FedEx employee helping a customer with a package

A Success in Numbers, Customers and Competition

A Success in Numbers, Customers and Competition

Ray Norton willingly shares that when he purchased a pack-and-ship store from a friend in McAllen, Texas, 21 years ago, he did it with some reluctance. His friend had been searching for a buyer for a few years and was ready to move out of the pack-and-ship business. But Norton had no background in the industry, and the store’s financials weren’t great. So he sought advice from another store owner, and when he was reassured that the price was fair, he decided to give it a try.

In the first five years as owner of Mail-Pak Your Box Store, Norton went through a steep learning curve, had a few bumps and bruises — and accomplishments — and wooed customers with his gregarious personality. Now, 21 years later, Norton’s store is a great success. He went from making very little to now making a very good profit each year.

How did he turn a floundering business into a success story? “You have to know your numbers, provide great customer service and do better than the competition,” Norton says. 

A Rough Start

When Norton landed his own pack-and-ship store, cash flow management was unfamiliar territory. He didn’t budget for the seasonality of retail business, had no plan in place for handling expenses and had no experience with the store’s profit centers.

As bills were due, he paid them with the money he took in from that week’s sales. That worked fine when he made more than he owed, but other times, the bills were double what he made in sales. Within the first year, Norton realized his way of managing the store’s cash flow wasn’t working — the store wasn’t netting what he had hoped. He needed a different strategy.

Learning How to Balance

Over the next year, Norton put his attention toward increasing the store’s reserves and created a cash flow management plan that put him in control. He developed a reporting system that enables him to pay close attention to the store’s numbers.

The services Norton offers at Mail-Pak Your Box Store are 60 percent packing and shipping, so seasonal income is significant to his cash flow management approach. The other 40 percent is in small-business support, such as printing, shredding and mailbox rentals.

His reporting system, an Excel spreadsheet programmed for him by a college IT professor, shows his revenue and expenditures so he knows exactly what he takes in each day and what it costs for him to run the store: rent, utilities, vendor bills, payroll, taxes and so on. Now, every night at closing, Norton enters his numbers from his point of sale (POS) system into the spreadsheet, scrutinizes where he’s making his money and what’s falling short, and plans the next day’s selling strategy accordingly.

The way he pays his bills has changed since he first took over the store, too. Originally, Norton paid them all out of the store’s account as they became due, but he found it difficult to keep track of the account balance. Now, he says, “I pay most of my bills with my American Express card. I don’t have to worry about the bank balance anymore.” Then each month, Norton pays off his credit card debt and starts over with a zero balance. 

When Money Is Tight

Taking out a loan from time to time to cover the cost of new equipment or for repairs or other expenses can go with the territory of owning a small business. With the nature of the pack-and-ship industry, Norton’s repayment strategy is designed to take advantage of the holiday peak season.  

Rather than pay equal installments each month, Norton explains, he prefers a schedule of a minimum amount, say $100 each month, with a principal payment due at the end of December. “My basic monthly expenses don’t increase throughout the year,” he says, “but in the last two weeks of the year, my income does.”

Tips for Running a Profitable Pack-and-Ship Store

  1. Provide the best customer service possible.
  2. Run an efficient business.
  3. Know where you stand in the market — and do better.
  4. Sell postage stamps at cost to bring customers in, then introduce them to other services.
  5. Network, network, network.

   — Ray Norton
Owner, Mail-Pak Your Box Store

Creating the Right Mood

Applying a cash flow management process is irrelevant without customers coming through the door. And it’s in this department that Norton really excels. Giving credit to his work in marketing and advertising, relentless networking, and his outgoing personality, his client base is strong and growing.

People come to the store because of the attention they get, Norton says. When they walk in, they’re greeted within 30 seconds, usually by name. He knows most of his customers well enough to hold a conversation beyond the standard “How may I help you?” retail-speak. “I love people,” he says.

He creates an inviting ambiance in his store for the same reason: to make customers feel welcome. The store is decorated for each season, and scented plug-ins give off a fresh aroma. “The store is always bright, comfortable and warm. That’s our whole approach,” Norton says. “It makes people want to come back.” 

Marketing to a Captive Audience

Norton markets to a core type of customer — people who are more concerned about saving time than spending a little more for high-quality service.

“Think of our business like you do when you have to buy a carton of milk,” Norton says. “You could go into a big-box grocery store and spend less, but then you have to park farther away from the door. Or you could save time by going to a corner drug store. Sure, you spend a little more, but to my customers, the time saved is worth the extra cost.”

In addition, Norton is an active member of the local chamber of commerce in McAllen and makes use of its events, activities and business directory. “Many of my customers came out of my chamber of commerce networking,” he says. 

Better Than the Competition

Norton’s store competes directly with six other pack-and-ship centers in the immediate area. As part of his ongoing market research, Norton studies his competition carefully, watching what they sell and what services they offer. “You have to know where you stand in the market,” he says.

When he first opened the store, he undercut his competitors’ prices to gain the business. He gradually bumped them up after recognizing that his customers were coming to his store for his customer service, not for low pricing. Now, his prices are higher than the competition — and business is stronger than ever.

While his competition offers 20 or so box sizes, his store displays 55–60 boxes of different types and sizes where customers can see them. He has black-and-white and color printers. When a competitor started offering digital graphics printing, Norton bought his own equipment and upped the ante. He also offers mailbox rentals — a big draw and moneymaker.

Unlike the competition, Norton’s store sells stamps at cost — a catalyst that “gets new people through the front door and keeps them coming back,” Norton says. “The first time they come in, they’re buying only stamps. I see them again and they’re buying something else. Offering stamps at cost gets them coming in and taking a look at our packing and shipping services, and all the other products the store offers — and our exceptional customer service.”

A Promising Future

After fumbling for a bit as a novice owner of a pack-and-ship store, Norton developed and followed a successful cash flow management strategy. And it paid off. Today, he and his wife live comfortably, with vacation plans in the making and retirement funds at the ready.