Tag Archives: business

Essay

The ones left behind

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We are definitely living in difficult economic times.  According to the the Bureau of Labor Statistics, from January 2009 through May 2009, we have lost a total of 3.4 million jobs; a staggering average of over 680,000 per month.  Why that is like the entire population of Memphis, Tennessee losing their jobs… for 6 months straight. And appropriately we focus on the people behind the job losses.  The personal stress, the family concerns, health insurance, retirements, downsizing, mortgages, college funding.  All important concepts.

I am not an economic prognosticator, but I don’t believe that we have seen the end of job losses.  Heck, GM, Chrysler and the Boston Globe haven’t figured out if they are going to be in business a month from now.

But one area that we really haven’t focused a lot of attention on are those people who are still working.  Now what our large corporations have done is cut jobs – that is clear from the BLS statistics.  My guess is that they did what they always do and cut way deep.  Now, I learned the lesson from a mentor back in my corporate days, that you want to cut deep and cut once to keep morale of the remaining staff as positive as possible.  You don’t want your staff to be continually wondering when the other shoe is going to drop and the next round of layoffs is announced. I am not sure that our current corporate leaders learned from the great John McCarron.

Generally speaking, the team that has remained is stressed because they don’t know if their job is next.  They feel resentful because they now have to do their work plus that of workers that have left.  They feel ashamed to be feeling resentful because they have a job and a paycheck and health insurance.  All of this mental stress is not helping our corporations get what they need, which is to start selling, delivering, servicing, writing, producing again.

I have stated it before – someone in Big Corporate America needs to stand up and say that we won’t lay anyone off this year.  In fact, we are going to start a limited hiring campaign to ensure that we can still deliver the best products to the marketplace.  Now is the time for some American Executive to make his mark.  Will it be someone you know?

Essay

Baseball and Business

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As you know, I love baseball.  Baseball is a sport that is managed by the numbers.  The cool thing is that the numbers are available to everyone.  For example, if you tried, you could find out that in a game on April 30, 1977, Carlton Fisk of the Boston Red Sox batted 3 for 4 with a double and a stolen base (he stole home!), scored 3 runs and the Red Sox (Luis Tiant) beat the Oakland A’s (Mike Norris) 8-4 in an afternoon game on a 72 degree day.

Some baseball players, like Alfonso Soriano go for the fences every time they go to the plate.  Sometimes they are successful, other times, not so much, but overall they are recognized for the ability to go long ball. Not the first guy you would pick to move a guy from first to second in a close game. Good to have on the team for power, an expert in a certain discipline.

Other players, like Barry Bonds or Manny Ramirez go outside the rules of the game to get the extra oomph to make their careers. Their numbers are great, but they will always have that thorny asterisk besides their name signifying that their accomplishments might not be on a level playing field. Think of the bankers who changed the rules of the game to make more money.

Then there are the less remembered players, like the shortstop for the Red Sox in that game, Rick Burleson.  Rick played 13 years in the majors, hit .273, fielded .972, got into a couple of All Star games, was honored with a Gold Glove and a Silver Slugger award.  The unusual fact about Rick was that he once hit an inside the park home run. He was methodical and steady. Not a Hall of Fame candidate, but a good solid player that you would want on your team.

We know these facts because they are measured.  The great advantage is that everyone has access to the numbers.  When the managers of the teams build a plan for a game, they use these statistics to choose strategies to win. Does it always work?  No, of course not.  That is the fun of the game.   But it can tip the balance in your favor.

What if your whole business life, every decision, every program, every customer interaction was available to everyone for viewing?  How would that change the way that you operate?

Essay

Sales Differentiation

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Normally, this blog wouldn’t be the first place to go for sales advice.  But, Jeff Leitner wrote this a while back and I have been thinking about it recently as I work with one of my consulting companies.  It is a classic.

Step 1 in sales, determine the prospect’s stomach for change.
No matter what he says, there’s a significant cost to changing.
Even if what he’s changing is no product/service.
Figure out what the financial cost, the psychic cost, the emotional cost of change.
And only then do you turn your attention to step 2.

