The Original Advantage Handbook : simplebooklet.com

The Third Factor I Genetics, Environment, and WillThe Original Advantage Handbook by Tony WalkerPosted by: Tony WalkerDate: May 7, 2023Although we spent almost four decades cultivating our merchant resources to enable and grow a varietyof B2C businesses, the Advantage Co's focus has changed dramatically over the past several years. Aswe aggressively invest in the future, our growth strategy is now based on enhancing and expanding oursupport and development resources for our international B2B ambitions.Note: The Advantage Co is not an operating entity; it is simply an informal legacy name that hasevolved over 40 years to reference the eclectic mix of independently owned and operatedbusinesses and partnerships that I am involved with in some manner. Likewise, there is no TonyWalker. It is also a legacy name that has evolved over the years as my nom de plume, startingwith my authorship of The Third Factor [The Advantage Co Handbook] in the 1980s.Any suggestion or inference that employees or participants are actual employees of theAdvantage Co is a mistake. All employees and participants referenced in any way are notemployees of the Advantage Co; they are the employees and participants of the independentlyowned and operated businesses often referred to as the Advantage Co.Over a period of our ﬁrst thirty years, I published and updated The Advantage Handbook: The ThirdFactor. By 2006, however, it became less relevant to the entire Advantage Co because our focus hadbegun to shift from being a merchant to providing professional services. Today, we have the AdvantageCo Annual Report as our reference for our eclectic array of businesses, but I still enjoy using the originalHandbook as a touchstone, and that is why I have decided to publish it in its original form on my blog asThe Advantage Handbook: The Third Factor.Page 2

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Tony's Introductionmer•chant n. one whose occupation is buying and selling goods for proﬁt.Gnothi Seauton: Know Thyself. Gnothi Seauton is inscribed in gold letters over the portico of thetemple at Delphi. Its authorship has been ascribed to Pythagoras and Socrates. It is prudently at thebeginning [and inevitably at the end] of every journey.My Mission Statement: My role is to provide the vision, resources, and conﬁdence necessary to enablethe development of our company as a merchant experience for those willing to take the full measure ofthe challenge.In order to stay ahead of the competition and to continue its ever-changing and dynamic growth, I helpto build and support the Advantage Co as a ﬂexible matrix that enables, encourages, and ensuresstrategic paradigm shifts through the simple restructuring of elements providing maximum speed tobeneﬁt and market ascendancy.Life is a journey, not a guided tour. By joining the Advantage Co, I realize you are looking to maximizeyour performance capabilities in the most productive and beneﬁcial environment possible; so, before youdo anything else, decide if this is the right environment for you to fulﬁll your enormous potential.In order to choose the right environment, you should know what you are best suited for and what you arewilling to dedicate yourself to. Once you are certain of what you are best suited for, thoroughlyunderstanding the environment you are entering is the ﬁrst step toward success. This Handbook willhelp you better understand the Advantage Co and our unique merchant experience by giving you an ideaof who we are, where we are going, your possible role in our journey, and, most importantly, theopportunities we oﬀer. This can be more than a job – it can be your future.We are storefront merchants. Simply put, we buy and sell at a proﬁt. However, the core objectives,goals, and values of the Advantage Co that deﬁne us need to go beyond such simpliﬁcation. It isincumbent upon us, therefore, to supply you with a more vivid and applicable understanding of who weare and where we are heading.We are here to show you what being a merchant at the Advantage Co. is all about. Take a moment tosee things through the lens of a merchant. I hope to help you better understand our company and thesingular role as a merchant that you will play in our success. We have created a particular environmentwhere everyone has enormous opportunities for advancement and personal equity - some of you willﬂourish in this environment and enjoy it. However, the Advantage is not for everyone.At the Advantage, we learn from the past, live in the present, and build for the future. The past providesus with precious memories, moments, and a building block for the future. The present is here to bothchallenge us and provide enjoyment [and neither meeting the challenge nor enjoying the moment shouldever be delayed until tomorrow]. The future provides us with the promise of what can be. Fortunately,the future of the Advantage provides us with more promise than ever before. We can not, however, fulﬁllthe promise of the future without your help.I hope your time at the Advantage proves to be a rewarding experience [for both of us].Page 3

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Understand, Believe, and Sell1. The Advantage ‘Magic.’ As a merchant, it is essential you Understand, Believe, and Sell theAdvantage 'Magic.' We are successful because of the eﬀorts of those who have understood, believed,and sold the Advantage 'Magic.' I believe we are indeed magic. A litmus test for 'Magic' will always bethe smile on your face - no smile, no 'Magic.' As a merchant, it is essential that you are alwaysenthusiastic, it is your job. If you are not smiling, you are not doing [or enjoying] your job.2. Recognition and Improvement. Growth at the Advantage is based on a gradual accumulation ofmodiﬁcations. Your successful growth will give us the opportunity to take on new challenges. Our aim isto be better tomorrow than we are today. Recognition and improvement pave our road to success.3. Be positive. As you read this Handbook, you will recognize we are committed to creating a positiveenvironment. You must understand the diﬀerence between being critical and being negative. Theformer is the foundation of improvement, while the latter plants the seeds of defeat. We must alwaysrecognize the need for improvement, but being positive is what paves the way for our enjoyment.4. Compensation. This Handbook will also explain what is expected of you as a merchant and therewards you can expect for helping us reach our potential. We recognize that compensation goesbeyond money. We want to reward your outstanding eﬀort with opportunity and a sense of satisfaction.I want you to enjoy a job well done, and I want you to reap the long-term beneﬁts of our success. At theAdvantage, you’ll ﬁnd our incentive programs and opportunities help shape our character. They rewardthe attitude, performance, and results that are necessary for our continued growth. Our incentiveprograms are designed to give you a share of the proﬁts and opportunities you help generate.5. Your Career Marketability. Advancement at the Advantage is based on how well you Understand,Believe, and Sell the Advantage 'Magic.' In addition to your career advancement at the Advantage andthe commensurate pay increases, you will also be rewarded, almost immediately, by the improvedmarketability of your skills. This is a very real and substantial reward for your association with us. If youlook at how marketable you were before you came here and how marketable you are now that you are apart of our success - the diﬀerence you recognize is enormous and proﬁtable to you in both the shortand long term. A successful Advantage Co beneﬁts everyone - especially you.6. Our Reputation. Therefore, it is easy to recognize we share with you not only our resources but ourreputation as well. Help make our reputation the best it can be, and you will beneﬁt from the associationyou have with a strong, independent, creative, and successful business. Our reputation is yourreputation - and you are its caretaker. It's your responsibility. It is something that you have to deliver on24 hours a day. Every time you represent the Advantage, you deﬁne us. Reputation is equal part imageand substance. We need you to deliver on both. Be big, be a builder.7. Energy and Purpose. They say that 90% of what we do is by routine and habit, and only 10% is byenergy and purpose. Success, however, comes from focusing 100% of your energy and purpose onwhat you have a burning desire to achieve.8. Do the right thing. At the Advantage, we always strive to do the right thing rather than to do thingsright. You are responsible for making the right decisions. Never compromise yourself or the Advantage.Your integrity and good judgment are vital to our success. You brought your integrity with you, what IPage 4

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hope to develop is your judgment. Your judgment will improve as your knowledge and depth ofunderstanding grow. Success is the result of good judgment, good judgment is the result of experience,and experience is the result of bad judgment [I’ve had a lot of experience]._____________________________________________________________________________________________Built to Lastpro•ﬁt n. the return on investment or business undertaking after all expenses have been paid.9. Power is the ability to initiate and sustain action, translating intention into reality. You are hereto help create an environment where individual needs are satisﬁed by a cumulative and focused eﬀort.You are the power. You are the battery attached. You are the energy. Pour it on.10. We are looking for giants. David Ogilvy said, “if you hire people smaller than you, you will have acompany of dwarfs; but if you hire people bigger than you, you will have a company of giants.”11. Points of Contact. We need to maximize the potential of every point of contact. It is not enough tomerely satisfy the immediate pretext of the contact; we need to recognize and maximize the potential inthe future of the relationship. It’s not only what we are currently doing with all of our contacts thatcounts; it’s recognizing what is possible - and the possibilities are often limitless. We are buildingrelationships that last a lifetime.12. Security, Proﬁtability, and Growth. Often, people do not feel involved because they do not seethe eﬀect their actions have on the ﬁnal outcome, so they focus solely on the minutia of their particulartask [in that limited environment, they can see the immediate result of their eﬀort]. That is why mostpeople feel more comfortable being judged on a particularly controllable and well-deﬁned task. Itdoesn't work that way at the Advantage. As a merchant, you are responsible for the eventualoutcome. It’s the big picture. We are not here for a good eﬀort; we are here to be successful. Successat the Advantage is deﬁned by achieving security, proﬁtability, and growth while creating opportunitiesfor everyone involved in our journey.13. Qui tacet consentit. He who remains silent consents. Another translation is 'Silence impliesconsent.'14. The two essential ingredients of success. In order to be successful, you will need to give anextraordinary eﬀort, and you will need help. In order to give an extraordinary eﬀort, you will need to havefaith in yourself, and in order to receive the help you need to be a success, you will have to have faith inothers.15. Pride. As a merchant, you must respect our customers, your fellow workers, and the community.It's a big job. You show respect by taking pride in your work and giving a 100% eﬀort. Anything worthdoing is worth doing well. Remember, if you don't have the time to do it right – you certainly aren't goingto have the time to do it over. Get it right the ﬁrst time. People will remember how well it was done, nothow fast. Exceed expectations. Your success as a merchant will be regularly evaluated.Page 5

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The Criticni•dus n. a nest or breeding place; a place where something originates or develops.16. Merchant Evaluation. We use a conﬁdential evaluation scored by your peers and management toevaluate your progress. The criteria we use in this evaluation is threefold:Understand. How well do you understand the core ideology of the Advantage Co, and how welldo you understand the fundamental principles and philosophy of this Handbook?Believe. How much do you believe in our core ideology and the Advantage ‘Magic’ in a tangibledemonstrable way? This is recognized by your motivation, enthusiasm, and concern.Sell. And, ﬁnally, do you sell the Advantage ‘Magic’ 24 hours a day whether you are at work,home, or play? This is demonstrated by your loyalty and concern for our reputation, each other,and our customers. It has to show.17. Theodore Roosevelt's famous Man in the Arena speech. 'It is not the critic who counts, not theone who points out how the strong man stumbled or how the doer of deeds might have done thembetter. The credit belongs to the man who is actually in the arena; whose face is marred with sweat anddust and blood; who strives valiantly; who errs and comes short again and again; who knows the greatenthusiasms, the great devotions and spends himself in a worthy cause and who, if he fails, at least failswhile bearing greatly so that his place shall never be with those cold and timid souls who know neithervictory nor defeat.'18. What do you think of your job at the Advantage?"I like it here, I mean, I like the people I work with, but it just, well, I don’t know if it’s what I really want todo. It’s a decent company if you’re into it, but I’m not sure if I am. I like my free time, and I don’t liketaking my work home with me. The commitment is demanding, and I don’t know how long I can take it.They are always changing things, and I never know where I stand [half the time, I don’t know what thehell is going on]. I work harder than most, but it never seems to be appreciated. I do my job. I wouldlike to be making more for the eﬀort I have to put in. If it was up to me...""I love my job; it is both a challenge and an opportunity. It’s been hard work and a major commitment,but I really feel as if I’m developing. The main thing is that I’m building something. I’ve had to makesome sacriﬁces, but I think I know what I want, and I’m heading in the right direction. I think as acompany, we’re doing the right things, but we certainly need to improve - and I think I can help. It’s along haul, and I’m already packed. I could have worked somewhere else that was less chaotic [half thetime I don’t know what the hell is going on], but life is a journey, not a guided tour."Who would you rather build a future with?19. Nidus. The sciences use nidus to refer to a breeding ground, often a place where bacteria lodgeand multiply. Although it literally means ‘nest’ in Latin, the word carries none of the positiveconnotations that nest has in English [such as home]. A Nidus is usually a source of infection orundesirable habits. The reason I bring this up is that I want to make all of our operations part of our nestrather than a Nidus – a breeding ground for growth and prosperity rather than infection or undesirablehabits – a place where opportunity develops.The symptoms of a Nidus are easy to spot. It starts with a bad attitude that leads to an us against themPage 6

