Exercise your mind!

February 24th, 2015

72 novaIn 1979, I bought my first car, a 72 Chevy Nova, off of a used car lot in North St. Louis. I did little research and just fell in love with the cool looking bright orange sports car. It had little frills, no A/C, manual windows and a stick shift. Ah, what a nice car; simple and fun to drive!

Then reality sunk in. The car looked great but seemed to eat gas and my left brain told me to get a handle on what gas mileage I was getting (not that I could really do anything about it). Back then, there were no gauges to report the gas mileage, so I kept a note book in my glove box. I wrote down the gallons and mileage after each fill up. Then I subtracted the difference in gallons and divided it into the difference in miles since the last fill up. The result was a pretty consistent picture of my gas mileage. And I did it all manually, in the car, without the help of a calculator!

Today, I push a button and it gives me the result instantly. No fill up needed. No log book. No mental math!

Computers have created a world of instant information and calculations that we use for a more efficient lifestyle. But the unfortunate consequence is that it eliminates the curiosity of how something really works. We morph into a lifestyle that relies on a machine to do the thinking for us. We focus our thoughts onto visual things rather than using the mind for basic step-by-step processes like math and sciences. After a prolonged period of nonuse atrophy sets in and we can forget about simple things, like multiplication tables, or how to figure out a percentage increase, or division by long hand.

Try a simple test. Divide 500 by 10,500 without a computer. Did you struggle getting the result? I sure did. It took me a moment to remember which number went on the left side and right side of the bracket, and how to “carry the zeroes” before I came up with the quotient of .0476.

The other day, I built a bench out of wood. The directions called for cutting a board at a 60 degree angle. I had to pause a moment to get it right. My mind is used to 45 and 90 degree angles, not 60.

In business, I use math every day as part of my financial responsibilities for my stores.  I have trained myself to add numbers quickly in my head, and to come up with percentage increases or decreases. I now construct complex excel spreadsheets using a variety of different formulas. But it is not easy and I have to force myself to do this to exercise my brain.

A couple of weeks ago, my business partner asked me to calculate the gross profit % of a subset of a particular department. I knew the result of 2 individual subsets, and the grand total, but not the third subset. So I had to set up a basic algebraic formula of x and y to derive the result. It took a while, but when I did get the answer, I felt a huge sense of accomplishment, much more than if the computer had done it for me.

Do not be embarrassed if you have forgotten some basic skills;  but do take the time to exercise the mind with refresher courses. There are many tutorials you can use online to review subject matter you may have forgotten since grade school. One I really like is the Khan Academy. It is free and the videos are short, around 10 minutes, on thousands of topics.  Other exercises include:

-Play Words with Friends-Debbie plays it all the time and has multiple games going on simultaneously with different people,

-Watch Jeopardy-this show is filled with fun facts and entertaining as well,

-Turn off the TV and read a book-when is the last time you actually did read a book cover to cover?

-Subscribe to Merriam Webster Word of the Day and learn some new words

Good luck.

 

John Marklin

www.marklinfinancial.com

Summarize your work

January 19th, 2015

binderBack in the 80’s, when I worked for Peat Marwick & Mitchell, our main form of documentation was not a PC, but large 10-ring green binders. These binders were critical to every audit as they held the support for the audit tests that we performed. The contents were a mixture of legal sized notes and 4, 10 and 16 column spreadsheets. The papers were a blur of multi colored numbers, words, tickmarks and explanations describing the contents and the audit procedures performed.

 It was customary to have every workpaper in the binder reviewed by a senior, manager or partner. One day, my senior reviewed my work, and returned it to me with a comment that has stuck with me for thirty years.

The specific workpaper under review was a complex list of numbers and stats to the naked eye. I knew what I was doing, but my senior had a hard time following my reasoning. He threw his hands up and told me to label every workpaper with:

 1-A purpose-(why is this workpaper important)

2-A story about the work (what is your approach to prove your point)

3-A conclusion (summarize the key point of the workpaper)

 The senior’s theory was if the worksheet was removed or fell from the binder, that someone should be able to pick it up and completely understand your conclusion.

 This simple three-point exercise made an indelible mark on me!

 My inbox today is a series of word, excel and power point files that oftentimes lack minimal description of what they are, much less a purpose, story and conclusion. As a result, I am left with the job of  trying to understand the logic of the file. This is a waste of time, and often leaves me with a conclusion much different from the one the author had or was trying to make.

