Written by Jay Turo on Monday, November 18, 2013
Jeff Bezos is a great hero and role model for all entrepreneurs that dream of doing something really, really big, and…pulling it off.
Like all legendary business leaders, he also has a number of management and creative peculiarities well worth studying and emulating.
One of my favorites is how Jeff manages the meetings of Amazon’s senior executive team, as described last year when Fortune named him Businessman of the Year:
“…the Amazon CEO's fondness for the written word drives one of his primary, and peculiar, tools for managing his company: Meetings of his "S-team" of senior executives begin with participants quietly absorbing the written word. Specifically, before any discussion begins, members of the team -- including Bezos -- consume six-page printed memos in total silence for as long as 30 minutes”
Bezos goes on to note that “Writing a memo is an even more important skill to master." Full sentences are harder to write," he says. "They have verbs. The paragraphs have topic sentences. There is no way to write a six-page, narratively structured memo and not have clear thinking."
Now when I learn of things like this, I understand why the success of a Jeff Bezos is no accident.
Remember, in addition to founding and leading one of the most successful technology companies of all times, Jeff Bezos also made arguably the greatest investment of all time.
The story is well-known but worth re-telling. In 1998 when Larry Page’s and Sergey Brin’s Google offices were a Menlo Park, California garage, Bezos invested $250,000 of personal funds into the fledgling startup.
When Google went public in 2004 that $250,000 investment translated into 3.3 million shares of Google stock. At Google’s IPO that represented a stock share position worth over $280 million.
While he doesn’t disclose how many of those shares he still holds, at the current price of Google stock they would represent an investment position worth over $2 billion.
So, what is it about what makes Jeff Bezos tick that allows him to have such great success when so, so many others - with similar ambition and arguably even greater talent - fall by the wayside?
I recently read a great book (bought on Amazon, of course) by Mark Helprin called "A Soldier of the Great War."
It is the amazing story of an Italian PhD student in aesthetics who was drafted into the Italian Army in World War I. In addition to being an unbelievable barnburner of a read and a tale of love and heroism and adventure, it is also the story of a young man trained as an "effete" intellectual struggling to come to grips / find wisdom from and peace with the horrors of war.
The story ends with its hero - Alesandro Giuliani - as an old man looking back on his life of books, of art, of family, of adventure, and of war and loss.
In the end it is the intersection of these two - of his great intellectual journeys tempered into character and resolve via the various "mortifications of the flesh" of his life - hard work, self-sacrificing, courageous deeds and words, and the willingness to push himself to the limits of one's endurance.
And from this coupling of intellectualism and ideas with a life of action and a love of the fight does flow the genius, power and magic of a Jeff Bezos.
So at your next meeting, do like Jeff and put down the PowerPoint and pull out the pen!
Written by Jay Turo on Monday, October 14, 2013
Watching the disaster of a process that is the D.C. budget drama, I found myself with a curious reaction.
And maybe even a little bit of a selfish one.
It was, by golly, how happy I am that I get to work in this so dignifying world of business and free enterprise and not have to waste my precious life energy on such nonsense.
And then feeling a bit more generous, I felt happiness for the hundreds of millions if not now billions of people worldwide that are able to do likewise.
To work in or at a business, just a plain old simple business.
A software development firm. A medical device company.
An accounting firm. A roofing company. An insurance agency.
A tanning salon. A yoga studio. A specialty retailer. A freight forwarding company.
Walmart. A donut shop.
Now don't get me wrong, government is important.
And that those that work in it often are mostly truly public servants and we should be thankful for their service.
And yes, our vexing public policy challenges require our attention and concern.
But it isn’t that important.
So much of the real action in this world of ours takes place in the micro.
In that wonderful world of business production.
The world of multi-billion dollar companies like Cisco utilizing information technology to accomplish the accounting miracle of closing their books each and every day.
The world of General Electric growing great managers and business leaders time and time again.
The world of amazing customer service at places like Zappos and how that service dedication translates to strong profits that fuel our world.
