The Mheda Journal

I read an interesting article today in Entrepreneur magazine. It discussed how brands like Rolls-Royce and Starbucks are able to get away with charging a premium for products that consumers can easily get cheaper somewhere else. You may remember that Brian Grubb of The Ritz-Carlton spoke about this at Convention as well.

“The association between your product and the price you’ve assigned it most likely is not fixed in your consumers’ minds the way it might be in yours,” the article states. “Business owners can and should think creatively when it comes to pricing their products and experiment with various price points that are different than what they initially think they can charge.”

How can a business owner tap into that? The article makes three suggestions—targeting affluent customers, becoming a leader in your field and upgrading your venue. I can’t figure out how the first and third ones are all that applicable to material handling (if I’m wrong, let me know!), but number two is more relevant. “A seller’s reputation, financial stability and leadership position in its market are more valuable as competitive assets than they were several years ago. As a business owner, your goal should be to make your company the go-to authority in your industry or area,” the article states.

This goes  beyond pricing directly to two things that MHEDA members talk about all the time—adding value and touting the benefits of MHEDA membership. Participation in an association like MHEDA can help make a distributor stand out as a respected leader in the field. How do you promote your MHEDA membership to your customers?

I read an article today that outlined the ways that rising cost of gasoline, once again, is wreaking havoc on small business. This seems to be an issue that comes up about this time every year, but it’s still a very real concern. According to NFIB SmartBrief, “Higher gas prices are forcing consumers to make sacrifices, cutting back on other purchases or delaying big-ticket buying, which is cutting sales for retailers and other sellers.” As NFIB Chief Economist William Dunkelberg says, “If all your customers are paying $50 for a tank of gas that they used to pay $25 for, somebody is not getting that $25.” About 64% of small-business owners say revenue is down because of higher gas prices, and 25% say they may have to lay off workers, according to a survey by wholesale distributor DollarDays.com.

With gas prices hovering around $4 a gallon in much of the country and some pundits saying they’re not at their peak yet (though most people say the prices will drop a bit from here), I can imagine this being a legitimate concern. As recently as December, fuel prices were as “low” as $3. Read what some members had to say at the time. Now, it’s even worse. How are members handling it? What, if anything, can be done? How are gas prices influencing business decisions. I’d love to hear what you all have to say!

Dr. Bart Basi

In my previous blog posts this week, I neglected to mention that I attended Dr. Bart Basi’s Convention seminar on “How Changes in the Tax Laws Are Affecting the Business Owner,” and I must say, kudos to Dr. Basi for making sense of some pretty convoluted information. And I say that as someone who knows next to nothing about taxes, I’m embarrassed to admit. It’s just one of those topics that no matter how clearly it’s explained, I usually can’t decipher it. Dr. Basi, the senior advisor at the Center for Finanacial, Legal and Tax Planning, presented some really insightful information that will go a long way to helping those in attendance take advantage of the most recent changes in the tax laws.

It’s no wonder why, every year, small business owners talk about the tax burden as one of the biggest challenges they face in their businesses. The laws are too hard to figure out. Even Dr. Basi himself admitted that, while the changes are good for keeping accountants and attorneys busy, they’re too complicated for everyone else. In fact, he began his presentation by saying that he no longer is going to make printouts of his presentations because he is wasting paper by constantly making changes and printing out new versions so frequently.

One of the most compelling discussions involved how companies can qualify for a manufacturing tax credit. Even companies that aren’t logically considered a manufacturer can qualify for the credit based on how the law is worded. Apparently, any company that takes a good and significantly alters it to create a new product can be classified as a manufacturer for tax purposes. Starbucks, for example, classifies as a manufacturer under this definition. It takes a good (coffee beans) and significantly alters it (grinds them up) to create a new product (double mocha Frappucino, etc.) Doing so entitles them to a significant tax advantage. (I’m not going to attempt to explain it for fear I won’t do it justice, but call Dr. Basi and he’ll explain it to you.) He also said that many material handling distributors, particularly those involved in installation or assembly, could take advantage of this rule because they are technically altering the product.

I found that really interesting…just one of the many tidbits of information that you glean from a week at the MHEDA Convention.

In celebration of Earth Day later this week, let me return to one of my favorite topics: green business. Often in this space, I’ve written about the philosophy of going green as a business. I’ve summed up the debate about whether going green is a viable business model or a marketing ploy, so I won’t rehash it here. But I came across an article today called “The Many Payoffs of Green Business.” It’s a few months old at this point, but I thought it made some interesting points.