 I have made a career using this three-point approach in the work that I do. Whether as an auditor, CFO, consultant or business owner, being very specific about the purpose, story and conclusion of my work has been a successful theme to my readers.  My bosses, clients and employees appreciated having complex bodies of work brought down to simple, understandable concepts.

 Keep this in mind the next time you prepare a list, chart, or graph. Tell the reader why it is important. Explain your thought process. And go on record and give a conclusion.

 He will thank you for it.

 

John Marklin

www.marklinfinancial.com

Wage stagnation

December 18th, 2014

wage stagnationThroughout much of my younger life, I was blessed with good employers and good jobs. Jobs that not only were interesting and helped grow my career, but provided a good wage, enough to raise a family of five and live comfortably in a nice home.

The annual performance review preceded the raise, and I was usually delighted with good marks on the first and above normal percentages on the latter.

Back then, raises in the 5-10% range were not uncommon and were the norm for doing a good job. Even the recessions of the 80 and 90’s didn’t detract much from the annual ascent of wages. And I must say that it was a very comforting feeling to know the range of earnings for the next few years. It certainly helped in budgeting family expenses.

But that trend of 5-10% raises has been replaced with 2-4% since the 2008 recession. More and more companies are setting annual increases on the rate of inflation, which has been hovering around 3% for the last few years. Companies are able to do this simply because there are a lot of people looking for work (much more than the government reports since the unemployment statistics do not include those who have given up looking for work).

This blog is not to analyze why the raise % is low; that would take much too long and quite honestly I don’t have the answer. But what I will comment on is how to deal with what seems to be a fairly long period of wage stagnation staring us in the face.

There is only one thing I know to do to get a higher than average raise; earn it by looking through the eyes of the boss!

As a business owner, I am responsible for about 100 people who work at our stores. Unlike me, they get a paycheck every week, regardless if the week was good or bad in sales. I can tell you that a day does not go by that I do not look at the financial picture of my businesses and project the future direction likely to happen. An entrepreneur lives on a risky edge, balancing day-to-day issues with longer term competition. It can be a frightening task if you don’t have exceptional people working for you and helping you achieve your goals.

So I tell my employees to think like an owner and make decisions that I would likely make. To raise the trust level from me to them so that there is no doubt about their honesty and their commitment to growing the business. To come up with ideas that I have never thought of to try. To out-think, out-work and out-perform anyone who has ever done your job before.

And here is the big one; to absolutely convince me that I cannot do without you!

If you are successful at doing the things above, you have a tremendous leveraged position that can equate to more money at raise time.

I always tell my employees; the more money you make me, the more money I have to give you!

 

John Marklin

www.marklinfinancial.com

My Aha moment

November 6th, 2014

lightningIt was an extremely hot Friday in July in 1994. I remember the day vividly. I had just moved jobs, and cities, again for the 4th time in my career. This move took me from Reading, PA to Richmond, VA to work for Richfood, a large food wholesaler as their Vice President/Controller.

That Friday capped off my first week on the job. Debbie and the kids were still back in Reading getting ready for the eventual move to Richmond.

That week, like most first weeks on a job, was filled with long hours, new relationships and complex procedures. This didn’t bother me; I usually enjoyed challenges and knew it was just part of any new job.

It was around 5:15pm. I had just put in about 60 hours of work and  was looking forward going to the apartment and having a Bud. As I was walking out of my office door, the phone rang. I hesitated and wondered whether to answer it. First week on the job, so I decided it would be a good move to pick up the phone.

It was the CEO. He asked me to come down to his office a few steps away.

As I entered his large office, typical of a CEO of a multi-billion dollar company, I saw him sitting behind his desk. He was flanked on both sides of his desk with a couple feet high of paper. In between the mounds of paper I saw him sitting at his desk, hunched over with wire rim glasses holding a sheet of paper in each hand.

He asked me why the one piece of paper (an invoice), did not appear on the other piece of paper (the weekly customer billing statement). The question startled me, not because I could not answer it, but why a CEO, making millions of dollars, was asking the question at 5:15pm on a Friday (or any hour of any day for that matter).

The CEO was a brilliant man, a mover and a shaker in the food industry. He was known for his turnaround tactics and bringing success to most business ventures in which he was involved. Richfood was no exception. We were hitting it out of the park with good, consistent financial results at that time.

But back to that evening. This 65 year old man felt it was important enough for him, to examine the hundreds, maybe thousands of invoices for that week and spot check to make sure invoices were not missed in hitting the customer statement. He knew the food industry inside and out, and also knew that it was a penny business. Sales volumes were high, and margins were small-around 2%. And any $100 of a lost invoice required $5000 of additional sales to make it up.

