Outsourcing the Extra Talent You Need
Outsourcing the Extra Talent You Need
I am making the assumption that when it comes to certain needs of your company, none of you would dispute the advice to use a CPA to prepare your annual corporate tax return or an attorney to advise you on complex legal matters. By using these professionals for only a few hours a month (or perhaps only quarterly or annually), you are able to afford them and thereby your company benefits by the higher-level skill sets you find in professionals.
I believe a case can also be made that you can find similar benefits by using professionals in other areas such as:
• Contract Review
• Human Resources
• Sales Management
We call the professionals who can help you in those areas “outsourced talent.” These are individuals, sometimes (but not always) independent contractors, who have in-depth knowledge and expertise, and network with others on almost a daily basis. As a result, they understand the issues and can distinguish between the meanings created or differences that may occur as a result of how a sentence is phrased or an errantly placed comma.
Let me give you a few examples:
When the pandemic hit and closed down our businesses, many of us retailers attempted to open communications with our business insurance companies for what we believed qualified as business interruption claims. Even our agents felt it made sense. While we had received updates and addendums, we just filed those, not realizing that the insurance companies had added provisions that stated an exception to the provisions in our insurance related to “viruses.” Thankfully, the U.S. government bailed out most of us, but we still wish we had realized the impact of this exception and shopped for a company which didn’t have the same exclusion. Only an advisor with very specific knowledge of business insurance could have advised us correctly.
Members of the National Shoe Retailers Association remember a gentleman named Ron Wilson (who unfortunately departed this world during Covid). He had represented many retailers’ interests in lease negotiation with shopping centers. Ron was what you might call “a bulldog” due to his negotiating style (he would say things to the landlords that we might not be willing to risk), but he had a secret weapon. He employed a contract reviewer who went through the lease with a fine-tooth comb and knew exactly what to delete or try to get deleted. Many retailers felt the fee Ron charged was worth every penny.
While simultaneously building up my retail shoe career, I also held a real estate license for 24 years (mostly involving commercial property). I was required to go to 24 hours of continuing education every two years and one of those regular classes included contract law, where the instructor taught us how to fill out the standard Purchase Agreement. Certainly, you might agree that the real estate licensees in those classes were more qualified to understand what could go wrong than the typical buyer.
So, what I am saying is that there are people outside your business who have specific skill sets and come with expertise in the finer details of contracts. You can’t possibly afford to employ all the individuals directly on your team who can do everything you might need in your business, but… you can outsource the talent.
Other examples for how extra talent can assist in retail shoe stores:
Contracts: such as service agreements, including communications and trash collection. There are people in the community that know the ins and outs of these contracts.
Human Resources: such as policy manuals, benefit contracts and administration, and advice on how to terminate employees where you feel there might be an issue.
Marketing: I had a local Media Buyer for many years who had his ear to the ground on the local rates for radio and television spots and he also was the middle man for my newspaper contract and some of our coupon publications. The side benefit was that every person calling me to get some of my advertising money was sent to my Media Buyer who ran interference for me.
Digital Marketing: Few shoe retailers (or anyone on their staff) have all the answers when it comes to Social Media, Google Ads, etc. There are a ton of small local companies who understand this better than many of us and they can be a great help to us.
Graphic Arts: The right person who knows how to create a consistent image for your business and regularly lay out a postcard can be very valuable to retailers.
Sales Management Training and Development: Many of us retailers have heard or been involved with The Friedman Group. As their website says, “a destined-to-fail retailer once asked, ‘What if I train my staff and they leave?’” Harry Friedman’s response: “What if you don’t train them and they stay?”
I think this list above is well understood by many of you and possibly you are already using outsourced talent in those areas. Here are a few more that might be outside of your radar screen:
Financial Review: What I am talking about here is getting outside help to review the details and metrics of your financial statements to see how you compare against other similar businesses and to provide insights that promise to assist you in reaping out those extra percentages of profit missing from your business.
A review would examine key operating ratios focused at a minimum on these areas:
• Sales Increase Rates (or lack thereof)
• Freight Costs
• Gross Profit Margins
• Major Expense Class Review
• Merchandising Statistics, including:
Markdowns, Turn, GMROI
A financial review is accomplished in one of these manners:
Trade Association Material: Buying the NSRA’s Business Performance Report and reading that material and comparing your business’s ratio against the average in that report.
Networking: Set up a network of your peers and help each other out by reviewing each other’s operation.
CPA Review: You ask your CPA to review your financial reports and recommend ways to improve.
Business Broker: The “right” experienced business broker can give you an idea of how your stats really stack up.
Outsourced Talent: There are many “old shoe dogs” with lots of expertise in running shoe stores who have the knowledge and expertise to help you do a financial review of your business and are ready, willing and able to serve as your coach to get it moving more profitably. By virtue of being “an old shoe dog,” most of them aren’t afraid to tell it like they see it and you will probably get the most value (as in “honest feedback”) from this group, but (of course), I’m biased.
Acquisition Review: Let’s face it: We are in a “grow or die” business. Regular escalations in expenses, led by Personnel Expense, requires us to consider expansion by opening new stores or acquiring other operators.
Finding a match: While there are a bunch of business for sale sites and business brokers, where you can find listings for shoe stores for sale, the rare one is truly “a find.” The best shoe businesses are sold through networking and before you’ve even heard about it.
The next step is if you do find yourself in a situation where you can buy someone else’s store and add it onto your little chain (which I believe will help cover your central expense, so it is a good idea), now you have to analyze it.
The right outsourced talent would hopefully advise you on this acquisition.
Elements to a successful Consultancy
So, now let’s imaging you’ve decided to outsource some talent and bring that person on to focus on a project for you. Here are other considerations:
I would advise you to hire a person who has these skill sets:
1. Experience working as a Consultant
2. Expertise in the project area you are hiring them for
3. Financial Acumen
4. Organized Mindset
5. Highly Developed Verbal and Written Communication Skills
I would advise you AGAINST hiring anyone who can’t or won’t put together a written proposal which explains in sufficient depth the Who, What, When and How components of the project and also includes sections such as these:
• Scope of Assignment
• Process (steps)
We’re all in this together. Over the years, I’ve noticed that the shoe industry is one of the most “together” industries imaginable. What I am talking about is how well most of us network with each other, are open for dialogue, reach out for help, are willing to put ourselves forward and accept advice (and sometimes critique) from each other.
The evidence exists in just how many people are connected with each other through social media (Linked In, Facebook, Instagram); the numerous posts on the shoe industry on those sites help prove my point. Not every industry can say the same.
When good businesspeople seek for and accept advice from other people and there is response, it’s a good thing. To those of you who haven’t tried reaching out and seeking consultant expertise, you ought to consider it. There IS expertise out there and some of it is very valuable and can help you take your business to the next level.
Alan Miklofsky is a semi-retired shoe industry veteran and contributor to Footwear Insight. This is his eighth article in Footwear Insight. After a 40-year award winning career as a retailer, long-term board member of the NSRA (which included a stint as its Chairperson), Alan is currently a business consultant. Alan is currently a business consultant.
For more information on Alan, visit his LinkedIn page at: https://www.linkedin.com/in/alanmiklofsky
Disclaimer: The author of this article is a Business Consultant, therefore the views expressed herein are from a person who makes a living by being employed as “outsourced talent.”