Alan O’Neill: 'Entrepreneurs need to get the finger out, not point it'
It’s easy — and understandable — to blame others when external factors hit our businesses. But we must take control to survive
In a previous career, more than 25 years ago, I was a retailer with a number of stores in Dublin. One of them was located in a Dublin shopping centre that was struggling in the mid-1980s. Even though it had a strong anchor tenant, footfall into the centre was poor in the early years.
There were about 15 other stores in the centre owned by independents just like me. Although I was only 24-years-old when I opened it, I had more retail experience than most of the others. That doesn’t say a lot for how the landlord selected its tenants.
As with most centres, we each paid rent and a service charge in proportion to the size of our units. By market standards, both charges were high relatively speaking.
One of the other retailers suggested that we all come together to badger the landlord for a rent reduction. In my naivety I went along with this battle, which took hours and hours of meetings. After months of mediation meetings, legal shenanigans, rows and threats, we got a reduction of about 25pc on the rent.
At the time, my rent accounted for about 20pc of net sales. So that reduction of 25pc allowed for a 5pc drop in my gross sales target. I think anyone reading this would say that is a positive result. And it was.
But, in hindsight, I wonder if we had all spent the same amount of time working together and focused our energies on marketing ideas to drive footfall, might we have increased our sales by more than 5pc? I personally would prefer an increase in full-margin sales of 5pc, which means getting more customers, clearing more stock, paying employees, etc.
The rent reduction was, of course, an appropriate correction — but that battle was all-consuming. It was a very negative distraction for too long a time. Each one of us signed a lease, with our numbers crunched in advance, knowing full well what we were getting in to. Why was fighting with the landlord our only answer?
Who is accountable?
In recent days I’ve listened to radio interviews, read articles and attended conferences where the challenges of business are the central theme. There will always be ups and downs in industry, such as Brexit, recessions, currency crises, increases in rent rates and insurance, minimum wage legislation, digital disruption, Vat changes, mass exodus from rural areas, and so on.
Real entrepreneurs know this before they start a new venture. But far too often when the tide turns the wrong way, we blame others: “The Government need to do this, the council needs to do that.” Perhaps some of that is true. But in our capitalist system where free trade is encouraged and SMEs are respected for being the backbone of our economy, handouts or government intervention is not the only answer. I have clients in Lebanon, the Philippines and the Middle East. Many of them envy the support mechanisms that we have.
In most cases, each one of us business owners is accountable for our own success or failure. I do understand that when the tide turns, there can be external factors that cause problems.
It’s natural, tempting and sometimes easier to blame, as our pride and our dignity is at stake. Government does have to act in certain cases, but that often takes time. In the meantime, we need to get on with it — because the buck stops here. All of this I say with the greatest of respect to those who hit difficult times. My point is more about taking control and being accountable for taking proactive action when the chips are down.
When the chips are down, take control
If and when you experience a prolonged negative turn in your business, take time to reflect on your own business first.
1 Seek market intelligence from suppliers, competitors, peers and customers if possible. Get as wide an understanding of the macro issues as you can. What are the causes? Is it short or long term?
2 Bring your team together and, in a positive upbeat tone, seek their input and opinions. Debate the macro issues and their impact on your business.
3 With your team and using these categories as prompts: people, product, place, marketing, internal controls… conduct a SWOT analysis. This is a list of internal strengths and weaknesses and external opportunities and threats. Be really honest regarding the internal weaknesses.
4 Develop an action plan to take corrective action.
The Last Word
The stress and the pressure of missing targets can be enormous and frightening. It can take you over and cause you to lose control. But the case study below of MoveHome shows that innovation and clever thinking can make any business stand out from the crowd.
Agents orange: colour scheme makes property player stand out
Business: MoveHome estate agents
Set up: 2005
Founder: Ronan Crinion
No of Employees: 10
Location: Drumcondra, Dublin 9
As economies go up and down, a key barometer that gets lots of airtime is the price of houses. During the boom, prices escalated beyond reason and of course we know what happened in the crash.
Selling a property is a skill that few vendors will tackle without the support of a qualified estate agent. Consequently, according to Pat Davitt, CEO of The Institute of Professional Auctioneers and Valuers, there are more than 5,000 independent estate agents in Ireland in addition to a number of franchise groups. Because we as a nation move home less often than in the UK and there is less property flipping going on, there is a lot of competition for limited stock. Standing out from a crowded market is an ongoing challenge.
MoveHome Estate Agents
Ronan Crinion was a retailer in Dublin for 15 years. His family had a number of toy shops called Tommy’s and he himself developed the chain of independent newsagents called Tom Stanley’s. The business enjoyed much success, but Ronan anticipated challenges in the sector due to a decline in tobacco and print sales. He reinvented himself and became an estate agent in 2005. Initially working from an office in Walkinstown, he planned to win with high volume and low fees.
Then, after a short spell working out of a retail kiosk unit in Omni Shopping Centre in Santry, Dublin, he relocated to a prominent unit on Drumcondra Road Upper, near DCU.
This road is the third-busiest artery into Dublin, with 30,000 vehicles per day passing the door. Anyone travelling that road will know MoveHome, the brand that Crinion developed. It’s a very attractive estate agents’ showroom which has won awards for its shopfront.
The Business Model
Most independent estate agents develop their business in the local community in which their showroom is located. MoveHome caters mainly for Dublin’s northside. Staying independent is a challenge, especially when a business is up against the large multi-site groups. MoveHome punches well in this regard, with 75pc of its revenue coming from sales and 25pc from lettings.
The business has a number of tools to help it deliver that success. One is the consistent and strong branding that runs throughout the business. Using a friendly orange colour against a white background, the branding starts with the shopfront and logo, website, brochures, font, stationery, pens, interior decor and so on.
It is consistent and is tastefully done. The distinctive shopfronts are clearly a selling point and with 10 different window schemes per year planned well in advance they are a significant driver of enquiries.
We know that retailers buy stock from suppliers, they put on a margin and they sell it. Estate agents, however, have to compete for their stock (properties) with other agents.
“We get stock by making a big effort with our potential vendors. We have a strong local presence with our showroom and the striking orange boards that we use on vendors’ properties send a strong message to other potential vendors,” said Crinion.
Over the years, I have run many workshops with estate agents and I always ask: ‘Who is your customer?’. The resounding answer is the vendor. I do, of course, appreciate that it’s the vendor that gives the instruction to the estate agent and therefore the agent is working to maximise the price.
But the industry as a whole is moving more to a balanced model of recognising the need to give great service to buyers also.
After all, if buyers are not treated with great respect, they’ll go elsewhere, and then the vendor suffers anyway.
I quizzed Crinion on this and was reassured with some great examples. Google reviews are another driver of prospects.
The business intends to continue its sponsorship of local GAA club Na Fianna, and its link with Drumcondra Tidy Village Group. Crinion has also just signed for an additional premises on the corner of Capel Street and Ormond Quay in Dublin. True to his strategy in Drumcondra which is about catering for the local market, he will target Dublin 1, 2, 7 and 8. I’ll look forward with anticipation for more ‘best windows awards’ when I’m driving down the quays in May.
Alan O’Neill, author of Premium is the New Black, is managing director of Kara Change Management, specialists in strategy, culture and people development. Go to www.kara.ie if you’d like help with your business. Business advice questions for Alan can be sent to email@example.com
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