I agreed with the importance of checking things to this level of detail, but not by a CEO at this time of the day. And then it struck me like a bolt of lightning to the chest. That will probably be me in 20 years!

That day, that hour, that minute was the time in my life I decided to do something different. To not be chained to a desk, focusing on historical things. I knew at that moment I wanted to be an entrepreneur: it was the Aha moment in my life!

I stayed with Richfood for another couple of years, but I laid out a plan to change careers. I researched industries, did some soul searching and decided to leave the company and become the CFO of a manufacturing company. I needed the manufacturing background and later left to start a consulting business which proved to me that I could use my skills to “sell” ideas to others. I became successful in consulting yet knew that it still wasn’t my dream. I wanted something more: something I could touch, some employees and a business that I could really get behind and make something exciting happen.

With the good fortune of finding the right business partner, I left the consulting world to buy a grocery store. And then a second and now a third. My days are exciting and hectic; just like I wanted it.

Michael Gerber speaks of the Aha moment in his book, The E Myth Revisited, as having an “entrepreneurial seizure”; that point in any business wannabe’s life of wanting to use his or her skills to start a business. He goes on to talk about the difference of being good at something (the skill) and running a business using that skill.

But it all starts with having the moment. That is important. But equally important is what you do after it.

I am really grateful for deciding to answer that phone call.

 

John Marklin

www.marklinfinancial.com

Using patience as an asset

October 2nd, 2014

patienceThroughout my career I have always tried to have a plan in place before making a decision. It just comes natural to me; thinking of the next steps in order to move the project ahead. My left brained organizational side has always told me to move ahead cautiously, to avoid surprises and to have time and options if things don’t go the way I thought they would.

I own three grocery in Virginia: one in the southwest corner (Danville), one in northwest section in the Shenandoah Valley (Bridgewater), and one on the eastern shore (Chincoteague). Living in Richmond puts me in the center of these three stores but still 2-4 hours away from any one store. Consequently, I spend a considerable amount of time driving between stores as my partner and I vowed to be extremely active and onsite as much as possible.

When I tell people about this, oftentimes they look at me like I am a bit crazy; spending so much time behind the wheel,  and on the road in motels while eating at greasy restaurants. They ask why don’t I find something closer to Richmond, to make my life a bit more convenient.

They have a good point and one that I have asked myself in the past. But then I realize that I do this because it was absolutely necessary to be successful.

I have seen too many situations where retailers choose locations because they are close by, or convenient to get to, or synergistic with their corporate staff. And by doing so, they put the business before the location. They force the situation and think that by building something, well people will flock to it.

Throughout my life I have only seen one retailer ever successful at picking locations irrespective of the normal traffic pattern-Walmart. They will often build a store in a sparsely filled part of the town, yet are successful at drawing gobs of people to the location.

But there is only one Walmart. Most retailers who are successful are good because they have a great business AND a great location.

We have been offered numerous opportunities to run stores in cities and towns close to Richmond. But after we looked at the business, and then the location, it made no sense, despite potentially being convenient.

We have managed to be patient and to wait for the right opportunity to come by. In doing so, we look at every possible opportunity, but we really know why we are successful. So we wait patiently for the right opportunity.

But patience doesn’t mean delaying everything. Oh no. We work hard on establishing relationships with vendors and suppliers and bankers so when the right opportunity does prevent itself, we can strike quickly, like we did with our most recent store.

When decisions are forced due to ego, time deadlines, or outside pressures, nothing good can come from it. You usually pay too much, or give up a significant bargaining chip. And oftentimes have buyer’s remorse for acting to soon.

 

John Marklin

www.marklinfinancial.com

Listen and fix

August 1st, 2014

rosesLast month I sent Debbie a dozen roses for our 35th wedding anniversary. I later discovered that there were only eleven roses sent and that the flower arrangement was a little askew (possibly due to falling over in the delivery truck).

So I called the floral shop, not to complain or to get a refund, but to politely inform them of the one rose shortage. That they may want to check into why or how this happened; to prevent it from happening again.

A few days later, two roses were delivered to Debbie with an apology. That really wasn’t necessary, but it was indeed noticed by Debbie and by me. The floral shop has won a customer for life!

Last week I was bagging groceries at our new store on Chincoteague Island (I love to bag because it gives me the best direct contact with my customers). The one pound bag of frozen shrimp on sale was not ringing up on the register. I quickly went to the frozen case, retrieved the price from the shelf tag and told the cashier so the customer would be charged correctly.