The world of that sumptuous donut fresh out of the oven.
The world where, with a click of a button on my phone, I can buy a mobile app that sends me my text messages as e-mails (but don't ask me why I want this).
The world where I order new leather seat covers for my car, from Greece, on Ebay, and at a fraction of the price of what the dealership is asking.
And oh yes, by doing so making a small dent in that nation's debt and fiscal crisis.
And it is the world of my own business’ unique processes and project tasks and how we will profit from this burgeoning new world of global service exports.
Yes, the real and meaningful action is in this amazing 21st century global world of ours of hundreds of millions of points and more of concentrated business production.
That creates for all of us, this transcendent potpourri, this never-ending buffet, of essential, helpful, frivolous, sometimes conspicuous, but so blessedly diversified consumption.
And you know what else?
History has taught that the more folks focus on getting great at what they particularly produce, no matter how great and glamorous or small and prosaic it might be.
Well, it is by so doing that all of our fiscal cliff and other challenges as if by some magical hand just seem to take care of themselves.
Written by Jay Turo on Monday, September 23, 2013
The word from the Fed last week that it would continue with its quantitative easing - purchasing approximately $85 billion per month in U.S treasury bond and de facto continuing to expand the country’s money supply - signaled that that the era of extremely low interest rates will continue.
Predictably, stock markets worldwide cheered along with it being seen as a very positive signal for the well-recovering US housing market.
Now, as to what it means that the Fed has, since 2008, expanded the U.S. Money Supply almost 400% - from $800 billion in 2008 to over $3.5 trillion today?
Well, it doesn’t take a Nobel Prize in Economics to reliably predict the inevitable outcome…
Now, in spite of its strong negative connotations, an inflationary economy while extremely painful for very many, also offers opportunities to profit and win.
Here are three:
Winner Number One: Debtors. This is obvious, but easy to overlook. Those owing money at set interest rates - homeowners with 30 year fixed mortgages and companies issuing bonds - will benefit enormously as the inflation train rolls in.
Let’s look at a worst but not overly improbable case - a hyperinflation period where all prices rise 10X, resulting in a $500,000 home able to be credibly listed for $5 million.
It sounds crazy, but over the years in countries where hyperinflation has hit, this has not been an uncommon occurrence.
Now let’s say that home was financed (or refinanced) with a $400,000, 30-year mortgage at a fixed rate of 3.5%.
Well, with its price increasing from $500,000 to $5 million - while the amount owed on it remains fixed - all of a sudden the house’s equity to debt ratio skyrockets from 20% to 92%!
Winner Number Two: Companies with Pricing Power. Businesses with the ability to increase prices quickly without seeing sales plummet - think luxury goods and easily adjusted staples like gasoline at the pump - will hold significant advantages over businesses constrained by “stickier” prices.
Examples of the latter include services like mobile phones contracts and gym memberships, and the classic example of restaurants not increasing prices because of the cost of printing new menus.
Winner Number Three: Private Companies for Sale. My favorite, as there is no greater form of an entrepreneurial, economic success than a sale of a business at an attractive price.
In a world of rising prices, the acquisition appetites of larger companies increase as their cost of money - as driven by their valuation multiples - decrease.
This is most evident for public companies, now trading at a rich 18x earnings (S&P 500), who are able to buy smaller, usually private companies with the relatively cheap currency of high multiple public equity.
This frothiness also drives the financing environment, where buyers (investors) and sellers (entrepreneurs, companies seeking capital) more easily strike higher risk, higher valuation deals (see Fab.com, HootSuite, and scores of others) with an ease that isn’t there in a flat or deflationary environment.
So, if you're an entrepreneur, think about accelerating and intensifying both your financing and exit planning efforts.
And for investors, remember that the worst strategy in an era of rising prices is to be standing still and sliding away in fast depreciating cash.
