Recently, I was invited to deliver the keynote address at the Norwalk Community College Phi Theta Kappa Honor Society Induction Ceremony. There were approximately seventy five students being inducted, along with parents, friends and college faculty and administrators in attendance. Below is the text from my comments.
November 9, 2012 – Norwalk Community College Phi Theta Kappa Induction Ceremony
Keynote Comments: “How do Locally Owned Small Businesses Successfully Compete with National Chains?”
Good evening. Let me start by CONGRATULATING each of the students who are being inducted into Phi Theta Kappa tonight. It must be a great feeling to have your dedication to academic studies recognized – and also to see all those family members, friends, professors and administrators here tonight to show their support.
My name is Leo Karl, and I am the third generation president of a local family business, Karl Chevrolet in New Canaan. Our business was started by my grandfather in 1927. Looking back at history, 1927 was not the greatest year to START a small business, but fortunately, through some challenging times, our business has grown and thrived.
I was asked by Professor Glazer to comment on the topic of “How do Locally Owned Businesses Compete with National Chains.” Certainly a wide open and far reaching topic. As I prepared for my comments, I did a little research on my audience and learned that Phi Theta Kappa recognizes and encourages scholarship among two-year college students by providing an opportunity for the development of leadership and service, providing for an intellectual climate for exchange of ideas and lively fellowship, and for stimulation of interest in continuing academic excellence. As I contemplated those goals, I began to realize how formative my own education was in determining the direction of my career.
I attended Sacred Heart University right here in Bridgeport, Connecticut. As I began my college studies in business, I actually wanted nothing to do with our family business. After all, I had friends whose parents worked for large corporations, who got to travel, attend international cultural and sporting events, and live in big houses. That all seemed very attractive. However, as I continued my studies, I began to realize that most corporate jobs would begin with a very narrow focus. By that time, I had realized that I really enjoyed all aspects of business – including marketing, sales, customer service, accounting, finance, human resources and more. And I realized that all of those skills were needed in my family’s business. Thus I began the career path that has led me here today.
Back to the question of the day: How do locally owned businesses compete with National Chains? The first thing that came to mind was the image of David vs Goliath. In that old biblical tale, after a stalemate of forty days as the Israelites were camped out against the Philistine army which was protected by a giant named Goliath, a young man named David stepped forward with only a slingshot. After a brief conversation, he convinced the leaders of Israel to allow him to approach the giant. He swiftly took down Goliath with one strategically placed shot of stone from his slingshot.
Granted, it’s a biblical tale, but what does David and Goliath have to do with business?
Upon reflection, I believe plenty.
Prior to David’s arrival, when faced with an imposing opponent in Goliath the Giant, the leaders of Israel acted more like a BIG NATIONAL BUSINESSES….. They waited for forty days…. They had Meetings among themselves…. They deliberated their options…. They assessed the situation…..
While David stepped forward and acted more like a LOCAL SMALL BUSINESS with an idea combined with the energy, dedication and enthusiasm to see it through. His mind assessed the situation, formulated a plan, brought in some key supporters, bounced the plan around in a small group, and then set out to execute his plan.
I believe there are FIVE KEY attributes that allow Locally Owned Businesses to compete with LARGE NATIONAL AND MULTINATIONAL CHAINS. They are:
- PERSONAL CONNECTION WITH CLIENTS
- CUSTOMER SERVICE
- LEADERSHIP & ENTREPENURIAL SPIRIT
Today’s business climate is fiercely competitive at every level. It does not matter if you are a small locally owned business or a large multi-national corporation; the overall global economy has created a series of challenges. Years ago, I began using a phrase within our business as we discussed trends and kept looking for ways to be successful; that phrase was the “FedEx & Walmart Effect”. Consumers began to expect goods and services to be delivered FASTER and LESS EXPENSIVE each time they did business. In and of itself, this is an unsustainable proposition. Yet we had two massive corporations spending billions of dollars in marketing to tell the public that 1) FedEx could deliver items FASTER than anyone else and 2) Walmart could sell them for less; in fact, Walmart’s marketing showed prices dropping all over the store.
