Tough Decisions & A Passing Calendar Build Greatness

Throughout the course of my career, I have worked with many companies undergoing challenges and transition. Looking back, it seems that I am drawn to that type of situation. This blog is going to be an exploration of parts of my career, but I promise there is a point to it all at the end.

At the start of my career, I was a manager at a 22 screen AMC movie theatre. AMC is one of the largest theatre chains in the world and is singlehandedly responsible for many of the innovations in the theatre industry including cup holders in the seats, stadium style seating, and even the multi and megaplex concepts themselves. The theatre I was a manager at was on the location where the very first AMC theatre was started by company founder, Stan Durwood. As such, we had the privilege of being host to numerous pre-screenings of movies and were the testing grounds for many new concepts and systems. During my tenure there, we were the first to get a new point-of-sale system that was scheduled to roll out to all AMC locations. We had the “honor” of going through the preplanning for the system, the training classes, and the in-theatre rollout. There were numerous bugs and the system failed on multiple occasions causing us to have to do manual sales. For a theatre that could see 6,000–8,000 people ever few hours, that was not a lot of fun. However, we worked through the issues and helped improve the system so that it could roll out to the other locations. It seemingly was a success, because I was in an AMC theatre recently and they still use this system today.

After AMC, I moved on to working temporarily as an Assistant Manager of a Kinko’s store. I say temporarily because it wasn’t long before I took over as manager of my own location. However, while working as Assistant Manager, I worked part-time for a restaurant doing their accounts payable and accounts receivable. When I took the position, I had no clue the mess that I was walking into. Apparently they had gone through several terrible managers, who had run up bills all over the city and the restaurant was a couple of hundred thousand dollars behind on paying their bills. It took nearly a year for me to get everything straightened out for them. At which time, they promptly sold the restaurant to another restaurant company in town.

When I took over as manager of my own Kinko’s location, I took over a store that was struggling. It was consistently falling below budget. Over the next several years, the team that I worked with and I, made numerous changes and built a large commercial printing business. This moved things consistently into solid territory. About that time, it was announced that the Kinko’s founder, Paul Orfalea and the Kinko’s board, were selling the company to FedEx. That decision started a long period of transition, training, and adjustment, as all Kinko’s stores were converted to become FedEx Kinko’s (now FedEx Office). Managers and staff went through a lot of extra training to begin to offer packing and shipping services and the goals and priorities of the company shifted, which meant an adjustment for everyone.

That brings us to the alpaca industry. Those of you who have been around a while, know that when I took over as ARI Executive Director in 2005, we were in the midst of cleaning up a large mess that was created by the previous management company. I know Gordon Anderson reads this blog, so let me just emphasize that Gordon dealt with the biggest parts of the mess before I even came on board. That is really scary considering the situation that we were still in when I came onto the team in June of 2005. It was great to work with Gordon for several months before I took completely over. The challenges during this time were huge, but the dedication of the ARI team was spectacular and combined with the patience of the membership, the problems were solved and the backlog of work was caught up by the end of 2005.

One thing that I have learned throughout each of the challenges I have encountered, is that change can never come fast enough. This is especially true when people are being negatively affected; That means employees, customers, or members. On average, real change or fixing difficult problems takes one to three years. While working through issues, establishing solutions, and implementing strong systems, it is often a much larger priority to get the work completed than to spend time updating people about the progress. Of course, this creates an interesting dichotomy because often times it means that those people who are being so affected are not hearing about the progress. This is always a problem anytime change is being implemented, and we certainly have this issue in the alpaca industry as well.

The merger of ARI and AOBA was a long, difficult, and often contentious process that required many thousands of hours of work by staff and board members to accomplish. The first discussions began nearly a full three years before the merger transition was completed. That’s a long time to work on a project, but it was so very important. There have been numerous articles, updates, blogs, and letters written about merger and merger transition, so I won’t bore you with another. However, I will discuss a few merger transition items to get into my discussion about where we are now.

