What does BuyIndependent.org mean to you?

Nation of Loners

How many of you belong to some sort of social club? It could be anything: a book club, an intramural sports league, a sewing circle, whatever. A lot you may be raising your hands, but probably most of you are not. Do you volunteer or make charitable donations on a regular basis? Do you talk to your neighbors? Before you start getting defensive, let me first say that I, shamefully and without excuse, belong to no social clubs, rarely donate either my time or my money, and don’t know the names of my neighbors.

“Shamed for not belonging any social groups?” you might ask. Yes, actually. According to the book Bowling Alone by Robert Putnam, social capital is on a steady decline in this country. Social capital is what is being built when people come together, share ideas, trust each other, and basically branch out instead of going it alone. “Almost two-thirds of Americans attended at least one club meeting in 1975-76,” writes Putnam, “but only 38 percent did in 1997-98.” Think about our behind-closed-shutters culture that we live in today, and then imagine how it has changed since your parents’ time, or your grandparents’ time.

Our social isolationism strikes me as creepy. The amount of times the average American invites friends over to his/her house dropped 60% from 1975 to 1998. What are we doing instead? Are we working longer hours, spending more time with family, or just parking ourselves in front of the television all evening? How have we replaced our connections with people?

Are we becoming a nation of loners, tuned in and shut down?

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Holding and Folding

Sometimes quitting is a good thing; you’ve slogged it out long enough, and it’s time to cut your losses and move on. But having to make that decision is a lonely and uncertain place to be. Maybe things will turn up next week, how can you know? 56% of all new businesses fail within four years, would they have done better to stick it out?

I recently stumbled across a book called The Dip, by Seth Godin. The book’s namesake is “the spot everyone trying to master something new reaches but that few get through…it’s the hard part that wipes most out.” The dip is the dark just before the dawn. The trick is not only surviving the dip, but also knowing the difference between a rough patch and a hopeless situation. Too often we confuse density with doggedness, and cowardice with shrewdness. To have both the determination to survive when hope has all but abandoned you, but also the clarity to see a dead end, this is the rare thing. The Dip offers insight into how to identify the difference in these situations, and shows how some of the most successful people are in fact skilled quitters (should Bill Gates have stuck it out at Harvard instead of founding Microsoft?).

How do you know when to quit?

More reading:
Business Week Interview with Seth Godin

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Seller Beware! How do Suppliers Survive Reverse Auctions?

As an outsider looking in on the world of commercial procurement, reverse auctions have always struck me as a mixture of efficiency and cruelty. Suppliers battling each other, trying to land that huge deal, watching their profit margins shrink, my heart goes out to them. At the same time, however, it’s hard to believe that no one thought of it sooner.

For those of you that don’t know (and if the term “commercial procurement” didn’t send you clicking away from this page), reverse auctions are just what the name implies; instead of a normal auction where buyers compete against each other, in a reverse auction sellers try to underbid each other in order. The idea was pioneered in the late 90’s by FreeMarkets Online Inc., but has since taken off and has had a profound effect on the business world.

The benefits to the buyer are great; in a moderately competitive auction, one can easily shave 15-20% off the cost of parts or materials. If a manufacturer is looking to keep their same supplier but lower the price, a reverse auction will usually shake the supplier up a little and yield significant savings. But what about the supplier, do they benefit at all from this arrangement? Not really, but the toothpaste isn’t likely to go back into the tube, so you may as well get used to it.

You might even find the positive side. In a recent Inc. article, one business owner says that reverse auctions have made his business better. In order to remain competitive (and solvent) in the new world of reverse auctions, you have to do your homework. A business must be intimately familiar with all the variables that affect its margins, knowing which belts can be tightened, etc., and the result can be a leaner, hungrier business.

Then again, you don’t really have a choice.

Does anyone have any insight into reverse auctions? How has it affected your business?