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Written by Jay Turo on Sunday, September 22, 2013
Individual Retirement Accounts, or IRAs, in all their forms - traditional, Roth, 401k, Defined Contribution, Simple, SEP, 403(b) and 457, have become increasingly popular vehicles for private equity investing.
For the individual investor, investing in private equity via a "Self-directed" IRA has a number of key advantages:
First and foremost are tax savings - both at the time of investment and as the investment appreciates. In some circumstances - for pre-tax contributions via a SEP-IRA for example - up to $49,000 can be invested on a pre-tax (i.e. tax deductible) basis.
Secondly, the power of tax - free compounding of interest, dividends, and capital gains - via both traditional pre-tax IRAs as well as the increasingly popular (and increasingly tax-advantaged) post-tax Roth IRAs is enormous.
In high-return and payout scenarios, where there are larger cash dividends and/or capital gains paid on an annual basis, the value of tax free compounding can lead up to a doubling of total investment return when compared to taxed compounding.
And thirdly, investing in private equity via an IRA addresses "de facto" arguably the key negative of private equity investing - its illiquidity. This is because, to encourage a long-term, retirement-focused time horizon, under the IRA umbrella there are significant, structured penalties for early withdrawl.
In short, IRAs are ideally designed to house long-term investment assets with high capital appreciation potential. This is, of course, the core objective of almost all private equity investing.
Written by Jay Turo on Monday, August 12, 2013
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Last week, I talked about the communication breakdowns that occur when investors and entrepreneurs talk about risk.
Well, in most forms of angel and early-stage private equity investing, these breakdowns flow from a misunderstanding of the power and nature of outliers.
The concept of outliers and how they apply to early stage private equity investment was best described by the Lebanese thinker and writer Nicolas Taleb, in his best-selling books "Fooled by Randomness" and "The Black Swan."
In the Black Swan especially, Taleb described the nature and importance of outliers in a modern, inter-connected economy:
“What we call here a Black Swan is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."
Taleb continues, "I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives."
Less famous, but more helpful when it comes to designing an effective private equity investing strategy is Taleb's theorizing on how technological interconnectedness vastly intensifies Black Swan impacts.
This idea of technological interconnectedness is related - though not exactly the same – as that of the much ballyhooed Network Effect that is so much at the heart of many of the biggest technological and investment success stories of the last 15 years, Facebook, Twitter, and LinkedIN, being first and foremost amongst them.
In its simplest form, the Network Effect posits that the value of a network increases exponentially with each new user on it.
Or, in other words, the primary reason why folks use Facebook, Twitter, and LinkedIN is because there are a lot of other folks that use Facebook, Twitter and LinkedIN too.
And, as more users join, such the value for others to join grows that much greater.
And so on and so on.
Thus, one of the first screens that the intelligent early stage investor should utilize is the degree to which a network effect is present in a company's business model.
Now, let’s get to the rub of the matter as to how Taleb’s interconnectedness concept both informs and signals danger for the thoughtful investor.
Simply put, global technological inter-connectedness drives the winning business models to heights never seen before …
…and because of this, there are a lot fewer of them.
Simply put, the winners are bigger and happen faster than ever - Facebook's IPO was bigger and faster than that of Google’s which was bigger and faster than that of Microsoft’s, which was bigger and faster than that of Apple’s.
And because the winners are bigger, there are less of them.
So that giant sucking sound you hear is the consuming of so much of the energy and return in the deal economy into fewer, bigger and more lucrative deals.
To put it another way, turning $500,000 into $1.8 billion in seven years as Peter Thiel did as a small minority investor in Facebook is just not beyond extraordinary - it is also unprecedented.
And, correspondingly, returns of this scale crowd out and widely skew the distribution to fewer, higher returning deals.
Now, how should we respond to this brave new and highly challenging investing and entrepreneurial world?
Well, one obvious response is to proceed extremely carefully.
Investing in early stage private companies can be great fun and you can make money beyond your wildest dreams if the stars are aligned right doing it….
…but the probabilities of doing so in any one company or deal are low…and getting lower.