We have over 30,000 different items in our store. That is a lot of information that has to be stored, updated and retrieved in the computer upon a scan across the register. So occasionally we do have some that do not ring up properly. The important point is not to get frustrated with the small percentage of error, but to correct the problem as it happens. I took down the UPC code on the frozen shrimp bag and had it immediately entered correctly in the computer, hopefully before the next customer bought one.

Yesterday, I was at another one of our stores. I met a woman across the street from our store who regularly shops with us. She asked about our ground beef and where it was coming from. I told her and then asked why and she went on to say that the last time she bought some “it just didn’t taste good”. I apologized and told her I would check into it.

After talking to our butcher, we did have a case of ground beef that failed our inspection process and was quickly retrieved and thrown away. We then notified the supplier. I was assured by our butcher that the matter had been resolved up to our quality standards. I then had the butcher prepare a fresh 1.5 pound tray of ground beef and personally delivered it to the woman across the street, with my sincere apology.

All three of these corrective measures (roses, frozen shrimp and ground beef) were preceded by a trigger:  a customer comment or a noticeable flaw in the system. The easy thing to do would be to do nothing to fix the flaw. But an owner knows better, that most people don’t complain. So when they do, it is probably something that really needs corrective action. And to fix it quickly and then notify the customer can go a long way in retaining customers.

So what do you do when you hear about a flaw in the system?

 

John Marklin

www.marklinfinancial.com

 

11 days!

June 30th, 2014

ChincoteaguePony-Penning-2002-500x333On May 24, 2014, my business partner and I received a phone call that a grocery store was for sale on Chincoteague island, off of the eastern shore of VA. That weekend, my partner and his wife traveled to the island to check it out. A few days later, we met in Richmond with all interested parties and negotiated a deal to buy our third store. After many hours and sleepless nights, we closed on the deal on 6/7/14.

The next two weeks became a  true race in order to get the store open in time for the tourist season in mid-June.

In that period of time, we did hundreds of tasks, including the following:

-Hired 25 new employees

-Removed all trash and old inventory

-Cleaned and sanitized everything

-Painted the interior walls

-Repaired all refrigeration units

-Replaced the air conditioner

-Scrubbed and put on 5 coats of floor wax

-Replaced every fluorescent light bulb

-Installed new front end cash registers and trained the cashiers

-Replace meat, deli and produce scales and trained employees

-Filled the store up with groceries

And all of this was accomplished for our store opening on June 20. Excluding off days for floor cleaning, that was only 11 days!

None of this could have been accomplished without the help of dozens of employees, vendors and suppliers. The relationships that we have established over the past 4 years in growing our businesses really paid off. People literally dropped everything to come to the island to help us get the store open on time. And for this we are extremely grateful.

We are improving the store every day and you can watch the progress on Facebook. The reception from the islanders (Teagers) and the tourists has been wonderful.

Chincoteague island was just named the happiest seaside island  by Coastal Living Magazine. And the annual pony penning is July 30, 2014.

Come on up and visit. A nice little grocery store is there to serve your needs!

 

John Marklin

www.marklinfinancial.com

Time to negotiate-for everything

June 2nd, 2014

negotiateMy mind was elsewhere as I was scanning my emails while waiting in the pickup lane at a local CVS when I heard the pharmacist say, “Sir, do you realize that the cost of the prescription is $372”. This statement snapped my attention back to reality and I said “No I did not. It is supposed to be a generic”.

Well it was a generic drug. I then started a casual, more in-depth conversation about alternatives to paying such a high price. I finally ended up getting a similar alternative drug for $170 -a 54% savings from the original price!

This episode seems to happens frequently in my life. I want to buy something, I check out the product and the price, and then start to figure how to negotiate the price down. You would be surprised at how often I am successful.

On a recent trip to Cancun, I marveled at the buying process that was going on around me. It seemed like everything for sale was sold at a price other than the listed price, and usually much lower.

Now I admit that I really don’t like to barter. It is uncomfortable and takes time. But if it can work in Cancun, why not here in the States?

Also, the facts are that Americans love things-a lot of them- and much more than years ago. And these new things cost money that exceed the average take home pay.

Take cell phones, a product that didn’t even exist 20 years ago is a must have today, at a price of $200-$400 per month for a family.

And of course there is education. A bachelor’s degree in 1974 at Mizzou cost $2500 for the WHOLE year-compared to 10 times that today.

The list goes on and on: computers, clothing, fitness clubs, vacations, day care, etc. More and more things we want while dealing with less and money in our pocket.

