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Al’s column: Covering all the bases with sign-off sheets

July 8/15, 2019: Volume 35, Issue 2

By Lou Morano

 

(Editor's note: This is the third installment in a multi-part series.)

Many retailers have had to deal with customer complaints over the course of doing business. Perhaps you had a client who though her carpet was defective because there are pulls in it. Or she’s looking for monetary compensation because of the mess your installers made when you ripped out her old ceramic tile flooring to make way for the new materials. “No one told me this was going to happen” is the common response from the consumer.

We all could come up with dozens of other complaints from customers on things that are just normal and customary for the products and services we provide as flooring retailers. Over the years, my sales associates have been diligent in trying to manage our customers’ expectations by letting them know what could—and probably will—happen, yet we still receive complaints. The customer will often claim the salesperson never told her, which could be the case because it would be very difficult to cover all the scenarios verbally.

So how do you address this issue? Over the years we have utilized “sign-off sheets,” documents that aim to cover normal and customary expectations of product performance as well as scenarios that are inherent with the product they purchased. For instance, when we’re on a job that entails a hard surface removal we have a specific document that states the items we normally cover with plastic, and we advise customers on what they need to remove from the area to limit exposure to dust. We also inform the homeowner that the area will likely need to be cleaned after the job is done.

Every product category has its own sheet that must be signed. The sheets are self-explanatory and cover almost all bases. We’ve found this process has drastically reduced customer complaints. First, we educate the customer at the time of purchase to manage her expectations. Second, when a customer states, “I was never told…” we refer to the sheet she signed showing she was indeed properly informed.

Of course, as a retailer who is customer-service oriented, we always do what it takes to satisfy the customer. In the past this has cost us money and eaten into the profits for the job. But now that we’ve implemented sign-off sheets, when there is a situation that is clearly no fault of our own—or the manufacturer—we’ll still take care of it, but at the consumer’s expense.

A perfect example is our sign-off sheet for carpet installations, which states that “seam placement will be at Capitol Carpet’s discretion unless specifically indicated on the signed contract.” During a recent job, we installed a patterned carpet on steps and in a hallway. The consumer wanted the carpet to run in a different direction than we laid it, and she insisted that we change it at our expense. We explained that we did it the correct way and showed her the signed sign-off sheet. She argued she wasn’t home when we measured, and that her husband signed the contract and sign-off sheet. We explained that we are not responsible for lack of communication between her and her husband, but we would replace the carpet at her expense. She agreed.

Bottom line: Our salespeople can’t realistically come up with every possible scenario for product performance/expectations, nor can they come up with all possible installation scenarios. With these sign-off sheets customers are educated, they have realistic expectations of the project and/or products and they have proper maintenance guidelines.

 

Lou Morano started selling carpet for a major retailer at the age of 19 in 1981. In 1985 he and his father incorporated Capitol Carpet and opened their first full-service retail store in 1986. Today Morano operates five retail stores, including a commercial division, under the name Capitol Carpet & Tile and Window Fashions.

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Al’s column: How much is your business really worth?

June 24/July 1, 2019: Volume 35, Issue 1

By Roman Basi

 

You’ve invested your life, money, time and effort into your business. Countless hours have been spent operating, maintaining and adjusting the business to stay competitive and profitable.

All this begs the question: How much is my business actually worth? Plenty of owners could arbitrarily claim a value based on their income and assets, but how many have sat down and had an independent business valuation?

Knowing the value of your business is necessary for a number of reasons. Whether buying or selling your business (M&A), succession planning, estate planning or looking into employee stock options, business loans or divorce, a valuation is critical to proper planning, execution and structure of the transaction.

A business valuation is more than just a number arrived at through various methods used to calculate value. In many cases, the value number is of secondary importance to the actual methodology used in the calculation. Consider this scenario: Two shareholders enter into a buy/sell agreement and a shareholder looks to exit the business or passes away unexpectedly. What value of the business is the shareholder or the shareholder’s estate owed? Moreover, how do we calculate a number that is ever changing as business values increase or decrease on a weekly, monthly and yearly basis? The answer is the valuation methodology proposed and agreed upon by the shareholders in the executed buy/sell agreement, which will provide a valuation methodology that will be calculated at the time of the shareholder’s exit, thus avoiding a battle of various methodologies leading to different values more beneficial to one party over the other.

