Off-The-Cuff

It’s January 2011, another year. I trust so far you’ve enjoyed our annual Business Person of the Year issue.

We issued a call for nominations in September and the first week of October sent off the nominee list along with supporting information to our panel of judges, who were Minnesota State business faculty. For the fifth straight year, they did a superb job choosing. Just my opinion, but of this year’s nominees we easily had nine that could have graced our cover and all the rest could have been featured as a runner-up. It was that good of a crop. If you nominated an associate not chosen, my advice is for you to hold on to your submission information and resend next year. Our winners were chosen on the basis of business results, community involvement, character, and leadership. Buckle your seat belts, and away we go….

Now for a change of pace versus regular column fare: The Editor has never claimed to be a business expert, but does have outside-the-magazine business experience. I worked in sales twelve years, beginning as a summer field sales assistant with General Foods in 1980-81 covering Dayton, Ohio. My second and first full-time position was with General Mills in Baltimore as a sales representative. I also worked for Baltimore-based Chaimson Brokerage for six years, covered half of Maryland and parts of surrounding states, and sold everything from Tylenol to Centrum Vitamins into wholesale drug and/or grocery accounts….

But my favorite position bar none was in 1988-90 as head grocery buyer of Green Cash & Carry, a Washington D.C. grocery, candy, and tobacco wholesaler—vaguely akin to A.H. Hermel. It was there, primarily, where I learned most of what I now call “Dan’s Four Business Laws.” In fact, in September, I shared these laws with two Minnesota State international students majoring in business and explained how the “laws” had guided my work the last 20 years….

Law No. 1: Only spend money on things making you money. In 1988-90, my desk was adjacent to that of Hui Yul Han, a Korean immigrant, who over a ten-year period had legally scratched and clawed his way up from changing tires at Montgomery Ward to co-owning Green Cash & Carry, a $21 million Washington D.C. wholesaler. (He still owns it, but now does $40 million under a different company name.) For months on end, I argued with him about the ugliness of our office carpet near where salespeople gathered. It was disgusting. I wanted him to buy a new carpet. His constant retort: How will getting a new carpet make us money? I could never counter….

Law No. 2: When selling into wholesale accounts, you never know if your product is a success until the third order. The first order feeds the retail pipeline—and the size of it is artificially fueled by the salesperson’s rapport with the buyer. The second order often is artificially fueled by consumer demand sparked by coupons, introductory pricing, and heavy media. The third order, if occurring, is a truer measure of demand because it’s based on whether consumers actually like the product….

Law No. 3: Copy success, not failure. With Chaimson Brokerage, I sold to 18-store Valu Food and its health & beauty aids buyer, a pharmacist. I asked once what accounted for his department’s success and he replied: “I just do what Giant Food does. They spend millions on market research—why not just copy them?” Giant Food was his main competitor, a 225-store chain, and if it expanded a section or began carrying a product line or SKU, Valu Food copied. Starting in 1996, I began using Dr. Karpe’s formula of copying success when settling on a format for Connect Business Magazine….

Law No. 4: If you have a relatively static client base and try front-loading your sales by using especially hot pricing, you don’t grow your business short- or long-term. While at Green Cash & Carry my first three months, I sold Mr. Han on having a “grand opening” sale. We qualified with most manufacturers simply by buying a new $30k frozen food freezer and tweaking the company name. It was a scheme, really, for us as a wholesaler to take advantage of manufacturer off-invoice allowances and bill-back money normally allocated only to retailers. I ordered hundreds of thousands of dollars in extra product. Our sales sizzled that month, but fell the next. It was because our niche wholesale market had only so many retail customers and we already had been reaching nearly all those. Hot pricing wasn’t creating new markets, only front-loading sales. (See Cash for Clunkers.) By buying heavy, I also caused a mild short-term cash flow squeeze. It wasn’t the brightest idea….

That’s it for now. Perhaps you have your own business law or two gleaned from years of business experience? If so, send an email. We will take a look and perhaps share it with readers….

Thanks for reading southern Minnesota’s only locally owned business magazine. We have been publishing in Nicollet since 1994. Before leaving, the Editor would like to publicly thank again our panel of Minnesota State University judges for choosing our Business Person of the Year 2011, John Roise.