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bias. A Nidus then becomes isolated, and the bacteria festers and rots the spirit of all that come incontact with it [fellow workers and customers alike]. Isolation breeds suspicion.In order to build a nest rather than a Nidus, we need to come together and build our future as one. Wecan not aﬀord a Nidus builder. You are either here helping us to build our future, or you will become partof our past. Every choice has a consequence. Be big; build a nest, not a Nidus.20. The consequences. 'Although the emotional impact of being ﬁred varies with the individual,studies show that the trauma associated with termination is so great that it can be compared in intensityto divorce or the death of a loved one. Shock, depression, anger, self-pity, confusion, and loss ofidentity are some common feelings and reactions. The person is ﬁlled with anxiety and self-doubt abouttheir prospects of ﬁnding a new job, the reactions of family and peers, and ﬁnances. The individual maybe extremely bitter and negative about the future to the point of seeking revenge. He or she may go towork for a customer or competitor, ﬁle a lawsuit against the company, or spread malicious rumors. Suchnegative actions can substantially damage a company’s reputation and can have serious eﬀect on itsrecruiting eﬀorts, community image, and employee morale and loyalty.' - A.M. Triosi. June 198021. Mario Cuomo. 'In 1982, I wrote in my diary that life is motion, not joy. If the way you measuresuccess in life is by how much joy it brings you, you're measuring inaccurately. Life is also sadness,defeat, and striving. It is many things. I want to go home winning, but the important thing is that Iplayed the game.'_____________________________________________________________________________________________A Brief Historyluck n. to gain success or something desirable by chance.22. Gary Player. 'The more I practice, the luckier I get.'23. The Old-Fashioned Way. There are three worlds: the one we are given, the one we are stuck with,and the one we bend to our will.I am a merchant. More speciﬁcally, a storefront merchant, that's my world. I buy and sell at a proﬁt.It's a merchant's life. It's not for everyone, but, as I have often said, it's the life I chose [and love]. It hasbeen good to me. I have been fortunate as a merchant beyond my expectations, and I am grateful. I ama lucky man, and I pay constant respect to my good fortune by never taking it for granted. I neverdismiss or discount the tireless help, loyal support, and good luck we have had. Fate plays a cruel jokefrom time to time on those that don't appreciate their good fortune. Hubris is historically the tragic ﬂawfor good reason.I started the Stereo Advantage in the Spring of 1978. I was 24 years old and in no particular hurry to doanything. I had sent my deposit in to law school for the Fall of '78 semester. At the time, I was sellingLloyd's all-in-one stereo systems out of my apartment, and I had a few of my friends on commission.On June 6, 1978, I rented a 450 sq. foot storefront at 5687 Main Street. My childhood friend, TM, and Istarted the Taplin Agency [an advertising company] and Jalmar Graphics [gift items] to go along with thePage 7

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Stereo Advantage. We were young, enthusiastic, and well... After a few weeks, TM left with JalmarGraphics [now Manzella Productions], and I ventured alone with the Stereo Advantage. I never did makeit to law school.I married Peg in the Summer of '79, hired Al in the Fall of '79, and had my ﬁrst of 7 kids in the Spring of'80. Fatherhood certainly motivated me. We stopped carrying albums [only $4.97] in the Spring of '80,and we were oﬀ. 'Sounds Great' almost blew us out of the water during the Summer of '81, but we dugin! I bought some more product, relentlessly promoted our business, enthusiastically sold to ourcustomers, and managed my business aﬀairs.It was all based on a simple premise: buy product people wanted and then sell it to them in a waythat made them want to buy more.I remember painting the store late one night when a guy knocked on the window and asked if I was stillopen. I unlocked the door and told him I had a store full of product to sell him, so, of course, I was open.I was always open to anyone who wanted to buy. Store hours? There was no such thing. I had productto sell, and my one goal was to sell it in a way that would make them want to buy more. As I said, it wasa simple premise.We started Wholesale [iFul] in the Spring of '82, and Butch joined up in the Fall. As '82 came to a close,we opened our ﬁrst catalog store in Olean. There was also a joint venture in a Stereo Advantage inPhoenix, Arizona, not to mention the little store on Elmwood Avenue. None were as ahead of their timeas our computer school - Computer Head Start. Around this time, we also started the Stereo Shop inRochester and the Sneaker Advantage. We were an intrepid bunch.By 1984, we were a $10 million company, and we made the big move to 5195 Main St. Silo came totown and opened the largest electronics store on planet Earth in October of '84, and we moved into ournew store in November. Everyone wrote us oﬀ, but we've been taking on all challengers ever since.Today, the Advantage Co is a well-diversiﬁed organization, uniquely prepared to not only face thechallenges of volatile economic realities but strategically positioned to reap the beneﬁts of future growth.The development of our company began in 1978, and our current direction has been evolving since thebeginning of 1996.Many are called, and few are chosen. The merchant adventure is not the life for most of those that havejoined us over the years. Of the 5,000 or so people who have worked at the Advantage since 1978, onlya few have ever truly embraced the merchant's life, and fewer still have been able to truly ﬁnd successand happiness as a merchant. Success as a merchant is realized by focusing all that you are capable ofon what you have a burning desire to accomplish. There are no secrets or shortcuts to this success. Itis the result of thoughtful preparation, maximum eﬀort, eﬀective execution, learning from your mistakes,and selling like your world depends on it. Our remarkable growth over the past several years has beenaccomplished by the extraordinary eﬀorts of the very few who have a unique understanding of what ittakes to make us a proﬁtable and responsible venture.Our success could not have been achieved without the investment necessary to support suchopportunity. It takes people, money, and courage. I think we have a great mix of all three, and that iswhy I am so excited about our prospects for the future. It has been earned – and it has been rewarding!Page 8

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Root Philosophyroot n. the portion of a plant that serves as support and draws minerals and water from the soil.24. The Root. A business starts out as one lonely root. It heads down into the dark recesses of theearth, looking for water. It’s not sure where it’s heading, but it sure knows what it needs. It knows itspurpose! Nothing else matters, and this singularity of purpose deﬁnes the root. There are nophilosophical contradictions, no conﬂicting strategies: just ﬁnd some water – it is better to be ﬁt than tobe right. It takes more courage than virtue.25. Grow or die. Once it initially succeeds in its search, the root beginsto grow. It won’t grow in just one direction – instinctively, it knows betterthan that. It sprouts new roots in all directions. Some ﬁnd water andrepeat the process, others ﬁnd nothing, and atrophy sets in. Grow or die,succeed or perish. The root never rests; it never stops searching.26. Adapt. The root is not stuck on one path; it does not resist change. It welcomes the opportunity tointertwine with other roots, knowing there is strength in this union. It is ready to adapt. It knows its job,and it sticks to it. It is the search that gives the root meaning, not the success. It is the skillsdeveloped and used [to grow] that give it substance and character. Like the root, we are not here tocollect and admire; we are here to build and grow. We measure the quality of our life by the eﬀort givento our journey, not by our ephemeral success. It is the struggle that deﬁnes us.27. We are always at risk. Our business knows its purpose; it’s been taught well. We have strongroots. We do not resist change; we welcome it. We must grow or die. It would be nice to say that wehave arrived at the journey’s end, but that doesn’t happen to a root. A root goes on searching; thejourney continues unabated.The challenges that can destroy us are right around the corner, lurking behind this veil of success. Wemust be ready; we must be prepared. Who knows when the next storm will hit? We must stay strong. Itis not enough for the root to ﬁnd water; it must have the ability to store enough water to survive theeventual drought. No root is so bold or so arrogant as to think that it will avoid drought. The key is tosurvive. Luck has nothing to do with it; preparation does. Failure to prepare is preparing to fail. Wehave our water stored, and we continue on.28. Stand together. This business is a seed of opportunity. Properly cared for, it will grow strong andprosper forever. It must be able to withstand the vagaries of life. It must be supple and pliable enoughto change with the demands of a dynamic world yet strong and ﬁrm enough to stand tall against allchallenges.Like the mighty Redwoods of California, we cannot stand alone. The roots of the great Redwoods donot run deep and alone; rather, they spread out and intertwine with each other. They stand together. Astorm doesn’t take on just one, it takes on a hundred, and the Redwoods have been standing tall forthousands of years.Page 9

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Building a Business29. Step one: Pick the right market space [know thyself]. The criteria for picking the right marketspace is based on our ability to be competitive in, to be proﬁtable in, and, ultimately, to be dominant inthe chosen space.● Is this the space we are best equipped to compete in? Do we have the leadership, expertise,and resources to deliver? Can we navigate eﬀectively?● Can we be more proﬁtable in this par ticular market space [as opposed to another space]?Is this where we will maximize our return on our investment for all the resources we must committo compete, proﬁt, and dominate? Is this the most fertile ground for the seeds we are going toplant for our merchant harvest?● Can we eventually be dominant in this market space? If we can’t, we will eventually beoverwhelmed by the dominant player. In order to build a sustainable core business, it is notenough to be competitive and proﬁtable – we must be dominant. Business is extremelycompetitive and ruthless. There are winners and losers. All of our competition wants to put usout of business. There are no half-measures. Dominate or be dominated. Now, I'd like to paint awarmer, kinder, gentler picture of the business world for you, but, just like the rest of the world,it’s not survival of the ﬁt; it’s survival of the ﬁttest. There's some nasty shit going on out there.Our intention is to dominate because the only other option is to be dominated [and eventuallyexpunged]. That's just not going to happen. We have the resources and desire to build aworld-class business that dominates our market. I wouldn't want it any other way.30. Step two: Brand equity [the Advantage ‘Magic’]. In order to build a sustainable business, it isessential that our operations become the brand. This creates our brand equity. Our brand, however, isof little value unless it delivers performance, value, and cache. We build our brand equity by exceedingthe customer’s expectations in all three deliverables.We don’t have a service department; we have Lifetime Service. We don’t have a wholesale division; wehave iFul. We even had Audio Al. It’s not just a pair of Seven jeans; it’s a pair of Seven jeans from TonyWalker & Co. It’s not just an A/V system; it’s a Smart Center system installed by the Smart Squad. Inour chosen market space, we need to not only attract the customers who will naturally shop in thatspace, but, more importantly, we must also attract those who are likely to make an aspirational purchasein that space. We help accomplish this by branding everything we do, and we brand everything we doby adding the special sauce. It’s just like the Ragusa Figs my great-great-grandfather use to bring tomarket back in Sicily. He would dip his ﬁgs into his special sauce and get double the price for his ﬁgs.They weren’t just any ﬁgs; they were Ragusa Figs. We need to dip everything into our own special sauce– that’s the diﬀerentiator – that’s the Advantage ‘Magic.’ And, remember, you’re the special sauce.At Tony Walker & Co, we are the brand. Our customers do not buy a North Face jacket; they buy a NorthFace jacket from Tony Walker. It's where they got it that gives it its cache. A gift from Tony Walker is aspecial gift. Just like when you give a gift from Tiﬀany's in their little blue box, the Tony Walkerhounds-tooth wrapper itself evokes a promise of quality, fashion, elegance, and style. It is not meant tobe discounted or diminished. It is not meant to evoke a feeling of prudent shopping and closeoutpricing. It's not a deal, rather, it is a big deal to get something from Tony Walker & Co. Our goal is toPage 10