How do we know what methodology determines the true value? (The IRS describes this as “the fair market price at which the property would change hands between a willing buyer and a willing seller, when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, with both parties having reasonable knowledge of the relevant facts.”)

To properly obtain a valuation, the business will need to employ an unbiased, qualified appraiser with experience and training in both the area of valuations and the industry in question. Moreover, the appraiser must understand and employ the various valuation methods, the discount and premium variables while weighing the result accordingly. Finally the appraiser must be able to communicate and ultimately defend the value calculation. Remember: The calculated value is only as strong as the appraiser’s ability to defend it.

From an M&A standpoint, the value put forth to potential purchasers will undoubtedly be reviewed, scrutinized and potentially challenged to reduce the buyer’s purchase price. The buyer’s due diligence team will comb through the business’s internal financials to substantiate the numbers in the seller’s most recent financial statements. The buyer’s due diligence team will then use their own valuation methodology calculation to arrive at their proscribed value. If the seller’s value cannot be substantiated, a purchase price reduction may be sought and the transaction may be jeopardized.

From a succession planning standpoint, the valuation methodology should be tailored to best meet the needs of the successor—whether the needs be tax minimization, payout terms or level of value. However, the valuation method and transfer of assets or stock must be valid under IRS rules pertaining to related party transfers.

If you have questions regarding valuations, call 618.997.3436 for a free consultation.

 

Roman Basi is an attorney and CPA with the firm Basi, Basi & Associates at The Center for Financial, Legal & Tax Planning. He writes frequently on issues facing business owners.

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Al’s column: Sometimes disagreement is healthy

June 10/17, 2019: Volume 34, Issue 26

By Lou Morano

 

(Editor’s note: This is the second installment in a multi-part series.)

If you want to be truly successful, make minimal mistakes and make more “right” choices, then this point is of colossal importance: Surround yourself with people who are not afraid to challenge you.

I never understood why owners of companies surround them- selves with “yes” men or with people who think exactly like them. Don’t get me wrong: It is very important to align yourself with people who have the same vision, ethics and goals for your company. But you must do it with people who have strengths in areas you are not strong in and think differently.

Case in point: Steve Cosentino, the vice president of my company, and Rodney DiFranco, my general manager, have been working with me for more than 32 years; we all think differently but have the same goals. When it comes to making decisions, the three of us usually make them together. We look at situations from different viewpoints, but we have the same goal in mind.

For example, Steve is very detail oriented and meticulous. When we implement a new system or process, he thinks of every single step, creating fail-safes along the way. Meanwhile, Rodney knows the installation end of our business and the sales process extremely well. His greatest strength is in the mechanics of things and how to physically get things done and in what order. My strengths lie in leadership. I am also very good at creating, maintaining and nurturing relationships. I know how to get things done and how to keep people on task and motivated.

When we address serious projects, problems, situations, etc., we discuss it together. We don’t always agree on everything, and we all have good points.

When we encounter situations where we are all not in agreement, the majority rules—even when I am not in the majority. Do we make the right decision 100% of the time? Of course not. However, over the years we made the right decision by an overwhelmingly large majority of the time than if we had just gone with my decisions when I was not in the majority. You need to trust and respect the people around you. More importantly, you have to trust the process. In my case, three heads are better than one.

As an example, many years ago, when we became a Mohawk Floorscapes dealer, we went to all five of our showrooms and made some very hard decisions on completely renovating and remerchandising our showrooms. There were five of us making the decisions, and I valued everyone’s opinion as much as mine. And more than once I strongly disagreed with the majority. I remember the Mohawk representative telling me, “Lou, you’re the owner, so if you want it your way it is your decision.” My reply was, “No, I am not so arrogant that I think I know better than all of you put together, and I truly respect all your opinions. If I can’t convince the majority to agree with me, then I know by going with the majority we will make the right decision more times than not.”

