Are you going out of business…intentionally?

Last week, I wrote about the most expensive minute of your life.

This slideshow should provoke a similar discussion. How does it make you feel about what you’re doing now?

What does your community’s welcome mat say?


Creative Commons License photo credit: archerwl

A state association of businesses has pushed legislation into our state house that would limit the on-premise retail sales volume of a related group of businesses.

Yes, we talked about this recently, but today let’s go beyond this one business, this one time.

That situation is just a symptom of a far bigger concern.

For an established business with good wholesale distribution in place, retail sales limitations wouldn’t be a big deal – except that those same businesses already have legislated production and sales volumes that limit their growth.

These production/sales limitations brilliantly restrict both growth and new businesses in that market.

One of our town’s newest businesses, started by a young family, is placed in jeopardy by this legislation just weeks before their doors open.

That doesn’t mean the “other guys” don’t have grievances to settle (such as a level compliance playing field), but those grievances aren’t going to be cured by artificially limiting sales numbers.

Even so, it shouldn’t be about one business group over the other – both have the right to do business. I know business owners and employees on both sides. I believe these two groups have much more to gain by cooperating.

While the specifics of issues like this will change from year to year, what concerns me most is the message these situations send.

What’s the message to young families and entrepreneurs?

Last week, we talked last week about what communities do to encourage young families and businesses to put down roots or return to the area. Governments and community economic development groups put a lot of effort into these programs. Meanwhile, legislative proposals that limit the growth of new small businesses fly directly in the face of that work.

My question to those in the State House is this: Does legislation that chooses one market over another send the message you want to send from your state, much less your community?

Do laws like that encourage young families to stay and invest in your community? Does the legislature realize that when a small business person sees this done to one business niche, they can’t help but wonder if it will be done to another niche in the next session?

The message we heard then

When we moved our family and our business here in the late 1990s, one of the reasons we chose Columbia Falls was the warm response we received from folks around town. When we said we were considering moving here, the typical response was something like “That’s great. We’d be happy to have you here.”

While schools, the Park and recreation opportunities were important, the overwhelming “this is the right place” feeling came from the welcoming nature of the people we met.

The message I heard back in the 90s was not “Be a no-holds-barred success at all costs.” It was “Build it here. Be a good corporate citizen, a good employer, a profitable example for others who want to build / relocate a business here, and an asset to your community. Become a member of the family.”

If things didn’t work out or legislation targeted my business, I could always move it out of state because it isn’t tied to a brick and mortar retail location. It’s a by-design luxury and a property of the kind of work we do.

Thing is, brick and mortar retailers, restaurants, microbreweries and most services businesses really don’t have that choice.

What’s the message now?

No matter what the state house is working on, they must be careful about the message being sent by legislation that artificially manipulates markets and favors one group over another. It’s a message that other business owners and entrepreneurs look for when they choose a home. Business is hard enough as it is without having to fight off competition from the state house.

This session’s controversy in your state house, whatever it might be, will likely be old news next session.

The real concern to have is this: What our legislators do sets out your state’s welcome mat.

Do you want it to say “Welcome to our state” or “Build it somewhere else”?

Maker, Taker, Patriot.

Wall Street Journal senior economist Stephen Moore recently wrote a column about “takers and makers“, revealing that “More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined.

Twice as many people (22.5 million) work in government than in manufacturing (11.5 milion).

Upon hearing this, many will launch into their political persuasion’s talking points (regardless of leanings). But it isn’t that simple.

It’s not the 60s anymore

In 1960, about 8.7 million people were government employees. In 51 years, that number has almost tripled. I don’t have a breakdown of the increase in front of me, but a 300% increase is large no matter how you look at it.

Moore derisively calls these 22.5 million “bureaucrats”, which to me coveys the image of the corrupt Daley regime in Chicago or an uncaring, inefficient Department of Motor Vehicles (not what you get in Kalispell’s blue building).

Based on the comments I hear, most don’t view rank and file firefighters, police officers, teachers, train conductors, military personnel and the like as bureaucrats.

In one example, Moore mentions the doubled public school employment between 1970 and 2005, referencing a University of Washington study, as an example of government inefficiency given that standardized test scores haven’t doubled in that time.

Electric shock and cages

In the 1960s, students with Down’s Syndrome, mental deficiencies, autism or physical challenges were treated as second class citizens. Today, they learn as a part of mainstream student populations, just as employers do. Doing this requires increased staff. Some kids have a single staff member dedicated to them. Today we teach topics in school that didn’t exist in 1960, like computers, robotics and computer-aided design (CAD).

I don’t think anyone, with the possible exception of the current Montana Legislature, would wish for a return to the 1960s. Yes, that was sarcasm. Mostly.

