2021 is Going Fast. Are You?

February 8th, 2021

As I write this, it dawned on me that we are 10% through the year already.  It is hard to believe.  That means we are also almost halfway done with the first quarter.  With everyday feeling the same due to covid, it is easy to fall into a rut and lose sight of what needs to get done. 

Years ago, we did training with Christine Comaford and the Smart Tribes Institute.  (www.smarttribesinstitute.com).  I highly recommend you check out their stuff.  One of the exercises we went through was tracking time we spent doing Low Value Activities (LVA) and High Value Activities (HVA).  LVAs are day to day things that need to get done.  HVAs are more strategic and focused on the future.  Every role has some component of both types of work but the goal is to spend more time on HVAs.  Take a look at where you are spending your time.  Especially at year end and the beginning of the year, it is easy to get bogged down in LVAs. 

Are you 10% done with your goals for 2021?  If not, you better shift your focus soon.  Time slows down for no one.  Do not dig yourself a hole. 

A Small But Very Big Deal

February 1st, 2021

Last week, UPS announced it is selling its LTL (less than truckload) business to TFI International.

From The Wall Street Journal:

The move shows how booming online consumer demand is reshaping domestic shipping, pressing package carriers to invest in business-to-consumer delivery capacity while trucking companies cope with fractured industrial markets. UPS is giving up the bundling of parcel and freight sales for big customers… (Emphasis added)

https://www.wsj.com/articles/ups-to-sell-freight-trucking-business-to-tfi-for-800-million-11611592797?mod=djemlogistics_h

UPS Freight was a relatively small player in the LTL market and not a large part of UPS overall.  Like many manufacturers, a vast majority of our shipments are sent parcel and LTL.  UPS bundled its parcel and LTL services.  Based on the operating margins of its LTL business, UPS subsidized LTL with its parcel business.  In other words, it competed on price in the LTL market.  Do you think the new owners, who do not have a parcel business, are going to do that?

We are already dealing with capacity issues in freight.  While this transaction does not take capacity out of the market, over time, it will change dynamics for UPS customers.  Just dealing with two different carriers adds transaction costs.  It will also change market dynamics as I do not expect TFI International to be a low-cost provider.  I know I am a broken record:  freight costs are going up.  Remember, every product we buy is on a truck at some point.  While transportation costs are not large relative to most products, they will eventually lead to the costs of everything going up. 

Your Marketing Tactics Are Counterproductive

January 25th, 2021

I am fed up with receiving voicemails that say, “Hi Brian, this is Bob.  I have some important information for you.  Please call me at XXX.”  Bob does not identify his company, his product or service, or anything else.  Why would I call you back?  Do you really think being secretive is the way to start a potential business relationship?

I also am not particularly fond of the emails that have “Re:” in the subject line and start with something like, “Brian, Getting this to the top of your inbox since you did not respond to my email last week…”  I know I am getting old and forgetful; reminding me of that does not make me want to do business with you.  If your mass email were of importance to me, I would have responded.  You are insulting my intelligence by sending me a fake email indicating you have already emailed me. 

Covid has not changed this irrefutable fact:  people buy from people.  I will add to that: “People buy from people they trust.”  Your marketing tactics should support that truism.  Do not leave cryptic voicemails.  Do not lie in emails.  Before you get a sale, you need to develop trust.  Any action you take that reduces trust reduces your chances of a sale. 

Are You Having a FANTASTIC Day?

January 18th, 2021

A few weeks ago, my wife and I were walking our dogs.  A young man was walking towards us.  We stopped and waited in a driveway to let him pass us.  He stopped and said, “Are you having a FANTASTIC day?  Isn’t it a FANTASTIC day?  I’m having a FANTASTIC day!”  He emphatically said fantastic each time.  He put a huge smile on our face.  We went on with our walk and turned around.  We passed him by and he said, “Isn’t it a FANTASTIC day?”  We smiled again. 

The young man has Down syndrome. 

Last week, I was driving with our son in the car, dealing with teen angst.  Our new friend was walking on the sidewalk.  I slowed down and honked and waved.  He passionately waved back at us.  I do not know that the teen angst completely subsided, but I did see a slight smile come across my son’s face.    I am smiling as I think about him waving at us.