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make every customer proud to shop and promote the Tony Walker experience because it is how I wantto build our business, and it elevates them, as well. It is both a social experience and a statement.Therefore, we must do everything we can to make their in-store experience magical.31. Step three: Get more bites out of the apple. In order to build a sustainablebusiness, it is also important to get the maximum performance out of our resources,especially our inventory. We must get as many bites out of the inventory as possible.We need to keep our inventory fresh, productive, and turning. Therefore, we not onlysell our inventory through our retail stores, we also wholesale and distribute it.Today, the internet oﬀers even more opportunities to get additional bites out of ourinventory. Our Jumpsite strategy is the foundation of our online experience, but thereare so many available venues it’s almost limitless.So, since we already stock our core inventory, why not sell it as many ways aspossible? One of the noteworthy aspects of this strategy is that we don’t have to usethe same criteria for choosing our market space. As long as we are not putting ourcore operations, our suppliers, or our customers at risk, we can sell it anywhere. Wedon’t necessarily have to be competitive, dominant, or, at times, even proﬁtable. It’s agreat way to start a new root and create opportunities for everyone with limited risk.32. Step four: Turn our support functions into proﬁt centersThe same perspective goes for our other resources, especially our support functions. If we have to do itanyway, why not turn it into a proﬁtable business? Whatever we do, we want to be world-class, andthat’s a great start for any business. Once again, our criteria for turning our support functions into proﬁtcenters is not as demanding as picking a market space for our core operations.We have to manage our properties, so why not develop proﬁtable income producing property? We haveto have a design team, so why not start a proﬁtable Smart Squad design agency? We have to have aservice department, so why not provide proﬁtable service for other companies? Look what we did withour personnel department [our G8 division has become our fastest-growing and most proﬁtablebusiness]. This is the Root Philosophy in action.When the inevitable storm comes, it’s taking on our redwood root structure. Failure to prepare ispreparing to fail. We are uniquely prepared: We have branded ourselves, and, unlike our competition, weare getting more bites out of our inventory. But, equally as decisive, we have dramatically reduced ouroverhead by turning many of our support functions into proﬁt centers. This all adds up to a remarkablecompetitive advantage, not to mention a growing root structure.There are many businesses that are successful but not sustainable. Most stop short of steps two, three,and four in building a sustainable core business. Once they handle step one, they think they havesucceeded. It is a combination of hubris [the tragic ﬂaw] and ignorance that eventually proves theirundoing. We, however, are in it for the long run. We are here to build sustainable core businesses.We are the root. This is how we roll. Be big, be a builder.Page 11

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33. Step ﬁve: Growing the Business. In order to grow our business, we need to start with the obvious.Every one of our operations can certainly increase their sales by at least 40% by doing a more eﬀectivejob of selling more of the goods and services we already have to the customers we already have. Weneed to look at our business through this lens every day and every moment. It’s essential.If we are going to continuously grow our business, we must identify everything we have available to sell,then make it accessible, desirable, and consumable. Next, we need to identify all of our customers, getto know them better, make them accessible, and then connect with them [this is where the rubber meetsthe road]. We facilitate this connection by building a better conduit between all we have to oﬀer and allof our customers. This is really the key to growing our business. It’s organic.33.a. Sell more of what we have to the customers we have.Identify everything we have available to sell. I have no idea of the entire scope of ourremarkable oﬀerings, I doubt anyone actually does. Out of sight, out of mind. Theproducts, programs, and services we now oﬀer are as diverse as they are outstanding.Before we get started working on any strategy to increase sales, we have to begin withidentifying ALL of the goods and services we currently have available to sell.Make all that we oﬀer accessible to everyone at the Advantage. Once we identifyeverything we have to oﬀer, we need to make it accessible to everyone at theAdvantage. This is the challenge of The Resource Center. If we can’t identify andaccess it, we can’t sell it. This access must be available for everyone from the ﬁrst daythey arrive at the Advantage and continue on [even as they become more and morefocused on a speciﬁc division and less likely to be exposed to the rest of the company].It’s easy to become myopic and miss opportunities. Keep everything in sight andaccessible.Merchandise it all for customer access. After we’ve identiﬁed and provided access toour eclectic mix of oﬀerings, everything needs to be oﬀered, packaged, and presented ina way that is attractive to our customers. This is the special sauce; this is the Advantage‘Magic.’ We are here to satisfy particular needs. Our customers need to know that wehave what they need, but, more importantly, we need to ﬁre their imagination with allthat is possible. Along with our personal performance, one of the things we can controlis the quality of our customer’s access, so let’s make certain that they have the bestaccess possible.Make it consumable. Our range of oﬀerings is nothing short of incredible, but it is justtoo much to present or grasp all at once. We need to make it all consumable in one bite– maximum exposure in the minimum amount of time and space. The most consumablevenue is obviously a little ﬂier. Do you think we can get everything we have to oﬀer inone little ﬂier? It’s a challenge, but it is essential. I’m certain we can do it. From asimple ﬂier we move into other more voluminous venues, each providing a larger formatfor more information and depth. So we graduate from a ﬂier to a brochure, then acatalog, then a website, and ﬁnally to the actual displays in a store. Each venuepresents an opportunity for maximum exposure to all that we have to oﬀer [as well asdeﬁning speciﬁc oﬀerings]. We will bring them all together in The Resource Center.Page 12

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Identify all of our customers. We have customers everywhere. In fact, everyone wetouch is a customer or potential customer. We need to build, organize, and proﬁle ourcustomer lists. We need to know our customers better. It is essential.Make all of our customers accessible to everyone at the Advantage. Once again, ifwe can’t identify and access them, we can’t sell them. We need to share all ourresources, including our customers, throughout the Advantage Nation.Connect with our customers. We need a better conduit for our customers. Everypoint of contact needs to be improved. From our website/blogs to social media to all ofour salespeople, we need to improve every day.33.b. Find more customers for what we already have to sell. We start with word-of-mouthreferrals because we know nothing is more critical to our success. Until our customers refer us,we haven’t completed the sale. In addition to referrals, we must seek out new customersthrough a comprehensive marketing program. Eﬀective marketing makes selling easy.33.c. Find more to sell to the customers we already have. We’re actually pretty good at this,especially at TW&Co. This is what makes buying fun. It’s the hunt. Fortunately, the internetallows us to access and deliver an even broader array of goods and services for our customersat minimal cost.33.d. Diversify. The future is uncertain, and the end is always near; let it roll. Everything wearsout – every fad, every product. Everything that is new today is old tomorrow. Sooner or later,we have to be ready to move on. Diversiﬁcation will lay the foundation for future growth. Weshould always be on the lookout for new opportunities that provide us with access to diﬀerentproduct, services, markets, suppliers, partners, and customers.34. Aesop's Fables. A father whose daughters were perpetually quarreling decided to give them apractical illustration of the evils of disunion. He gave each, in succession, a bundle of sticks and orderedthem to break them. Though each daughter tried with all her strength, none succeeded. The father thenunbound the sticks and gave each daughter one of them, which they broke easily. Then he said: "Mydaughters, if you are of one mind and unite to assist each other, you will be as this bundle, proof againstyour enemies. But if you are divided among yourselves, you will be broken as easily as these sticks."This simple story tells us everything we need to know about the importance of building a strong andloyal team. We are in this together, and I am dedicated to building our future with your help and loyalty.35. Reputation. It starts with our reputation. A reputation is equal parts substance and image. Wemust provide the substance and promote our image. First impressions are lasting impressions. Wemust show our customers, community, friends, and each other that we believe in what we are doing –that we are indeed the best merchants anywhere. Our reputation will hold us in good stead through thestorms we must face; it is our root. It is our greatest and most fragile asset.36. Henry Ford. 'Whether you think you can or whether you think you can't - you're right!Page 13

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The Moment of Truthdel•liv•er n. to produce what is expected; make good.37. Will Durant's The Mansions of Philosophy. 'We may take the same attitude to pugnacity and itsadvance agent, pride; these are virtues, not vices; and though we shall prune them, it is only to makethem grow. Not quarrelsomeness, and not conceit: conceit is the imagination of victories to come, prideis the remembrance of victories achieved, and quarrelsomeness is the pugnacity of the weak. To ﬁghtdoes not mean of necessity to shout and strike; it may mean to persist quietly and politely to one’s goal.’‘To be ambitious need not mean to be cruel and greedy; the strong man gives as readily as he earns andﬁnds his joy in building rather than in owning; he makes houses for others to live in, and money forothers spend.’‘Character does not come from conspicuous consumptions; it comes from construction and creation.'38. Leadership is the ability to create an environment where people are motivated to give a 100%eﬀort toward the desired result. Therefore, in order to get the results we desire, we will need eﬀectiveleadership. I think this is something we all knew before we came to the Advantage. It's just commonsense. Are you an eﬀective leader? I don't want to hear about the great eﬀort you're putting forth, Iwant to know if you are creating an environment where everyone around you is motivated to give a 100%eﬀort toward the desired result - and, most importantly, are we getting the results we are working sohard to achieve.39. Supply Time. We are all merchants. From preparation to execution, all of us are inexorably tiedtogether in a process that produces a desired result [security, proﬁtability, and growth]. It is my job tosupply the leadership and the resources to help make it happen. You can't draw water from an emptywell. I have to ask myself if I have supplied you with the reputation and resources so you can deliver. Ifyou are taking care of a customer, have I empowered you with the authority and knowledge to satisfytheir needs? This is my Supply Time. If I haven't, you better let me know. We have our faults, but weaim to correct them. Be critical, not negative. We are committed to recognition and improvement. Thisis our strength. This is our responsibility.40. Delivery Time. Delivery Time is your time to come through for the Advantage; this is yourresponsibility. It is that moment of truth when you have to deliver. Whether you are at home, work, orplay – you are on call for Delivery Time. You deﬁne the Advantage every time you represent us. Somake sure you understand, believe, and sell the 'Magic.' When you are at work, people will respond tohow you represent us; that will be their deﬁnition of the Advantage [be it good or bad]. The same is alsotrue when you are not at work. If someone mentions the Advantage, this is a moment of truth; this isDelivery Time. Do you have the pride and the loyalty to make it happen? We are all counting on you.You are where the rubber meets the road. Our reputation is our most treasured asset. It is the oneresource we can not replace. Our inventory, facility, personnel, and skills can be replaced, but ourreputation has only one life. Every time you are faced with a moment of truth, remember, it's DeliveryTime, and our reputation depends on you. You should be able to say with conﬁdence and sincerity thatwe are in the right place, that we deliver on our promises, and that you believe in our future. It's a24-hour-a-day commitment. It's not just your job – it's your reputation.Page 14

