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CEO Blog

12/02/2011

"Emotional Hedging" -- using the example of Eintracht Frankfurt

As a fan of Eintracht Frankfurt I am used to many things, but currently it is worse than usual: in five games more points (one) than goals (zero) accumulated....

As a fan of Eintracht Frankfurt I am used to many things, but currently it is worse than usual: in five games more points (one) than goals (zero) accumulated. Despite business seats and ample consumption of applewine, the misery is sometimes unbearable. Always when it looks like higher goals can be reached, a setback immediately follows. It would be nice if the athletes would all be subjected to some sort of punishment, like putting them in bathing suits and flip-flops, and making them work as supermodels in the Frankfurt Hollister shops. Up to now the only advantage was the connection to this diva club over the years, allowing for a certain calmness under all circumstances.

A friendly investment banker (a Mönchengladbach fan) gave me the decisive tip: "Emotional Hedging". Before each game, place a nice bet on your team losing. Should they win, your euphoria will make you forget about the money. If they lose, at least you win some money. That is better than interest rate hedging (see below), and you are less upset with the protagonists on the field.

And if the team loses too often, you can invest the money into certain referees. . .

11/02/2011

Suddenly you are looking into an armored conduit

A friend of mine is in charge of Lufthansa LSG in Cairo. Certainly no cushy place to do business currently....

A friend of mine is in charge of Lufthansa LSG in Cairo. Certainly no cushy place to do business currently. He stayed, out of responsibility for his employees alone, sleeping in the office, and giving them very flexible working hours, so that they could participate in vigilantism, in order to protect their personal property. Kudos to you! Here is his interview with the WZ.

http://www.wz-newsline.de/home/politik/specials/aufruhr-im-nahen-osten/ploetzlich-schaust-du-in-ein-panzerrohr-1.567462

10/02/2011

Proprietor living in a dream world

During the course of our growth we buy out a company here and there. Unfortunately, you are dealing with five firms on average, until the deal is "complete"....

During the course of our growth we buy out a company here and there. Unfortunately, you are dealing with five firms on average, until the deal is "complete". It just so happens that this past week I could not believe what ideals some proprietors in Europe have about their companies. And that in wholesale. Meaning, companies that do not develop anything, but rather only have contacts with customers and manufacturers. These contacts are never exclusive, no manufacturer has only one distributor, and customers also hop around back and forth, unfortunately. Add to that a sector in which profit traditionally sinks by percentage. Obviously, the appraisal no longer follows the formula "Profit times X", but rather, "How much money can I absorb", or "How many millions do I need in order to retire right away". When a company costs a certain amount in a country like it would us, and during the course of one year all Auto-ID and POS peripherals are to be frugally given away, then something is wrong. The giving-it-away tactic surely leads quickly to monopolism. . . :)

09/02/2011

Construction Activity / Building Frustration

Ok, out with the building frustration: when completing a construction site, like we did here in Usingen, you can annoy yourself all day long....

Ok, out with the building frustration: when completing a construction site, like we did here in Usingen, you can annoy yourself all day long. Some workmen destroy something which another one has just finished building. A sun-blind is hung-up, and what you do see left and right on the freshly painted white wall, but black fingerprints. A hole needs to be drilled right away in the sales department - no problem! The mess stays put, and is nicely distributed all over the newly layed carpet. For the grand finale, only one wall still needs painting, and by wall, we mean carpet base trim and door frame too. New lamps were installed, meaning the floor needed immediate fixing up, although it was not even one week old. Of course, in each case, nobody did it. . . (Construction photos under www.facebook.com/jarltech)

08/02/2011

Do manufacturers want to destroy market margins?

Year-end 2010: Some of our manufacturers stopped the flow of goods. Why? Because their goals had already been reached - 2010 was a better year than planned....

Year-end 2010: Some of our manufacturers stopped the flow of goods. Why? Because their goals had already been reached - 2010 was a better year than planned. I thought it must be a joke, but it wasn't.

Early 2011: Suddenly nearly all manufacturers swarmed their distributors and agreed to 2011 growth targets. Since they guessed too low in 2010, the manufacturing centers in America and Asia said: goal-achieving bonusues will only be given above 20% growth. Secretly, the manufacturers are calculating with a 6% market growth, when they really mean they can easily add on 20%. And Jarltech, as the best partner, wants to realize this.

