Are You an Operator or Sales Person?

In my time in the retail business we classified ourselves as either an operations person or a merchandise person (sales). Most business owners tend to be better at one than the other and usually it is sales. I was a merchant, my bosses knew this and proceeded to pound operations into my head. As a manager of a multi-million dollar operation I had to know where every penny of expense went and why. Most successful business owners excel at sales and marketing which fuels the original success of the business. Then they ignore an equally important part of the business operations.

What do I mean by operations? Operations is the boring stull looking at where your money is going, expenses, gross margin etc. Imagine building a great business with huge sales but no profit, what was the sense in going to all of the work of setting up a great business if you aren’t going to make any money and survive for any length of time.

Here is a great example using a large retail chain I worked for that, at peak had over 100 stores. The founder had done a great job of getting the business going but as it got bigger margins started to drop (there were a number of reasons for this). I was shocked to find just after starting that they did not track inventory at retail in any store and had no idea of how much shrinkage was in each store. Think about this, they had no idea how much money they were really making in each store. One great example is a store in a rural area not often visited by head office that had huge weekend sales. The manager gave great weekend promotions and sidewalk sales as the reason for the results. Then, someone visited the store (without notice) on a weekend. He was running the whole store at ½ price every weekend. I told the CEO that his had to change, they had to track inventory but it was never fixed and the company is no longer in business. There were a number of other operational errors that led to the downfall but that was a big one.

If you want your business to survive pay attention to your operation, know where your expenses are going and where you can save money. Know your return on investment for all of your expenses, when you run an ad do the results justify the cost, does your rent justify the traffic you get, do you need an A location or B or C if you bring in your own traffic. Know understand and keep track of all of your expenses if you can’t do it yourself hire someone to help. I can’t tell you how many times I have received a year of credit card processing statement still in their unopened envelopes. I understand the reason, too hard to read and understand but really that is no way to run a successful business. I truly enjoy the shocked (and grateful) look on business owners faces when I tell them they are paying 20% to 60% more in fees than they should be.

1 reply
  1. Ryan the water guy
    Ryan the water guy says:

    Excellent article. So true. I am fortunate to have my spouse with me and we both have separate roles.
    Helps us keep an eye on all aspects of our business

    Reply

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