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41. Measurement Time. Measurement Time is the process of recognition for the sake of improvement.This is the time when we take a look at how well we are keeping our promises and commitments. As amerchant, we are making an implicit promise to satisfy particular needs. As a company, we make manymore promises. We have made unspoken promises, especially to the community we serve. We havealso made considerable promises to our suppliers and each other. Quality is external. It is measured bywhat people expect. They keep score. We are here to exceed expectations._____________________________________________________________________________________________The Business Life Cycleﬁt adj. suited, adapted, or acceptable for a given circumstance or purpose.42. Everything has a life cycle. The earth is approximately 4.5 billion years old, and there was no lifeon it for the ﬁrst 2 billion years. Man has been around for about 50,000 of those 4.5 billion years – that’sabout 800 generations. The ﬁrst 650 generations were spent as cave dwellers, and nearly all themanufactured products and technology that we use today were produced by the last 5-7 generations.43. Survival of the ﬁttest. It’s been a Darwinian Process – a struggle for existence. Darwin's NaturalSelection suggests results from the gradual accumulation of individual modiﬁcations. It is survival of theﬁttest. We must be ﬁt and willing to adapt.44. About Darwinism. 'It’s true that Darwin couldn’t prove his theory since, as he put it, the great spanof evolutionary time was simply unrecoverable. But that was okay. The circumstantial evidence - in theform of fossils, species, distributions, plant and animal structure, embryology - was good. And, exceptto the religious fundamentalists of the day, the basic setup felt right, just as the theory that the earth wasround had felt right. What was upsetting were evolution’s vibes: that nature had gone from being asun-kissed harmony to being a tag-team wrestling match; that there was no such thing as virtue, justmore and more adaptation; and that there were greater rewards for being ﬁt than for being good or evenfor being right.' – Jones & Wilson45. The 6 Phases of the Business Life Cycle. Businesses also have a life cycle, and ours is noexception. There are six phases in the life cycle of a business: the ﬁrst three are dependent upon theeﬀorts of the individual leader, the next two are dependent upon the core ideology, and the ﬁnal phase iswhen the leader and the core ideology give way to expedience, status, and greed. I would like to see usstay in the Expansion Phase forever. Every phase calls for signiﬁcant adaptations.45.a. The Dreamer Phase - The founder of the business sets out on a journey, chasing adream. Few are convinced, and those who come along do so on faith alone.45.b. The Rebel Phase - The battle has been joined. The business lives on the edge ofsuccess or failure every day. There is no respite; the leader knows that success or failure rests in hisability and eﬀorts alone. The team is tight and loyal; there is no room for anything less than totalcommitment.45.c. The Captain Phase - Initial success creates a more intrepid attitude. The team grows intoPage 15

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a workforce, and internal conﬂict begins. The business works at becoming more productive andeﬃcient. Competition and creativity are at their height. The leader must begin to delegate. Things arechanging overnight. The business remains ﬂuid and adaptive.45.d. The Expansion Phase - The business is a ﬁnancial success and isrecognized as a force in its industry. Competition is giving way to internal growingpains as the main concern. Expansion in its core business and the development of aneﬃcient infrastructure provides the foundation for further development. Professionalmanagement is being developed and gaining power. Proﬁts provide for creativity, andnew ideas create new opportunities.45.e. The Diversiﬁcation Phase - The core business is seen as a proﬁt center. Currentoperations must continue to cut costs and run more eﬃciently. The leader is now a corporate managerand creativity gives way to 'numbers' and return on investment. Bigger proﬁts and higher margins aresought in new businesses through diversiﬁcation. Professional managers have now become moreimportant than producers. A corporate culture [with its inherent caste system] is fully developed. Imagebegins to dominate substance. Hubris is indeed the tragic ﬂaw.45.f. The Acquisition Phase - The core business is being sucked dry and is limping along. In aﬁnal eﬀort to stave oﬀ extinction, the business acquires other businesses. The future is mortgaged byoverburdening the business with debt for acquisition and status. A well-entrenched management is avariety of power cells. Creativity is a thing of the past. The leader has made his money and has left thebusiness to the stockholders and their internecine Board of Directors.46. Courage. A man who says he never had a chance is a man who never took one._____________________________________________________________________________________________The Need Hierarchyneed n. lack of something required or desirable. want v. to wish for.47. Every choice has a consequence. There is a gap between stimulus and response, and the key toboth our growth and success is how we use that space.48. Perception. Everyone perceives things diﬀerently - not correctly, or incorrectly - just diﬀerently.'Human Relations' is the development of awareness about others as individuals.49. Closure. Our brain can only process about 1/10,000th of what we see; a criterion is developed toselect what is useful to us [selective perception]. This process is based on our growth and survivalneeds. Because we do not react equally to all information, we are left with gaps in our perception.We use a process called 'closure' to ﬁll in the gaps with information we already have. Sometimes this'closure' is made too quickly, without enough information. This narrow perception is calledPage 16

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'stereotyping.' However, this is not always bad because it often allows us to categorize large volumes ofinformation eﬃciently.50. 'Just do it' doesn't work. We need to understand why people do things or what motivates them. Itshould be understood that getting someone to do something and having a person want to do something,are two completely diﬀerent endeavors. It can be opportunity, responsibility, or fear that appears tomotivate someone, but there is a more basic force at work.51. Motivation comes when a person wants to do something because it satisﬁesthat person's own unique needs.52. Needs. To better understand motivational structure, we can use Abraham Maslow's NeedHierarchy. The structure contains 5 separate graduating Need levels:Basic Needs - Survival [food, water, air, and so on].Safety Needs - After survival needs are met, we turn to meeting our need for health, a steadyjob, and other basics to depend on.Belonging Needs - The ﬁrst set of needs dealing with the psychological well-being of theindividual. Love, aﬀection, and a sense of belonging are sought from groups such as family, coworkers,and friends.Esteem Needs - Prestige, recognition, and respect. The need to feel worthwhile and signiﬁcantintensiﬁes.Self-actualization Needs - the ﬁnal and highest level. This can only be achieved after all theother physical [1,2] and psychological [3,4] needs have been basically satisﬁed. It is reaching one's fullpotential.53. Maslow felt that unfulﬁlled needs were the motivating needs.54. More Will Durant. 'But then one can be too cautious, and by turning away from the beckoning ofgreat deeds, remain forever small. Make sure that modest victories shall not content you; on themorning after your triumph, having feasted for a day, look about you for the next and larger task. Facedanger and seek responsibility; it is true that they may defeat you, may even destroy you; but the date ofthe one death which you must die is too slight a chronological detail to disturb philosophy. If they do notkill you, they will strengthen you and lift you nearer to greatness and your goal. Make or break.'55. It cuts both ways. You can't have life in slices, you have to take the whole pie, and there is thepotential for adversity or success in every bite. This can be either a burden or a challenge.56. Our greatest assets are also our greatest liabilities. This is true for everyoneand everything. A good example of this is free will; it is our greatest asset, yet itremains our greatest liability. It leads to the ultimate burden of individual responsibilityand the enormous consequence of every decision.Page 17

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Characterchar•ac•ter n. moral or ethical strength.57. The Mansions of Philosophy. In 1929, Will Durant wrote The Mansions of Philosophy, a story ofhuman life and destiny, or, as the subtitle promises, an attempt at a consistent philosophy of life. It hasbeen a chisel on my life. One of the most revealing chapters concerns itself with character. Character, inDurant's view, is a sum of inherent dispositions and desires; it is a mosaic of instincts colored andrearranged by environment, occupation, and experience. Below he formulates the extremes: thenegative and the positive character.58. Here is his negative character: ...If he meets a man, he observes him unobserved, looking ateverything but the eyes and measuring the other’s power and intentions. If danger comes, he trembleswith surprise and fear; he does not feel active anger, but is consumed with a fretful resentment; hisviolence is the mask of one who knows that he will submit. He shrinks from responsibility and trial. Hebelieves that the world would entrust him with leadership if it had intelligence. If he succeeds inanything, he credits himself; if he fails, he is "not guilty"; it is the environment [i.e., other people] that is atfault, or the government, or the arrangement of the stars. He is a pessimist about the world and anoptimist about himself. Rest and inaction, being his essence, causes him to shun the sharper realitiesand tasks of life and shrinks into a world of reverie, in which he wins many victories. These being hisimpulses, he is weak above all because his impulses are not coordinated by some purpose thatdominates and uniﬁes his life. He is restless though always seeking rest; he passes discontent fromproject to project and from place to place; he is a ship that never makes a port while all its cargo rots.He is incapable of regularity or industry, and though he seems at times nervously busy, he ﬁnds himselfunable to persist in a deﬁnite purpose. He is intense in intention and lax in an application; he is given tobursts of passion that simulate strength, but they end in quick exhaustion and accepted chaos. He hasa thousand wishes but no will.59. Here is the positive character: ...If he looks at you, it is face to face, but he does not look at you;he is absorbed in his enterprise, intent on his goal. His motto is 'to have and to hold.' It is his pugnacitythat gives power to his purposes; in him, desires are not timid aspirations; they are unavoidableimpulsions; for their sake, he will accept responsibilities, dangers, and wearing toil. He has morecourage than virtue and less conscience than pride. He has powerful ambitions; he despises limits andsuspects humility. If he meets a man stronger than himself, his impulse is not to bow down before himbut to honor him with emulation and rivalry. When he is defeated, it is after a struggle to exhaustion. Heis curious; all processes lure him, and his mind plays actively about. He believes in action rather thanthought, and like Caesar, he thinks nothing ﬁnished if anything remains undone.He is domineering and likes to think that men are bricks to his trowel, to build with them what he likes,and they ﬁnd a secret zest in being led by him; he is so certain, so conﬁdent, and so cheerful. He has ahundred lives of action for one life of thought. What he has above all is will. A unity of aim, an order andperspective, and a hierarchy of purposes, molded in his character by some persisting and dominatingdesign. He dies, never doubting that life was a boon, and only sorry that he must leave the game toyounger players.60. The burden of power. The strong are subject to the depredations of the weak, but they cannoteﬀectively retaliate in kind.Page 18