And unfortunately, this is true no matter how enthusiastic, how passionate, how hardworking, how brilliant the entrepreneur that is pitching his or her deal happens to be.
So does this mean that early stage private equity investing is for the birds? And that we all should just stay away?
Of course not.
You just have to do it right.
Next week, we’ll share how today’s most successful investors and entrepreneurs do just that.
Written by Jay Turo on Sunday, July 21, 2013
My column last week, where I praised leaders that channeled legendary Green Bay Packers football coach Vince Lombardi’s “tough love” leadership approach, prompted a lot of responses - some nice, some not so nice (and not just from the Minnesota Vikings fans out there!).
The most thoughtful ones came back and said, “well that style maybe all well and good if you are running a factory in China, but when it comes to managing younger people (i.e. Millenials - those born after 1982) in modern service businesses, to be effective a "softer" touch is needed.
Points well-taken, so do let me offer here five "Managing Milllenials" best practices:
#5. Revel in the Importance of Company Culture. In a world where everything can and is easily and quickly borrowed, copied, and sometimes just plain old stolen - the only sustainable competitive advantage is how a company organizes and aligns, inspires and challenges its people.
Or, in a word, its company culture.
Taking it further, the modern manager is doubly vexed by the unsettling (yet exciting) reality that the plan today will almost certainly not be the plan tomorrow, and as the plan changes, so must change both individual roles and team dynamics.
And thereby so must the culture change.
Please let’s not jump over this point too quickly. It is all too easy for the ambitious, hard-working, and often older manager to just throw up his or her hands and lament over “these kids” and how “if they only knew how things were like when I was starting out” that they would think and act differently.
And how they should be just happy to have a job and not just be so – well young and self-absorbed.
Well, that is dead-end talk.
Building high-performing 21st century teams requires winning hearts and minds and doing so each day anew. The best managers REVEL in this challenge as opposed to shirking from it or whining about it.
#4. Empowering and Coddling are NOT The Same Thing. Some may read the above and shake their heads and think that this is a “coddling mindset” or entitlement culture and is exactly what has gotten us in America in trouble in the first place and a big part of why China is kicking our you know what every which way.
This is where leadership and administrative creativity are of such importance in building win-win work structures that both inspire and challenge the younger worker to work harder and get better faster.
AND allow for balance and acknowledge those aspects of work that are not so “goal-driven.”
What are these? Well, that sense of community and common cause and healthy friendship and competition that make the best workplaces, for lack of a better word, fun.
And fun, as high-performing cultures like Southwest and Richard Branson’s Virgin have demonstrated so inspirationally is - surprise, surprise - very good for the bottom line.
#3. Understand that Entrepreneurship and Youth Go Hand-in-Hand. Most ambitious young people today don’t grow up dreaming about getting that “good state job” or to work for the same company for 30 years.
Rather, and following up on that overriding sense of “specialness” with which we now raise our children, young people want their star to shine. They want to come up with the new, great ideas, and to be acknowledged and rewarded for it.
They, in essence, want all of the recognition and empowerment and self-definition and financial opportunity that attract people of all ages to become entrepreneurs.
This is a great and good thing, and is at the heart of why we live in golden, global age as young people the world over are being raised with the right kind of high self-esteems to dream and act BIG.
BUT many of even the best of them on balance do not want the headaches and heartaches and vexing, painful choices and compromises that are just as much part and parcel of the real entrepreneurial “lifestyle.”
So how do you work with this? The deep desire and burning ambition that all companies desperately want in their people on the one hand, and a wariness and even a distaste for all of the prosaic, “not fun” stuff on the other?
Well surprise, surprise, this is tough.
A general rule here is as opposed to fighting this energy, go with it and reframe the “tough stuff” as opportunities for personal and professional growth and then profusely recognize and acknowledge these “less fun” challenges are taken on.
Not easy to do for sure, but it is this leadership that both modern organizations and younger workers desperately need and want.