The author, who works for a energy-efficiency nonprofit group (not the most unbiased source, I’ll grant you), makes the case as to why sustainability is the way to go. “The straightforward financial return on investment of sustainability measures is only part of the reason businesses should be committed to reducing their environmental footprints today. There are a host of compelling long-term benefits that businesses reap once they embark on sustainability initiatives—and many of these benefits are ones they often didn’t initially bank on,” she writes.

Here’s the list of her four “fringe benefits” of green business:

• Opportunities for great publicity.
• Better employee engagement.
• Healthier, more comfortable workplaces.
• Time saved in the long run.

You can click the link above to read the explanations for yourself if you want, but it seems like common sense. So, I’m curious what the flip side of the argument is. What are the best reasons for a business to “remain ungreen,” to use a phrase I just made up? I assume cost is one…after all, changes in any business cost money and time in training and implementation, so keeping the status quo would save money, at least in the short-term. But is there more to it than that? Espeially in material handling, with the push toward more energy-efficient trucks, chargers, batteries, conveyors and everything else, I think it’s a compelling question. What are some other legitimate reasons? Let me know what you think by leaving a comment below.

Today (April 15) has historically been tax day (although this year’s filing deadline has been extended to the 18^th), so it seems somewhat fitting that the federal government yesterday approved a law that will have an impact on the taxes for many small businesses.

President Barack Obama signed into law a bill that repeals a requirement in last year’s health care overhaul for business owners to file a 1099 Form with the Internal Revenue Service for all purchases of more than $600 a year. According to a Reuters article, “The tax reporting provision was meant to improve tax compliance and help pay for the healthcare law, but small firms and the self-employed complained it would bury them in paperwork.” So this would be good news for businesses of all sizes, small businesses in particular.

News of the repeal spread like wildfire on Twitter, and I was able to read several articles about the topic within a few minutes of the bill’s passage. Pretty amazing how far technology is come in the last few years. (And for the record, most if not all of the sentiments expressed by my Twitter followers found the repeal to be good news.) When awash in such rapid information, it’s sometimes hard to sift through to find the important, impactful details. Here’s one that I thought did a good job of breaking it down pretty simply.

So score one for the taxpayers. Hopefully, many of the MHEDA distributors who cited this and other government regulations as potential hindrances this year in our Industry Forecast can breathe a little easier. After all, it looks like things are looking up if the First Quarter is any indication.

Have a good weekend, everyone!

I’ve been referencing the Second Quarter 2011 issue of The MHEDA Journal in this space for several weeks now, and I’m happy to report that it is now at the printer, ready for distribution by mail in mid-April and at MHEDA’s 56^th Annual Convention at the end of the month. (By the way, once again this year, I’ll be blogging and Tweeting live from the show, so I hope you follow the goings-on even if you’re unable to attend.)

 This issue is all about the Convention and, more specifically, the Convention theme of “The Customer Convention.” The magazine features articles all about customer-centric topics such as how customer service can put money in distributors’ pockets, handling customer complaints, when it’s OK to say no to a customer, partnering with the manufacturer to handle difficult customers, using social media to engage customers, customer survey best practices, encouraging customers to go green, and much more! There’s even an interview with an end-user customer, who describes what he looks for in a distributor partner.

I’m a little bit biased, but I think this is a tremendous issue. It will be available in print and its full online glory within the next week or so. I hope you enjoy it. On to the Third Quarter!

I was going through some built-up e-mail today when I came across my New York Times e-newsletter from Friday. Nevermind that I’m likely going to have to pay for it if I want to continue to receive it each day, this one contained an interesting editorial. Since the Supreme Court ruled in 1992 that retailers could be required to collect sales tax only in states where they had some physical presence, many businesses, particularly online retailers like Amazon.com, have not charged sales tax to consumers. Not only does this lower out-of-pocket cost for customers, it also keeps the states and municipalities in which it does business from collecting tax revenue. The point of the article is that in times when many states are in fiscal disarray, this rule makes no sense.

I tend to agree with that, but that’s not the issue I want to focus on. What got me thinking was that this rule, which I was unaware of, seems to put small businesses at a clear disadvantage. Most small businesses, including most MHEDA members, don’t have a physical presence in more than one state. That means that they are required to charge sales tax in their state, which online competitors based somewhere else wouldn’t have to do. Even if the small business in question transacted the sale over a website or e-store, it still would have a harder time competing with an out-of-state online competitor on price  because of its physical location tax requirement.

