Moving the conversation from “What’s your cheapest product?” to “What’s your best product?”
You know you’re doing things right when the conversation with your customers changes from “What’s your cheapest product?” to “What’s your best product?”
When Patrick McDonald opened McDonald’s Vacuum Center in downtown Arkansas City, Kansas in 2004 he opened with an eclectic mix of products and services that weren’t available in his home town. Used books, vacuum service, sales, and repair, sewing machine sales and repair – McDonald made all available to customers under one roof.
It was a diverse mix of product lines that worked on some days better than others.
McDonald, not unlike other small business retailers, often shot from the hip making decisions over the years without the guidance of a business plan. When we asked if he could go back in time what advice he’d give himself he shared “that it would have been nice to not experience the growing pains made in some of my rush decisions.”
McDonald realized that if he was going to grow from where he was to where he wanted to be it would take a dramatically new way of thinking. The business was getting too big to make rush decisions and hope that they work. .
McDonald knew about the Kansas SBDC and decided to tap into our market research to help with the decisions he was now faced with. He contacted Jason Cole of the Kansas SBDC at WSU located in Arkansas City.
When he contacted the Kansas SBDC, MoDonald had already expanded to Derby, Kansas, to grow his business in a new geographic market, but it wasn’t enough. He wanted to expand further in the Wichita, Kansas market. Cole gathered market research for McDonald to analyze where to identify his best opportunities and what those opportunities might be. By working closely with Cole, using both market research and consulting, McDonald decided that expansion this time would be realized through select brands and product lines.
To make this move, and to sustain growth, Cole and McDonald identified several changes to McDonald’s Vacuum Center – changes that would need to take place over time.
A new business model.
Operating multiple locations with new product lines as well as securing new dealer contracts required a different approach to business. The recent closure of an established quilting store in Wichita (due to retirement) added to the opportunity mix. And, all of McDonald’s growth hasn’t been limited to his second location. His original location in Arkansas City has grown to the point where he can separate his sewing and vacuum sales from used book sales. Together Cole and McDonald continue to research and develop a new business model that will support McDonald’s profitable growth.
A new approach to financing.
Over the years McDonald relied on cash flow to purchase the majority of his products. Market research identified opportunities to expand his product line from $300 sewing machines to $10,000 high-end machines. Additionally, McDonald was able to secure a protected dealership area with two major sewing and vacuum manufacturers. These changes would require a different approach to financing.
Because McDonald’s product mix involved expansion into new product lines, historical financial figures didn’t reflect future earnings. Cole took a 360 degree approach to develop accurate cash flow projections – key to helping McDonald manage his expanding business and to securing financing to support his growth. Cole used ProfitCents –a financial analysis and benchmarking tool – to evaluate how other small businesses were performing in the industry. Additionally he reached out to suppliers and manufacturers to get a better understanding of his potential revenues.
After gathering financial projections, benchmarks, and analysis. McDonald and Cole began reaching out to local resource partners. They began working with a local bank and regional Certified Development Company (CDC) to explore SBA funding and revolving lines of credit. And they reached out the county economic development organization to explore opportunities for support of local small business growth.
A new approach to operations.
Operating multiple locations with expanded product lines called for new systems. McDonald recognizes that this requires running his business different that he did in the past. Together he continues to work with Cole to put additional systems – inventory tracking, detailed profitability tracking by product line, and more. Since initially working with Cole, McDonald has recognized the need for and added a part-time bookkeeper to this the team member at McDonald’s Vacuum Center.
McDonald knows that part of what has grown his business and allowed him to secure exclusive brands is his reputation for quality service. He knows the key to his long-term sustainability and growth is ensuring that customers continue to have a positive experience at every location.
As McDonald’s Vacuum Center has grown, and McDonald has taken a more strategic approach to his business he’s noticed one great benefit that can‘t be overlooked. We’ll share it in his own words: “When I sold vacuums and sewing machines in my used book store, people would ask, “What’s your cheapest product?” Now they ask, “What’s your best product?”
For any small business, that’s a great conversation to have.
About McDonald’s Vacuum Center
Learn more online at http://mcdonaldsvacuums.com/
About the Kansas SBDC at WSU in Arkansas City
The Kansas SBDC Cowley County Outreach Center is a partnership between Wichita State University and Cowley College as well as funding partners that include: City of Wellington Economic Development Department, Cowley County Economic Development, Harper County Economic Development Council, and Sumner County Economic Development Commission.
About Jason Cole
Jason started as the Consultant for the Cowley College Kansas SBDC Outreach Center in 2012. Clients seeking loans find themselves in good hands, because Jason served as an Assistant Vice President for Home National Bank in Arkansas City. As a co-owner of Centaur Solutions, a company specializing in employee assessment, Jason developed a passion for creating high-performing workforces. He helps Kansas SBDC clients identify and solve employee issues that are constraining sales, operations efficiencies, and profits.
Jason also served as Adjunct Instructor with the Business & Industry Training branch of Cowley College and taught in the Wellington school system. Jason holds a B.S. in Business Administration from LeTourneau University and a M.S. in Business Education from Emporia State University.
He can be reached at 620-441-2563 or by emailing: email@example.com