#2. Recognition is Key. Having 2 young sons has helped me immeasurably in understanding the sometimes gentle psyches of younger employees. Long gone are those days of fear and punishment-based parenting and schooling. Rather, understanding that a recognition-based milieu is how most high-performing young people have been raised and schooled is a key to effective organization-building.
The best guidance I have seen on effective “recognition-based” leadership comes from authors Chester Elton and Adrian Gostick in their awesome book “The Carrot Principle.”
They describe recognition done right as being “positive, immediate, close, specific, and shared:”
Positive - managers sometimes mistakenly use a recognition presentation as a time to talk about how far someone has come, or how they could have done even better. This is not the time or place. Comments must be positive and upbeat.
Immediate - too often by the time a worker is recognized for a job well done, weeks if not months have passed. The closer the recognition to the actual performance the better.
Close - recognition is best presented in the employee’s work environment among peers. Invite team members and work friends to attend.
Specific - a great presentation is a time to point out specific behaviors that reinforces key values.
Shared - typically, recognition comes from the top down; however, recognition that means the most often comes from peers who best understand the circumstances surrounding the employee’s performance. Peers, as well as managers and supervisors, should be able to comment during the presentation.
#1. Embrace Fluidity. This is perhaps the hardest reality and where the rubber really hits the road with building 21st century, knowledge-based entrepreneurial organizations dependent on younger people.
They just get up and leave.
On a moment’s notice and often for the simple and defensible reason of valuing experience and variety over the often hum-drum and slow career - building that is part of staying and growing with one organization over time.
Again, as opposed to fighting this energy, go with it. Work to design the organization and refine the business model based on relatively short tenures - say 3 years or less - and with the ability to plug new people in and have them produce quickly.
To accomplish this requires strong and well-defined training styles and processes, clearly defined and “bounded” roles and responsibilities, and a knowledge management system that captures and processes the intelligence of the organization so that it doesn’t walk out the door when that “year overseas” calls.
How About Investors?
As for investors looking for emerging companies to back, my strong suggestion is to evaluate these softer “above the line” qualities in a corporate culture and a leadership team as much as the below line technology and balance sheet factors that are usually at the forefront of an investment evaluation.
For it is the right company culture - one that gets the best out of people of all ages - that both endures and provides for success for the long term.
Written by Jay Turo on Monday, July 15, 2013
Green Bay Packer tackle Henry Jordan once famously described legendary football Coach Vince Lombardi’s coaching style as “He’s Fair. He treats us all the same – like dogs.”
Well, with the Big Data, “Moneyball” and “Freakonomics” management and investment revolutions, where it is a matter of high faith that you get the behaviors that you reward and that you measure, we are seeing a clear and strong movement back toward high accountability, no excuses “get it done or get out” management practices and cultures.
For entrepreneurs looking for organization structures to model and for investors looking for companies to back, here are four trends to watch:
1. Look for Companies That Harness the Power and Avoid the Danger of “Corporations of One.” Never before in human history has the world afforded more opportunities for talented individuals to work for themselves, by themselves.
The amazing tools of modern, virtual collaboration – text, email, video conferencing and every cloud-based business productivity application that you could ever dream of (and ever use) available in the palm of your hand - have eliminated most of the collaboration advantages of the traditional corporate form.
The smart, modern company understands when to marshal their power - in the form of utilizing contractors to fulfill bite and mid-sized projects - and when to resist it.
How? By focusing vigilantly on building distinct and equity - filled brands, strong barriers around their customers, and company cultures and management styles that demand and reward high performance and results.
2. And Ones That Let Virtuality Touch Them, but not Kill Them. With the now universal business adoption of “everything and more that was once only on your desktop is now in your pocket” mobile phones and apps, all of us worldwide are truly on line 24/7.
Books like Jason Fried’s “Rework,” Tony Schwarz’ “The Way We’re Working Isn’t Working,” and John Freeman’s “The Tyranny of E-mail” address from various angles the promises and drawbacks of virtual work.
