INDUSTRY INSIGHTS

Three Vital Questions All Successful Companies Keep Asking Themselves.

All successful companies periodically ask themselves three basic questions. The questions might seem almost simple-minded, but they are usually never asked, and if asked, incorrectly answered.

The world is changing at an increasing pace. What were the correct answers 10 or 20 years ago are more then likely not the correct answers today.

Question #1: �What is our business?� Sounds simple doesn�t it, but it�s not. A classic textbook example is the railroads. The railroads were the # 1 industry of the last half of the 19th century. The world changed, but railroad executives didn�t. The railroad executives spent more and more money trying to make yesterday work until most of them went out of business, and/or were forced to merge.

Living in the past is a pattern that 80% of all executives of old companies fall into. The railroads didn�t invent the General Motors & Ford. GM and Ford didn�t invent the jet airline travel industry. IBM didn�t invent either the personal computer or Microsoft. AT&T didn�t invent either the mobile phone industry or the Internet, etc. The old executives at the old companies spent more and more time, effort and money trying to make yesterday work.

Our gun industry in 2006 is the same. The old fashioned matrix of multiple redundant warehouses, multiple redundant sales staffs, layers of reps, the over priced SHOT Show, a market/product feedback system out of the dark ages, all of this is obsolete.

Everything has a bell curve. The old way of doing things went over the top of the bell curve around 1995. The downward un-workability of the general current way of doing business will increase in speed with each passing year.

If we asked American firearms manufacturers, �What is your business?� About 80% would say, �Running a gun factory and making guns.� The old joke that�s been around for 40 years is, �When the guns to get to the loading dock of the gun factory, that�s where the gun executive�s mind ends.� With some people this is still true.

In the 19th century if you owned the factory, you owned it all. Everything else took care of itself. In the 21st century the factory is a pain in the ass. Walk into any factory and you will find zero profits. The only things anyone can find inside of a factory are costs. 100% of the profit is on the outside of the factory where the customer meets the gun dealer, and/or the customer meets the product.

Companies like Dell computers, Nike, and so forth are individually bigger than the total gun industry, and they never owned a factory. Where is Microsoft�s factory? I don�t know, and who cares? The factory in the 21st century is irrelevant.

The second question you have to keep asking yourself is, �Who are my customers?� Many people in our gun industry have a too narrow definition of their customers. For example, some gun companies still define their �customers� as the distributors!

Today, every American company should be organizing itself to be a world business. Even gun stores can go on-line via gunbroker.com and sell some things nation wide, and even worldwide. The young people who are 12 to 21 right now are very pro-firearms. We have a massive market coming on line inside of the USA. Outside of America, the world is full of expanding police departments and armies. The rich (a growing world market) shoot and hunt regardless of the local anti-gun laws. Private companies are building their own police departments, rich people are hiring full time body guards, and the security business worldwide will grown significantly for all of the 21st Century.

However, we can�t as an industry move into the future until we release our death grip on the past. AT&T, General Motors, US Steel, etc. etc. all made the same mistake. As the past became more unworkable they put more and more time and money into making it work. This is a basic weakness of Homo sapiens.

All of America has the same problem. Federal programs are failures. What does the government do? Fund them with more and more money each additional year. America�s obsolete Middle East mind set is a failure. The current Washington DC answer? Kill more young American soldiers and destroy more American treasure until the past works again. The biggest 20th century disaster example of the above mind set was World War One. The generals would attack a position with 25,000 troops and fail. Then they�d attack again with 50,000 troops and fail. Then they attack again with 100,000 and troops and fail. Then they attack with 250,000 troops and fail!

General Motors didn�t do anything for their GM dealers by trying to make the past come back. AT&T didn�t do anything for their employees by living in the past. IBM didn�t do anything for its IBM dealers by ignoring the personal computer. Gun makes who have a sales system out of the dark ages, a system where all the good sellers are always �back ordered� and all the dogs are talked-up. They�re not doing much for their dealers.

So, what�s the long-term future of the current firearms distributors? In the February 2006 issue I outlined a future distribution system. I�m sure that the distributors who can move into the future will grow and prosper more then they imagine. However, they must become worldwide distributors, and they must become mainly warehouse free distributors. They must become distributors of information and knowledge with the products secondary. Market sales information is the way Wall Mart always made its profits. The end result of a new market-sales-information-knowledge based distribution system with be more profitable dealers because they�ll be getting products that are �hot.� We�ll have more efficient manufacturers who can quickly change to what�s selling the best at that time. We�ll have bigger distributors who are 21st century companies and a true help to worldwide sales, and to customers everywhere around the world in an expanding firearms market.

The third question we have to keep asking ourselves is, �What does the customer consider to be value?�

I�m going to take off the gloves and be a little brutal. So, if you�re uncomfortable at this point I�d suggest you stop reading.

A customer comes into the gun store. He�s looking to buy a new deer gun.
The customer sees one on the shelf and asks the dealer to see it. The dealer gives him the gun and says: �This is a great company. I went to the SHOT Show and they had a $600,000 booth! They gave a ton of money to Reed because everything at SHOT is way over priced. When it comes to blowing money on showboat status symbols they are top drawer. They also have tons of distributors, two dozen warehouses, all kinds of reps, layers and layers of people all on the payroll, and all of that is right here in the product, it�s wonderful!�

The customer says: �It�s nice to know that I�m helping to support all of those people. The longer the sales line, and the more people involved, that�s just more people with jobs. When I buy a gun, things like big over priced booths and multiple costly duplication of everything is what represents value in a gun. I will definitely take this rifle, here�s my credit card.�

Some people will say, �I don�t think the above copy is very funny!� Well, I don�t either, so why don�t we all find the courage to change and move into the new, bigger, more profitable world that�s waiting?