As one of my close friends reminds me all the time, “We are all subject to the human condition.  The human condition includes happiness, joy, suffering, pain, and every other emotion.”  It is much easier to deal with the human condition with a positive attitude, especially in today’s environment.  Have a FANTASTIC day!

Did Anyone (Other Than Our Vendors) Notice the Price of Oil?

January 11th, 2021

In April 2020, oil prices briefly turned negative.  You had to pay to sell oil.  Oil had started 2020 at $63 per barrel.  Oil ended 2020 at $48.50 per barrel.  Last week, oil briefly crossed $50 per barrel.    We also started to receive notifications from vendors about fuel surcharge increases.  Funny, I do not remember any prices going down when oil plunged.  Fuel (gas and diesel) went down slightly but not very significantly. https://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_w.htm  In fact, we were warned about potential shortages and price increases of oil related products as refining volumes plummeted. 

The government is going to continue to tell us there is no inflation.  When you owe $27 trillion and counting, you have a vested interest in keeping interest rates low.  As I have said before, I would like the ivory tower economists at the Federal Reserve and Treasury Department to step into the real world.  In the last six weeks, we have received price increase notices for freight, corrugated boxes, , and cores.  To my knowledge, we did not do any year end salary decreases and no employees came to us voluntarily asking their pay to be cut because inflation is low.  Eventually, cost increases will get passed on.

Government officials think inflation is good.  They are going to get to test their thesis in 2021.  Get ready.

Challenge Yourself to Think Differently This Year

January 4th, 2021

I was recently in the car with our son.  We were talking about something and he remarked, “Dad, you sound just like me.”  We ran our errand and got back in the car.  Another conversation occurred and again, he said, “Wow, Dad, you sound just like me.”

Part of me felt bad (OK, not really.) bursting the bubble of a 15 year old that knows everything but I had to say it, “No, Logan, the sad truth is you sound just like me!  You’re turning into your old man.”  A look of horror came across his face.  I laughed and said, “It happens to everyone.”  After I thought about it, I did have to admit one of my comments was greatly influenced by a previous conversation with him.  We talked about how the people you listen to the most influence your thoughts and words.  

In this pandemic environment, our social circles have shrunk.  We spend more time with the same people than we did pre-pandemic, whether it is in person with our families or virtually with colleagues and clients.  We are not in situations where we can easily meet people outside of our circle.  In an environment in which we do not have different experiences or meet different people, we can become stale. 

Challenge yourself to talk to someone outside of your normal circle.  Read the news from a site you normally disagree with.  The only way to change your thinking is to be exposed to something different.

2021: Cash is Forever King

December 28th, 2020

Like many others, I am bullish about the 2021 economy.  Pent up demand will be unleashed as vaccines are rolled out.  Already, we are seeing signs of companies preparing for an increase in demand.  Inventories are being built.  Job postings are up.  For a lot of industries, meeting demand will be a challenge. 

For anyone that has experienced business growth, a familiar refrain will be played:  growth requires cash.  It is common for businesses to underestimate the working capital (inventory and receivables) required to fund growth.  A business needs to build a product before it sells it.  Once a product is sold, it takes time to get paid.  In the meantime, employees expect to be paid.  Rent needs to be paid.  Suppliers generally like to get paid too (hint, hint to any customers reading this!). 

Cashflow will be a challenge for a lot of businesses in 2021.  Many small businesses are still struggling to meet cash requirements.  As demand increases, so too will their needs for cash.    Many large businesses take advantage of the situation by demanding obscene payment terms. 

An old business adage says, “Nothing happens without a sale.”  That is true but it needs a caveat:  “Nothing happens without a sale but really bad things happen when a sale occurs and cash is never generated.”  Sales are necessary but not sufficient to have a viable business.  Pay attention to your cashflow.  Here’s to a HEALTHY and prosperous 2021. 

Have Yourself a Merry Little Christmas

December 21st, 2020

I first wrote this blog in 2013.  It has special meaning this year for a few reasons.  First, we could not attend a Cleveland Orchestra concert in person due to the pandemic.  Second, the last member of my family from the World War II generation died last week.  My great Aunt Emily, my grandmother’s sister, was also my godmother.  She personified the World War II generation.  She worked hard, never complained, and gave of herself to everyone.  She will be missed.  Godspeed, Aunt Emily. 