A common theme is almost universal doubt regarding email and other tools of instant communication and the “react versus respond” culture they foster.
What to do about it? Well, continue to look for “end of email” company movements and cultures to continue to gain steam and social currency, and for social networking mainstays like Facebook, Twitter, and LinkedIN to slowly but surely lose their business luster.
Companies that embrace this re-emerging “culture of the deliberate” will have the leg up where it really counts – in more thoughtful strategic positioning and consequently, more sustainable profits.
3. And Ones That Are Learning Organizations. The pressing need for organizations to innovate or perish, and of young workers equating quality work environments with ones offering intense personal and professional development almost makes the definition of a successful company as one that propels its people forward.
This company as a learning organization motif is an old one, but never before have the reductionist pressures of virtuality combined with young worker expectations made it so paramount for companies to either grow their people or see their businesses shrink.
4. And Finally, Look for Leaders that Channel Coach Lombardi. There is a fine line between an encouraging company culture and a permissive one. Inspired by the success of high accountability cultures like Amazon, Apple, and FedEx, smart investors are backing leaders that give BOTH pats and kicks on the backside.
In a paradoxical way, the typical, high encouragement environment in which most young people (i.e. the Millennials) were raised and educated has created in them a deep desire for structure, to be told exactly what is expected of them and the consequences for poor performance.
Leading “tough” like this is hard, draining work, but is a key and easy-to-identify quality in a company poised to breakout.
Find, back, and grow with companies that embody the above and winning will be more of an everyday thing for your business and your investments.
Written by Dave Lavinsky on Sunday, June 30, 2013
July 1 is a critical day in your business. Because it's the day that officially starts the second half of 2013. That's right, the year is already half-way over.
So right now is the PERFECT time to take an honest look at your business, see how much progress you've made so far this year, and develop your plan for the rest of 2013.
There are three things I strongly suggest you do on July 1 as follows:
1. Give Thanks
I hate to sound too righteous, but I recently watched 'Girl Rising' on CNN. The show "documents extraordinary girls and the power of education to change the world." While this description seems and is uplifting, some of the struggles of the girls profiled seemed unbearable.
In particular, the segment detailing the lives of most girls in Afghanistan left me crying.
So, please take a moment to understand how lucky you are. Lucky that you are even able to run a company and control your destiny.
2. Assess Your Results from the First Half of the Year
You must assess your results from the first half of 2013. Start by looking at your goals and plans for the first half of the year. And then look at your results.
- Were your revenues as high as you had planned?
- Did your profits exceed expectations?
- Did you build as many new products/services as you had planned for the first half of the year?
In assessing your performance, the key question to answer is "why?" For instance, if you didn't achieve your revenues goals, what obstacles prevented your success? And, how can you overcome those obstacles going forward.
3. Create Your Goals & Plans for the Second Half of the Year
Now it's time to detail your goals and plans for the second half of 2013. Hopefully if you over-estimated your goals for the first half of the year, you can now do a better job of understanding what is more realistic to achieve in a 6-month period.
Think about this question: what must I accomplish in the next 6 months to make 2013 a great year?
Use this question as a guide in documenting your goals for the next 6 months and detailing your plans for how you will achieve them.
Remember, you still have half the year left. So even if you didn't achieve enough in the first six months, there's plenty of time left to make 2013 a banner year.
But importantly, make sure you set goals for the rest of the year, and have a way to measure your progress on them. If you don't, as some of you unfortunately just learned over the last six months, you won't achieve the success you desire.
Written by Dave Lavinsky on Tuesday, June 25, 2013
If you don't know Peter Drucker, you should: he's known as the man who invented modern business management. He wrote 39 books on the subject and is widely regarded as the greatest management thinker of all time.
And Peter Drucker is credited with two of the most important quotes in business management.
Here's the first: "If you can't measure it, you can't improve it."
