September 25, 2006: Benchmarks, sailors and rocks in the night

The night of Saturday, Oct. 22, 1707, was foggy and the seas were heavy, but Admiral Sir Clowdisley Shovell pushed ahead with his fleet of English warships, headed back to his homeport after a successful engagement with the French in the Mediterranean. He knew he was close to the treacherous shoals of the Scilly Isles, 28 miles off Land’s End, but his navigators all agreed that he was well out of harm’s way.
But he wasn’t. And one lone crewman knew he wasn’t. That crewman also knew that he was risking his life by talking to the officers, and revealing that he had kept his own log of their positions during the voyage. But he was certain, and told the admiral they were close to disaster.
They hung him for mutiny on the spot.
The Association hit first, and sank within minutes, drowning all hands. The Eagle and the Romney hit the rocks next, and went down like stones. In all, four warships and 2,000 men were lost.
Author Dava Sobel in her book “Longitude” tells us that ironically, only two men washed ashore alive that night. One of them was Sir Clowdisley himself. But the fine ring on his finger was too much temptation for a local woman combing the beach, and she handily murdered him for it, confessing to the deed years later while on her own death bed, and producing the ring as proof of her guilt and contrition. (For a different take on the good admiral, see www.geocities.com/Athens/
3682/clowdisley.html. Perhaps Sir Shovell
wasn’t the 1700s equivalent of the pointy-haired boss that Sobel makes him out to be.)
Too many independent business people suffer from the same malady that caused Admiral Shovell’s demise. The two most common forms of this “disease” are first, the belief that no one could possibly know more about their business than they do, and the second, they don’t want anyone else to know more about their business than they do!
In 1972, I worked my way into the ownership of a Honda franchise in Salt Lake City. Suddenly, it was up to me to figure out how to make that thing run, and make money at it. All my training in college had been to first get the standards, the benchmarks and the guidelines, and then map a course accordingly. So I set out to find the numbers.
University of Utah, Polk, Standard and Poor’s, Brigham Young University — I tried them all.
Nothing.
So (and remember, this is before Google!) I tried trade organizations, Honda itself, auto dealer friends, RV guys and transmission shops.
Again, nothing. At least, nothing that fit.
So I blundered on, and did OK, but I was constantly worried that I wasn’t getting enough margin out of my bikes, enough turns on my parts, enough sales on each counter ticket, and enough hours on my RO’s.
That was on the top end, above gross margin. There was absolutely no hope at all for the expenses below gross margin. What was a good percent for personnel? How much should I be spending for advertising? Was I into my building too heavy? And how much should I and my partners expect to make as salaries for running the place, and in profit after all the bills were paid for the year?
There was no North Star. There was no GPS nor PCSAS. There were no topographical maps for the business landscape we were trying to navigate.
No answers. Neither for Admiral Shovell, nor for us. And just like the good admiral, we just blundered ahead, with our own limited successes, and occasional disasters both big and small.
It’s different now. The Lemcos of our world have all pulled numbers and derived highs, averages, and lows. The consolidators now know what is good and what is bad. And there are benchmarks for just about everything that we now do.
And here at ADP Lightspeed we have added our share. Literally millions of records collected over the past 10 years now tell us the historical highs and lows, the retail do’s and do not’s, the predictors of success and the sure signs of impending disaster.
But none of this will do you one bit of good if you don’t seek it out, add to it, and use it in the operation of your own business. I see owners every day who pass on the opportunity to “see the numbers” and choose instead to go it on their own — shoals or no shoals. No guarantees here, but sometimes they make it, and sometimes they don’t.
That young man swinging from the yardarm as the Association went down was the one person who could have saved the fleet. None of us has a corner on knowledge, and it pays to listen, read, watch and continually educate yourself about the retail world we live in. You never know when that one word of caution, or that one idea quickly passed in a 20-group session, or even an off-hand comment by your lot boy, might be just what you need to either reach new heights of profit, or wisely avoid impending disaster. psb
Hal Ethington has been associated with the powersports industry for more than 30 years. Ethington is a senior analyst at ADP Lightspeed. You can reach him at Hal_ethington@adp.com.