use role playing as a form of modeling.
3) Build Relationships by getting your employees to trust you. This can take a very long time to establish, and only seconds to ruin. My daughter has worked with a manager for a very long time and she thought she had established a trusting relationship with him. One day, he took his temper out on her and accused her of something that was not true. He tried to make up for it by apologizing the next day, but she is still wary and suspicious of this manager.
4) Motivate your employees. Giving your employees clear expectations and immediate feedback, especially positive feedback, you are motivating them to do their job well, or even better. By finding opportunities to reinforce good behavior, you are creating powerful associations with your employees to fulfilling your expectations.
5) Monitor Performance so that your employees know where they stand. This is where a checklist can come in handy. When goals are set, they should be set down on paper, creating an agreement between the employer and employee.
6) Continue Training so that you can reinforce all the lessons your employee is learning. Keep this positive so that your employees have the desire to improve. Always remember that you must model what you expect.
Every person has different needs. Some needs are to be recognized or loved. Others need a boost in their self-esteem. By learning the needs of your employees you can best discover how to motivate them. The following websites are great resources for a topic that could be a class in and of itself. The basic secret to motivation is to know that you cannot motivate someone else.
Customer service is the very essence of your business. It is not some kind of a code word for the few difficult customers that you might have to handle. Customer service affects every aspect of your business, and should be considered when you take any action on any portion of your business.
The purpose of your business is to provide a product to a consumer who pays you money for that product. Few businesses operate in a vacuum where money rolls in without having to deal with people. By offering a product to your customer, your business is dependent on your customers' satisfaction. Your very relationship with your customer is defined by how you and your employees communicate and relate to them.
Will We Make It?
This is how you will determine just how well your business is doing. There are several ways of evaluating retail performance, and with the help of either your accountant or some software tools this can be as easy as putting in your income and your expenses.
1) Average Transaction
2) Items per Transaction
3) Conversion rate.
The average transaction is simply evaluating just how much each of your customers spends on a typical transaction. Most retailers know that the best and easiest way to increase their sales is to increase the amount of their average transaction. This can be accomplished by changing how you display your merchandise, how you direct your customers through your store, how well you train your sales clerks to practice suggestive selling techniques.
Regardless of what last week's average transaction was, you should always aim to increase it each week. Your entire team must be on board for this, and all should be aiming to increase their average transaction.
Wendell has been keeping track of his average transaction and see just what a difference it is making in his business. Last week he had 125 buying customers who spent an average of $50 per customer; which means he took in $6250 last week. This week he still has 125 buying customers, but manages to get them to spend an extra $5 per paying customer by placing a planting guide for their locality by the cash register and talking it up. This week he has taken in $6875; $625 more than last week, almost a 10% increase.
The idea of suggestive selling is practiced every day by McDonald's. You cannot even order a Coke without their sales clerks asking if you'd like to have fries with that. They do it so often it has become natural. McDonald's expects every staff member to do it with every customer every day. Rather than being annoyed by this practice, look to McDonald's for some of their marketing and suggestive selling techniques. They have not sold 99 billion hamburgers by accident!
Items per Transaction
This is very closely linked to the average transaction number. And, it is only increased by suggestive selling. This number is strictly the average of the number of items that are sold per transaction. The greater the number of items sold, the greater your bottom line.
This number tells you how many customers you have coming into your store who actually make a purchase. For example, if you have one hundred customers come into your store and thirty of them make a purchase, your conversion rate is considered to be 30%. This important number tells you how many people you are turning into buyers. It can also tell you how well you are meeting your customers' needs. If you had a higher conversion rate and recently you have noticed that it has dropped off, you need to evaluate why. Likely it means that you are no longer meeting the needs of your customers.
Just as you evaluate your sales performance, your inventory deserves the very same attention. There are three criteria to look at:
1) Inventory Turnover
2) Gross Margin Return on Inventory Investment (GMROII)
3) Stock-to-sales ratio
Refers to the number of times you are able to sell and replace your inventory over a period of time. The higher the turnover, the stronger your business. Some items can have a lower turnover rate, but should be higher ticket items as they have to "pay the rent" for the amount of time they spend on your shelves.