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Free Willres•o•lute adj. ﬁrm or determined; unwavering.61. The situation often helps make the man. During peacetime, Winston Churchill was considered bymost an anachronism, but when the free world was facing defeat at Armageddon, he was the man whoheld forth against the cataclysmic onslaught of fascism. He saved the world! And with peace restored,he was once again relegated to the broom closet, a relic.62. There are three factors that determine who we are: Genetics, Environment, and Will [the ThirdFactor]. It is a comforting fact that although we cannot change our heredity, we can alter our situation.In order to change our situation, we must sometimes ﬁrst change our character. Recognition is the keyelement of the process of redeﬁning your life as you want it. It is an ongoing process that can only befueled by a resolute will. To take control of your life, get out of denial, and stop blaming everyone andeverything else. It's your destiny, your free will puts you in control, and you are responsible andaccountable.63. There are two worlds - the one we are given and the one we make.64. The will to change. How do we develop the positive character and the will to achieve our commongoals? This is where we encounter some subtle diﬃculties. Some of us do not want to change ourcharacter. We like our faults. We ﬁnd comfort in our old familiar habits. The same is true fororganizations. We often do not feel the need to grow. So, it is imperative that we ﬁrst develop the will tochange. If we are to make ourselves stronger, we must understand what will is.65. Will. Will is the one desire that stands out so high above the others that they are harnessed in onedirection [focus]. It is the way of life. Will is a uniﬁed desire, and its strength and stature increase only aslife ﬁnds for it new challenges and new victories [the root].66. What doesn't destroy us makes us stronger. Face danger and seek responsibility, it is true thatthey may defeat you, but if they do not defeat you, they will strengthen you and lift you nearer togreatness and your goal. Your fears will make you stronger if you have the will to overcome them.Beethoven, losing his hearing, fought his way to incomparable music; Demosthenes, who stuttered,became a perfect orator. The Advantage, initially lacking in resources, is now a diversiﬁed, dynamicenterprise.67. What's right for you? The old wisdom is that there are two things you need to know: what are yougood at, and what will make you happy? If you’re lucky, they’ll both be the same. At the Advantage, wehave many diverse opportunities with diﬀerent concentrations, ﬁnd the right ﬁt, and have the will andcourage to make it happen.68. A short guide to happiness. Bring pride into your life, and you will be amazed at thetransformation. You will lose weight and get in shape. You’ll stop smoking and drinking. You’ll stophanging your head. You will be renewed. You will walk tall and have conﬁdence. You’ll nevershortchange yourself, and you will stop taking shortcuts. You’ll look in the mirror and feel good aboutwhat you see. You will be nicer to people; your fear will be replaced with friendliness. You will ﬁnd fewerreasons to lie. You'll stop cheating yourself [and others]. You will be admired. You will be happy.Sounds unlikely? Not really, you can do it. Try it.Page 19

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10 Points of Businessmag•ic n. a mystery quality of enchantment.69. Immoral. I believe it is immoral to waste. Do not waste your opportunities.70. Take ﬂight. There are only two kinds of people in the business world, eagles and mosquitoes. Youeither soar with the eagles, or you swarm with the mosquitoes.71. The 10 Points of Business. These are our original guidelines for the everyday care and feeding ofour business:1. Loyal Employees. JC Penney believed that you could tell how well his customers werebeing treated by how well his employees were being treated. You will treat our customers the way youare treated. It's that 'do unto others' thing.2. Loyal Customers. They are our partners in the future and an essential part of our rootsystem, let them in on the 'Magic' of it. Earn their trust and respect, and they’ll stick with us forever.Treat them with only the thought of earning their loyalty as your goal, it makes it all come into focus.Understand the diﬀerence between a satisﬁed customer and a loyal one [and its importance]. The sale isnot complete until the customer is so excited that they refer us to their friends:We must develop and enable every customer as our advocate. This is exceedingly moreimportant than having every customer merely make a purchase or being satisﬁed in some vagueway. A customer does not become an advocate because they bought a great pair of jeans; theybecome an advocate because of the remarkable experience they have when they are in ourstores. If we have a choice between making a customer an advocate or having them buy a pairof jeans, it's not even close - I want them as an advocate. It is a thousand times more beneﬁcial.Back in ancient China, sometime between the 4th and 6th century BC, Lao Tzu, who was thefounder of Taoism, said, "Give a man a ﬁsh, and you feed him for a day. Teach a man to ﬁsh,and you feed him for a lifetime," which is analogous to my strategy for making every customeran advocate rather than a sale.We must encourage every customer to spend more time in our environment. This is ouraﬃnity program. The more time a customer spends at our stores, the more time we have toimbue them with the Tony Walker ‘Magic.’ We have to have events, programs, services, andentertainment in order to keep them involved. We need to give them a reason to both stay andcome back. Anything we can think of to enhance the experience must be done.We need to involve our customers in both our success and our destiny. Our customerswant to be part of the experience. They want to suggest product and make recommendations.They want to feel they are an active part of it. I want to enable and encourage that feeling. TheFashion Board is just the start. We need more customer activism.3. Loyal Suppliers. We need our suppliers. It is essential to understand their needs and tosatisfy them. Price is not the only criterion we use to judge them. They, too, are an essential part of ourroot system.Page 20

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4. If It’s Good - Pass It Along. If It’s Bad - Own it. This is all about taking responsibility. Thedays of passing oﬀ your problems are over. The time has come to work through the lows and passalong some of the highs. Try saying, "I’ll take care of it!" It is not a question of 'if' hard times andchallenges are coming, it is a question of 'when,' and you are measured by how well you handle them.There is the potential for adversity or success in every bite.5. Lead, Don't Follow. Leadership sleeps with humility, management is in bed with arrogance.The time has come to lead. It takes intelligence, patience, and a strong will. A leader sets a higherstandard and exceeds it.6. Teach, Don't Tell. If someone tells you to just simply do something - ask why. If they tell youbecause they said so - tell them to blow it out of their ass.7. Choose Quality First, Then Price. We want to oﬀer the best products and services at theright price. Remember that it is the performance we are oﬀering - not the price. Everything has to bethe best, not just our product and service - everything. Take pride in everything you do.8. Get Better, Not Bigger. Growth is a byproduct of getting better [as is proﬁt]. We set ourown standards. We measure our progress against our previous performance, I could care less whatsomeone else is doing. Getting bigger is sometimes the fatal ﬂaw.9. Support The Community. It is time to give more back than economic revival. We must havea positive impact on our community with greater social awareness. Our roots are intertwined.10. Create Opportunity. Take care of 1 thru 9, and 10 will take care of you. We have it; let’s doit. At the Advantage, we oﬀer opportunity as our #1 beneﬁt; you’ve earned it, so grab it and build it._____________________________________________________________________________________________The Art of Wardis•ci•pline n. training expected to produce a speciﬁc character or pattern of behavior.72. An excerpt from The Art of War. Sun Tzu, whose personal name was Wu, was a native of the Ch’istate. His Art of War brought him to the attention of Ho Lu, King of Wu. Ho Lu said to him, "I havecarefully perused your thirteen chapters. May I submit your theory of managing soldiers to a slight test?"Sun Tzu replied, "You may."The king asked, "May the test be applied to women?" The answer was again in the aﬃrmative, soarrangements were made to bring 180 ladies out of the palace. Sun Tzu divided them into twocompanies and placed one of the king’s favorite concubines at the head of each. He then made them alltake spears in their hands and addressed them thus: "I presume you know the diﬀerence between frontand back, right hand and left hand?" The girls replied, "Yes."Sun Tzu went on. "When I say ‘eyes front,’ you must look straight ahead. When I say ‘left turn,’ youmust face toward your left hand. When I say ‘right turn,’ you must face right around toward the back."Page 21

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Again the girls assented. The words of command having been thus explained, he set up the halberdsand battle axes in order to begin the drill. Then to the sound of drums, he gave the order "right turn," butthe girls only burst out laughing.Sun Tzu said patiently, "If words of command are not clear and distinct, if orders arenot thoroughly understood, then the general is to blame." He started drilling themagain and, this time, gave the order "left turn," whereupon the girls once more burstinto ﬁts of laughter.Then he said, "If words of command are not clear and distinct if orders are notthoroughly understood, the general is to blame. But if his orders are clear and thesoldiers nevertheless disobey, then it is the fault of their oﬃcers." So saying, heordered the leaders of the two companies to be beheaded.Now the King of Wu was watching from the top of a raised pavilion, and when he saw that his favoriteconcubines were about to be executed, he was greatly alarmed and hurriedly sent down the followingmessage: "We are now quite satisﬁed as to our general’s ability to handle troops. If we are bereft ofthese two concubines, our meat and drink will lose their savor. It is our wish that they shall not bebeheaded."Sun Tzu replied even more patiently: "Having once received His Majesty’s commission to be general ofhis forces, there are certain commands of His Majesty which, acting in that capacity, I am unable toaccept.’ Accordingly, and immediately, he had the two leaders beheaded, and straightway installed thepair next in order as leaders in their place. When this had been done, the drum was sounded for the drillonce more. The girls went through all the evolutions, turning to the right or to the left, marching ahead orwheeling about, kneeling or standing, with perfect accuracy and precision, not venturing to utter asound.Then Sun Tzu sent a messenger to the king saying: "Your soldiers, sire, are now properly drilled anddisciplined and ready for Your Majesty’s inspection. They can be put to any use that their sovereign maydesire. Bid them go through ﬁre and water, and they will not now disobey." But the king replied: "Letour general cease drilling and return to camp. As for us, we have no wish to come down and inspect thetroops." Thereupon, Sun Tzu said calmly: "The king is only fond of words and cannot translate them intodeeds."After that, the King of Wu saw that Sun Tzu was one who knew how to handle an army and appointedhim general. In the west, Sun Tzu defeated the Ch’u state and forced his way into Ying, the capital; tothe north, he put fear into the states of Chi’i and Chin and spread fame abroad among the feudalprinces. And Sun Tzu shared in the might of the kingdom.73. David Ogilvy. 'Rules are for the obedience of fools and the guidance of wise men.'Page 22

