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SEI/Aaron’s • A Faster Company Issue 176, June 2014 INSIDE THIS ISSUE Lucky Dog a Hit at My View 2 Dunkirk, NY Relay for Life Event! Operationally Speaking 2 The Bottom Line 3 NH/ME News 4 Empire State News 4 SNY Round Up 4 CNY Crunch 5 ENY News 5 Insight Into Aaron’s 6 Northstar News 6 In This Corner 7 Boston Banter 7 Rochester Recap 8 Central Mass News 8 Buffalo News 8 KY/IN Recap 9 Maine Moose News 10 Kentuckiana Chronicle 10 Coastal Flow News 11 Associate Spotlight 12 CONTACT US! Atlanta Store Support 3108 Piedmont Rd Ste 202 Atlanta, GA 30305 404-495-9707 Operational Support Office 100 Prestige Park Rd E. Hartford, CT 06108 860-290-6670 [email protected] Issue 175, Page 2 My View By Charles Smithgall that 62% of managers probably shouldn’t pick out our “A” players. In fact, we rank Chairman & CEO be in the position. That is a dismal record. our general managers at every multi-unit Dave Edwards, Chas, and We always talk openly at SEI/Aaron’s meeting. We know that the team with the I recently attended the about hiring and developing “A” players. best players usually wins. If you want to APRO (Association of Pro- Dave Edwards says that “A” players have know how you rank as a general manager gressive Rental Organiza- an exponential, not an incremental impact at SEI/Aaron’s, first look at profitability. tions) Annual Meeting in Indianapolis, IN. on our business. Dr. Woodward indicated Next, is your store growing in customers, One of the featured speakers was Dr. that Bill Gates believed that out of 80,000 revenue, and GAP? We are in a very trans- Woody Woodward, an executive coach, Microsoft employees, the entire company parent business. It is very clear how we are consultant, and author from Human Capi- was built around twenty. If it’s true in our performing. We win or lose every day. tal Integrated. Dr. Woody stated that business that, “you are who your numbers There is never any doubt about who is win- eighteen percent of managers are great say you are,” (as former COO, Ken Butler, ning and who is not. We are going to con- and twenty percent are okay; that means repeatedly said) then it’s not difficult to tinue to work until we have ALL winners on our team at SEI/Aaron’s. Operationally Speaking By Dave Edwards business is results-orientation. Measuring business. I am convinced that is what President & COO yourself, and deriving self esteem from champions want. I am also sure that SEI/ your numbers, is a consistent trait that our Aaron’s is loaded with current and future May illustrated how small the top performers have. One of the opportuni- champions. margin is between growing ties that I think we possess as an organiza- and losing during the course The summer months are upon us. Focus on tion is to publish more rankings. We have a of a month. As an organiza- every customer and make their experience little over one hundred stores as a part of tion, SEI/Aaron’s lost $31,000 as special as you can make it. Make sure the SEI/Aaron’s system. Ranking our stores in GAP and 187 customers. An additional that we have new living rooms and bed- from 1 to 106 gives a manager, and our as- two customer deliveries per store would room sets in the front of our stores as we sociates, a pretty good idea of how they are have resulted in SEI/Aaron’s being posi- always want to put our best foot forward. performing. Logically, if you are in the top tive last month. That equates to an extra Continue to focus on output and collected twenty in a category, you are performing delivery every two weeks. I am sure all of as our definition of winning and until July, better than eighty percent of the stores in you would agree that we could have found Make Each Minute Count. our company. Conversely, if you are in the a way to deliver one extra customer during Congratulations to the F196 Fall River bottom twenty, there are over eighty stores a fourteen-day stretch. As we enter the team on capturing the SEI/Aaron’s May that are performing better. I know how summer months, focus on taking ad- store of the Month honors. Left to right competitive our team is. I know nobody vantage of every customer opportunity. are Jeremy Doria, Bill Duarte, Marc De- wants to be at the bottom of any list. I hope broisse, Arthur Ruiz, Mario Oquendo From a collected standpoint, May was very all of you have noticed that we have pub- Bryan Carlson, Paul Flannery, Cy