Bank Refuses to Finance New Stores -- Scott Nash's Response

"...keeping you great"

HEADLINES:

Best Year in Profits and Revenues in 23 Years -- Scott Nash, founder of MOM's Organic Markets, was filling out an application for "best business in Maryland" award. One of the questions "How have you made your company better as a result of the recession?" prompted the following answer, another indication that this "black swan" moment in our economy can provide once-in-a-lifetime opportunities...

Bank Refuses to Finance New Stores... "This recession is one of the best things to happen to me as an entrepreneur. MOM's is largely recession-proof and grown nicely over the years, but until now I have been neglectful in almost solely focusing on top-line growth. When the bank told me in Oct. of 2008 that they would not finance any more new stores, I was forced to focus for the first time on existing operations and how to make the best of what I have."

Gross Margin is Key... "Since then, without compromising sales or service, we reduced our labor 3 points, improved margin 1.5 points (we have maintained our "lowest price guarantee" by mostly reducing shrink and lowering cost of goods sold), implemented meaningful daily/weekly/monthly metrics, and conduct effective monthly P&L meetings.

Daily/Weekly Metrics... "In the past, I never really analyzed the details of financial statements- mainly focusing on the top line and merely glancing at the bottom line, figuring that growth would solve any problems. Now, I have a very good reading fiscally on how MOM's is doing each week, if not each day in some categories. 2009 will be MOM's best year in our 23 year history- both in revenues and in profits- and I feel fortunate to have been taught this valuable lesson (better late than never!).

Securing Cheap Real Estate and Hiring Good People... "One more thing- not only is MOM's stronger right now within our 4 walls, but our competition is much weaker. Whole Foods is getting beat up and the other independents in our region are pulling back. One such direct competitor who was moving into the area from Richmond just pulled out of a lease in downtown DC and we are now negotiating for that same space at a lower rental rate. The opportunities in hiring good people and securing cheap real estate are as good as I've seen in my 23 years in business!"

Unlimited Opportunities...concludes Nash (FYI, he was worried when giving me permission to share his note to me that he would come off as bragging -- anyone that knows Scott knows that he's one of the most humble leaders you'll ever meet) "When this economy turns around, surviving companies will be lean and mean and have unlimited opportunities." Scott, thanks for sharing the good and the bad.

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