Now is the time to negotiate. Try this process:

 1-Get mentally ready that you really need the item. Is it a need or a want?

2-Then decide what will drive your purchase-quality or price.

3-Know the cost of other competing products beforehand (this could never be easier than today with the internet).

4-And finally ask if they will take a lower price or if there is a similar item at a lower cost. Or use the phrase-“that price is much more than I expected to pay”.

Sometimes it doesn’t work, but even if it does one out of ten times, that’s a 10% savings!

 

John Marklin

www.marklinfinancial.com

 

Free Time

May 5th, 2014

hourglassMany years ago, I knew a man named Steve who claimed to only need 3-4 hours of sleep per night. Supposedly he rarely went to bed before midnight and promptly awoke by 4 am.

Sleeping so few hours intentionally seemed rather peculiar to me, so I asked him why he did it. He said he viewed his life as a huge hourglass, that he wanted to get as much out of life before the last piece of sand dropped. And this could not be done while he slept.

To me, Steve’s thinking, while a bit bizarre and extreme, makes a point. There are just so many hours and days in your life, and how you choose to spend them is important.

Roughly speaking, a day is split into thirds. Eight hours of sleep, work and play – and on the weekends it is sixteen hours of play!

The following statistic was shocking to me. free timeOn average, every American spends an average of 1700 hours per year watching cable or broadcast TV. Assuming a full “work year” consists of roughly 2000 hours, we spend 85% of a comparable work year watching TV!

I must admit that there is really good television on today. It used to be an occasional excellent show that caught my eye: MASH, Seinfeld, Frasier. But now there are so many good actors and directors producing addictive TV watching: House of Cards, Game of Thrones, 24, Mad Men, Good Wife, Downton Abbey, and many others.

Add On Demand, streaming capabilities, and the plethora of 24/7 sports and talk shows to the mix and it is not surprising that we have become a nation hooked on the boob tube!

So I ask the question, “How do you choose to spend your free time, not just today, but during the remaining years on this planet?”

 

John Marklin

www.marklinfinancial.com

Keynote

April 11th, 2014

Fr PatIn 1998, I was asked to give a presentation to twenty five Procter and Gamble sales reps about “how the food wholesale business worked”. I put together what I believed to be a fairly entertaining presentation, albeit given the pretty boring topic. After the show, I asked a friend what he thought. He said, “John, the subject matter was right on, but the black and white overheads just didn’t do anything for me.” He then told me to try a new program called PowerPoint in order to spiff up my talk.

I took his advice, bought PowerPoint, took the time to learn how to use it and redid my presentation in color and with fade in and fade out slides! The next time I gave the talk, I got a much better reception from my audience; they seemed to be more attentive and glued to what I was saying. PowerPoint made my presentation come to life.

When we visit our daughter, son-in-law and granddaughter in Greenville, SC, Debbie and I make a point to go to Mass at St. Anthony Padua Catholic Church. The pastor there is Fr Pat, whom we have grown to love because of his homilies. Fr. Pat has a very charismatic connection with his congregation and knows how to make his sermons worthwhile. He usually precedes his talk by putting up three fingers while saying three words, which will be the key points of this talk. He tells his tale, adding humor at just the right time. His passion about being a Catholic monk and trying to live a Godly life comes alive in his talk.  And he always ends with the three fingers helping to accentuate the three topics. What he said stays with you for the remainder of the Mass, and beyond.

Last week, I traveled to Pittsburgh to a Produce Food Show and had the privilege to hear Erik Wahl give the keynote. Eric is a motivational speaker with a very unusual style. He is a late blooming artist and mixes his story about “unthinking” like others while speed painting portraits on stage to the beat of a popular hit song. As his painting come to life and you discover the subject matter, your eyes are glued on him, the music and the complementing video that is playing. His energy is ever present as he tells the story of overcoming an elementary teacher who dashed his dreams at a young age by telling him he wasn’t a good drawer. He ends his presentation by challenging the audience to take a risk and go on a scavenger treasure hunt for his painting after the food show.

We have all been to too many speeches and talks that were mundane or just plain boring. Rarely, it seems, are speakers lively, and entertaining. Some throw way too many facts, figures and points of view out to the crowd that it is difficult to walk away remembering anything important that was said.

Debbie has always said that speakers should stick to a couple of significant points, and not drag on with useless stories we will never remember. I agree and also add that doing the unexpected can make for a very memorable keynote address.

 

John Marklin

www.marklinfinancial.com