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Bears Business Brief: Creative thinking in business

Dennis Marlin

With nearly 40 years of working around great creative thinkers, I have learned that great ideas don’t typically just pop into someone’s head; it is a process.  That doesn’t mean inspiration is not part of the creative process, but it is only one element. Often, I am asked, how did you come up with that idea? It’s a process, not a gift.

When you start a business, you are generally full of great ideas that are at the core of your business foundation. Over time, as the business matures, new ideas seem harder to coax to the surface. Primarily, that’s because your business model is well established, and upsetting that foundation is hard and even scary. The only time most people are willing to entertain new creative thinking about their business is when it is in trouble. This is not necessarily the wrong time; but, if we could interject creative thinking into our business model, we could reduce (not eliminate) the chance of avoiding trouble.

One creative person I worked with had a very quick mind and could come up with a continual flow of ideas. These ideas were fueled by creative inspiration but not grounded in knowledge or understanding. I never wanted to stop that flow of ideas. You may have a similar person in your business who always has ideas, but you generally kick them out or turn off the input. Maybe it is that great idea you woke up thinking about. I would encourage you to not stop this input — just learn how to filter it. You should always be open to inspiration, but it is only one element of the process. I found that the best ideas don’t usually come first; they only come after you add the two other elements of the process —​ knowledge and understanding.  You or your team’sknowledge,combined with you allowing your team to dig for a better understanding of the problem you are trying to solve, will help you form those great ideas.

For example, our company had a major client whose premium business was being dominated by a family-owned business. The issue became, how does a major brand compete, with substance, with a well-respected smaller brand. Our client had the commodity volume covered but was not competitive in the premium product category, Italian tomato sauces. Since we were dealing with a crop-based business, we were not trying to kill the family business, but expand the category with the capacity we could bring to the market. We knew that our client’s tomatoes were grown in the same premium county where their competitor grew their products (business knowledge) but that only offered us a “me too solution.” With a deeper understanding and industry research, we found that our client harvested more tomatoes in this premium county than their competitor. This led to the point of difference: with our client’s volume, they were able to select only the best of the crop to put into their premium sauces. To validate the quality of our client’s product, we had to humanize how they processed their products. We brought to life the growers who cared for the fields, the agronomists who watched over the crops and the method used to process the product — rebranding the product line to give a premium image. The end result was not only growth in our overall business, but an expansion of the category.

Creative thinking in business really fits around the formula of inspiration + knowledge divided by a greater understanding. Remember, the best ideas don’t always come first — they only come when you are willing to dig deeper and are willing to be open to new thinking.

Dennis Marlin worked in the marketing and advertising business for nearly 40 years, both for clients and agencies. Thirty-one years ago, he founded The Marlin Network, which became the largest food service agency in the industry, and was honored by Inc. 5000 six years in a row as one of the fastest-growing companies in the country.

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Congratulations to Dr. Christopher Hines

The work of Dr. Christopher Hines will be featured in the 2017 issue of Mind’s Eye, the university’s research publication.

Here is an excerpt:

How did the global financial crisis of 2008 happen? And how can we make sure nothing like this happens again? The research of Dr. Hines, assistant professor of accounting, may be able to help policymakers determine whether some legislative reforms of the banking industry passed since “the Great Recession” can play a role in stabilizing economies and preventing crises.

His full story can be found on the Mind’s Eye blog and on the Research page.

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Bears Business Brief: Small business specialty retailers can afford marketing research

Ron Coulter
Dr. Ron Coulter

Small businesses are important contributors to economic activity in the U.S. and in southwest Missouri. Small specialty retailers comprise a significant portion of those businesses. Most owner/operators would recognize marketing research as an important business tool to understand the target markets they serve. What is marketing research? It is the collection and use of information to make good business decisions. Sadly, many business retailers do not conduct marketing research because: 1) they think it costs too much; and, 2) they think it takes too much time. In this article, I will describe some quick, inexpensive common-sense techniques for marketing research.

Let’s use an example of a small hobby shop specializing in model railroading supplies. As a specialty retailer, the owner focuses on a limited number of complementary merchandise categories: that is, items for the model train enthusiast. The store is probably small, with a deep but narrow product assortment, and an owner who is possibly a model railroader himself and has a lot of knowledge about the products and a desire to help his customers. As customers likely seek out the store via phone book or the internet, a prime retail location is not necessary. So, how can the owner do quick and inexpensive marketing research?

Observationcan be and is a critical and useful tool, and most small retailers use this form of marketing research without even realizing it. Small specialty retailers must know their customers: who they are, where they’re from, what they do for a living, and what they typically purchase. For instance, our hobby shop owner wants to know what scale of model trains most of his customers shop for and purchase. Do most buy kits to assemble, or materials to construct unusual models not commercially available? If a business owner categorizes the departments or product categories his sales come from, he can make good inventory decisions and provide his customers the products they want. An owner can do this through a simple inventory/sales tracking process.

Another source of customer information comes from something as simple as how payment is made for purchased items. Some specialty retailers take credit in the form of layaways and take cash and personal checks. Owners can gather information about the customer (name, address, phone number, etc.) from these transactions. Then, with minimal effort and investment, the owner has the start of a customer database/mailing list.

What about other customer information? By simple observing, the retailer can make guesses about a customer’s age, marital status or family composition. This information can provide the owner with clues about his customer base. Casual interaction and conversation with customers might provide other clues that help the owner know his market. Another way to get customer information is to ask them to sign up for a newsletter, which the owner can then use to provide coupons, new product information, promote sales, etc. Finally, some retailers use drawings for contest “giveaways” to gain additional customer information.

