Jun 20, 2007

Fabulous Article on Owning a Scrapbook Store...

This was so good that I HAD to share. This comes via The Creative Leisure News:

The Keys To Success – and Failure
Dreams get you started, but management skills make you profitable.
by Bud Izen (June 18, 2007)

(Note: Bud and Shelly Izen own and operate Scrapbook Fever, a highly successful scrapbook store in Salem, OR. They will be featured in the business seminar, "The Inside Secrets of Charisma Retailers" by Kizer and Bender, at the CHA Summer Show on Fri., July 20, 3-5:00 pm. To register, visit www.chashow.org.)

In a previous life, I was very active in the independent electronic service industry back in the days when there actually was one. It is easy to draw an EXACT parallel between independent service and the scrapbook retail industry.

Most of the guys who started their own electronics repair business were technicians who wanted to run their own business. Like the guy who bought my store when I sold it in 1975. He wanted to "make all the money." Prior to that, he had worked for the best shop in town as a tech. Like a lot of guys – most guys – in the business, he had spent a LONG time learning how to be a great tech, and NO time learning how to be a good manager.I left him a business that did not need to advertise. I had built the business from scratch, and he could make a good living just by keeping the doors open and not making too many operational changes. First thing he did was lay off the other tech and the receptionist, so the shop had to be closed when he was out on call or any other reason.

You know where this is heading. In two years when he paid me his last payment, he attached a note saying that he was closing the shop – not selling it, closing it. It had taken only two years to destroy a successful business. He understood his craft but had no idea of how to manage a store. If you substitute scrapbook store owner for technician, it's the same story.

About 20 or so years ago, there were two trade associations for the independent electronic service industry. As the industry changed away from less reliable vacuum tubes to semiconductors ("transistorized") to integrated circuits, the cost of electronics decreased as complexity increased. Those shops that could not become more productive failed. As the number of independent service shops decreased, so did the financial base for the two trade associations, which then merged into one. When there were no longer enough independent service providers, the remaining trade association likewise failed. Try to find an independent electronic service dealer these days. Good luck. It was not lack of technical skill that killed them all off. It was lack of management skills.Similar issues in scrapbooking.

Some scrapbook store owners are called "IBBA" (in business by accident). These (in many cases) former homemakers went into business as an extension of their love of their hobby. Nothing wrong with that, per se. Problem is, they spent a LONG time learning their craft, and five minutes learning how to be a retail manager. Well, if you are in the right place at the right time, anyone can make money for a while. But when business conditions tighten up, then evolution occurs and you get survival of the fittest. If you don't understand the concept of inventory turns and its relationship to cash flow analysis, then you end up four years (or so) later wondering why you can't pay your bills. All your cash, of course, is staring you in the face. All that product you bought because you loved it is yours forever because it is NEVER going to move unless you basically give it away.

My wife has a business background as do I. She is a former office manager and project manager. I've worked for myself most of my adult life as a contract programmer, computer consultant, and contract project manager, preceded by a 17 year career in electronics (store owner for nine years, instructor for eight). So, we have a bit different take on the scrapbook industry and run our store as business-like as possible. My wife excels at staff management and customer relations (and I am not just saying that because she is my wife.)

We bought our store from its original owner who operated it for four years before developing health problems. (Financial health problems in reality.) Under new ownership we now do approximately five times the business the previous owner did, with no long-term debt. My wife is BRUTAL when it comes to non-moving inventory. We try to keep nothing in the store over three months old unless it is a staple item. We buy on a budget and have been working on developing Open To Receive software.

When asked how we are doing, we tend to keep our mouths shut because no one would believe us. We hired Kizer and Bender as consultants and after their visit a year and one half ago, we increased our business 40%, and this year we are doing better than last year. We see NO evidence of a slow down, and no sight of a loss. I believe that the scrapbook industry is headed for some sort of shakeout, some type of plateau. Vendors or store owners who entered the market with no business plan other than to "get rich quick" are going to be out of the market. Businesses that run their operations business-like will succeed. We'll end up with fewer but stronger vendors and stores. That is only good for the industry.

To paraphrase Shakespeare, the fault, dear scrapbook store retailers, is not in the stars, but in ourselves.

1 comment:

Anonymous said...

I concur completely.