What will the results be? All distributors will agree to utopian quarterly figures, then during the last month in the quarter, sell their goods at wholesale prices, to achieve their goals. Since they will all be doing this, goods will be squeezed and stretched until nothing is left over. That means the following quarter will be tougher, for everyone. It is this scenario that every manufacturer should think about twice. It will be interesting, since our colleagues not only represent one manufacturer, but rather, multiple, and in various segments. And we all pay our S&M according to margin. But if one manufacturer is enough for each segment, and the margin is hereby secured, the customers, out of self-preservation instinct, will come running. This could mean enormous moves away from manufacturers, whose goals cannot otherwise be reached.

It is going to be an interesting year. Maybe the exception to the rule will triumph, where business rational prevails.

07/02/2011

Sales training with the goal: more margin!

We decided to allocate more budget money for sales training this year....

We decided to allocate more budget money for sales training this year. But, for the German sales & marketing team alone, you need 8,000 Euro a day for a full-day training session (with trainer and expenditures). But, even if our unadjusted margin only goes up by 0.1% a year, we can afford to do this more often. One day we will reach the point of being happy to have some sort of margin.

Good sales & marketing, by today's standards, must be able to deliver a "value add". If we store nearly two month's worth of product sales for just under 10 million Euro, then it's still not cheap, despite low interest rates. The same applies to a technical department which works on each package on the same day, and also partially repairs products in our workshop. Efficiency is the key to success, but we want to be affordable, and not seen as just cheap.

I will let you know later on what sort of ROI the training session for "Sales Skills" brings. Perhaps it can help your sales & marketing team too.

06/02/2011

Sales Kick-off in Königstein - what ROI is there from product knowledge?

Is this really necessary? A whole weekend for product training? Yes, it really is necessary....

Is this really necessary? A whole weekend for product training? Yes, it really is necessary. This weekend we gathered around 50 of our European offices' sales associates and technicians together. We participate in lots of on-site training courses, but at least twice a year we have to have a refresher crash course. This time we tried out a new format over the weekend, by dividing the employees into small groups in the manufacturer workshop. Rule number one: PowerPoint is forbidden (to the greatest possible extent, that is). There is nothing worse than someone reading the specs off the wall.

This system really helped us to create more interesting training sessions, particularly since we have three new fundamental manufacturing partners in 2011 (Getac, NCR and HP). Special kudos goes out to Mr. Hennig from Getac, for the best workshop. Close behind were Mrs. Köber and Mr. Walker, both from Datalogic Mobile.

As a special distributor, the only chance we have to differentiate ourselves is via knowledge. We do not need any specialised sales people to simply look up article numbers or prices off the computer; there are webshops for performing those tasks. If an article is on back-order, the only way you can offer customers an alternative is with product knowledge. If you want to tackle the market, then you need the know-how. Even broadline distributors can handle the rest.

Independent of this, kick-offs are also the perfect opportunity for networking between our sales offices and the manufacturers. The evening was a lot of fun too, so much in fact, that during the tour of the newly reconstructed facilities in Usingen the following morning, more employees were reaching for the Red Bull than the champagne!

We have posted pictures from this event on our Facebook fan page: www.facebook.com/jarltech

02/02/2011

Interest rate hedging - please spare us!

Believe me, not a week goes by without one of our banks trying to sell us interest rate hedging....

Believe me, not a week goes by without one of our banks trying to sell us interest rate hedging. It's getting really hard being nice to them, though I understand the bank employees, because they have to sell something too. Interest rate hedging is a great tool for securing long-term capital assets, but not for a distributor who only finances liquid assets.

First: When interest rates increase, our warehouse will become more expensive. Before I put the effort into a six-digit interest hedge, I can always adjust my stock, especially when regarding the fact that we continually raise our net worth (I leave the majority of the profit in the company).

Second: The bank is right that the EURIBOR rate can triple at any time, for example, from one to three percent. But, in order for that to happen, the economy needs to be strong, the corporate credit ratings would improve, and then the banks would have to lower their interest margin. And just like that, you would win back percentage points. Over a five-year policy period it is still not an interesting offer: half of what you pay to the hedge fund is for nothing anyway; perhaps in the second half you could turn a profit.

30/01/2011

Our growth continues

As a special distributor, we have grown an average of 25% continually per year over the last four years, in contrary to our publicly traded competitors....

As a special distributor, we have grown an average of 25% continually per year over the last four years, in contrary to our publicly traded competitors. This growth far exceeds market growth and signifies increasing market share for us, particularly in our new markets (France, Holland and Belgium). How nice to have something left over! Even our net worth will grow. However, 2011 will be a tough year, because the manufacturers expect more growth, and the competition is out of its crisis mode. May the best company win!