Step 2 is to change the game.
If you’re competing against an existing product/service, there’s little chance he’s changing vendors.
Instead, you have to craft and then sell something very different than the incumbent sells.
You can’t sell better or more or enhanced or even cheaper (commodities aside).
You have to sell something substantively different, that solves a qualitatively different problem than the incumbent is solving.

Men don’t leave their wives for prettier girls.
Men leave their wives for substantively different, qualitatively different things that they can’t get from their wives.
Prospects are the same.

If you can’t put together a substantively different offer, you can’t win.
Even if you’re competing against no product/service.
Or an ugly wife.

Essay

Who is your Customer?

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Jeff Leitner writes about the questions that you should be asking when you start your business. They include: What is the pain that you are trying to relieve? and What one thing are you trying to sell?.  Both of these are great questions, but I would like to add another to your list.  It is, at once more basic and for some of us, it is a no brainer.  But be careful, the answers might surprise you.

The question is Who is your customer?  Yes, who are you trying to make your products or services for. The reason it is important is that if you truly know who your customer is, you can design the company’s products and processes to support that customer to the best extent. Let’s take a look at some examples to see where this could go.

Pharmaceutical companies – The customer is the patient who needs the medication, right?  Well, if that is the case then why do they sell to the doctors, who do not buy the product, but authorize (through prescriptions) others to purchase the drugs.  I’d have to say that the doctors are the customers.  They pharmaceutical companies do everything they can to influence the doctors and dabble in consumer education, hoping that the patient will be able to demand a certain drug from the doctor.  But the doctor is still the customer, because the buying power remains with them.

Physicians – While we are on the topic of medicine, who are your typical physician’s customers?  It seems you have two choices, either the patient or the insurance companies.  Based upon the way that most doctor’s offices are run, it is obvious that the insurance companies are their main customer.  Everything that the physicians do is designed to make sure that the insurance company gets what it needs.  The patient is the one who allows the doctor to get paid, but the gatekeeper is the insurance company. Concierge care (I love that description) has started to catch on in wealthy areas.  Basically, the doctor does not take insurance and charges an annual membership fee to his or her patient base.  Does this exclude people who must use insurance to cover their health needs?  Yes, of course.  But it allows the doctor to change the customer relationship from the insurance carriers to the patient.

Google – Who is Google’s customer?  Good question.  Google sold over $22 Billion worth of services in the last 12 months.  Most of that came from advertising.  So, of course, Google’s customer would be the advertisers who pay for the services.  Not so fast. I would venture that the users, not the advertisers are Google’s customers.  Most of the new things that Google rolls out are enhancements to the user experience and they are focused on making the world’s information available to everyone.  If they added an additional advertising service, they might increase revenues a little, but if they stopped providing excellent search (and other) services, the advertising would dry up very quickly.

This is all critical as you are building your business.  If you design your business around the wrong customer, you will never see the full benefits that you could be getting.  Think through this question (and Jeff’s above) as you start to build your business plan.  There are significant benefits for not taking the easy road and just picking the customer that everyone expects.  You may be able to garner a much more substantial or lucrative (see physicians above) customer base from a group of folks who are not supported by other organizations.

I would love to hear about more cases where you believe that the customer is not exactly the end user.  Contribute in the comments.

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DePaul, Business Strategy, Behind the Scenes and Fun

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DePaul: Thursday was a long day and thus no blog post.  DePaul University’s Coleman Entrepreneurship Center had their gala event and gave out several awards.  Congrats to Chris Campbell of Lakeshore Branding and Greenwerks, Jen Moran of Greenola and Ben Meader of CareerHook.  Also congratulations are in order to my friend Bruce Leech of evolve who was named the Coleman Foundation Catalyst Award Recipient.

Business Strategy: Tim Ferriss talks about a book by his friend, Alan Webber, called Rules of Thumb: 52 Truths for Winning at Business Without Losing Your Self. In the article, he has an excerpt of the book, RULE #24 – If you want to change the game, change the economics of how the game is played. After reading this, I need to read the entire book.

Behind the Scenes: We all remember the heroism of Captain Chesley Sullenberger in the saving of US Air Flight 1594 on the Hudson River.  What we have never seen until now are the pictures of the plane as it was recovered from the chilly waters of the Hudson.  Photographer Stephen Mallon was there and photographed the scenes for Wired.

