Volume 35, Number 6, June 2000
by Lyle R. Hill
Editors Note: Following numerous requests, we are reprinting the following article by Lyle Hill, which first appeared in USGlass in April 1995.
She was adorable ... all four feet, two inches of her. She had large brown eyes, a cute little smile and long chestnut hair neatly braided into perfect pigtails with pink bows. She reminded me so much of my own daughters at that age that I wanted to call her Amy or Beth. But her name was Rhonda ... Rhonda Sue Bimber ... and the reason she was in my office on this particularly pleasant Saturday morning was to interview me.
Well now, Rhonda Sue, I started, your father tells me that you need to interview a business-type person in order to earn some type of Girl Scout badge or something. So, you just relax and feel free to interview away.
Yes, Mr. Hill. In order to earn our Mergers and Acquisitions badge, we have to meet and interview an executive about their business. My father suggested you.
Im honored, I replied. And might I add that your father is one of our best glaziers. But I dont recall my little girls ever working on a Mergers and Acquisitions badge when they were scouts.
Well, you see, Mr. Hill, she said, were a very progressive troop and Mrs. Cline, our troop leader, says girls need to be prepared for the real world theyll face as women.
Okay then, I said, lets get on with the interview and see if we can help you get that badge.
Great, she replied. I have kind of a three-part question and I promise not to take too much of your time.
Fire away, I said.
What do you think are the three most important components of a successful business?
I decided to keep the answer simple, so this sweet little girl would understand it.
Well, Rhonda Sue, it all begins with sales. Yes, indeed, as the old saying goes, nothing happens until someone sells something.
She looked puzzled. Maybe I was going too fast. Is there a problem? I asked.
Well, she said, Mrs. Cline ... Did I tell you shes also a CPA ... says that sales for the sake of sales are like cancer on many businesses. The heart of the matter is margin. How profitable are those sales? Whats the rent? Are you properly managing your sales mix? And Mr. Hill, do you know your break-even point?
Rhonda, did I ever tell you about the time I spent in the basement of the local Catholic Church making baskets with my little girls when they were scouts?
We dont make baskets anymore, Mr. Hill. It would take away from our computer time. But lets move on. In addition to sales, what is the second component?
I guess it would be operations, I continued. Thats the area that produces the products and gets them installed for our customers. Weve got really good people here. This is where your father works.
Im sure, Rhonda said, you have performance standards for these individuals. How do they compare to your industrys averages. What was last years sales per employee? Do you have a program for productivity improvement?
Rhonda, I asked, do you girls still sell those little boxes of cookies?
Yes, we do, she replied. This year we introduced a whole new line of fat-free products in response to our market research. And, were now outsourcing most of our production to a number of new, high efficiency vendors. Margins have never been better. But, please Mr. Hill, continue .
You know, I began to think, she didnt look anything like my kids at all ...
Well, Rhonda Sue, I said, the third component is finance and administration, with particular emphasis on proper financial planning and control.
She looked less than pleased with this answer.
Im sure you know what your ROI and ROE were for last year, she started, but were they acceptable to you? How did you compare with other companies in your SIC category? What percent of receivables have you historically written off?
You know, her father wasnt all that good a glazier either. Kind of sloppy, as a matter of fact.
Tell me, Rhonda Sue, do you still wear those cute little green uniforms?
Not our troop, she replied. We wear olive-colored blazers and khaki slacks. But, Mr. Hill, can I get to the point?
Of course, Rhonda. What is it?
Our troop has been studying the glass industry and we want to know if youd be willing to sell your business?
You gotta be kidding! I replied, nearly falling out of my chair.
Ill keep it simple so YOU understand, she said. We know that your industry suffers due to unreliable suppliers, cut-throat competitors and customers that will do anything and go anywhere to get a cheaper price. So, we think the time is right to buy you out.
But, if the glass industry is so bad, why do you want to get into it? I asked.
We dont, she said. But, we think your building would make a great location for a cookie factory, and besides ... I could knock off my Hostile Takeover badge at the same time.
Lyle Hill is president of MTH Industries-Glass America of Chicago, IL.
© Copyright 2000 Key Communications Inc. All rights reserved. No reproduction of any type without expressed written permission.