strong for SEI/Aaron’s. We collected 104.7% lished more rankings over the past four or Medeiros, Dave Edwards and Jason Al- of our potential lease income and that five weeks. We are just getting started in should result in substantial profit for the lison. Missing from photo are Fernando how we are going to measure and rank Arruda and Ashley Orzeck. month. Although we have not added cus- about everything that matters to us in this tomers or potential lease income in 2014, our profitability has remained strong as our team has focused on expense controls. One of the things I like best about the lease -ownership industry is how measurable it is. We get a daily report card that allows us to measure ourselves versus our peer group, SEI/Aaron’s, standard, and the en- tire Aaron’s system. We can constantly evaluate how we are doing based on num- bers. One of the most important talents an individual can have to be successful in our Issue 176 Page 2 Issue 175, Page 3 The Bottom Line By Robert Barnes dollar, and percentage of net revenue per- steps do I take to reduce my inventory Dir. of Northeast Operations spective. As we examine our stores, we depreciation, and improve my profitabil- One of our primary objec- have a disparity in the inventory deprecia- ity?” In many instances we first look at tives is to maximize the tion in many of our stores. Our most profit- reducing the amount of inventory we have profitability of our stores. able stores have an inventory depreciation available in the store as a method to im- With that in mind, looking at of 28% to 29%, while other less profitable proving the inventory depreciation. While our P&L, we know that our biggest expense stores have Inventory Depreciation at 32% this will help, it is not the only step or the is inventory depreciation, both from a raw or higher of net revenue. The question most impactful solution. Let’s look at the many General Managers ask is “What following example. Store A Store B $105,263 $105,263 Lease Potential Percent Collected 95% 95% $100,000 $100,000 Lease Income Secondary Revenues $12,000 12% $12,000 12% $112,000 $112,000 Net Revenue $100,000 $90,000 Available Inventory Inventory Depreciation $35,840 32.0% $35,424 31.6% Profitability $12,000 10.70% $12,416 11.1% Reducing the available inventory by only will improve profitability by $416. What would happen if Store B collected $10,000 does save Store B $416 in invento- While there is improvement, is there an- 97%, and didn’t reduce their available in- ry depreciation expense and improves the other method to make a more impactful ventory? inventory depreciation expense percent- improvement ? You will notice in the age by .4%. This savings and reduction above example both stores collected 95%. Store A Store B $105,263 $105,263 Lease Potential Percent Collected 95% 97% $100,000 $102,105 Lease Income Secondary Revenues $12,000 12% $12,253 12% $112,000 $114,358 Net Revenue $100,000 $100,000 Available Inventory Inventory Depreciation $35,840 32.0% $35,840 31.3% Profitability $12,000 10.70% $14,252 12.5% Improving percent collected by 2%, Store B like a lot, but is only an increase of $2,358 would flow to the bottom line. This will improves their inventory depreciation ex- in lease revenue and secondary revenues. provide a much greater impact to both in- pense by .7%, without changing the availa- The only changes to expenses in this ex- ventory depreciation percent and profita- ble inventory. A 2% improvement in per- ample should be a small increase in the bility. cent collected in this example might seem royalty fee we pay, an additional $2,252 Page 3 Issue 176 NH/ME News Empire State News By Nate Bohacs By David Phillips GM F624 Belmont, NH Regional Manager Summer has certainly snuck As you read this summer will up on us once again and we have officially begin in the are heading into the 'dog days' northeast. We may not have of summer. Here, the Granite the longest summer season, Growth District grew 15 customers and over but we do enjoy it. While at $1,700 in GAP. Matt Kearns and his team in work we follow a simple safety system and Concord (F1274) led the way growing 30 cus- with schools wrapping up their year it is im- tomers and $2,706 in GAP. The performance portant to remind ourselves of these. They earned them the crown for Store of the are valuable not only at work, but can help Month for the second consecutive month. you during times with your family.