Fun: A fun new toy to play with, but one that has significant potential to be a solid research tool is Wolfram|Alpha.  Gina Trapani played with it and wrote a multi-faceted review.

Essay

Presentations

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I have been a business plan competition judge for a few years now. Not as glamorous as the Miss America contest and not as tasty as a BBQ Competition judge, but fun all the same.  I really enjoy feeling the energy that comes through from the entrepreneurs in their ideas.  As part of my role, I have the opportunity to read a lot of business plans and watch some presentations to panels. I have also had the ability to see how groups of judges make decisions, as we all have our own points of view that must be aligned before determining the placing of the contestants.

A few lessons from the judge’s table (in no particular order):

Make your projections reasonable, meaningful and achievable. So many of the plans show either Year 3 earnings of $100 million or $200 thousand. Investors don’t believe the former and don’t bother with the latter. In any case, make it easy for the judge to vote for you.  Make sure that your financial tables foot, are right justified, have thousands separators, are complete and are rotated to allow for easy readability on the screen without printing it out. Take the opportunity to explain all assumptions that you make while determining your financials. Don’t assume that every month will be the same. Is there seasonality?  Will month 1 really be the same as month12? Include every expense that you can think of and make sure that the expenses that are outlined in the text portion are considered in the financial plan.

Detail your marketing plans beyond “advertising and trade shows”. Our world is changing faster than ever.  Don’t bet only on the same old strategies that our parents might have used.Try to stay away from discounting and couponing in the initial years.  You might have to resort to that if the economy goes south, but it probably is not a good strategy right out of the box.

Beware of planning your long term growth strategy on existing tools. Will Twitter or Facebook look the same in 5 years?  Will it look the same in 1 year?

Sample, if you possibly can. Let the judges (or angels, private equity folks, friends and family et. al.) touch, smell, see and taste your product.  Do a demo, if it is software, even in there is nothing behind the demo.  Don’t lie and tell folks that there is, just show them what you can.  In the last competition, one company had clothing, but did not let the judges feel or interact with the interesting material.  Another concept was a restaurant, where the chef came out and cooked for the audience.  Hearing the garlic sizzle in the fry pan and then smell the just cooked foods, made a huge difference in their presentation.

Leave the arrogance at home. Try to answer the direct questions as clearly as possible without signs of impatience or omnipotence.  Take a deep breath before answering, gather your thoughts and give the best answer you can, which might be “I don’t know, but I will find out and get back to you.”.  The judges don’t know your business as well as you do, but also, remember that they may be looking at it from a new angle that can provide insights to you.

Make sure to have people proofread and edit your submission. You may be the best interior designer in the world, but if your financial page is wrong or your marketing plan is half-baked, it is better to know and correct before the big day.

Presentation skills count. Think about how the presentation should flow.  If you have 3 founders, it is difficult to follow when each of you does one slide at a time.  Don’t read from your slides.  Your slides should guide your talk, not take the place of it.  See what Seth Godin has to say about presentations.  If you can add a video to break up your presentation, do so.  Practice, practice, practice.  If you practice enough, you will not be nervous at the time of the big show. Know how long it takes to give the presentation.  Use cue cards to make sure that you convey the right ideas for each slide – bullet points, not complete sentences.  Important – do not read your presentation from the cue cards.

Even if you are not entering a business plan competition, these are all good rules to think about when making a critical presentation.  It could be for an internal project approval at a large company or for venture financing.  You are the best sales person for your idea.  A great presentation will get you further along towards getting that approval than anything else.

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Entreprenurship, Behind the Scenes, Behavior/Magic and Economics

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Entrepreneurship: Gina Trapani discusses all kinds of neat tools, applications and vendors that can help a new business get started.

Behind the Scenes: Robert Scoble takes us inside of Zappos.com and how they can create a corporate environment that keeps their employees excited and their customers enthralled by their service.

Behavior: An article on neuroscience probably would not have caught my eye, but bring Penn and Teller into the conversation and I am hooked.  This article talks about how magicians utilize flaws in our perception to amaze us.  I viewed the balls and cups clip 3 times and still I didn’t catch everything.