After all the stores were completely renovated, we could see that statement was very true. We made almost no mistakes, and for sure my decision to stick with the “majority rules” vote was the right decision. I can count on one hand how many times over 33 years owning my company that I went against the majority. In those few instances I have been right and wrong. However, we have made more right decisions because I trust and value the opinions of those around me, and our company is more successful because of it.

 

Lou Morano started selling carpet for a major retailer at the age of 19 in 1981. In 1985 he and his father incorporated Capitol Carpet, Inc., and opened their first full-service retail store in 1986. Today Morano operates five retail stores, including a commercial division, under the name Capitol Carpet & Tile and Window Fashions

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Al’s column: Best practices for retailers to live by

May 27/June 3, 2019: Volume 34, Issue 25

By Lou Morano


(Editor’s note: This is the first installment in a multi-part series.)

I’ve learned things from smarter people than myself, even after being in this industry for 38 years.

When our company first opened, I learned from my father that paying our bills early was going to be very critical if we wanted to be important to our vendors. He managed the books in the beginning, and he paid every invoice in full every week. Back in the ’80s, invoices were very similar to today. They were either net 30 days or you would get a discount on some invoices of 5% 30 days. Yet my father paid every invoice in full every week. I asked him why. He explained that if you pay your bills as quickly as possible, the vendors will look to sell you as much as possible at more attractive prices because they know they will get their money quickly and with no hassle.

More importantly, paying your bills on time—all the time—makes you a very valuable partner with the vendors. Suppliers will bring programs to you first. They will want to help you be as successful as possible so you can continue to buy more of their goods.

As we have grown over the years, we don’t pay all our bills in full every week, but we have paid all our bills on time or early every time without exception since 1985, when we incorporated. We have never been late—not once. Over the last several decades we have been told time and time again by various vendors that we are a much more valuable client than some others because of how fast we pay our invoices. If you are late with payments and/or are a hassle to do business with because they must chase you for their money, then they are less apt to do any of these things for you.

The flooring business—much like many businesses—is all about relationships, which is why it’s critical to view every vendor as a partner. When we treat them like a vendor, they will treat us like a customer. However, when we view and treat our vendors like partners, they view us and treat us like partners. This is a whole different level of doing business with tremendous advantages for everyone when we think this way.

One of the main benefits of paying your bills early or on time is the access to discounts. I strongly encourage retailers to take advantage of every discount possible, as this directly affects your bottom line. Let’s say, for example, you have a $3,000 invoice and the terms are 5% 10 days, net 30 days. If you pay after the 10 days, you have given up $150. Now, let’s say you have a line of credit that costs you to borrow money at 8% annually. You are much better off borrowing from your line of credit as it will only cost you 0.67% in 30 days, which on $3,000 is only $20. If you add up all the invoices in a year you can only imagine how much money that totals over time. Even if you must borrow the money on a credit card at 18% interest annually, that would be 1.5% in a month, which is still only $45.

Paying your bills on time not only makes good financial sense. It also ensures you have product exclusivity, the best pricing and optimal service from your vendor partners.

 

Lou Morano started selling carpet for a major retailer at the age of 19 in 1981. In 1985 he and his father incorporated Capitol Carpet, Inc., and opened their first full-service retail store in 1986. Today Morano operates five retail stores, including a commercial division, under the name Capitol Carpet & Tile and Window Fashions.

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Al’s column: Attracting the installers of tomorrow

May 13/20, 2019: Volume 34, Issue 25

By Kaye Whitener

The CFI division of the World Floor Covering Association (WFCA) recently partnered with Informa, owners of Surfaces, to host the first Build My Future—Flooring Edition. The interactive, hands-on educational event allows local high school juniors and seniors to experience employment opportunities in the floor covering industry.

The idea behind the event came from attending the Build My Future program in Springfield, Mo. This event is created through the local home builder’s association with a focus on the construction industry trades. Its purpose is to introduce trades to local high school students looking for career opportunities.

Their most recent event attracted more than 2,500 students and featured virtually every aspect of construction. Students had the opportunity to operate heavy dirt-moving equipment, hang drywall, nail shingles on dog houses, seam carpet and design tile backsplashes. At the end of the event, the kids voted on the vendor trade they enjoyed the most. The overwhelming majority said the flooring portion was their favorite!

