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Retail is a funny way to make a living. Even some of the big guys don't seem to know what to do from one moment to the next.

After hitting a slump, both Home Depot and Wal-Mart tried to blame the economy, gas prices and the housing credit crunch for lackluster sales, a New York Times article reported last August. After poor third-quarter results, they even projected concern for all of 2008.

Not a great way to start a new year. When one of my Group centers tries this "woe is me … let's not expect much from our efforts" approach, I tell them not to be surprised when they accomplish their goal.

A little further into the Home Depot/Wal-Mart article, Wal-Mart considered that "maybe" the problem was due to poor product choices while Depot said problems could have been caused by alienating customers with continuing poor service experiences.

Then in an action many garden centers attempt, Wal-Mart lowered prices on 16,000 items to drive more sales through the register. Then it wondered why the strategy hurt profit results.

Gee, maybe these retail giants missed Business 101. Low prices produce low margins, which in turn create low profits.

The other, more profitable, side of the coin

But not every retailer marches to the sound of the same dirge. Across the mall, people at Victoria's Secret have pushed sales and profits to the point that the CEO says it will double the size of stores from 6,000 to 11,000 square feet. The company also plans on opening or remodeling 140 stores this year.

Sure, the companies are different, much different. But each operates under the same economic forces. Consumers decide where to shop, when they want to shop and even if they want to shop. Where their money is spent is determined on a much more personal level than the next nationwide economic forecast.

Take a recent section from the Chicago Tribune, for example. The headline read "Employment levels and retail sales show signs of good things to come," while on the same page another article stated, "Bad housing loans could spell economic woes."

So is the glass half-full or the editor's chair half-empty? The answer was found in the same day's comic section with a single cartoon: "If all the economists of the world were laid end to end, they wouldn't reach a conclusion."

The key is to manage what you can manage: your company. The shift of the national economy is as changeable as the opinions of the people who report on it. Especially during an election year.

What defines an excelling company?

Over the next 11 months we're going to hear a constant point-counter-point to how well the country's economy is either doing or not doing. While one party says things are in dire straits, the other will be pointing to a totally different set of statistics. (Why do they call either side a "party"? There's nothing fun about either of them!)

Better to look at companies that made the cut for Alliance Data's list, which studies the nation's hottest retailers. Nearly a quarter of the companies that qualified last year did so with single-digit sales gains. This year only four companies failed to reach at least a 10-percent jump in sales.

But as Steve Bailey, the Group's financial analyst, reminds us, a jump in sales doesn't mean much without a jump in profits. Of the 100 fastest-growing companies in the report, 33 of them lost money in 2006.

I know what a lot of you must be thinking. The same thought crossed my mind. How can huge companies handling multimillions of dollars not find a way to keep at least a few bucks profit for all the work they've done?

The answer is simple. Someone wasn't watching what matters most -- the simple equation of money coming in and money going out.

It's a three-step process made up of goals, budgets and review. And by now, at least the first two should already be in place at your center. For a set of forms to help with the process, e-mail me and ask for MDR/Sales Goals & Results.

Only a few of my favorite retailers made the Alliance Data report. Best Buy saw a 17-percent jump in sales and a 21-percent increase in profits. Whole Foods had a 19-percent jump in sales and a 49-percent increase in earnings while opening only eight new stores. (This was before the controversial buyout of Wild Oats.)

We all helped Starbucks add 21 percent to its profit pot while it somehow found more than 2,000 locations for new outlets. Clothing stores led the mix of fastest-growing retailers with 30 spots in the top 100, with food purveyors a close second with 21 winners. (I wondered if these two might be in this together. People eat, need to buy larger clothes, eat some more, buy more clothes, repeat.)

While the report was interesting, it was weird in the fact that they allow companies that lose money. Lots and lots of money. When there's a profit problem, there should be an effort to identify the whys and hows, then come up with a plan to remedy the outcome. That's the true sign of a business winner.

Keep things in perspective

In spite of what a lot of people may think, I'm the first one to admit that business should be fun. But since business is about business, let's keep everything in perspective. Like what happened last fall at a workshop I conducted for a specialty plant group conference. I should have remembered that these folks really do like their plants -- lots and lots of plants. During my presentation I happened to mention that one of the best methods for reducing sign clutter on a bench was to reduce the number of plant varieties.

Wow! You would have thought that I had said that to stay in business you need to pay closer attention to financial numbers than the number of varieties. (I did say that later but by then the blood was already flowing and it didn't matter.) I should have remembered why I hadn't spoken to this group in nearly 20 years after getting a reluctant but somewhat willing crowd of plant lovers to chant "Greed will make you money" to the Queen anthem "We Will Rock You". Hey, the movie "Wall Street" was big at the time and my new hero was Gordon Gecko, what can I say?

But here we are nearly two decades later and not much has changed. I still believe that the purpose of business is to make money so a company can stay open, provide jobs, sell things people want then take the money to do fun stuff or pass it along in a philanthropic gesture.

Retail plant fanatics still seem to look at business as a way to turn the hobby of collecting plants into an excuse not to get a real job. One of the more perplexed individuals at last fall's meeting asked if my intent was to make all garden centers alike since she liked staying "independent." I said, "Yes, I believe every garden center should be exactly alike. They should all be capable of making a profit."

It went downhill from there. So for the next few hours we listened to garden center owners and managers talk about classes, petting zoos, giant pumpkin contests, egg hunts, pictures with Santa and one manager's disdain for being forced to track sales and profits of his department.

It was better than sitting through hundreds of slides of good, better and best plant varieties for the new year (What happened to last year's list? Are all of those plants now not needed?), but I could tell that little has changed over these last 20 years.

For a lot of people, business isn't about business at all. Success for many is measured by what I call the Sally Field Business Barometer: "You like me, you really do like me!" Sorry, but like don't pay bills. First you have to do well to do good.

So as the New Year commences, forget what the nay-sayers may be projecting. Your success depends on staying focused on what matters most: developing new skills, new attitudes and keeping a fresh perspective on what it means to operate a profitable company. Make this your best year, not your last.

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© 2007 Branch-Smith Publishing