When you think about this quote, it should immediately become apparent how true it is. Because, if you can't measure something, and know the results, you can't possibly get better at it. For example, it's nearly impossible to lose weight without stepping on a scale once in a while to measure your results - if you don't, you have no idea if you are succeeding or not.
Or it's like trying to improve your golf game, but never keeping score, so you don't know if you're actually getting better or not. Makes sense, right?
Now, in business, Drucker's quote is particularly true. If you can't measure every part of your business, you can't manage or grow it.
- Do you know the number of new website visitors you received in the last 30 days?
- And do you know what percentage of them turned into new paying customers?
- And do you know how the level of satisfaction among your customers has fluctuated over time?
- And do you know the precise average lifetime value of your customers?
There are nearly 50 questions such as these that measure each aspect of your business.
And if you don't know the answers, if you can't measure them, then you can't possibly manage or improve them.
And that's why your sales are too low, profits are too low, employee performance isn't high enough, and you need to work too hard and can't take enough time off.
Now, let's move on to Peter Drucker's second famous quote: "Management is doing things right; leadership is doing the right things."
Let's start with the first piece of this critical quote. "Management is doing things right." Well, as we learned from Drucker's first quote, you can't manage and you can't do things right in your business if you're not measuring it. So that's not happening and it's hurting your business.
And now the second piece: "leadership is doing the right things." So, my question for you is this: are you doing the right things in your business? Now before you answer this, let me ask you this: do you know exactly what you should be doing, every single day, to generate the most value from your time?
- Do you know when you should focus on improving your website?
- Do you know when you need to spend time on improving customer satisfaction?
- Do you know how much attention you need to give to securing new clients?
- And do you know when you should focus your time on better training your team?
Unfortunately, most entrepreneurs and business owners don't. Or their businesses would be much more successful than they currently are.
I give you these two Peter Drucker quotes along with their interpretation to help you figure out the answer to the question, what is the #1 Business Mistake you are making.
Which for most entrepreneurs and business owners is this: Your #1 business mistake is that you're running your business blind!
You're not measuring your performance throughout your business, so you can't improve. And worse yet, you don't really know what you should even be focusing on
It's like running around in a maze, and you haven't kept track of where you've been, and you're not sure what to do to get out.
But don't take it personally, virtually all entrepreneurs and business owners operate like this. And that's why business failure statistics are so terrible. As you might know, according to Dun & Bradstreet, 91% of businesses fail within 10 years. And according to United States Census, only 3.9% of businesses make it to $1 million in sales. And only 0.6% of businesses make it to $5 million. And less than 0.1% make it to $10 million and above.
The reason for this lack of success is that these entrepreneurs and business owners are running their businesses blindly. They are not measuring performance, so they can't improve. And they are focusing their time on the wrong areas of their business.
Now the good news is that there is a solution to this common problem of running blind. And it's called BI or Business Intelligence. Business intelligence or BI refers to computer-based techniques used to spot, dig-out, and analyze business data, such as sales, marketing and production in order to make significant improvements.
Importantly Business Intelligence uses the data you already collect in your business. For example, if you have a website, you probably have Google Analytics or another program installed that captures key information like the number of visitors you have to your website each day, where they are coming from, and what pages of your website they are visiting.
And you're probably using an accounting software like Quickbooks that includes information about your revenues, expenses and cash balances. And you might be using a customer relationship management or CRM system like Salesforce.com that identifies the number of leads and sales you generate.
And you might be using an email management system like Constant Contact or MailChimp that shows how many email subscribers you have and how often they open or click on your emails.
With the right Business Intelligence system, all the information from these applications and programs you already use automatically and in real-time is entered and analyzed. So you can quickly see, manage and improve your performance.
Importantly, you not only measure performance so you can improve it, but you instantly spot weaknesses in your company. And those are the areas you should focus your attention on. Remember, "leadership is doing the right things" - now you'll know exactly what you should be doing.
Ready to stop operating blindly? If so, check out Growthink's Business Intelligence solution, The Growthink Dashboard, by clicking here and start expertly managing and growing your business.