If you look at the manufacturing and industrial changes since the 60s, it’s hard not to see the migration of the steel, textile and heavy industries overseas as having a significant impact on employment numbers.

While government numbers have gone up markedly, Moore didn’t address the disappearance of manufacturing and industrial jobs during that same period.

The falloff of employment in those industries didn’t happen in a vacuum.

Blame the third world

The industrial revolution in the U.S. transformed business: Steam, electricity, internal combustion.

In the last 20-30 years, it happened again; fueled by computers, industrial automation and the rise of the third world.

While these changes were decimating U.S. presence in industries like heavy equipment, steel and textiles manufacturing, we retain a reticence to pay anything above 1960s prices for commodities like steel, lumber and textiles.

We kept prices down and competed with cheap overseas labor through industrial automation and computers, but that cost jobs. When someone is laid off from a foundry job, where do they go?

If someone laid off after two decades in one of these industries has an opportunity to share their skills with young people looking to learn a trade, and in doing so, keeps their family off of taxpayer-funded public assistance – are they a maker, a taker or a bureaucrat?

If in that 20 years they didn’t take the initiative (on their personal time) to remain employable by learning a new skill (welding, software, repairing industrial robots, etc), who’s responsible?

Meanwhile…

Industrial automation is replacing cheap third world labor with labor that’s even cheaper. China supplants India, who “stole” the work from US workers. Advances in automation allow us to keep prices low and allow our businesses to avoid paying modern wages for dangerous work now done by machines, but they also eliminate third-world jobs here in the states.

Are those jobs we want? That laid off industrial worker who now teaches…do we *want* them teaching a 1960s or 1970s skill in a 2011 economy?

Businesses of all sizes outsource work because it’s not efficient to keep people on staff to do that work. Business is then more flexible and the jobs we keep are usually more secure, but low-value employment is hammered by it. Is that good or bad?

Nothing is as simple as the politicos and power hungry want you to think.

Want to be patriotic? Invest in yourself, make something that people want/need, and create your own future.

Moving to where the jobs are

Formation Flying
Creative Commons License photo credit: Koshyk

In today’s guest post from Forbes, an interactive map showing where people are moving to and from, county by county across the US.

Thanks to @BeckyMcCray for sharing it with me.

Taken For Granted

This photo wasn’t taken in Chernobyl or in some abandoned ghost town.

It’s in downtown Detroit, a few blocks from shining skyscrapers.

Every mayor and business owner in the US should look at photos like the one above and imagine what this place once was.

The meltdown of the US economy has many looks.

Is industry/business/culture in your area taken for granted? Have you thought about the risks your business, your local economy faces?

Here at home

In my area, the collapse of real estate cascaded into the construction trades and to those who supply the tradesmen with raw materials like lumber.

Those troubles spread to truckers, accountants and others. The interconnections were no longer subtle as the economic virus spread.

Regardless of cause, one market’s problem cascaded through numerous business sectors.

It’s easy to look back now and ask why construction and real estate folks didn’t work toward additional revenue streams in businesses that were a bit more state of the economy proof.

It’s also easy to ask the truckers, accountants and others from all walks of life if their customers were too concentrated in one line of work, leaving them too open to a single market’s collapse.

The Hard Question

The question you should be asking yourself is “What did you learn from that and what are you doing to prevent a reoccurrence?”

We talked last week about some inexpensive little things that can damage a reputation and cause the loss of a customer.

In comments I got from that story, folks asked if I spoke to the owner or the manager. My visit was not irrelevant to me, but what I did that night is irrelevant in the big picture because it ignores the way most people deal with bad customer experiences.

Unless the problem is dangerous, blatant or just over the top terrible, most people will pay their bill without saying a word.

They’ll just leave.

Starting a conflict with a business’ manager while their family is there isn’t on their agenda. It’s easier to just leave.

And never return.

Whether they come back or not, they’ll relay their experience to others. Studies have repeatedly shown that people will tell three to five others when they have a great experience and ten or more when they have a poor one.

Even if those numbers are off by a factor of two, how many customers can you afford to lose this week?

Guaranteed

There’s a small town in Pennsylvania that has been fighting for its life. It’s an old steel mill town called Braddock.

There’s no good reason for that town to be fighting for its life – except that it depended too much on a single business. The steel business.

There’s nothing wrong with the steel business or any other distressed industry until business owners, government officials and employees take the status quo for granted.

“No one” ever thought that the steel business would change.

Prior to Henry Ford, “no one” thought the car business would ever change. Robotics fixed that.

After robotics, surely the car business wouldn’t change AGAIN. But it did.

Programmers felt the same way, multiple times. The end of the (widespread) mainframe era, the dot com boom (and bust) years of the internet, the expansion of open source, the rise of India, and the iPhone. Change.

