Wednesday, April 29, 2009

Big v. Better

Recently I read a blog by Seth Godin titled "Infinity - they keep making more of it." Essentially Seth poses the question to why is everyone focused on getting bigger instead of better? I call this decision matrix the “Return on Effort.” It takes into account what is more important (profit or revenues). I always say profit. If I can make $2 million selling $4 million, or $10 million selling $100 million, I will pick the $4 million. Why? First it is really difficult to sell $100 million! No one really thinks about that. It takes tons of resources, effort, people, planning, logistics, etc. Secondly, at $100 million and $10 million I only make 10% margins. So that every additional customer I bring on, I make progressively LESS profit due to the fact that I most likely be capacity constrained in some matter and will have to expend progressively more effort to expand. On the on other hand, with “less” customers but more profit, I have the freedom to pick and choose which new “profitable” customers I can add at progressively higher margins. Profit margins give me freedom to add incrementally more customers at MY choosing. Being bigger is usually not being better (on a lot of dimensions). While I am only making 1/5th as much money, I am expending only 1/10th as much effort to do so. I ask this question of just about every sales person I hire, and 95% percent of them get it wrong! Remember, it is ALWAYS better to get a 50% return versus a 10% return. Being the biggest is not always the same as being the best. Choose being the best (most profitable).

Tuesday, April 21, 2009

How Life Can Change in 18 Minutes

(source: Tom Swinnea who wrote this for Thomson Encyclopedia a few years ago)
Why is the Battle of San Jacinto so important in determining your future actions and how can I apply this to my business?

....Put aside almost one million square miles of territory that changed hands with this victory and the jingoistic "if it wasn't for that, we'd all be speaking Spanish today." Next time I go by Taco Bell and order a taco, a burrito, or some muy grande something, I'll be speaking Spanish.

What's always been at the core of the battle for me is this--in 18 minutes, your life can change. The Texans had all kinds of setbacks and defeats combined with dogged determination and whatever preparation they could muster that went into those 18 minutes. Just after the fall of the Alamo and the executions at Goliad, (Sam) Houston had 400 volunteers on Texas soil. Santa Anna had a troop strength of 4,000 regular army in the field. Fast forward six weeks after the Alamo, and Texans are walking through tall grass and approaching the top of a small incline on the Gulf coastal plain. When they clear the rise, Houston's men see their future literally in front of them. It's that "point of the spear" moment when what you do with all that training makes all the difference. If you need some sales, management, or personal inspiration (and in these times, who doesn't), think about those Texans heading down the hill.

Remember the Alamo! Remember Goliad!

Now, go out an win some unexpected victory!

Saturday, April 11, 2009

Just Do IT

Back in 1987, Art Williams, a self made billionaire made a speech to the National Religious Broadcasters that succinctly defines what is necessary to be successful in business. This list is STILL relevant today and I outline it below.

In essence, Mr. Williams believes that the winning edge in ANYTHING you do you involves having that have Mental Toughness, People Ability, Integrity, and Character. A more detail outline is listed below:

1) Be Excited about what you are doing and STAY excited about it until you have completed what you started out to do.
2) Stay Positive no MATTER what happens. Get "I Can't" out of your vocabulary.
3) Be a DREAMER - Yes a DREAMER. You HAVE to have a dream
4) Stand for SOMETHING. This goes to the power of purpose in what you do.
5) You must be TOTALLY committed to what you are trying to do.
6) Treat people Good. Show them love and caring and make EVERYONE you meet feel special.
7) Establish the right Priorities in your live: Faith, Family and Business in that order.
8) Have a Heart of a Champion - have the will and drive to win.
9) Be a Leader. Understand what leadership is all about (a servant leader)
10) Do NOT let being smart stop you from being successful. There is no easy way to being successful.
11) Do NOT stop at ALMOST getting there. Follow through
12) You have to stay PERSISTENT. Do not give up, do not quit even when you are successful

Bottom line: Just DO IT. Carpe Diem. Just do not talk the talk, walk the walk

Wednesday, April 8, 2009

How It Works In Washington

This is an old one, but a good one and you can fill in the states or locations of your choice. Still valid in today's political wheeling and dealing.

Three contractors are bidding to fix a broken fence at the White House. One
is from Illinois, another is from Tennessee, and the third is from Minnesota.

All three go with a White House official to examine the fence. The Minnesota contractor takes out a tape measure and does some measuring, then works some figures with a pencil. "Well," he says, "I figure the job will run about $900: $400 for materials, $400 for my crew and $100 profit for me."

The Tennessee contractor also does some measuring and figuring, then says, "I can do this job for $700: $300 for materials, $300 for my crew and $100 profit for me."

The Illinois contractor doesn't measure or figure, but leans over to the White House official and whispers, "$2,700."

The official, incredulous, says, "You didn't even measure like the other guys! How did you come up with such a high figure?"

The Chicago contractor whispers back, "$1000 for me, $1000 for you, and we hire the guy from Tennessee to fix the fence."

"Done!" replies the government official.

And that, my friends, is how everything, including the new stimulus plan, works in Washington, D.C.

Monday, April 6, 2009

How to Profit in an Unstable World?

A city boy, Kenny, moved to the country and bought a donkey from an old farmer for $100. The farmer agreed to deliver the donkey the next day.

The next day the farmer drove up and said, "Sorry son, but I have some bad news, the donkey died." Kenny replied, "Well then, just give me my money back." The farmer said, "Can't do that. I went and spent it already."

Kenny said, "OK then, at least give me the donkey." The farmer asked, "What ya gonna do with him?" Kenny stated, "I'm going to raffle him off." The Farmer replied, "You can't raffle off a dead donkey!" Kenny then said, "Sure I can. Watch me. I just won't tell anybody he is dead."

A month later the farmer met up with Kenny and asked, "What happened with that dead donkey?"

Kenny said, "I raffled him off. I sold 500 tickets at two dollars a piece and made a profit of $898."

The Farmer replied, "Didn't anyone complain?"

Kenny stated, "Just the guy who won. So I gave him his two dollars back."

Kenny grew up and eventually became the chairman of Enron.