Gross Margin Return on Inventory Investment
This evaluation should be viewed more as an investor evaluating a stock purchase he has just made. This number tells you how much you are getting back for how much you have spent on inventory. A GRMOII of one dollar means you are losing money. GROMII of two dollars means that you have doubled your money, but are not making any profit. GROMII of three dollars per dollar spent means that you are making money and will likely stay in business.
GMROII is calculated by dividing your gross profit in dollars by the cost of your inventory. This will equal your GMROII.
Gross Profit in Dollars ÷ Average Inventory at Cost = GMROII
$100,000 ÷ $42,000 = $2.38
$200,000 ÷ $52,000 = $3.85
The first example is barely making enough to meet expenses. The secondexample is doing better, meeting expenses, and possibly making a bit of profit.
This is another way to evaluate your inventory turnover. The idea is to sell your entire inventory a certain number of times per month. Some stores need to sell their entire inventory twelve times a year, so the stock to sales ration is 1:1. For other stores, they need to turn over their inventory three times a year, so their stock to sales ration is 4:1.
For new business owners, if you can turn over your inventory four times a year giving you a stock to sales ratio of 3:1, you are doing well. It is time to re-evaluate when your stock to sales ration is in the 7:1 to 8:1 ratio. Anything over this is cause for serious concern. Calculate stock-to-sales ratios by:
Beginning of month inventory at selling price ÷ Total Sales for the month = Stock-to-sales ratio
$3500 ÷ $550 = 6:1 (not a good ratio)
$3500 ÷ $1500 = 2:1 (very good ratio)
Look at your time in business as a journey and an adventure. Not everything will necessarily fall into place right away. You will make mistakes. You will also make amazing discoveries, about yourself, about your business, about the people you interact with in a regular basis.
The first few months will really go by in a flash, but remember to not let too much time go by before you go back and look at your Business Plan. This is a document you need to review regularly to see if you are on track or not. The more regularly you do this, the better your business will run.
Revisit and revise your business plan at least every three months. As your business needs change, set new goals for yourself and for your employees. Keep everyone accountable to those goals, especially yourself.
By using your Business Plan as a tool, you will feel as if you really are in the driver's seat of your business, rather than just along for the ride and you do not know who is driving.
Evaluate your marketing strategy in a regular basis as well, and try to do at least one thing each day to market your business.
Watch your budget and your money. Know where it is, where it has been spent, and how much is coming in. Check your numbers to be sure that you will be in business a year from now, ten years from now.
Get to know your customers and heed their advice. Your job is to serve them, to fill their needs. By listening to your customers you will be providing the best customer service, and you will be establishing a loyal customer base.
Read. Network. Join. Read everything you can on your business and your industry, from trade magazines to books on running a business. Network with other business owners, share ideas, learn from their mistakes. Join small business associations. There are many benefits to joining efforts with other entrepreneurs.
Wendell has looked ahead in his business, and continues to watch his competition. The Flower Pot shuts down at the end of the summer. Roberts and Sons, too, shuts down at the end of the summer with the exception that he keeps a skeleton crew for snowplowing services for their regular yard work customers. Because Daisy's Daisies is moving toward flower arrangements and potted plants for the winter months, Wendell sees a seasonal opening he had not originally considered in his Business Plan.
By staying open into the Holiday Season, he can carry Christmas trees, wreaths, holly, berries, ornaments, lights, etc. The first year he intends to find local vendors to minimize on shipping costs for the live materials. It will be an experiment for him to see just how well this new idea is received. His budget allows for such expenditures because his summer season went very well.
Continuing to evaluate his business, the real numbers, and the relationship The Barn Swallow has with its customers has really paid off for Wendell. He continues to look for new and innovative ways to market his business, to keep his budget under control and build his relationships with his customers. His love of plants is genuine, and Wendell reads every trade magazine available for new ideas and suggestions for his business. It looks like Wendell will be another successful small businessman.
There are two common reasons for a retail business failing.
1. Lack of money.
2. Lack of management skills.
There are two common reasons for a retail business succeeding.
1. A vision of what you want to be.
2. A passion to achieve your vision.