The key for small specialty retailers is to observe and collect useful facts and information, about their market, that are readily available and inexpensive to obtain. The type and amount of information is limited only by the small business owner’s imagination. To better understand their customer base and to determine what products and services to offer, small specialty retailers can use marketing research — which should lead to customer satisfaction that equates to repeat business and increased sales.

Ron Coulter, Ph.D. is a professor of marketing and marketing department head at Missouri State University. He is also interim department head in the merchandising and fashion design department. His areas of specialization include multivariate marketing research data applications and small business research.

This article appeared in the February 4, 2017 edition of the News-Leader and can be accessed online here.

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Bears Business Brief: Managing cash flow is everything

Dr. Stephen Haggard
Dr. Stephen Haggard

Small business owners often overlook the most important aspect of financial management in their businesses: Cash. Though often overshadowed by the topics of capital budgeting (deciding what long-term assets, like machines and buildings, to purchase) and capital structure (deciding how to finance these purchases), cash management is actually more important from at least one perspective: If you run out of cash to pay your bills, you will go bankrupt. Period.

Accounting numbers do not help small business owners recognize their perilous cash situations, either. Sales are recorded in the books, whether or not cash is received. If a firm makes most of its sales on credit, it can appear to be quite profitable from an accounting perspective but still be cash-poor. Firms with positive net income can and do go bankrupt — when they run out of cash. Firms with chronically negative net income can and do continue to operate. All these firms have to do is convince uninformed investors to buy their newly issued stock or to loan them money. Example: Sears. This scheme is unlikely to work for your small business, however.

So what is a small business owner to do? Spend some time developing what we call a cash budget. Look at the next four quarters and try to estimate your cash inflows and outflows. Use history as your guide, and do not assume you will suddenly develop new fiscal restraint. Use these estimates to figure out what the net change in your cash position will be in each quarter. Now, take your current cash balance and start adding (or subtracting) the changes forecasted in your cash budget. If the quarterly change is positive and your previous cash situation was solid, great! However, if the change in a quarter is negative, determine whether that change will reduce your cash balance below a safe level for your firm. Be conservative when determining how much cash represents a safe level. How often do you have pleasant cash surprises versus unpleasant cash surprises? Sadly, windfalls are rare, but unexpected expenditures are all too common — the delivery truck breaks down, an employee gets injured, or a fire destroys part of your inventory.

What should you do if your forecast shows your cash dropping below a safe level? Visit with your banker. This person has probably already loaned you money and, therefore, has a vested interest in your firm’s survival. If the low cash balance is a result of a temporary situation, like taking on inventory in preparation for a large project or sale, then a short-term loan might be the appropriate fix. If your forecasted cash shortage is caused by the purchase of a long-term asset like a new pizza oven, perhaps a long-term loan would be more appropriate. In either case, preparing the forecast in advance is important because doing so allows you to tackle problems in advance instead of waiting for a cash crisis to arise before taking action.

A native of southwest Missouri, Dr. K. Stephen Haggard is an associate professor of finance and a BancorpSouth endowed research professor. His teaching and research interests include corporate finance and asset pricing.’

This article appeared in the February 2, 2017 edition of the News-Leader and can be accessed online here.

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MBA Students take on experiential learning project with Hotel Nikko

group photo
L to R; Dr. Elizabeth Rozell, Jeanne Ferrari, Elizabeth Sivill, Meghan Wright, Rayanna Anderson, Arthur Guslim, Jordan Lewis, Dean Stephanie Bryant

Four MBA students had the chance to take on a challenging experiential learning project this fall as part of MGT 796.

Arthur Guslim, Jordan Lewis, Elizabeth Sivill and Meghan Wright worked with Hotel Nikko in San Francisco to develop a utilization plan for a 1,200 square foot retail space inside Hotel Nikko. The lease agreement for this space, currently occupied by Starbucks, expires in September 2017 and the management team of Hotel Nikko is exploring options to pursue when the lease expires.

To kick off the consulting project, Dr.  Elizabeth Rozell, Director of the MBA Program, and Elizabeth Sivill, team leader, held a conference call with Jeanne Ferrari, Missouri State University alum and Director of Operations for Hotel Nikko. This discussion set the stage for the semester long project.

To gain firsthand knowledge of Hotel Nikko and the San Francisco area, the students and Rayanna Anderson, Entrepreneurship Coordinator and Community Liaison for the College of Business and project supervisor, traveled to San Francisco in September. During their visit, they toured all aspects of hotel operations and had the chance to interview Jeanne Ferrari and Anna Marie Presutti, Vice President and General Manager of Nikko Hotels Inc., and Hotel Nikko San Francisco. They also collected data in the area around the hotel to gain knowledge of the current market.

Upon returning to campus, the students utilized data provided by Hotel Nikko as well as industry reports from the Small Business Development Center; to compile a 100 plus page report offering five suggestions for the Hotel Nikko retail space.

In December the students returned to San Francisco to present their findings to nine members of the hotel executive board. Accompanying them to their final presentation was Dean of the College of Business Stephanie Bryant, Dr. Elizabeth Rozell and Rayanna Anderson.

After the final presentation, the management team of Hotel Nikko commended the students work. “It was not excellent, it was superb,” states Presutti.

Reflecting on her experience with The Hotel Nikko project, Elizabeth Sivill states, “This project has been the highlight of my master’s program. I have done several projects and internships, but this has been the most challenging and rewarding project I have faced. Even though we were only students, the Hotel Nikko San Francisco management team truly treated us like experts and valued our research and work.”

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