The construction group decided to branch out and let other organizations such as CFI and WFCA hold their own recruitment event. CFI presented more than 40 hands-on installation modules for the teens to work on, including tile designs, seaming carpet, gluing hardwood, LVP and laminate. The excitement was most prevalent at the Magnetic Flooring platform, which introduced students to next-generation floor coverings.

Some of the industry’s major manufacturers also contributed to the cause. Mohawk sent a team of professional instructors to demonstrate carpet seaming, hardwood and laminate installation, etc. They were such a huge support for us. In addition, we also asked some of our local retail members to participate and be available for any summer work opportunities for the students. With such a large number of students in attendance, I don't think we could have asked for a better event.

In their prime
It was interesting to learn many of these kids are planning career paths, whether it’s college or becoming a tradesman. Even the teachers who brought them were amazed. “We never think about flooring as a trade,” one told me. And when we started talking about the income that can be made, they were very excited.

What was even more amazing to me was the presence of all the female students in attendance; I’d say it was probably 50-50 male and female. I was able to speak to both groups, and what I learned was kids who might not be looking to go to college directly after high school aren’t necessarily unambitious. Many of these kids are extremely smart; they just like to work with their hands. It’s our job to let them know there are alternatives available outside of college.

In a perfect world, we would like to develop this platform in different regions of the country. We realize we will not be able to create this type of regional event without the support of the floor covering industry. We would love to expand the modules to include design, estimating, sales and other employment opportunities currently in demand in our industry.

As we look to replicate the success of the program, we are also working on developing a tracking mechanism to evaluate the true success of this program and the impact it might have on our industry. When it comes to attracting the installers of tomorrow, we have decided it’s time to stop talking and start doing something about it today.


Kaye Whitener is the national manager of member relations for the WFCA, a nonprofit trade group supporting independent specialty retailers. Send an email to kwhitener@wfca.org to learn more about membership or the Build My Future: Flooring Edition program.

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Al’s column: Clarity on real estate deductions

April 29/May 6, 2019: Volume 34, Issue 24

By Roman Basi

 

It’s been over a year since the Tax Cuts and Jobs Act (TCJA) passed, and the IRS is providing the final pieces of clarity for the infamous section 199A deduction, which allows owners to avoid paying tax on 20% of the qualified business income. This article addresses another component of the 199A deduction—rental real estate enterprises.

The IRS in Notice 2019-7 states a rental real estate enterprise—whose primary form of income based on rental properties—will be treated as a trade or business solely for purposes of section 199A. The courts have often found there is a simple test whether a taxpayer’s activity qualifies to meet the level that constitutes a trade or business, the test being: regular and continuous conduct of the activity, which depends on the extent of the taxpayer’s activities; and a primary purpose to earn profit, which depends on the taxpayer’s state of mind and good faith intention to make a profit from the activity. By meeting these requirements with your rental property, you should be in line for the 20% qualified business deduction.

Additionally, it will be imperative the taxpayer meet the IRS’s definition of rental real estate enterprise in order to qualify for the safe harbor. Per the IRS, the definition is, “an interest in real property held for the production of rents and may consist of an interest in multiple properties.” For consistency sake, the IRS has decreed taxpayers must either treat each individual rental property as a separate enterprise, or treat all of them as a single enterprise. However, commercial and residential real estate may not be part of the same enterprise. Finally, taxpayers may not pick and choose enterprise variations year by year unless there is a drastic change in facts surrounding the properties.

For the sole purpose of section 199A, a rental real estate enterprise will qualify for the 20% qualified business deduction if the following are met within that taxable year:

1. Separate books and records are maintained to reflect income and expenses for each rental real estate enterprise;

2. For taxable years beginning prior to January 1, 2023, 250 or more hours of rental services are performed per year with respect to the rental enterprise. For taxable years beginning after December 31, 2022, in any three of the five consecutive taxable years that end with the taxable year (or in each year for an enterprise held for less than five years), 250 or more hours of rental services are performed per year with respect to the rental real estate enterprise;

3. The taxpayer maintains contemporaneous records, including time reports, logs or similar documents, regarding the following: hours of all services performed; description of all services performed; dates on which such services were performed; and who performed the services. Such records are to be made available for inspection at the request of the IRS. The contemporaneous records requirement will not apply to taxable years beginning prior to January 2019.