Then China and other countries started taking jobs from India, and so on.

Change is guaranteed.

What could change in your market and weaken – or destroy – your ability to retain your current market position?

And what are you doing to protect yourself if that happens?

Think back 10, 20 or 30 years…or even as recently as the boom times of 2006.

As GM goes

People once said “As GM goes, so goes the United States.”

Every business owner, every mayor, every county commissioner who takes the current situation for granted – no matter how good or bad – risks making a mistake that creates their own version of Detroit.

Look at these photos of Detroit. Beautiful, yet haunting.

Take nothing for granted.

Not a tax break. Not a government contract. Not a sweet 10 year deal. Not the supply of electricity, water, lumber, or programmers. Not a single customer.

And certainly not the next interaction you have with a customer.

Profitable creativity or touchy-feely crap?

Jobs.

Politicians talk about them.

Some own businesses that have created jobs.

The trouble is, it’s not just any-old-job that needs creating.

According to author Richard Florida, 45% of US jobs today are service-sector jobs. In other words, often low-paying jobs as retail sales clerks, customer service staff, food prep workers, personal health aides, and so on.

If you think back a few years, these are the same jobs that Americans supposedly “didn’t want to do”.

Rhetoric aside, the problem with these jobs is that the prevailing wage requires 2 or 3 of them to support a single household, sometimes more.

This isn’t a blog about humanities and social science, so we won’t pursue the impacts of that problem.

And those service jobs?

Florida comments on his blog about a portion of the working population that he calls the “Creative Class”. He refers to expanding creativity well beyond this so-called “class” in this comment about nationwide jobs strategy:

At bottom, a jobs strategy needs to start from a fundamental principle: That each and every human being is creative and that we can only grow, develop, and prosper by harnessing the full creativity of each of us. For the first time in history, future economic development requires further human development. This means develop a strategy to nurture creativity across the board â?? on the farm, in the factory, and in offices, shops, non-profits, and a full gamut of service class work, as well as within the creative class. Our future depends on it.

It might be easy to discard this as a bunch of touchy-feely crap that’s of no use to anyone.

Before you do that, look around in your own community.

Who’s rocking?

Which employers are rocking, despite the average condition of businesses in today’s economy? Why do you think their situation is so different from everyone else’s?

Have you ASKED?

It’s easy to say “well, they aren’t in the construction, building materials or real estate business”, but that’s the lazy answer.

First off, they might very well be in those industries. If they are, they’re doing something differently than those who are not doing well.

They observed. They reacted. They planned. They strategized. And after all that, maybe they got a little lucky.

Are they also innovative? Creative? What processes are used to create new products, nurture new ideas and change their market, much less their business?

How’d they get that way? I suspect part of it comes from observing others and from experience on prior projects.  There might be a key employee who drives the entire company’s creative process, or transformed how they look forward and how fast they take action.

Finally, they might exhibit…

Habits

Australian Innovation, an innovation-focused group of representatives from the private sector as well as Australian Federal and State agencies, identified 7 key habits of innovative/creative organizations:

  1. A deep understanding of the customer and market needs: Engage with customers; Understand industry trends and competitive environment; Big picture perspectives
  2. A â??Cultureâ? of innovation: Vision; leadership; Executive support; Openness to new ideas; supportive/encouraging of innovation; commercial imperative to innovate; Flexibility.
  3. An Open Innovation model: Open collaboration model and having global partnerships
  4. An appropriate funding model for innovation activities: Willingness to invest in R&D activities; Balanced investment in future versus current needs.
  5. Ability to execute: Commitment of resources dedicated to innovation; Continuous development/improvement processes; Benchmarking; Clear goals/deadlines/strategy; Best practice evolves over time (dynamic); Flexible and quick to move.
  6. Human intellect/creativity: Development of skills; Knowledge base; Talented Educated individuals; Willingness to learn/change.
  7. Management of Intellectual Property: Ability to manage/protect IP that is generated through the innovation process in a practical manner.

If you let yourself get past the touchy-feely, can you develop these habits?

What works for the rockers?

Make a list of the rockin’ businesses in your community. Ask to meet their CEOs. Ask all of them to get together as a group and speak to your Chamber of Commerce or even an adhoc group of business owners.

Ask them what they do differently. Ask open-ended questions. Yes/No questions don’t often contribute to breakthroughs.

You might also look nationally to see who the creative employers are – no matter what kind of workers they employ.

The obvious in-our-face answers are Apple and Facebook, but not all creative employers are in the tech sector. In fact, they’d better not be limited to that sector.

Want to start simple? Ask yourself at least one question per day that confronts and challenges the status quo in your market.