Hermanisms - Herman School of Business

Is Your Business the "Best of Breed?"

John L. Herman — Mon, 09 Nov 2009 10:59:16 GMT

Today is the annual trophy presentation for my fantasy baseball league…our 25th year. The party will be in my barn where we have the spring auction to draft our teams. The barn is now known as the Draft Palace. The hot dog machine will be ferris wheeling around with the dogs cooking and the guys will try to stab the dog they want…even though there is a “stop” switch they could hold while they pick out their favorite.

There will be steamed shrimp…roast beef…baked potatoes…crab soup…fruit…celery stalks…salted snacks…bowls of chocolate candy…a homemade cake…and a deep dish apple pie…to go with the dogs. This party is clearly the “Best of Breed” when it comes to gatherings for my buddies. Although it takes me several days to prep for the event and then hours to cook all the food, the pleasure it brings to me watching the men I love enjoy themselves can’t be beat. When one of them proclaims “You feed me better than my wife” one of my thoughts is that these Neanderthals need to do more at home, but it also comes to mind that I am making them happy. My wife asked me a few moments ago if I really enjoyed doing all this work and she knew the answer when she saw the smile on my face. Today my buddies will relax and enjoy…and my efforts helped make that happen.

The potatoes are huge…they are Green Giant brand and I mention to Maggie when you see their product it always has the best color, the best look, and usually the best taste. She said, “Of course Herman, they are the Best of Breed.”

At the seafood shop where I get the shrimp I always get the jumbo because they steam the best. The shopkeeper sees me take the package from the freezer and he calls me aside. “We keep an even larger size in the back that we cook for take-out orders…would you like a box of them?” He wanted me to have the “Best of Breed.”

For 25 years Simon Bakery has been supplying spectacular cupcakes for all of our events…again the B of B. Everything at the party has to be as good as we can get. No generic candy…M & M’s and Hershey Kisses are a must. Real butter, not some substitute. Nothing but the best without the blink of an eye as to the cost…because we don’t do this party every day. Now, before you say, Geez these guys are pigs, they eat too much and they spend too much for their own pleasure while others suffer…you are missing the point of the story. The money spent went to stores where the best products are sold. The products selected were made by companies that make the best products in their categories. The effort I made would not make the buddies as happy if they didn’t get the Best of Breed.

Is your business putting out the best product you can make? Is your customer service better than your competition? Are you putting in the best effort you can into your business? If you want success why not be the Best of Breed!

Are Your Blinders Still On?

John L. Herman — Sat, 07 Nov 2009 15:57:57 GMT

For several months now I have been getting back into the “deal mode.” In the last four months I have visited more than 15 business owners scattered around the country and the theme is almost always the same. “My business was fine, I paid my bills on time…my customers disappeared.” Following that statement would come the notion that if the owner could “raise new money” or “find a new debt source” all would be well.

Rarely does adding debt save the day. I don’t mean small amounts over short periods of time. I mean big chunks of money where the idea is that next years’ performance will make it possible to pay back the big chunk.

The part I want you to focus on is not that out of desperation someone is willing to borrow more, even at higher costs, just to build that bridge to the future next year when the recovery will make everything all right. You see…the recovery people expect isn’t coming. THIS economy will actually get worse before it gets better.

GET YOUR BLINDERS OFF.

When you feel sick, maybe with the flu, deep down inside you know as you take your medicine that soon you will feel better. You have been sick before and you got better, so you comfort your aching body by having your mind think about that recovery just around the corner. It works for almost everyone for almost every illness. It gets a little rougher when it is a long term problem like getting a new hip or knee, or suffering a more serious ailment. When it turns out you have something really bad, something that could be terminal…you start acting differently…you realize you might not recover.

I am proponent of positive thinking. But it has to be reality based positive thinking. The economy did not catch a cold. America has a potentially terminal economic illness. And you better act accordingly. You can survive when you do everything you can, as fast as you can…to survive. That starts with taking your blinders off. If your child acts out you scold them…if you find drug paraphernalia you better step up the actions taken to correct the situation. Five pounds overweight, maybe you should skip dessert a few days. Fifty pounds overweight calls for quite a different action.

This is the new economy. People have less buying power. People are actually changing their philosophy about spending frivolously on “stuff.” The slower spending comes from less available credit and a new “less stuff” philosophy…get used to it. We will be here for several years before people will change again. We didn’t have a “scare” in this country, we woke up to the reality that we might have a terminal economic illness. Short term hope based on a short term recovery will most likely put you out of business.

COMING SOON: HERMAN UNIVERSITY…what people want are answers. They read, listen to the radio, and conduct research for more than just entertainment. They want answers. I am working with others to launch an idea I have had for years…have a place for people to get answers. And since people equate going to school with finding answers I have named this blog the Herman School of Business. The next evolution of this site will be HERMAN UNIVERSITY. It will be a “six lane highway” of answers: College Students, Start-Up Owners, Women Entrepreneurs, Seasoned Veterans, the Author’s Page, and the Speaker’s Corner. I won’t send you there just yet…give me your ideas about what should be available at HERMAN UNIVERSITY.