If you have questions about what qualifies as a rental service, following is a list of services the IRS has deemed as rental services: advertising to rent or lease the real estate; negotiation and executing leases; verifying information contained in prospective tenant applications; collection of rent; daily operation, maintenance and repair of the property; management of the real estate; purchase of materials; and supervision of employees and independent contractors.

But there are some exclusions. Real estate used by the taxpayer (including owner or beneficiary) as a residence is not eligible for the 199A deduction. Neither is real estate rented or leased under a triple net lease.

 

Roman Basi is an attorney and CPA with the firm Basi, Basi & Associates at The Center for Financial, Legal & Tax Planning. He writes frequently on issues facing business owners.

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Al’s column: Creating a culture of winners

April 15/22, 2019: Volume 34, Issue 23

By Irene Ross

 

Motivated employees are not just good to have; they are good for business. A showroom work environment is even more important, because those employees create the consumer’s first impression of your company.

This is particularly critical for people who operate flooring stores. After all, flooring can be a big investment, and motivated salespeople can make all the difference. “That means you’ll want your showroom employees to be enthusiastic, motivated, knowledgeable and well trained,” said Sean O’Rourke, director of merchandising, Art Van Furniture, with several stores in Chicago and Michigan.

Why is employee morale so important? Research shows just one bad experience can change the mind of someone planning to make a purchase. The firm Gladly recently surveyed 1,000 consumers, of which 92% said they would change their mind about buying after three or four bad encounters. However, 26% said they would also consider stopping after just one unpleasant visit.

“You can have a lot of leads and potential customers, but it doesn’t mean a thing if your employees are unmotivated, uninterested and untrained,” said Lyle Sapp, general manager of the retail division of Carpets N More, Las Vegas. “If they only come into work for the paycheck, they might make a sale or two but they won’t get referrals, and those are the lifeblood of any business.”

Ensuring employees remain motivated is a top priority for dealers such as Jeff Perez, general manager, TF Andrew, with showrooms in New Rochelle and Elmsford, N.Y. That’s why he makes it part of the hiring and ongoing training process. “We’ve found it easier for an employee to align with our company goals if we’re very clear about them from the beginning,” he said. “It also works in their favor because we can spot opportunities in the company for them.”

Employee motivation isn’t just about working hard or completing assignments. It comes from multiple sources, including the ability to make more money, the possibility of promotion, the desire to meet personal/professional goals or just plain satisfaction from the work. Sometimes a group outing, a bonus or even a simple “thank you” will do the trick.

Following are key strategies to keep in mind:

Maintain transparency.“It’s important for employees to know about the company,” Perez said. “Although the sales team sees figures every month, we also show them to the entire staff on a quarterly basis. We want people to know they are working for a financially sound business.”

Focus on education. Chris Quattlebaum, a manager at Bradenton, Fla.-based Manasota Flooring, believes an emphasis on training helps develop and retain employees. It also conveys confidence to the consumer. “Our employees are charged with gaining PK,” he said. “We qualify them on carpeting so they know all the different fibers and styles.”

Quattlebaum isn’t alone. Contract Furnishings Mart, with stores in Portland and Seattle, conducts weekly training sessions and PK classes to improve RSA morale. “Once or twice a year we also send our reps to facilities to learn how a product is made,” said Garrett Anderson, director of marketing. “It’s not just about PK; it solidifies relationships between our sources and employees.”

Make it fun. At Contract Furnishings Mart, managers try to foster a fun workplace to keep employees happy. “We are a family-owned business and we promote that type of environment,” Anderson said. “Balance is important. We don’t want our employees to think about work 24/7 or stay up all night sending emails.

 

Irene Ross is a marketing and public relations specialist/copywriter at IFR Communications. She writes frequently on issues impacting floor covering retailers.

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Al’s column: How exactly does working capital work?