Business Economics: The US Postal Service is one of those organizations that we take for granted.  6 days a week, we will have a red, white and blue truck drive up and deliver our mail, most of it “junk mail” or what the USPS calls standard mail.  What we don’t think about often is how fiscally responsible they are, what are their unfunded pension liabilities and how they make money in the age of the Internet.  This article sheds some light on how the USPS operates and offers some suggestions to make the service more effective.

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Entrepreneurship, Urban Studies and Grammar

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Entrepreneurship: For anyone who needs to give a killer presentation or just to prepare a cool way to show mixed media, check out Simile Widgets Exhibit.  It is open source and free to use. For a helpful introduction, see what LifeHacker has to say.

Economy: Based upon the news media, it would seem that the whole country is in a deep recession.  However, Joel Kotkin writing on NewGeography.com talks about a swath of middle America that doesn’t seem to feel the pinch as much as the rest of us.  The article also takes an in-depth look at the center of this swath, Kansas City.

Grammar Police: Those of you who know me well, know that I have, occasionally taken my red pen to a document.  Most often, I use Microsoft Word’s track changes.  But if you want to know what is right to write, check out this comprehensive site by Paul Brians.

Essay

The Business Plan

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Nothing sends shivers down the spine of the new entrepreneur more than the idea of writing that business plan.

Over the past several weeks, I have had the pleasure (?) of reviewing a number of business plans. Some were for a business plan competition, others were for companies that I have been advising and still others were presented as part of a class that I have been taking.

It is very instructive to me to see how people treat their business plans.

A very few build their plans so that they can be used as a real guide to build and grow their business, much as an architect uses a blueprint to guide the building of a house. However, often they forget that another reason to write a business plan is to sell your idea to an investor or a banker or a vendor.  You need to have that hook in there that explains the mystery of WIIFM (What’s in it for me?) for the reader.

Others use the business plan as a marketing piece. The more graphs, flowcharts and photographs the better. If you can find a way to throw a video in there, it must be golden. Market size, the entire population of the US? Develop a comprehensive  financial or operations plan? — they figure they’ll get those sorted out when they get the investor bucks.  Um, sorry, but investors want to understand how the business will make them money. That WIIFM concept comes back to haunt us.

In reality, the business plan is an exceedingly hard document to write.  It has to function in both modes, as a management tool and as a marketing piece.  If you look at writing the plan as something that you have to do to check the item off the entrepreneurial checklist, I can almost guarantee that the final product will not achieve what you want. If you do not have a few trusted people edit the document and provide feedback, it will not achieve what you want.  If you do not take the time to lay the document out clearly with a title page, table of contents, headers, footers, section headings, spell check, grammar check and possibly footnotes, it will not achieve what you want. If you don’t make sure that your financial statements tie together and are reasonable, it will not achieve what you want.

And the sad part is that an investor or banker probably sees hundreds of business plans a year.  They probably spend an average of 5-10 minutes scanning the document to see if they should invest the time necessary to evaluate the plan.  You may have the best widget or service on the planet, but if the plan doesn’t sell in the first 5 minutes, you may not get a chance to present to the target.

The business plan has to be able to clearly explain what the business is all about, why it is necessary, who will buy from it, how you will operate it, who will have what responsibilities, what the financials are projected to be and what kind of returns an investor can expect.

In the past several weeks, I haven’t read one plan that met all of these criteria.  But I remain hopeful that I will find the Holy Grail sometime soon.

Recommended Links

Business, Economy and Fun

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Business: Seth Godin put together a good resource page to help those of us who are graphically challenged find our way in the world.

Economy: Normally, I wouldn’t take Penn Jillette’s economic advice, but he does have some good points about skidding and crashing and hoping that our leaders know the difference.

Fun: As the father of a 19 year-old and a 14 year-old, sometimes I wonder where the time has gone.  Amy Flanagan sure helped me remember how far technologically we have come in 16 years.

Economy: Several weeks ago I wrote asking why corporate CEO’s weren’t going for the PR play of telling the world that they would not lay anyone off this year.  Mark Cuban tells us the reason and what we can do about it.  Granted he is only one voice, but it makes sense.