While working through the merger process, nobody new when, or even IF, merger would become effective. The fact that the timing landed such that it became effective on January 14, 2014 meant that nearly all the costs associated with merger would land in one financial year. That meant that expenses for 2014 were much higher than normal years. First, the newly formed AOA was, at that point, still technically running two separate organizations with two large offices in two separate areas of the country. We had two full staffs, and the computers, printers, servers, and other items to support those two offices. Those bills had to continue to be paid until things could be downsized as part of the merger transition plan. This all happened, and in fact happened ahead of the schedule that was outlined in the merger process and in nearly every case, we were ahead of the merger transition budget that was proposed nearly 2 full years prior. Having the entire transition all land in one year, and not be spread over a couple of years meant that the impact was much more staggering than it would have been if the timing were different. This coupled with a much larger decline in revenue meant that the loss on the books was much larger than anticipated. This loss was from a variety of things including the larger decline in revenue, costs of running two organizations during transition, costs associated with writing off furniture and fixtures from the old AOBA office as we downsized that location to just a few small offices in an office complex, and other costs associated with merger transition. The good news is that despite the large loss on the books, the organization did not really decreased the amount of cash on hand by much because many of those losses were accounting related and not actual cash losses. With over a million dollars in reserves, the organization is still in a strong position.

As discussed above, as humans we are often impatient and want to see results much more quickly than possible. While I know that to some of you, it often seems as though AOA isn’t getting anything done, progress is always happening. The long hours, high expense, and difficult process that we went through in 2014 was done to set the organization up for the best possible chance of success moving forward. It was almost like ripping a Band Aid off quickly. While it hurt a lot at the time, it also means that we can more quickly move towards healing.

Thanks to the work completed in 2014, AOA was positioned well for 2015. With over 8 months under our belt, AOA’s financials have been trending right near budget on income and significantly under budget for expenses. That’s excellent! Additionally, because of the cuts made during merger transition in 2014, we are already more than $400,000 lower in expenses year-to-date this year, than last year, and by the end of the year, we expect that to approach $600,000 lower in expenses for 2015 when compared to 2014. This is because of the consolidation of staffs, equipment, servers, systems, downsizing of staffs, downsizing of the Nashville office, and much more. Many difficult decisions were made in 2014. While this positions us much better, we still need to grow the industry and revenue of the organization if we hope to have long term success. This is the focus of the strategic plan and the board is working to continue to address these items moving forward.

Our position at the beginning of 2015 has meant that AOA has been able to complete some amazing things. We had what many called, the “best national show they had ever been to” in March in Grand Island, Nebraska. We held the first ever AOA National Fleece Conference where there were education classes, the AOA annual meeting, and the largest National Fleece Show in nearly 7 years. At that event, we also held the fleece awards in front of all attendees at the end of the conference and the judges spoke about the winners. This was recorded and made available on the AOA website. We also brought the fleece show out from behind the curtain by having a live video feed into the fleece room, so that members could watch the fleece judging while it was going on. Both of these national events made money.

We have released new tools to the membership including redesigned Meet the Alpaca and Alpaca From Fiber to Fashion booklets. The organization has seen over a 300% increase in benefactors as compared with 2014. Participation in AOA’s member marketing programs is dramatically up and the number of farms purchasing listings in the Alpaca Owners Guide has nearly doubled in just one year. National Alpaca Farm Days also saw success, with nearly double the participating farm as compared to 2014.;

AOA also increased the number of issues of Alpacas Magazine from three issues per year to four, with no increase in costs. This has greatly benefited the industry and members and also has increased purchased advertising in the publication. We also spent nearly 9 months gathering footage to develop an Industry Promo Video that talks about the basics of both alpacas and the product that you raise these beautiful animals for, the fleece. Through AOA’s promotion of this video, it has been viewed more than 250,000 times just this year. Lastly, we have had a much larger focus on online advertising of events, which has meant more attendance from the public at national shows, National Alpaca Farm Days, other AOA certified shows, and similar.

There are of course many other things that have been accomplished this year, but by now you are probably beginning to nod off. The AOA staff is proud of what we have accomplished in the past 18 months. The challenges have meant that this team really pulled together and became much stronger because of it. We are proud of what we have developed, of the new options for members, of the strong brand that we have created, and the smoothly run national events that have been accomplished.

At the same time, it is important to remember that success will always take time. It will always take longer than we all hope it will take and is never instantaneous. This will continue to be the case with the initiatives that the staff are currently working on and the strategic plan items that are only just beginning to be prioritized and planned for. Taking the time necessary to properly execute programs and services, will ensure the future success of AOA and the future success of all alpaca owners throughout North America. We are working to continue building something great, and every decision the staff and board make, contribute to that greatness. We want our industry founders, like Stan Durwood for AMC and Paul Oraflea for Kinko’s, to look back with pride on what this industry has become.

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