April 1/8, 2019: Volume 34, Issue 22

By Roman Basi

 

Working capital is an important concept for every business to understand. At its heart, working capital is defined as the amount of a company’s current assets minus the amount of its current liabilities. More simply, it’s a company’s available capital for daily operations at any given point in time. Thus, working capital provides a measurement to determine a company’s operational efficiency and short-term financial health.

At the basis of working capital is the calculation, which is generally the difference between the current assets
and the current liabilities. Current
assets can be converted into cash
within one year or
less. This would
include assets such as cash equivalents, marketable securities, accounts receivable, inventory and prepaid expenses.

Meanwhile, current liabilities include short-term debt such as accounts payables, accrued liabilities and other similar obligations. Subtracting the current assets by the current liabilities will provide the working capital figure. This figure is “positive” when there is an excess of current assets compared to current liabilities. However, a working capital calculation not only plays a role as a financial measuring tool, but it can also figure in merger and acquisition transactions.

While the working capital calculation is fairly straightforward in most applications, it can be vastly different in cases involving mergers and acquisitions, where the formula will be dictated by the asset or stock purchase agreements. Some transactions will involve cash or debt in the working capital calculation, while others may exclude certain assets. Some transactions may exclude certain liabilities, thus creating an impact on the seller that can vary on a wide spectrum. When the working capital determination is made, a target will be set and the operations of the selling company prior to the target date can have a drastic impact on the closing funds.

For example, the working capital language of an asset purchase agreement may state, “a purchase price of $5,000,000minus the amount by which the working capital as of the closing date varies from the six-month trailing average of the working capital.” The agreement will then go on to describe the calculation methodology of the working capital. Therefore, a working capital target is set by a 12-month average trailing the transaction’s closing date. If the working capital at closing exceeds the average monthly working capital balance for the 12 months prior to closing, the seller generally walks away with more funds at closing.

However, if the working capital at closing is less than the average monthly working capital balance for the six months prior to closing, then the purchase price may be reduced by the amount equal to the difference of the 12-month working capital average.

The purpose of such clauses in asset purchase agreements is to ensure the buyer and seller are both getting their due pricing. Imagine buying a company that initially shows solid working capital, but upon looking at the averages over time it shows a steep decline. This may indicate you are buying a company that is hemorrhaging money. Requiring an adjustment of the purchase price based on average working capital ensures both parties are protected in the transaction.

Working capital is a key component to analyzing the efficiency of a company. The general rule of thumb is a company with positive capital is typically in good shape for expansion. However, it is important to remember that some businesses operate with a negative working capital due to the nature of their business.

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Al’s Column: Change is right in front of you

March 18/25, 2019: Volume 34, Issue 21

By Lisbeth Calandrino

 

 

Have you ever looked in the rear-view mirror of your life? As I move through life, I realize I have less time in my future and more in my past. Yes, it’s scary, but I’m realizing I shouldn’t waste my time on meaningless things. Whether I clean up my desk or not today really doesn’t matter. I need to focus on the change necessary in my life to continue moving forward.

I recently spoke at the Starnet meeting in Las Vegas. The two-day conference included presentations from their vendor partners. In addition to vendors showing their products, they talked about how they could help by supplying blogs and video content. The group had such energy and curiosity about building their businesses.

Eric Boender, vice president of business development for Starnet, kept the group on track and provided useful information. I was impressed with the group’s positivity and time spent brainstorming and sharing ideas on how to acquire more business. He suggested members work closely with each other and their vendor partners. He also suggested a couple of motivational books. I came back psyched.

How often do you measure your success with past accomplishments? That’s when we start talking about the “good old days” and “how we used to do it.” No, change is not behind; knowing we are capable of success can move us to change. If you could do it when times were tough, you can do it now.

We get inspired by seminars and often come away with good feelings. The environment itself can be inspiring. Motivation is often controlled by the environment, who you hang out with and the books you read. The more we surround ourselves with people who are on our same track the better. The key is to figure out how to take those positive bursts of motivation and keep them going. To keep this momentum, we must design an environment that sparks self-motivation and gives us energy from others. Research says it takes 66 days to form a habit. When something is a habit we don’t have to think about when we do it—we just do.

