Coffee and Leading Indicators, Please
Like most small-business owners, Barbara Rodstein listens to the news and reads the business pages.
But when she really wants to figure out how the economy will affect her decorative bathroom-fixture business, she pulls up to Randy’s Donuts in Inglewood for a cup of coffee and an earful of news.
“I guess I don’t believe the government indicators,” said Rodstein, who founded Harden Industries with her late husband, Harvey, eight years ago. “I want a more immediate response to what’s happening in the world.”
In boom times, businesses can flourish even if their owners ignore international events and pay little mind to short-term economic trends. But today, a slack U.S. economy, turmoil in the Persian Gulf and escalating oil prices make accurate information critical to success.
Instead of hiding under a pile of paperwork and worrying about whether we are really in a recession, try visiting a nearby truck stop or coffee shop. What you pick up in an hour could be more valuable than reading 10 business magazines or listening to the prognostications of respected economists.
“There are a lot of defense companies around here, so I hear about layoffs possibly a bit earlier than most people,” said Larry Weintraub, who has owned Randy’s Donuts with his brother, Ron, for the past 12 years.
Situated five miles from Los Angeles International Airport, Randy’s, with its distinctive, giant rooftop doughnut, serves a busy, traveling public. Every customer going to or from the airport is a potential bearer of important economic and international news.
“Right now, people are talking about the oil crisis and how prices are going up and up,” said Weintraub, who knows many of his customers well enough to have their orders ready before they reach the service window.
When she is not cruising through the industrial area surrounding her Southwest Los Angeles plant in her cream-colored Rolls Royce, Rodstein frequently strolls around Beverly Hills noting the alarming amount of retail space for rent. She considers business in Beverly Hills a good economic barometer because the people who frequent the pricey Rodeo Drive boutiques are the same ones who buy her bathroom fixtures.
“I’m mostly concerned with the amount of consumable income people have to spend on luxury items,” said Rodstein, who also peeks into grocery carts to see what people are buying.
When she can’t leave her office, she visits the parking lot during breaks to ask the lunch truck driver whether business is up or down and which companies are laying off workers. “I know things are bad when the drivers tell me people are buying fewer items.”
Rodstein, who took over the multimillion-dollar company when her husband died three years ago, said her never-ending quest for useful economic information helps her make critical business decisions.
“If you are ignorant of something, there is no way you can take action,” said Rodstein, who recently laid off several workers and changed her product lines in response to the economic downturn. Historically, Harden focused solely on the high end of the brass bathroom-fixture market. But now she hopes to tap the middle market by producing lower-priced fixtures. This change of strategy is aimed at averting further layoffs and boosting sales to consumers who cannot afford a $600 faucet.
Across the country, in Milford, Conn., another successful entrepreneur is on the road one week out of the month, collecting information. Fred Deluca, founder of Subway sandwich shops, said he comes up with some of his best ideas while traveling.
Deluca, who started the company 25 years ago with Pete Buck, a retired nuclear physicist, has 4,760 franchised Subway stores in operation. By 1995, he predicts, there will be 8,000 across the United States and in several countries abroad.
One of the secrets of his success came to him seven years ago while he was visiting Subway sandwich stores in the Southeast.
“I stopped in to visit the owner of a store in a small town outside Charlotte, N.C.,” Deluca recalled. “When I got there, an employee told me the owner was at the Greyhound bus station picking up bread, which he did three times a week because the closest bakery was 40 miles away.”
Sensing an immediate disaster if the bus was late or if the workers at the distant bakery went on strike, Deluca decided right then that Subway owners had to start baking their own bread in the stores.
When he went back to Connecticut and explained his plan to his colleagues, they thought he was crazy. But he persisted because he knew it was the right move.
“I visited that North Carolina store in June, 1983,” Deluca said. “By August, we were testing our first frozen bread dough.”
Today, every Subway store bakes its own bread to maintain consistent quality and taste throughout the system. And, Deluca said with a smile, one of the things customers like is the freshness of the bread.
BECOME YOUR OWN ECONOMIC FORECASTER * Get out of your office at least once a day to visit another business.
* Talk to as many people as possible wherever you go.
* Chat with truck drivers and delivery people to gather information on whether business is good or bad in your area.
* Drive around to count the number of “for rent,” “for lease” and “for sale” signs in your area.
* Listen carefully to any information passed along by your suppliers and vendors.