More Reading:
Forbes Magazine:
Going, Going, Gone! The B2B Tool That Really is Changing the World

Inc. Magazine:
Game-Day Strategies: 5 Ways to Fight Back in a Reverse Auction

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“A Pale Metropolis”

A Star Tribune article this morning reported on the difficulty some Twin Cities employers are having in keeping African-American employees who they have recruited from outside the area. The main reason for this difficulty (besides the winters) is that there really isn’t much of a community here for them. Blacks only make up 6% of the population in the metro area, compared with 30% or more in other cities. Anyone who wants to be a part of a black community will find their options limited, especially in terms of where to live, but also when it comes to small things. One interviewee, Jeanine Lewis from Atlanta, who left after a few years in the Cities, said, “People said, ‘I can’t believe you’d leave a city because you couldn’t find a hair salon,’ ” Lewis said. “Well, no, but when you roll up all those tiny things together in terms of quality of life, it becomes a place I couldn’t see myself staying.”

I’m a transplant as well, but being a white male makes adjusting to Minneapolis quite a bit easier, so I would really like to hear from people who can relate to this.

If you are an employer: Do you try to find ways to help recruits, especially minority recruits, from outside the region adjust to the change? If so, how do you do it? Has it worked?

If you are an employee, minority or not, who has had to adjust to a very different culture and climate, how do you cope?

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Too Good to be True

I occasionally like to revisit the subject of Wal-Mart and its effect on the world, not just because it’s so obviously pertinent to the discussion of the viability of small business, but also because it’s just so darn fascinating to me. Today I’d like to discuss why I admire Wal-Mart, despite my desire to stop It.

First and foremost, Sam Walton was a genius, a visionary, and someone who never lost touch even when Wal-Mart was doing several billion dollars in annual sales. He started with nothing, learned as he went, and eventually built the largest retail company in history. Business was his true passion and he never seemed to tire of it. His energy is still what animates Wal-Mart.

His secret to success was amazingly simple, in that it was based on working tirelessly to please the customer. Quoting from the Wal-Mart website:

“The secret of successful retailing is to give your customers what they want,” Sam wrote in his autobiography. “And really, if you think about it from the point of view of the customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience.
“You love it when you visit a store that somehow exceeds your expectations, and you hate it when a store inconveniences you, or gives you a hard time, or pretends you’re invisible”
How can you argue with that? He realized the customer’s basic wants, and gratified them.
What I respect about Wal-Mart as a company is that they have never gotten lazy, even as they have become the undisputed king of retail; they take nothing for granted. According to Charles Fishman, author of The Wal-Mart Effect (a very interesting book), Wal-Mart management instructs its sales reps to bring back as many free pens as possible from business trips, and they make collect phone calls. Wal-Mart made $345 billion in sales last year! Being a cheapskate myself, I can’t help but applaud this.
So at heart my problem with Wal-Mart is that they are too good at what they do. From a business point of view, they can do no wrong, but what is the real cost of such amped-up capitalism? I know and understand that Wal-Mart helps struggling families save money (though I’d like for you to stop and think for a moment where the newest Wal-Marts are being built. In my hometown they are springing up in the most affluent communities), and that they gave out $300 million in charitable donations last year; I just don’t think it is worth the toll it wreaks on our social, economic, and physical landscape.
What is your opinion on Wal-Mart? Mixed feelings as well?

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Boom Towns

Inc. magazine recently released their rankings of the best cities in the U.S. to do business. The rankings are based on four measures of employment growth: recent, mid-term, long-term, and current. The top five large cities are:
1. Las Vegas
2. Phoenix
3. Ft. Lauderdale
4. Orlando
5. San Bernardino
I’ve got to say that I am a bit miffed that the Twin Cities came in at an unspectacular #33; this is a great place to do business! (Though Forbes ranked Minneapolis as the 5th cleanest city in the world!) Check out the full list and see how your city ranks.

Let us know why your city is a good place to do business; and all you Minneapolisians and St. Paulites out there need to stand up and show some pride!

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Everything 2.0

Web 2.0, Enterprise 2.0, Management 2.0, the brave new wiki world…yes, I know everyone is talking about these things. I’m not nearly techie or smart enough to add anything to the discussion (except to say that if these terms mean nothing to you, get thyself to Wikipedia, man!), but as I was reading a Business Week article on Web 2.0, I suddenly found hope for the future! Assuming, that is, that as the Web changes so shall our culture.

2.0 is about collaboration. Boundaries are being blurred, between producer and user, manager and employee, top and bottom; communal environments are replacing rigid hierarchies. Whether we should thank web pioneers or the so-called “We Generation,” I say this is a good thing. In a reversal of, or at least a queer twist on the “Me” trend in American culture, people are contributing to communities for the simple satisfaction of having contributed. There is a new sense of communal ownership that is heartening.