I believe we spend too much time thinking about what might happen. What’s the absolute worst that could happen with anything you try? Yes, it might not work but history is filled with people who failed their way to success.

If change is what you want, define it and determine how it fits into your core values. If it’s more business, ask yourself, “What am I willing to do to make it happen?” What about this goal will enhance my life? If being successful is on your radar, you will have to see life on a continuum and keep changing.

It’s easy to get caught up in negativity, especially if you surround yourself with people who are too frightened to make changes. That’s why you need a support network, a tribe of like-minded individuals who will support your effort and help move you along the way. Take baby steps and celebrate the daily wins. I know, it’s slow and hard. Try to imagine the outcome and not make the process stressful.

Change can happen a little bit at a time. If you think of completing the entire task at once you will get overwhelmed. Think about life as a game and a big puzzle. As the pieces connect, the task gets easier.

 

Lisbeth Calandrino has been promoting retail strategies for the last 20 years. To have her speak at your business, or to schedule a consultation at your store, contact her via email at lcalandrino@nycap.rr.com.

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Al’s column: How to pick your next leader

March 4/11, 2019: Volume 34, Issue 20

By Keith Martino

 

Ron is one of the most polite individuals you’ll ever encounter. You’ll never feel intimidated by Ron’s presence. He answers your questions as smoothly and predictably as the captain of a cruise ship. Within minutes of meeting Ron, you’ll know why he was recently promoted within a large French holding company.

Ron is pragmatically aggressive. He picks his battles carefully and is only aggressive in business endeavors when he sees a clear course to the winner’s cup. Then, and only then, does he press full throttle ahead. Ron prides himself in preparation so, just in case, there’s always an adequate stash of life vests onboard.

But wait—before you rush out and hire Ron to be the captain of your ship, don’t forget to consider Rob. He may be just what you need.

Rob’s persona is larger-than-life. He works fast and loves trading sports cars. In a crowd of construction CEOs, he can come across as a big, lovable teddy bear. However, when a casual conversation with Rob turns toward business strategy, Rob will magically morph into a hungry grizzly. He’ll show you how to eat your competition for lunch.

Should your next leader be someone who proceeds circumspectively like Ron? Or are you looking for someone who is a natural born hunter like Rob? Hint: If you need Rob but hire Ron, you’ll likely be seriously disappointed. Your patience will be exhausted. On the other hand, hire Rob and you’d better hold on to your hat.

Rob will enthusiastically and methodically pass every other car on the track. He’ll interject an energy you didn’t know was possible into every employee who is able to hang on for the ride. At the end of the day, Rob will have created new business opportunities you never thought possible.

Sure, Rob will occasionally break something, but when he puts your stock car back together it will run so much faster than before that you will be among the first to forgive him. Rob takes aggressive chances and then makes smart decisions based on the way the market appears to evolve. His ability to plan and execute simultaneously is uncanny. He shifts gears without flinching and leans into the turns. Ron, on the other hand, intuitively reaches for the caution flag.

Although their names sound similar, their styles are vastly different on a practical level. They each get the desired results when matched with the appropriate assignment. That’s why absolute clarity about which style of leader your business will need is so crucial.

Here are a few questions to ponder that may help you consider various leadership styles:

  1. What are you trying to accomplish with your company?
  2. How important is creativity/innovation in your business?
  3. Which is more important to you: growth, stability or something else?
  4. Do your key processes need incremental improvement or a complete overhaul?
  5. How much risk are you willing to accept to achieve your top objectives?

Another thing to consider when changing/hiring leaders is knowing your corporate culture. You want your corporate values to be firmly entrenched when you pass the torch.

Bottom line: Consider not only the qualities of the candidates you’re interviewing and/or screening, but also look at the needs of your business, survey the current climate and anticipate changes that might impact you in the future. In short, don’t hire Rob if who you really need/want is Ron.

 

Keith Martino is head of CMI, a global consultancy that customizes leadership initiatives in the construction, renovation and remodeling industries. The author of “Expect Leadership,” he has a passion for helping contractors and family construction business owners achieve stellar results.