Stoner's Small Engine Shop prospered from the time it was established in October 1970 by Thomas and Nancy Stoner in Pleasant Gap. They sold lawn and garden equipment, with an emphasis on mowers, and provided extensive servicing for all small engine equipment. Income easily covered expenses and provided a satisfying margin of profit. They kept detailed records and kept up to date with trends that might affect their small business. In trade press publications they read about the super stores and knew that their coming to State College would eventually have an impact on how they did business.
The effect from Wal-Mart on sale of equipment initially was only slight as Stoner's satisfied customers kept coming back, despite the extent of the offerings at Wal-Mart. Then came Lowe's and then Wal-Mart Superstore. Price differentials became obvious between what Stoner's had to charge for equipment and what was charged at Lowe's and Wal-Mart, where volume sales made lower prices possible.
With prices higher at Stoner's than at either Lowe's or Wal-Mart, sales slowly declined. Efforts to match the super store prices only aggravated their problem. Income from equipment sales no longer met expenses. The problem was complicated by demands from vendors who wanted to contract for annual renewal of equipment franchises. Vendor prices were higher than Stoner's sales could justify. The possibility of losing the franchises was real.
Nancy had read about SCORE, an organization of retired business executives from the Centre Region who volunteer to help small business. She knew SCORE's service was free, confidential and readily available. She called 234-9415 and asked for counseling. By the time of the first meeting with Counselor Robert Allen, her husband and son Toby decided to participate, too. All three were at the SCORE offices at the scheduled time. Toby, who is now 32 years of age, had progressively begun to take important roles in the management of the business.
Mr. Allen, as is characteristic of the SCORE counselors, encouraged them to talk about their business and how they perceived their problems. They told him about business in the early years being very good, but the changes in economic conditions in the country in more recent years were obviously having an impact on them. The Stoner's questioned whether they should expand their business in equipment sales.
The second and third meetings concentrated on analysis of the sources of current income. How much came from sales of small engine equipment and how much came from servicing? Mr. Allen shifted the meetings to Stoner's so he would have a first-hand knowledge and awareness of the business.
As business details began to emerge, the Stoners, with guidance from Mr. Allen, became even more aware that their major problem was equipment. Business losses came from insufficient sale of lawn and garden equipment. The losses coincided with the super stores coming to State College.
On the other hand, Income from services exceeded expenses. The quality of the services was so high that former customers stayed with them, and some of the people who bought equipment at the super stores came to Stoner's for service. Regardless of the success of services, however, the income was not great enough to cover losses in equipment.
Again with guidance from Mr. Allen, the Stoners concluded that they should discontinue sales of equipment and concentrate on service. And they talked with Mr. Allen about strategies for increasing service income. One of his major suggestions was to visit with Wal-Mart and Lowes about their services and seek agreement for the super stores to refer their equipment customers to Stoner's for service. Stoner's also decided to put more emphasis on sale of spare parts.
Stoner's is still in business and operating with a profit. The success that followed their encounters with SCORE has prompted discussions among Toby, Nancy and Thomas for expansion of the business. They are seeking a new series of appointments with SCORE to discuss the possibilities.
Mr. Allen, the Stoners said with appreciation, was generous with his time and other suggestions, all drawn from his personal experience and that of other SCORE counselors. Toby talked at length about Mr. Allen's other suggestions and effectively summarized them in the context of how they do business:
Customer confidence is important to every successful small business, but particularly to those that offer services. The foundation of this confidence is quality.
The typical customer knows little about the technical side of business and judges the business solely on results. For others, it's the courtesy and integrity of the business. Never assume things are satisfactory. Continually monitor operations and competition to be sure the business is staying on top of customers' needs.
Be patient with all customer questions. Be sure there are clear policies in place to address service errors, complaints, and discounts. In all business dealings, honesty is the best policy.
You can learn more about service policies and processes for delivering quality service by contacting Chapter #618 of SCORE, counselors to small business. SCORE is a non-profit organization of volunteer business executives and administrators who provide free and confidential counseling to veteran entrepreneurs and those just starting out. Their work is coordinated with the Small Business Development Center at Penn State, the Small Business Administration and local banks.