The last few years, Kelly and I have kicked off the holiday season by attending a Christmas concert by the Cleveland Orchestra with good friends. Regardless of your beliefs, put attending a holiday concert by an orchestra on the bucket list if you haven’t already done so. Hearing classical arrangements of carols both old and new puts things in a different light, at least for me.

The conductor did a wonderful job providing context to the songs. One in particular hit home to me. I’ve seen the movie “Meet Me in St. Louis” with Judy Garland. In that wartime movie (1944), she sings “Have Yourself a Merry Little Christmas” (video link https://www.youtube.com/watch?v=yudgy30Dd68

Warning: it will bring a tear to your eye.) The conductor explained how this became a wartime anthem in those still dark days of World War II, both home and abroad. It brought a smile to my face and a tear to my eye. My grandfather was one of those patriots that lied about his age to enlist in the Army after Pearl Harbor. He was not even 17 when the war broke out. He had just started dating my grandmother. He, of course, made it home and they got married.

I remember my grandparents singing “Have Yourself A Merry Little Christmas” to each other over the years and the looks on their faces as they sang to one another. I never understood the significance of that song until I heard the conductor’s explanation. Music was a big part of their lives and a big part of our family holidays – we sang together before we could open presents. For some reason, their musical abilities were not passed down to any succeeding generation thus far. We’re well into generation 4 and the caroling sounds worse every year.

Grandpapa and Gram, as you look down upon us, know that your love and spirits live on. Merry Christmas.

Did Covid Take Away Common Sense?

December 14th, 2020

I will start by saying I am not a covid denier.  It is real and causes significant issues, especially for those with underlying health conditions.  I believe we should enact policies that protect those people.  Instead, we seem to have a haphazard approach that creates confusion and opens the door to question why we are taking any actions to “stop the spread.”  Consider the following:

  1. Our son recently had surgery for a broken hand. I took him to get his cast off.  The appointment involved:
    • Check in with doctor’s office.  Both of us had to get our temperatures taken.
    • Go across the hall for an Xray.  Temperatures taken again.
    • Back to doctor’s office. Temperatures taken again.
    • Upstairs to physical therapy.  Temperatures taken again. 
    • All this activity took place in the same building.  Four different individuals took our temperatures.  Our temperatures were taken with a thermometer pointed at our wrists.  Our temperatures ranged from 92.6 degrees to 94.5 degrees.  Don’t worry; we’re both still alive.
  2. The state of Ohio allows high school wrestling, but wrestlers cannot shake hands with each other after their matches. 
  3. Also in Ohio, the state has instituted a 10 pm curfew.  Certain professional and college sporting events that are taking place at night, including the Cleveland Browns’ game tonight, were granted waivers.  Fans can stay out past 10 pm. 

It is situations like this that make people question the rationale behind any measures to stop the spread.  Let’s apply some common sense to stop the spread. 

The Great Freight Reset

December 7th, 2020

For many months, I have been concerned about freight.  Fortunately, freight is the gift that keeps on giving for a blogger looking for ideas.  Unfortunately, it is going to be a challenge for businesses for the foreseeable future.

I wrote about UPS and FedEx putting customers on allocation on October 26th.  UPS stopped picking up from some retailers last week.  Think about that.  You order a present for someone and it does not ship.  What do you do? Do you go to the store to find it?  Do you wait and hope your package arrives?  I think consumers can deal with price increases.  I do not think anyone is prepared to deal with not having products.    

The supply and demand pendulum is clearly in the shipper’s favor right now.  From The WSJ:

The average spot-market price to ship a 20-foot box from Asia to Europe hit $2,091 this week, according to the Shanghai Shipping Exchange, surpassing the $2,000 mark for the first time since May 2010. The rate has more than doubled from $1,029 at the end of August. (Emphasis added)

https://www.wsj.com/articles/container-rates-from-asia-to-europe-climb-to-10-year-high-11606928233?mod=djemlogistics_h

A doubling of freight rates is not going to kill an economic recovery, but it will hinder margins for the short term.  Shipping delays and product shortages caused because of a lack of shipping capacity will hinder the recovery.  To combat these delays, businesses will start to carry more inventory.  That slows down the velocity of money (which is already low but that is a topic for another day and someone smarter than I).  More money tied up in inventory = less money for capital improvements or paying people.  That will hinder the recovery in the long run.  Higher prices and lower growth.  Can you say stagflation?