FREE is your marketing...

John L. Herman — Mon, 12 Oct 2009 13:23:21 GMT

I have been preaching for about a year that spending money on marketing in today’s environment is a waste of money. Your customers are broke…they have no more credit…blasting ads at them is like teasing a kid with candy but not giving it to them. Your customer doesn’t want to see ads that remind them they can’t afford what you are selling.

Give what you have to them for free!

By now some of your inventory is outdated and starting to remind you that having a big pile of merchandise means no money in the bank. On this week’s SUNDAY MORNING show there was a feature worth talking about. A Professor offered his students a piece of “truffle chocolate” for 15 cents or a Hershey Kiss for one cent. 73% took the 15 cent bargain, going for quality at a ridiculously low price. He them lowered each by one cent…the “truffle chocolate” was 14 cents and the Hershey Kiss was FREE. The overwhelmingly majority of students took the free chocolate…taking nothing out of their pocket.

Stop having “huge discounts” on some things trying to lure customers in for a bargain. Today every store, every restaurant and every service company now offers “huge discounts” and people would be insulted if they didn’t see a price reduction. BUT…people will stop in, call you for help, and at least give you a try if they could get something for FREE.

If you own a jewelry store announce that every hour on the hour there will be a drawing for a FREE WATCH all weekend long…but you must be there to get the watch. A clothing store can give a twenty dollar gift certificate away every hour…a restaurant will give one meal FREE for every three who pay for all seated by 6PM this Friday and Saturday night. Consultants can give FREE hours…you get the point.

I keep telling you things will get worse before they get better. Ignore the MSNBC crowd who preaches we have turned the corner…we have only lost 100 banks so far…200 more will be falling over the next twelve months because the commercial real estate collapse is in full swing now. One-third of houses sold…are selling below their purchase price. Commercial property isn’t selling at all…because no banks are offering financing on commercial real estate. That’s right…banks are worrying about falling prices…then cause falling prices by not offering loans to pay higher prices…shooting themselves in the foot yet again.

Weather the Storm...

John L. Herman — Sun, 27 Sep 2009 12:59:27 GMT

For those of you still watching…I hope to drop a few lines as time goes by. The last three weeks have been amazing…visiting owners, bankers, private equity fund managers, and getting to speak to many business groups all over the country.

Two things stand out that need to be addressed. People are resiliant but not yet realistic. When you say out loud that things are going to get worse they think you are a doomsday person. NO…I AM A REALIST.

People don’t want bad news because it brings them down. So they want to wear rose colored glasses whenever possible. I WANT THE TRUTH.

You can’t turn the corner ahead unless you know where you are going. Today’s announcement is that the 95th bank just closed for the year. Folks, there are many more to come as we have not admitted the truth about commercial real estate loans. How can any business afford the rents from leases made two or more years ago when revenues are falling off the charts? Yet, landlords can’t cut rents and keep up payments on mortgages that are higher than the value of the building.

If you would just face reality…and think and plan in what is the real world…incredible opportunities are all around you. Ignore being sick and you will stay sick. Diagnose your problem, take the right medicine…and you get better faster!

ATTENTION MY CEO COLLEGE BUDDIES...I AM SPEAKING TWICE AT THE CEO CONFERENCE IN CHICAGO IN OCTOBER...PLEASE COME AND BRING TWO FRIENDS AS MY NEW SPEECH WILL WAKE YOU UP AND MOVE YOU FURTHER DOWN YOUR ROAD TO SUCCESS.

Incremental Issues

John L. Herman — Sat, 29 Aug 2009 13:01:15 GMT

We slip down the slope in small incremental steps…we don’t just jump off a cliff.

I didn’t get overweight because one day I ate too much. I ate too much on many days, over a long period of time. Incrementally increasing my weight an ounce or two until whammo…way too much.

You didn’t create debt in five minutes…it probably took five years. Your business didn’t start to fail overnight…it has been failing for quite some time. Your relationship wasn’t wonderful last night and this morning the two of you are in chaos.

How do we get here in a bad space when none of us plan to be too heavy, have too much debt, have our business collapse, or lose all respect for our partner? In small increments of time.

If you knew in ten seconds you would crash your car you would instantly put on the brakes. If you knew your regular speeding behavior every day would one day cause an accident would you start slowing down…avoiding ever being close to that accident.

People let things go down in small incremental steps which we overlook. That blouse is on sale…I have to buy it. I could make a few more customer calls but the slow sales depress me…so I will skip them. It’s getting stressful out there, pass me the potato chips. He/she will have to wait while I indulge myself instead.

How do you turn any problem you have around?

Incrementally. One small incremental step at a time. Now get to work.