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Inventory and Margincon•trol n. to verify or regulate by systematic comparison.74. The #1 Inventory Rule. Narrow and deep, keep it fresh and keep it turning. The deﬁnition of a greatinventory is one that has a great selling motion [selling motion = margin x turns]. For example:Let's say we have a business that does $4,000,000/yr @ 25% margin. That would mean that our cost ofgoods sold [CGS] is 75% of sales, or $3,000,000. Now, if our inventory was $1,500,000, that wouldmean our inventory turns/yr is 2 times [$3M/$1.5M]. Now, if we were working on 4 turns/yr, it wouldmean our inventory would only have to be $750,000 [$3M/4]. That would leave $750,000 to do whateveryou wanted to [invest in stores, etc.]. The more turns, the better.Some inventory investments, however, like investing in inventory for our own brands, createopportunities for us to build on for future harvest. An inventory that we control our fate with allows usthe ﬂexibility to develop new opportunities, such as online sales, wholesale, and new stores in anymarket we choose [not to mention the increase in margin].75. Cash Flow. Simply put, cash ﬂow is a game of beating the check. If you have to pay for yourproduct before you have collected for the sale of that product, you are in a negative cash ﬂow position.Conversely, if you have collected for the sale of your inventory before you have to pay for it, you are in acash ﬂow-positive position. If you are purchasing product that will only turn once per year, you wouldneed one year dating to be in a cash ﬂow-positive position. If you are turning your inventory 12 timesper year, then you would only need 31-day dating to be cash ﬂow positive. The 12 turns in theelectronics division are a huge advantage in our quest to be cash ﬂow positive. Understanding thelimitations of turns [but the advantage of higher margins] in the clothing sector, we are more than willingto have more actual cash tied up in our clothing inventory because, ultimately, we are concerned withthe net ROI on our entire investment in an enterprise [and by that standard, the clothing division is doingok, but not as well as we should].76. Margin. When considering margin, you must always take into account inventory turns. One withoutthe other leaves you with an incomplete picture.If you were to invest $10,000 in two diﬀerent businesses [A&B], and if A were to promise you a 40%return, while B promised you a 15% return, which would you choose? You shouldn't choose yetbecause you don't have enough information. If I was to tell you that the 40% return from business A isover a 4-month period and the 15% return from business B is over a 1-month period, you could nowmake a more reasonable evaluation of the merits of each investment.Over a 1 year period, business A will make you $12,000 [$4,000 x 3], while business B will make you$18,000 [$1,500 x 12]. The choice is easy. Business B makes you 50% more. So, never talk marginwithout turn, that's margin eﬃciency, and we call it the selling motion.77. Selling Motion. Margin x Turns = Selling Motion. Always consider margin eﬃciency when pricingan item. Each item has its own margin eﬃciency, which we call its selling motion. Do not get caught upin having to work at a certain margin; it is meaningless. Every item has its magic price. Everything sellseventually, but what sells the best? Good instincts with good numbers lead to good judgment. Withoutgood instincts AND good numbers, we are compromised.Page 23

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78. The Art of Buying. The foundation of our buying strategy is based on knowing what our customerswant, but the art of buying is based on knowing our suppliers.79. Inventory turns. In an industry that has an average of 40% margin, there will be a change of 1inventory turn for every 5% change in the margin. For example:If your margin is 40% and you enjoy 4 turns per year [ME=160], you will ﬁnd that your turns will go to 6per year if your margin drops to 30% [ME=180]. This would prove a better return. Furthermore, if yourmargin dropped to 20%, your turns would increase to 8 [ME=160]; this would not be better than thereturn at 30% with 6 turns [ME=180]. Your inventory is expensive; make the most of it, keep it working,keep it turning!80. Customer Retrieval, Associated Sales, and Goodwill. When talking about margin, you mustconsider not only turns but customer retrieval, associated sales, and goodwill as well. The lower yourmargin - the greater the customer retrieval. The better your value, the more likely your customer is tobuy other items. The greater the value - the more likely the word will spread. Repeat business andword-of-mouth advertising are essential to a retailer's success. For example:If you are in Disney World, you may buy a T-shirt for $30, but you are not going to go back there and buymore unless you have to. It is not a good value. You may go to a store and buy a particular item thatyou really want, but if it is not a value, how likely are you to buy something else? Whereas, in a store thathas a great deal going - you are more likely to buy more, come back again, and, most importantly, telleveryone about it. Here’s a guide to measuring the possible impact of diﬀerent pricing:_____________________________________________________________________________________________The Magic Pricegen•ius n. extraordinary intellectual and creative power.81. Criteria for lowering a price. If the new price is at a lower margin, does the increase in volumemake up for the loss of gross proﬁt? If there is still a loss in gross proﬁt after test #1, does the increasein associated sales make up for the remaining loss of gross proﬁt? And ﬁnally, if there is still a loss ofproﬁt, do the customer retrieval and word of mouth make it worthwhile? This is seen as an advertisingcost. For example:When we decided to lower the price of our Outback Jeans way back in the ’90s from $29.90 to $19.90,we ﬁrst looked at the increase in volume to see if it made up for the loss of gross proﬁt. Since the grossproﬁt per jean was going from $16 to $6, we would need an increase in sales of 2.7 times [16/6].Fortunately, our sales more than tripled.Next, we looked at associated sales. Our average associated sale with a pair of jeans was $10 [with agross proﬁt of $3]. This means that our actual gross proﬁt per total sale was not $16 but rather $19, andit went down to $9, not $6. Therefore, our necessary increase in sales only needed to be 2.1 times. Thebonus in this scenario was that associated sales per purchase actually went up because everyone hadPage 24

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more left to spend, and it made everything appear to be a better value. Not to mention the word ofmouth. The news of great jeans at $19 spread a lot faster than jeans at $29.82. Value, Performance, and Conﬁdence. We've talked about the Advantage'Magic' and how that is our #1 product. What makes the Advantage ‘Magic’ is thevalue, performance, and conﬁdence we provide our customers. Some stores providevalue, some provide performance, and some try to provide conﬁdence, but no oneprovides all three like the Advantage - it's 'Magic.'83. A triple threat. Our value in technology integration is the best in America because we have thelowest everyday prices on the highest quality product, system architecture, and services available. Theperformance of our deliverables is enhanced because we are the most informative and concernedconduit to the customer. We satisfy needs. The conﬁdence our customers have in us has earned us ourremarkable reputation in large part because of the commitment we have made to Lifetime Service. Thecombination of all three is unbeatable.84. Understand, Believe, and Sell. So, now that you know why we are 'Magic,' do you understand it?Do you believe it? And, most importantly, can you sell it?85. You are here by choice. This is a free association of men and women who are dedicated tobuilding the Advantage Co's future. It is a future ﬁlled with career and annuity opportunities. I hope thateach and every one of you are able to reap the beneﬁts of our extraordinary eﬀort and success. If youdo not understand that you are part of this building process, then you miss the point of youremployment. Please do not think you are here for some speciﬁc task other than our growth andprosperity.86. Advantage 'Magic.' Your job as a merchant truly is to deliver the Advantage ' Magic' 24 hours aday. You are the Advantage [and so are our customers]. You are where the rubber meets the road.That's just the way it is. No matter what we say, the fact of the matter is that you deﬁne us 24 hours aday. Once you are part of the Advantage Co, you come to deﬁne us with every action, with every word,with every success, every gesture, every consideration, every act of kindness, every act of deceit, everycomplaint, every encouragement, every smile, every bit of misery, every achievement, and with everyfailure to recognize what it's all about. We are what you make us. Make us a great place to build afuture, and we will be. Make us a miserable place to work, and that’s what we will be. The inmates runthe yard. When it is all said and done - it's up to you.87. Maximum Performance Value. We all have Inherent Performance Capabilities. In fact, ourproducts, services, facilities, suppliers, and even our customers all have Inherent PerformanceCapabilities. It's our job to recognize them, access them, and maximize them. Keep it in mind -especially all of the Inherent Performance Capabilities of our customers. Their ability to refer othercustomers to us is their #1 and most important Inherent Performance Capability. It's up to you torecognize it, access it, and maximize it. The sale is not even close to being done until they refer us.What they can purchase from us is nothing compared to the business their enthusiastic referral canmean to us.Page 25

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Audio Al’s Sales Processsat•is•fy n. to gratify or fulﬁll a need or desire.88. 85% Closing Rate. This is the original sales strategy of the Stereo Advantage. It is timeless. It isthe foundation of our success.1. Purpose - "What are you doing here?" This is not something you usually ask a customer,you know why they are here! They are here because they are shopping for something we sell. Howoften does a customer come up to you and ask, "Why are you here?" Not very often; they know whyyou’re here – to help them get what they want.2. Conﬁdence - First impressions are the most important. Take a walk in the customer’s shoes.How do they want to be treated? What are they looking for? Let them know right oﬀ the bat that theycame to the right place. Have the shop neat and clean. Be attentive and make sure the displays workperfectly. Be informed about the product you are selling. Make them conﬁdent.3. Respect - You can’t fake it. Respect is deﬁned as deferential or high regard. Remember thata customer can smell bullshit because they’re sniﬃng for it. Respect starts with humility. Yourarrogance is your biggest hurdle. You are not here to dazzle the customer with your knowledge. Dazzlethem with your concern. Arrogance and ignorance are the two greatest sins.4. Information - To 'extrapolate' means to infer unknown information fromknown information. Here’s where you earn your keep. Ask what they have and whatthey need. You need to get information ﬁrst, not give it.5. Recommendation - If you know your product and know your customer, and if you’veestablished conﬁdence while demonstrating respect, you should have no problem establishing yourcredibility. The customer knows he has choices. He needs a recommendation. You are theprofessional; act like one. Do the right thing. Never recommend anything unless you think it is right fortheir needs.6. Reinforcement - Remember, people don’t buy our products; they buy howthey imagine using them makes them feel. So, make them feel good. Let the customerknow they made the right choice. Reinforce it after they pay. The time you spend withthe customer after the sale shows that you care about more than just making a sale.Stick with them to their car if necessary.7. The Seminal Sale - Respect, conﬁdence, concern, and knowledge all help you plant theseed for a future sale, but it's up to you to give the customer a vision of the possibilities. Be fun andmake sure the customer is going to tell everyone they know that there is only one place to shop – theStereo Advantage!Page 26

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Pay Programsin•cen•tive n. something, such as a reward, that induces action.89. Regular Pay. At the Advantage Co, we pay people to turn intention into reality. We have bothhourly and salaried personnel. Hourly personnel are paid a minimum of $7.25 per hour and time and ahalf for any hours over 40. This is their regular rate of pay. Salaried personnel are paid a minimum salaryfor speciﬁcally stated managerial responsibilities. They are paid a wage commensurate with the level ofresponsibility accepted by that individual. We endeavor to create an environment where your eﬀorts willbe rewarded according to the criteria for success I have set down.All bonuses, vacation time, and disability beneﬁts are forfeited upon thetermination of employment for whatever reason, including quitting.90. Fundamental and Functional Responsibilities. At the Advantage, everyone, as a merchant, hasfundamental and functional responsibilities. If the Advantage was a car, its fundamental responsibilitywould be to provide reliable transportation, all parts would be working towards that goal, but each partwould have a functional responsibility: The brakes, transmission, engine, etc., would all have diﬀerentfunctions, yet, all would be working in unison towards the desired result.91. Fundamental Responsibilities. The fundamental responsibilities provide the foundation of ourcharacter, behavior, and performance. The following criteria deﬁne your fundamental responsibilities andare used in your evaluation:a. Honesty and Integrity - Be honest with others and true to yourself. Understand what isaccepted at the Advantage and what is not. You help set the standards under which we will operate,and make them the highest possible. It is better to do the right thing than to do things right.b. Loyalty and Enthusiasm - You must want to belong to the Advantage Nation and show it.You must understand that you are responsible for results and that it will take an extra eﬀort to do yourjob well. We do what needs to be done, which sometimes calls for extra hours, particularly at Christmas.c. Concern and Respect - You must have concern and respect for the customer, theAdvantage, and your co-workers. The customer is our ﬁrst priority. Everyone aﬀects this relationship,you must make it positive. You must also really care about the viability and growth of our business.Recognize, seize, and build opportunity. You must care about and respect the people you work with.d. Appearance and Preparation - Are you presenting yourself properly? Do you know whatyour responsibilities are? Do you have an understanding of the resources necessary for 'Delivery Time'?e. Information and Improvement - Are you informed about what is going on in the businessand your area of expertise? Are you up on competitive information? Are you reading and learning, tryingto improve? Get better or bitter; the choice is yours. It is your job to stay informed and keep meinformed. Ignorance is no excuse. Be inquisitive.f. Results - How well are you getting it done? Are you making the Advantage a better place?Are you delivering the goods at the moment of truth? Are you part of the ‘Magic’?92. Business is a popularity contest. I want to be more popular than the competition. You can’tignore the needs of people and expect to be popular. You may say, "I do my job," but I think you maynot understand your job. It's fundamental. I want our customers to be excited by every point of contactwith our company. It's that simple.Page 27

