Like athletes, the most successful business thrive under competitive pressure. Yet, as Warren Buffett says, “it is only when the tide goes out do you discover who’s been swimming naked.”
Two of Dallas’s home grown retail companies are feeling the change occurring in retail. One has filed bankruptcy and the other is looking for a new buyer. The landscape is changing rapidly with the online approach to shopping.
The Dallas Morning News reported that in a conference call on Tuesday, March 14, Neiman Marcus CEO Karen Katz said: “while Neiman Marcus remains at the forefront of luxury shopping, people are shopping less.”
“Customers are making fewer trips to the store and the mall and more trips to the web. They want newness, exclusivity and the best price,” Katz said. “Driven by these expectations, and thanks to the information available to them on the web, more and more we are seeing our customers shop multiple stores or websites, not just ours.”
Luke’s Locker started in Dallas in the 1970’s and filed for bankruptcy in January 2017 citing the accelerated online competition as a major cause of the bankruptcy. Luke’s Locker missed the changing landscape of competing with online retailers and major retailers. In Dallas, Nike and Under Armour have opened their own retail locations. A major part of Luke’s Locker business has been women’s athletic apparel. Over the last 15 years, Lululemon started and conquered technical athletic clothes for yoga, running, working out, and most other sweaty pursuits while offering free shipping.
The Lesson – Adapt or Either Fall Behind or Perish
In today’s business, you must adjust quickly to emerging technologies. If not the consumer will decide whether you stay in business or go bust. We see this in the business clients we work with as they consider adapting new accounting technology.
If you are using the same approach to your accounting that you used 5 years ago, then you are missing the opportunity. Your competitors are changing both internally and externally in how they interact and communicate with clients and customers. What will the result of your inaction be? The classic example is Kodak.
Kodak had 90% of the US film and 85% of camera sales in the US yet failed to adapt to digital photos and smartphones while its chief competitor Fujifilm did. The result – today Fujifilm has a market value of $19bn and Kodak $700mm after filing for bankruptcy in 2012.
I challenge you to examine your business in these five key areas focused on remaining competitive. It is your choice to either adapt or become like Kodak, fading away like an old photo.
Give yourself a score of 1 to 10 for each area. 1 for not at all and 10 for being a leader in your industry.
- Invest in technology, improve your process – Automation of many aspects of your business can provide an efficient and accurate service for your clients. Moving to the “Cloud” will ensure a seamless service for your clients.
- Changing Business Models – Is your business model a 1970’s approach that has become out of date in today’s internet business. Think of Luke’s Locker and how they missed the change and now must emerge from bankruptcy and remake themselves to compete with both a brick and mortar building and an internet presence.
- Invest in People – Do you have a comprehensive training and development program? This allows you to provide better service to your clients and create a loyal and committed team.
- Focus on Markets – Are you the “Go To” business/firm in your chosen area of expertise or product?
- Review the clients/customers you serve – Every client/customer has a relationship with you. Are you attracting clients that have the same beliefs and allows you to add value to the relationship?
Total your score __________
If your score is less than a 40 you need to ask yourself; will my business be around in five years?
In my blog, “Is there anything greater than XERO”, I stated how we changed ALL of our accounting clients to XERO, a flexible cloud-based accounting system that integrates and works with over 500 other applications.
The result is the ongoing progress of adapting and mastering new technologies while giving clients reduced repetitive bookkeeping tasks. Add to that the timely flow of information and our clients are adapting to the changing business environment.
A couple examples of how new technology is making an impact for our clients.
- A law firm eliminated duplication of data entry for their billing system and accounting system. The adoption of XERO also increased reliance on their accounting system to keep the IOLTA trust accounts reconciled to the penny.
- A successful and growing Dallas real estate brokerage company integrated their payroll function and moved the accounting system to “The Cloud”. Together these actions eliminated time spent by the CFO doing routine accounting functions and allowed her to focus on improving internal operations and cash flow. The net for her was four hours per week of additional time. What could you do with four free hours each week?
If you scored less than 40, then you have two options. Do nothing or act today.
If you are ready to act and want to have a conversation about the changes your business is facing, then reach to me. Want to set an appointment? Click here or give me a call 214-239-4700.
Change is the only constant.
Michael Tannery CPA CDFA® AIF® ● CEO