The past decade has certainly put locally owned small businesses to the test as they have had to compete in an ever changing and challenging economy. But I believe there are many signs that locally owned small businesses have not only survived, they have thrived during this time. And I absolutely believe that locally owned small businesses will provide the job creation our economy so desperately needs.
I say this with one GIANT CAUTION. Our public policy leaders and our political system must recognize the difference between small locally owned business and large national and multi-national corporations. We have been in a policy making and regulatory binge lately. And one-size does not fit all. As you continue your studies here at NCC and move on to your next adventure, I urge you to stay informed on the policy debate and consider the potential impact for everyone who might be affected. This not only goes for the national political debate, but most importantly at the state and local level where most issues that directly impact businesses are decided. Burdens are placed on business in two primary ways: through regulations and taxes. Both add cost and complexity. But while large companies typically have dedicated staff working on compliance and tax planning, often these burdens fall to the hands-on owners of local small business. As a society, we need to be aware of this fact and guard against unintended negative consequences that severely impact small businesses. In my business, we are dealing with a flood of new regulation that has added cost and added complexity. Under Regulations, we now have to:
- Red Flag Rule (part of the financial reform act – mandates that we run all customers through an identity fraud check)
- Federal Terrorist Alert List (result of heightened security post 9/11 – mandates that we cross reference all vehicle purchases against a federal alert list)
Under taxes, we have:
- Connecticut Tourism Tax – requires us to collect $1 per day for each day a rental car is used
- Refrigerant Storage Tax – requires us to pay a quarterly tax based on the amount of A/C refrigerant (Freon) we have on hand
- Connecticut Tire Tax – requires payment of a small tax based on the number of tires sold
The list could go on but I don’t want to bore you. My purpose is only to shed light on an important topic that impacts all of us, from increasing the prices we pay for goods and services to potentially harming future employment opportunities.
Enough politics and economics. Let’s go back to those FIVE KEY ATTRIBUTES of local business and take a closer look at each….
- FOCUS – the ability to stay focused on core business – Just like your studies here at NCC, when you are in business your ability to stay focused on the most critical business issues of the day is a big challenge. There are always distractions. As a business grows and gets bigger, those distractions tend to grow and multiply as well. From my experience, a locally owned business has its leader’s right there on the front lines. That allows the entire team to stay focused on their core business to maximize results.
- FLEXIBILITY – the ability to quickly adjust and adapt to market changes – We are a small business working under a large corporation – General Motors. So there are times when a corporate policy decision directly impacts our business. Like during the financial crisis of 2008 and 2009 when General Motors made the decision to stop offering consumer leasing of new vehicles. The decision was based out of the crisis of the financial meltdown that left most large banks and lenders unable to fund the leasing model. However, for our business and our customers, we had a huge problem. Leasing typically offers a lower monthly payment than a purchase finance contract on the same vehicle. As we had customers whose leases were expiring every month that were looking to actually lower their monthly payment on their next vehicle, we simply had no choice other than to offer them a much smaller and less expensive car. For most families that would not work, so we quickly morphed our business and began sourcing late model pre-owned vehicles from around the country. With large corporations cutting back on their fleets from excess purchases over the previous couple of years, there was a flood of very nice, low mileage vehicles available. We cherry picked the nicest models and shipped them in from around the country. We then worked with a variety of new lenders, including local and regional banks and credit unions to ensure we have viable financing options available for our customers. We then offered these vehicles to our returning lease customers at a fraction of their cost new coupled with attractive terms. We retained and grew our customer base and solved the urgent need for a family vehicle. Meanwhile, many large corporations were not able to act as quickly and we gained market share during this time.