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We have not done our job until they refer us with enthusiasm. We will always rely on word-of-mouthadvertising to build our business, so let’s be great at it. We must be certain the word-of-mouth of everycustomer is nothing short of enthusiastic. When I look at a customer in our store, I can’t help but thinkabout how many more times they are going to go shopping during the rest of their life. I see a35-year-old woman and I ﬁgure she’s good for at least 2 fashion shopping trips per week for the next 40years. That’s 4,000 fashion shopping trips. I want the lion’s share for TW&Co. I am focused on makingcertain that I not only encourage her to continue shopping enthusiastically with us, but I am alsocognizant of how important it is to encourage her to recommend us to all of her friends. 20 friends at4,000 shopping trips each means 80,000 potential shopping visits for TW&Co - and that means success!93. Sam Walton. 'There is only one boss: the customer. And he can ﬁre everybody in the company,from the chairman on down, simply by spending his money somewhere else!'_____________________________________________________________________________________________Equal Opportunityop•por•tu•ni•ty n. a favorable or advantageous circumstance.94. The Advantage Co. is an equal employment opportunity employer. The Advantage Co. does notdiscriminate against employees or job applicants on the basis of race, color, religion, gender, age,national origin, disability, veteran status, or any other status or condition protected by applicable statelaws, except where bona ﬁde occupational qualiﬁcation applies.95. The Advantage Co. will:Recruit, hire, train, and promote persons in all job titles without regard to race, religion, color, sex, age,national origin, handicap, veteran status, or any other status or condition protected by applicable statelaw, except where a bona ﬁde occupational qualiﬁcation applies.Ensure that all personnel actions such as initial consideration for employment, job placement,compensation, beneﬁts, promotions, transfers, layoﬀs, return from layoﬀ, training, professionaldevelopment opportunities, discipline, termination, and social and recreation programs will beadministered without regard to race, color, religion, gender, age, national origin, disability, veteran status,or any other status or condition protected by applicable state laws, except where bona ﬁde occupationalqualiﬁcation applies. If any employee has a suggestion, problem, or complaint with regard to equalemployment, he/she should contact Tracy Allen at [716] 866-6425.All Advantage employees have a right to be free from sexual harassment. The Advantage does nottolerate sexual harassment in the workplace. All employees have the right to work in a professionalenvironment in which they are treated with respect and dignity. At The Advantage Co, sexualharassment, whether verbal, physical, or environmental, is unacceptable and will not be tolerated. Allemployees must avoid any action or conduct which could be viewed as sexual harassment.For purposes of this policy, sexual harassment is deﬁned as unwelcome or unwanted sexual advances,requests for sexual favors, and any other verbal, visual, or physical conduct of a sexual nature whensubmission to or rejection of this conduct by an individual is used as a factor in decisions aﬀectingPage 28

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hiring, evaluation, retention, promotion, or other aspects of employment or when this conduct couldreasonably interfere with an individual's employment or creates an intimidating or hostile workenvironment.Examples of situations that may be sexual harassment include but are not limited to unwanted sexualadvances, demands for sexual favors in exchange for favorable treatment or continued employment,verbal conduct, such as derogatory slurs, or physical conduct that is sexually harassing in nature.The Advantage Co encourages employees to report sexual harassment complaints immediately so thatwe may respond rapidly and take appropriate action. Any employee who believes he/she has beensexually harassed by anyone, including supervisors, co-workers, or visitors, must bring the complaint tothe attention of responsible company oﬃcials. You may conﬁdentially report sexual harassment to anymember of the Grievance Committee, Tracy Allen at [716] 866-6425, or your supervisor. If the complaintinvolves the employee’s supervisor, the employee may go to another supervisor to ﬁle a complaint.All complaints of sexual harassment will be properly investigated, and special privacy safeguards will beapplied in the handling of all complaints. The Advantage Co will not reveal the names of participants,the facts of an investigation, or any written information regarding an investigation to anyone not involvedin the investigation and will reveal to those involved the minimum information necessary in order toinvestigate thoroughly and eﬀectively. If The Advantage Co ﬁnds that sexual harassment has occurred,the harasser will be subject to appropriate instructive and/or disciplinary procedures to remedy allviolations of this policy.96. The Grievance Committee. At the Advantage Co, we have established diﬀerentgroups to prepare and guide us as we move forward. The Grievance Committee hasbeen created to improve interpersonal working relationships at our company. Thiscommittee has proven to be extremely eﬀective, and the more you use it, the better itgets. If you have a problem with someone or something, we want the opportunity toright the wrong. Step up and be heard [or blame yourself]. The Grievance Committeemeets on a regular basis and will also meet if a situation arises.97. The Payroll Review Board. We established the Payroll Review Board in 1993 to provide allemployees with a venue for information and discussion of all pay and beneﬁt opportunities._____________________________________________________________________________________________Beneﬁtsin•for•ma•tion n. knowledge derived from study or experience.98. Vacations. All full-time employees are entitled to a one (1) week paid vacation after one (1) year ofemployment. After three (3) years of full-time employment, employees are entitled to one (1) week paidand one (1) week unpaid vacation, for a total of two (2) weeks vacation. After ﬁve (5) years of full-timeemployment, employees are entitled to a total of two (2) weeks of paid vacation. The second week ofPage 29

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vacation may not be taken within three (3) months of the ﬁrst vacation period, and no vacations areallowed during the blackout period.Blackout periods are as follows: Spring Break [March - April], Tent Sale, Back to School, and ChristmasHoliday [November 10th - January 10th] selling seasons. A vacation request form must be ﬁlled out andapproved by your supervisor. Vacation time may not be accrued from one year to the next. Use it orlose it.99. Disability and Maternity Leave. All employees who cannot work due to a non-job-related disabilityare covered under the company-provided, short-term disability insurance program if they meet theeligibility requirements of the New York State Disability Beneﬁts Law.A company maternity plan is available after one (1) year of full-time employment and entitles qualiﬁedemployees to up to eight (8) weeks of paid leave based on 50% of the eligible employees' averageweekly wage (for the last eight weeks previous to the leave) up to a speciﬁed maximum amount. Formore information, please contact Tracy Allen at [716] 866-6425.100. Health Insurance. Community Blue or Traditional Blue Health Insurance are the two programs thatare available to employees. Coverage is available to employees thirty (30) days after hire. Employeesare responsible for monthly premium payments for the ﬁrst year of full-time employment. After one (1)year of full-time employment, the Advantage Co will provide the following contributions toward premiumpayments on the Community Blue program. The company will contribute 10% to the cost of coverageeach consecutive year of full-time employment. The company's contribution is based on the CommunityBlue single rate. After 10 years of full-time employment, both single and family coverage on theCommunity Blue plan is paid up to a predetermined maximum allotment.101. Dental Plan. Dental coverage is provided through Cigna Dental Care and is available thirty (30)days after the date of hire. The monthly premium of this plan is the responsibility of the employee andwill be paid through a predetermined weekly payroll deduction.102. Vision and Eye Care Courtesy. This arrangement is no longer available.103. COBRA. In the event that an employee leaves the Advantage Co and they are enrolled in thecompany’s group health insurance plan, the employee may stay on the plan for up to 18 months (or 29months if they are disabled at the time of departure from the company) through the provisions ofCOBRA. Employees assume responsibility for monthly premiums on COBRA. Nonpayment of a monthlypremium will result in the cancellation of the coverage.104. 401k Plan. A 401K retirement plan is available to all employees who have been employed for oneyear, at a minimum of 1000 hours and are at least 21 years of age. Once an employee is eligible to jointhe plan, they may contribute 1 to 15% of their gross pay (pretax) into the plan, and the company willprovide a match of 25% of the ﬁrst 4% contributed by the employee. For complete information, contactTracy Allen at [716] 866-6425.105. Family and Medical Leave Act. FMLA is a federally mandated unpaid leave available to eligibleemployees for qualifying events. Employees become eligible to apply for a leave of this nature aftercompleting 12 months and 1250 hours of employment. Contact Tracy Allen at [716] 866-6425 for acomplete explanation of FMLA.Page 30

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Employee Informationca•ve•at n. a warning or caution. caveat emptor n. buyer beware.106. Employee Purchases. Employees may purchase inventoried consumer products for their ownpersonal use at the Company’s ‘computer’ cost. The courtesy request form must be ﬁlled out andsigned by a speciﬁcally designated manager.107. Dress Code. All employees must wear an Advantage Co t-shirt or authorized alternative, andpants or shorts must be a solid color khaki or blue jean only. No cargo pants, cut-oﬀs or ripped shortsare allowed. Sweatpants or leggings are not permissible. All employees must wear full-coverage shoes;no sandals are allowed.All employees must be clean-showered and clean-shaven every day. All employees must keep their hair[facial and otherwise] neat and clean. No excessive jewelry, makeup, perfume, or cologne is permitted.No visible body piercings are allowed except for earrings on women. Tattoos must be covered at alltimes.108. Change is inevitable. It is inevitable that new personnel policies will need to be written from timeto time, and old policies will need to be revised. We reserve the right to make those changes withoutnotice.109. Notice. This Handbook has been prepared as a guide to being a merchant; nothing in theHandbook should be construed as a contract of employment. The Handbook is not intended to cover allsituations that may arise. Should you need further information or clariﬁcation on the Handbook, pleasecontact Tracy Allen at [716] 866-6425110. All employees of the Advantage Co must understand that employment hereis 'at-will', that is, that either The Advantage Co or the employee may terminatethe employment at any time without cause or advance notice. There are noexpress or implied agreements contrary to this 'at-will' relationship.111. No Solicitation Policy for Email/Internet Access and Company Notice Boards. Solicitation byone employee of another employee is prohibited while either is on work time. The distribution ofliterature by employees in work areas is prohibited. Trespassing, solicitation, or distribution of literatureby non-employees on these premises is also prohibited.The e-mail and information systems of the Advantage Co and its aﬃliated businesses are not to be usedin a way that may be disruptive, oﬀensive to others, or harmful to morale. The Advantage Co prohibitsthe display or transmission of sexually explicit images, messages, or cartoons, or any transmission oruse of e-mail communications that contain ethnic slurs, racial epithets, or anything that may beconstrued as harassment or disparagement of others based on their race, national origin, color, gender,sexual orientation, age, disability, religious or political beliefs.In general, employees should use the information systems for company business only. The e-mail andinformation systems may not be used to solicit or proselytize others for commercial ventures, religious orpolitical causes, outside organizations or other non-job-related solicitations. Failure to adhere to thisPage 31