Heartening because I have hope that Web 2.0 will spill out onto the streets, or that maybe it already has. Heartening because it shows a healthy desire to belong to something greater, and not to simply dominate and/or alienate one’s self from one’s surroundings.

I believe in the potential of this trend, but I haven’t yet connected it with life outside of work and my computer. Have you noticed a greater sense of community and collaboration in your offline life? Or perhaps you’ve noticed it more in young people? Or maybe just the opposite? Tell us your story.

p.s.: If you have some extra time, here is a long, but very compelling article article from Wired about the history of the Internet, its larger trends, and speculation on its future.

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What is your favorite independent restaurant? and why?

Everyone can appreciate independent restaurants. Restaurants are the visible soul of a community; they are the social gathering spots, and they literally represent the tastes of the community. Historically, independent restaurant been more resistant to the chain invasion because they can keep their prices competitive, but as of 2001 there are now more chain restaurants than independents. What does that say about the souls of our communities?

Here we have Twin Cities Originals, part of the national Dine Originals movement. DineOriginals is the work of the Council of Independent Restaurants of America, and this is their mission:

“Big box retail stores, chain bookstores, drug stores and mega-hardware stores have drastically altered the retail landscape throughout America. Chain restaurants not only dilute a community’s culinary heritage and contribute to the “dumbing down” of the American palate, but also threaten to drive all but the most well-established and successful restaurateurs out of the profession.

It is local Independent restaurateurs that capture each community’s flavor and unique personality. These same hospitality professionals are the ones who stimulate their local economy, support local charity initiatives and create jobs for young people across their communities. The dining public doesn’t really know the difference between a locally-owned Independent and a chain that is one of 500 in almost every city across America. Our goal is to raise their awareness.

CIRA seeks to level the playing field against the marketing and buying power of the corporate chains and preserve the culinary sense of place in our communities. Through working together, DineOriginals™ membership collectively generates $1.4 billion in sales and spends $450 million on goods and services.”

Below is a list of Twin Cities Originals member restaurants; if you live in the Twin Cities, take a look at this list. Are these some of your favorite restaurants? If you live somewhere else, visit the DineOriginals website to see if their is a chapter in your city.

Tell us about your very favorite restaurant. Is it an independent business?
(if your favorite restaurant is Applebee’s, just keep that to yourself)

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Passing the Torch

According to Business Week, family owned businesses account for 50% of America’s gross domestic product, and 60% of our employment. This is from a great article about a new Family Business Management class at the Opus College of Business at the University of St. Thomas in Minneapolis, which is designed to bring together the younger and older generations of a family business. Along with the students, the family members who own the business must also attend the class.

“’There are a lot of nuances that come from a family business that differ from a traditional multi-owner one,” [dean of Opus College of Business Christopher] Puto said. “All of these issues are more challenging for families than they are for traditional corporate structures.”
For instance, Maggie Cotton and her father discovered that they had different ideas about how Maggie would be integrated into the family business if she chooses to return. She assumed she would rejoin the company as a top manager after college, but her father had different ideas. She will have to earn her way back into the business and gain the respect and confidence of longtime employees, he said. “It is not a given in my mind,” Tom Cotton said.”

Read the full article

Has anyone out there had to deal with the complex issues involved in handing over a family business to the next generation? How did you do it?

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Death of the Gab?

To my mind, the strength of a town’s independent business community is a great way to gauge to strength of the community as a whole. Local shops, restaurants, co-ops, etc. are the places where people tend to gather, talk, and collect news (gossip); there is a certain type of person who will use any excuse to go to So-and-So’s shop and shoot the breeze. As the commercial landscape changes, will this age-old custom of loitering and gabbing passing away?

Anyone who grew up in a small town may let out a sigh of relief, and welcome any weakening of the rumor mill that can make privacy seem impossible. I’ve known people who would drive several towns over to do their grocery shopping, just so they wouldn’t see anyone they know and have to stop and chat it up. But is this desire for anonymity destroying communities?

Are you willing to trade out these communal gathering places for individual privacy?

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