- PERSONAL CONNECTION WITH CLIENTS – successful local businesses seek to make a personal connection with their customers. Using technology and social media, today’s local businesses can connect with their customers in ways that large corporations simply cannot do. In our case, my team at KARL Chevrolet is active in our community in a number of ways. We volunteer for area non-profits, we coach youth sports teams, we sponsor and support a myriad of local events. Each of these opportunities allows us to personally connect with our customers. These interactions provide us invaluable feedback on how we are doing; where we might need to improve; and what other products or services we could offer. Here are just a few ways we have used social media in the past year: TWITTER – we have used our @KARLChevy twitter feed to update local HS sports fans on scores from FCIAC and CIAC sporting events. FACEBOOK – we have used our KARLCHEVY facebook page to keep local residents updated on emergency preparedness prior to Hurricane Sandy and then provided regular updates on things like generator safety. Our service team provided local residents with motor oil for their generators as many people began to realize that a generator uses oil over an extended period of use. We have used our LINKEDIN company page to encourage people to support local events like the recent American Cancer Society’s Making Strides Against Breast Cancer Walk at Sherwood Island State Park. Staying CONNECTED with your customers and clients is a key to business success. Building and maintaining a personal connection with your customers and clients is a key to business success.
- CUSTOMER SERVICE – by nature and culture, locally owned businesses are typically capable of providing superior customer service. Associates get to know their customers and there is a personal commitment to be there for the client when needed. For a local service business, that may mean making a house call on a holiday weekend. For a retail business like ours, it means delivering a superior level of customer service on a daily basis and then going the extra mile when called for. One example of the ‘extra mile’ occurred for us a couple of winters ago, when one of our customers was in Montreal Canada on a ski vacation with their entire family over winter vacation. On the second day of their trip, they found their Chevy Suburban had been broken into and stolen. The Montreal police suspected it was part of a large theft ring that had been operating at the ski resort over the recent weeks. There were over a dozen SUV’s reported stolen and little hope of recovery. With international driving rules in place, it was not possible for the family to rent a large vehicle to drive their six kids home and plane tickets for eight people was a huge expense. Some quick thinking by our staff and the next day one of our driver’s was headed north driving a new Suburban. We delivered it to their hotel while they were out on the mountain skiing and our driver flew home the next day. One plane ticket was much less than eight, and eight happy family members that got to stay on vacation together was priceless. When it comes to customer service, we are simply always asking ourselves ‘how else can we help our customers’. That may be identifying a new service or just providing useful information.
- LEADERSHIP & ENTREPENURIAL SPIRIT – is simply stronger in most local small businesses. Passion and enthusiasm is contagious. I’m sure each of you has had both good and bad group experiences. I suspect if you look back on the best group experience you’ve had, whether it be a group project for a class here at NCC, a sports team you’ve played on, or a work project, one of the things that made it special was a positive, passionate leader emerged and kept the group focused on its goals. By our human nature, we always want to associate with a winner and a good leader can inspire a group to win. I am quite sure that some of you in this room have been in a leadership position yourselves, and I am confident that you’ve displayed that passion and enthusiasm to others. When successful, local small businesses can achieve tremendous results. All it takes is leadership.
Well, that concludes my take on the five key attributes that allow small business to compete with large national chains. I would like to thank Professor Glazer for the opportunity to speak with you tonight. As I look out around the room, I see so much enthusiasm and so many bright futures waiting to unfold. I can only imagine the collective good that will come from this room in the coming years and I hope one day to learn from some of your stories. And I wish each and everyone of you the utmost success in whatever future endeavors you choose to pursue.
In closing, I must let you in on a little secret. In reality, everything I reviewed tonight is possible within any organization. It’s up to you to make it happen. So no matter what size company your career path takes you to, you will have the ability to impact the business you work for. I hope that some of the thoughts I’ve shared with you may spark a thought or ignite an interest as you advance through your studies here at NCC. Congratulations again on your achievements tonight. Thank you.