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policy may constitute grounds for termination of employment.112. Policy on Participation and Cooperation in Investigations and Searches. Any employeeinvolved in an investigation of any problems is obligated to cooperate with the authorities that areconducting the investigation. The Advantage Co and its aﬃliated businesses reserve the right to inspectall company property, including, but not limited to, desks, ﬁle cabinets, computer ﬁles, and discs,storage areas, and vehicles, and all personal property brought onto the company premises, including,but not limited to, briefcases, purses, and knapsacks. Consequently, employees should not have anyexpectation of privacy with respect to company property or premises or personal belongings broughtonto company premises or any communications. The purpose of this policy is to ensure that theAdvantage Co can eﬀectively investigate any problem, including technological issues with a computersystem and complaints of wrongdoing, or to protect the interests of the Advantage Co._____________________________________________________________________________________________Tony's Reading Lister•u•dite adj. marked by deep, extensive learning; scholarly.113. More Will Durant. 'If you think there is no greater one than you in the circle to which life narrowsyou, then make friends of genius in the past; for a penny, you can buy their counsel, listen familiarly totheir speech, and mold yourself in the clear air which runs about them. It is an error to suppose thatbooks have no inﬂuence; it is a slow inﬂuence, like ﬂowing water carving out a canyon, but it tells moreand more with every year; and no one can pass an hour a day in the society of sages and heroes withoutbeing lifted up a notch or two by the company he has kept. There is no excuse for being small when wecan sit at the table with Napoleon, or walk with Whitman, or have midnight suppers with Frederick andVoltaire.'114. The Reading Program. You can learn by reading; hard to believe, I know, but trust me on thisone. Talk to the giants of history. Talk to the experts. How? Just pick up their books – and read them.Read six signiﬁcant books on any subject, and you will be well-armed for success. Try it.Read six books on being a merchant and see what happens. As with any diﬃcult subject, the ﬁrstcouple of books will be hard to comprehend; the next couple will make sense, and then the next few youwill ﬁnally read with a critical eye.115. Life is a journey, not a guided tour. However, I do recognize and embrace the fundamental rulesof business set down by the business gods thousands of years ago, and truly I believe we can not besuccessful if we do not address these fundamentals.Over the years, I have researched, read, written about, and embodied these fundamentals. I believe inmy Root Philosophy. In believe in the merchant harvest. Below is a short reading guide to what I havelearned. The books on this list all have one thing in common - their clarity. For me, the search for clarityis where knowledge begins:The One Minute Manager – build loyal employees [we’re all managers]. 1 night.Page 32

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The One Minute Salesperson – build a sales strategy and loyal customers. 1 night.The Art of War – build a competitive strategy and win. 1 night. By deﬁning a winning strategy,Sun Tzu’s classic book about waging war emerges as one of the great strategical essays of alltime.The Prince by Niccolò MachiavelliWhat Sun Tzu is to war, Niccolo is to politics - hardcore and undeniable.Direct Marketing by George DuncanAnd what Niccolo is to politics, George Duncan is to marketing. It is pure and unadulterated.You should also read Claude Hopkins’ Scientiﬁc Advertising. "Nobody, at any level, should beallowed to have anything to do with advertising until he has read this book seven times" -- DavidOgilvySwim with the Sharks W ithout Being Eaten Alive: Outsell, Outmanage, Outmotivate, andOutnegotiate Your Competition by Harvey MackayHarvey has a way about him. He likes to throw in a little ﬂuﬀ, so I apologize for his hubris inadvance, but there is no denying that he gets to the crux of the selling dynamic better thananyone else.Built to Last – build a Core Ideology and a business that lasts.One Page Management – how to communicate with each other.Finance & Accounting for Non-Financial Managers – handling your ﬁnances.The Mansions of Philosophy – Will Durant’s nourishment for the mind.An Incomplete Education – the basics for a well-rounded education.Siddhartha – Hermann Hesse's great little story for the soul.Lapsing Into a Comma: A Curmudgeon's Guide to the Many Things That Can Go Wrong in Print- and How to Avoid Them by Bill WalshNo matter what you do in life, you will need to express yourself persuasively if you want to beeﬀective or, at the very least, taken seriously. Although you may have the Tweeter lingo downpat, it may help if you learn how to actually write skillfully. Improper punctuation, spelling, andsyntax always compromise the most well-intentioned and sometimes brilliant thoughts.The Essential Drucker by Peter DruckerOne of the reasons I haven’t written a complete business book is that I would have a hard timebeing more eloquent or precise than Peter Drucker. I am including a few excerpts from thiscompilation because you really can’t be in business without reading and understanding thebasic premise he illustrates. He deﬁnes the purpose of business and management better thananyone before him or since. Here’s what he said:Page 33

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Deﬁnition of a Business. It is the deﬁnition of a business that it exists for the sake of economicperformance. In all other institutions — hospitals, churches, universities, or medical services —economic considerations are a restraint. In business, economic performance is the rationale andpurpose. Business management, therefore, must always, in every decision and action, puteconomic performance ﬁrst. It can justify its existence and its authority only by the economicresults it produces. Business management has failed if it does not produce economic results. Ithas failed if it does not supply goods and services desired by the consumer at a price theconsumer is willing to pay. It has failed if it does not improve, or at least maintain, thewealth-producing capacity of the economic resources entrusted to it. And this meansresponsibility for proﬁtability.The Purpose of a Business. A company can make a social contribution only if it is highlyproﬁtable. To know what a business is, we have to start with its purpose. Its purpose must lieoutside of the business itself. In fact, it must lie in society since business enterprise is an organof society. There is only one valid deﬁnition of business purpose: to create a customer. In everycase, it is business action that creates the customer. It is the customer who determines what abusiness is. It is the customer alone whose willingness to pay for a good or for a serviceconverts economic resources into wealth, things into goods. What the customer buys andconsiders value is never just a product. It is always a utility, that is, what a product or servicedoes for him. Because its purpose is to create a customer, the business enterprise has two —and only these two — basic functions: innovation and marketing.Marketing. The aim of marketing is to make selling superﬂuous. The aim of marketing is toknow and understand the customer so well that the product or service ﬁts him and sells itself.The business does not ask, What do we want to sell? It asks, What does the customer want tobuy? It does not say, This is what our product or service does. It says These are thesatisfactions the customer looks for, values, and needs. The business deﬁnes its goal as thesatisfaction of customer needs. It demands that business bases its reward on its contribution tothe customer.Values and Goals. Every enterprise requires a commitment to common goals and sharedvalues. Without such commitment, there is no enterprise; there is only a mob. It must be builton communication and on individual responsibility. The enterprise must have simple, clear, andunifying objectives. The mission of the organization has to be clear enough and big enough toprovide a common vision. The goals that embody it have to be clear, public, and constantlyreaﬃrmed. Management’s ﬁrst job is to think through, set, and exemplify those objectives,values, and goals.Objectives. Deﬁning the purpose and mission of the business is diﬃcult, painful, and risky. Butit alone enables a business to set objectives, to develop strategies, to concentrate its resources,and to go to work. It alone enables a business to be managed for performance. The basicdeﬁnitions of the business and of its purpose and mission have to be translated into objectives.Otherwise, they remain insights, good intentions, and brilliant epigrams that never becomeachievements. Objectives must be derived from “ what our business is, what it will be, and whatit should be.” They are not abstractions. They are the action commitments through which themission of a business is to be carried out and the standards against which performance is to bemeasured. Objectives, in other words, represent the fundamental strategy of a business.Page 34

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Objectives are the basis for work and assignments. They determine the structure of thebusiness, the key activities that must be discharged, and, above all, the allocation of people totasks. Objectives are the foundation for designing both the structure of the business and thework of individual units and individual managers. Objectives are always needed in all key areas.The area without speciﬁc objectives will be neglected. Unless we determine what will bemeasured and what the yardstick of measurement in an area will be, the area itself will not beseen. Objectives, therefore, have to be set in these eight key areas: Marketing, Innovation,Productivity, Physical Resources, Proﬁtability, Financial Resources, Human Resources, andSocial Responsibility.Management and Personnel. Management has to be accountable for performance.Management exists for the sake of the institution’s results. It has to start with the intendedresults and has to organize the resources of the institution to attain these results. A manager’sjob should be based on a task to be performed in order to attain the company's objectives... themanager should be directed and controlled by the objectives of performance rather than by hisboss.Human Resources. A business enterprise (or any other institution) has only one true resource:people. It succeeds by making human resources productive. It accomplishes its goals throughwork. To make work productive is, therefore, an essential function. Management is abouthuman beings. Its task is to make people capable of joint performance, to make their strengthseﬀective and their weaknesses irrelevant. This is what an organization is all about, and it is thereason that management is the critical determining factor.Growth. Management must also enable the enterprise and each of its members to grow anddevelop as needs and opportunities change. Every enterprise is a learning and teachinginstitution. Training and development must be built into it on all levels — training, anddevelopment that never stop.If you are interested in reading any of the books listed above, please contact Tracy Allen at [716]866-6425.116. Don't stop short. There are no traﬃc jams when you go the extra mile.117. Take advantage of all of our resources. If you don't ask, you don't get.118. Guaranteed. Extra eﬀort does not guarantee success, but a lack of eﬀort guarantees failure.119. True or False.People do what you inspect, not what you expect.People born round don't die square.The future is uncertain, and the end is always near.You either kick ass or kiss ass.Every choice has a consequence.Chaos is the bedrock of both our success and frustration. We are not looking for control; we are lookingfor understanding and execution. We do not need managers; we need leaders.Chance makes a plaything of a man's life.We stand between two worlds – one dead, the other hardly born, and our fate is chaos for a generation.Page 35

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Evolution ceased to be physical, it became social, and survival came not by individual power but bygroup coherence and ability.Time. It is what you are investing in. It is your most valuable resource. Don't waste it.It's not where you come from but where you're going that counts.You don't sell what you like; you like what you sell.It’s never too late to enjoy the gift of life.120. In conclusion: This job [and life, for that matter] is what you make of it. There are happypeople, and there are miserable people; that's just the way it is. There are people who choose to cometo work every day with a smile on their faces, and then there are people that choose to be miserable. Itis a choice. I choose to be around enthusiastic people. Call me crazy, but misery just sucks the life outof me.It is not my job to convince you to help me build our future; it is your job to convince me you are the rightperson for the job. Somehow the wires often get crossed on this one. Basically, it is my responsibility toprovide the resources that will enable our success. It is your job to get it done successfully. A goodeﬀort is merely a busy way of doing nothing.Be big, be a builder.Page 36