Shot by Dan

Note from Dan: Basil Akers is a former business owner and business consultant who lives in Roanoke County. Basil: If you need help on your time-and-motion study at that Nevada brothel, let me know!

By Basil Akers

Dan,

Your columns and the Sunday coupons are the only two factors that keep me as a subscriber to The Roanoke Times. The reason is that they both are relevant to today’s critical issues. If you inject a little more humour you could rise to the status and wealth of Dave Barry of The Miami Herald.

Your column on Grandin Automotive dealt with a significant problem and should be required reading in high school economics classes, Oh, excuse me, they don’t teach economics in high school. However the reason for Mr. Millner’s lack of success is not Barack Obama nor would success have been achieved by the election of Mitt Romney.

There are other specific reasons that Mr. Millner has not achieved his profit objectives:

1. He bought the business at a time when full-service stations were in decline. Sam’s Club and other discounters had entered the market with huge volume-purchasing deals.
2. He failed to diversify his business as other small service stations have accomplished such as Sheetz and the Parker Companies in Savannah. Sheetz started as a dairy store.

From Wikipedia:

Sheetz, Inc. is a chain of gas stations/convenience stores owned by the Sheetz family. Sheetz, Inc was founded by Bob Sheetz in 1952 when he purchased one of his father’s five dairy stores.. In 1972, the company expanded from seven to fourteen stores. By 1983, Bob and Steve had opened 100 stores. In early 2004, Sheetz opened the world’s first “Convenience Restaurant” in Altoona, PA. Sheetz now has more than 400 locations across six states and more than 13,600 employees. Sheetz now hires and trainsbaristas for their newest brand of “Sheetz Bros. Coffeez”, which are designed to be higher-grade coffee than typically found in convenience stores. Sheetz was ranked as the 12th-best large company to work for in Pennsylvania in the 2007 Best Places to Work in PA survey. In the same survey in 2006, Sheetz was ranked 22nd. In 2005, Sheetz was ranked 12th.[14] In Ohio, Sheetz is ranked in the top 5 places to work.

I worked in the small/medium business-consulting industry and in that process I worked in projects with over 100 businesses and probably 50 business types. About the only type of project that I haven’t completed is a time-and-motion study for the Mustang Ranch in Nevada.

I completed one project with a newspaper that was going to fail rapidly and was able to implement a plan in one week that turned them around and they are still in business after fifteen years although the owners are now battling over money and ownership. Some people learn slowly.

I started and operated a computer business in Florida in 1983. By 1985 the margins on hardware had dropped from 42 percent to a negative rebate where 4 percent could be refunded for training expenses.

The federal government under Reagan had approved Nynex’s acquisition of the IBM computer stores which IBM was too incompetent to operate. Nynex was subsidized as a telephone company so they were able to operate the stores at a $700  million loss that was subsidized by individual telephone users.

My solution was to diversify into accounting, networks and CAD systems. By achieving this, the company was able to obtain operating margins of 35 to 40 percent. By 1992, I had learned everything so I sold the business and went into the more lucrative field of consulting.

A typical reference is attached. The company I Got It was in a similar situation in 1995 with major office supply stores moving into the market. After a three-week project, Chuck Underwood was able to sell his business for well over $1 million and retire to California where he unfortunately invested the funds in real estate.

The government, other than when subsidized businesses are allowed to compete unfairly, has little to do with a business success or failure. Southwest Airlines has operated for 50 years profitably in a difficult low-margin business. Why?

They don’t whine and they create opportunities for their customers and employees.