Written by Dave Lavinsky on Thursday, June 20, 2013
Lead generation is critical for all entrepreneurs. And once you master it, your business will thrive.
To help you with lead generation, below I have answered the most common questions entrepreneurs. However, let me start with some definitions.
Your "leads" are simply your pool of prospective buyers who might be interested in your product or service.
For physical stores, your lead list can be residents in a certain zip code or a list of shoppers with certain demographic characteristics. For online or virtual businesses, your lead list is often defined as the list of prospects that subscribe or "opt-in" to your email list or otherwise contact you so you have their contact information.
Whether online or in a physical store, communicating with your lead list is a primary marketing strategy for generating new and repeat customers. A general rule in marketing is: the bigger your list of leads, the more opportunities you have to generate new clients and sales. This is why lead generation is so important. Sound lead generation tactics grow your lead list. Great lead generation strategies grow your list with prospects that are most likely to buy.
Below are answers to the most common lead generation questions I get:
1. How Do I Create a Lead List?
There are many ways to start building your lead list. The easiest is to put an opt-in box on pages of your website where visitors can register their email addresses - typically in exchange for content or freebies. Most websites offer free guides, e-books, tools or a newsletter.
You can also offer free samples of a one-time discount coupon. Make sure the freebies are enticing. Once the website visitor opts-in to receive the freebie, he or she now becomes part of your email list.
2. Does My Target Audience Matter?
Yes. Know your niche and determine the people you want to target. This important element should be clear to you from the beginning. You will likely fail if you do not understand what type of customer best appreciates your product or service.
Once you truly know your target audience, you can do a better job of "talking" to them on your website. For example, you will use different verbiage to convince a 20 year old, single, suburban woman to buy your product than you would to convince a 60 year old, married, rural man to buy it, since each has different wants and needs.
3. How Will My Audience Find Me?
In order for your prospective customers to find you, you should be promoting your website in places where your targeted audience already frequents. For example. Let's say your business sells electronic gadgets. If so, make sure customers find you on other websites that discuss electronic gadgets. You can advertise on these sites or submit guest blog posts and articles to them. You can do the same with social networking groups that discuss this topic. In many cases you can also pay the other websites to send an email promoting your company to all their subscribers.
Likewise there are other tactics to reach these customers such a direct mail, door hangers, radio spots of TV ads. Naturally, you must align your strategy to your specific product or service, and to your budget.
4. What Should I Put On My Site To Attract Visitors To Opt-In Or Buy From Me?
Content is key. When your visitors find your site helpful and informative, it will be easier for you to get them to opt-in or buy. They will see you as the expert and be hungry for more information from you. The key is to provide quality content that gives solutions to your audience's problems.
Also, the more quality content you have on your website, the more other websites will link to you and thus drive new visitors. Likewise, these links will boost your search engine rankings, so you'll get more organic search traffic.
5. How Do I Maximize Social Media In Getting More Opt-Ins?
Most of your customers are using social networking sites (event if you're in the B2B space). Build your reputation as an expert in your niche when you are creating your social media presence. Become the "guru" of your circle of influence and continuously expand that sphere of influence.
Even brick and mortar businesses have a huge opportunity to build genuine, trustworthy relationships with clients and prospects on social networking sites. Offer tips, publish sales offers, share today's menu, teach a skill, publish testimonials and so forth. These steps create opportunities to get followers and convert sales.
It's All About The Relationship
A growing email and/or lead list is crucial for business growth, especially for businesses that operate online. You can publish a website or open an online store and HOPE that customers come. Or you can build top-notch content and opt-in system that allow you to communicate and build relationships with your prospective customers.
It's a common phrase that "people do business with people they know, like, and trust." Using social networks and content generation strategies (like newsletters and quality emails) you can develop strong bonds with people who you will never meet in person.
The strategies detailed herein will deliver prospects to your business that are interested, ready, and able to buy your products and services. It will take some time to implement these strategies, so get started now!