In this day and age when businesses are doing more search engine optimization to get their websites and businesses noticed outside their traditional geographic footprint, this is an issue that is often being overlooked. The Times article in question mentions several lawsuits in play regarding this rule. Several states have passed laws requiring sales tax be collected, so this situation will certainly come to a head soon. What do you think? Is this an issue that should be talked about more often? What does it mean for distributors going forward?

The Second Quarter issue of The MHEDA Journal will be distributed at MHEDA’s Annual Convention, which, as you are probably aware by now, is themed “The Customer Convention.” To tie in with that theme, the magazine is chock-full of articles about different facets of the distributor-customer relationship in material handling. Part of that series of articles covers customer surveys and ways to use them effectively.

As it turns out, I was thumbing through a back issue of Inc. magazine the other day and ran across an article called “How to Write A Customer Survey,” which, not surprisingly, gave tips on how to effectively create a customer survey. According to the article, common goals of surveys include measuring customer loyalty, helping human resources departments train staff, new product development, determining the direction for new financing or gauging customer service effectiveness. The first step to create an effective survey, obviously, is to know which of these goals-or a different one-that you want to achieve.

Once that’s determined, it’s important to craft questions so that people will want to answer them. It seems intuitive, but it’s harder than it seems. Asking ambiguous or “double-barrel” questions such as “how easy or timely an experience was” makes it too hard for the customer to answer. It may have been timely but not easy, for example. At the same time, make the questions hard-hitting and valuable so that you’re getting usable, measurable information in return.

The article goes on to outline how to choose the best format, improve the response rate and interpret the results. All of these topics will be covered with specific reference to material handling in the April 2011 issue of The MHEDA Journal in a few weeks. Perspectives come from a manufacturer and two distributors who conduct surveys of their customers. Hope you’ll take the time to check it out!

I read an interesting article today. According to a survey performed by Brother International Corporation, the office equipment manufacturer, 47 percent of small business owners said they were willing to spend money rather than stockpile cash. Only 36 percent said the same thing last year.

I first took this as a good sign, thinking that must be a signal that people aren’t being as cautious with their money. However, I’m not so sure that this is in fact an indicator that the burden of the recession is easing. The same article says, “Small business owners are experiencing stress levels relatively unchanged from a year ago, with more than half indicating their worry is higher than usual.” So if they’re still worried about recessionary pressures, why the difference. Particularly with unrest in the Middle East and Northern Africa inflating gas and diesel prices domestically, why the rosier spending forecast?

Unfortunately, this particular article doesn’t answer that question (nor does it say what industries the respondents came from). But I’m curious what those of you out there, who are much more experienced as a business owner than I am, think of this. Is it a function of hording cash for a while and they can’t hold out any longer? Something deeper at play? Any comments or feedback would be appreciated.

A few days ago, I sat in on a presentation that really ties in with the theme for the next issue of The MHEDA Journal. The presentation was based on “Lessons From the Mouse,” a book by former Disney executive Dennis Snow. It’s all about customer service lessons organizations can learn from the Disney Corporation’s theme parks and then implement at their companies.

Seeing as how the April issue of The MHEDA Journal is a complement to the association’s Annual Convention, which has the theme “The Customer Convention” this year, the presentation dovetailed nicely on some of the customer service issues we’ll be addressing in this issue.

The presentation I attended was put on by two of my colleagues at Data Key Communications, talking about how we can apply some of those lessons in our company. But the lessons can be applied to any organization. Below are a few of the takeaways from Snow’s book.

• Never Let Backstage Come Onstage – Make sure customers only see the polished product and not the dirty work behind the scenes.
• Never Say “That’s Not My Job.” Don’t Even Think It – In order to provide the best customer experience, everyone must be on the same page. Everyone’s job is your job.
• Little Wows Add Up – The more positive experiences you can provide for the customer, now matter how small each one is, will add up to one big positive experience and outweigh any bad ones.
• Have Fun With the Job (No Matter How Miserable You Feel) – We all have stressful days and stressful moments. Don’t project that onto the customer. The customer doesn’t care about your mood. You may as well make the best of it. Besides, you may find pretending to have fun will make you feel better. 

These are only a few of the lessons Snow describes, and each one provides valuable customer service tips. If you have a moment, you may want to pick up a copy of Lessons From The Mouse. It looks to be a pretty quick read. Look for similar topics in the Second Quarter 2011 issue of The MHEDA Journal, all about seeing things from the perspective of the customer!