The Money Machine


 

Business is pretty straightforward. 

You take a certain amount of human and physical capital... 

add quality ideas and consistent energy... 

and what naturally will come out is...

...money. 

And lots of it.

Given this simple formula, why do so many businesses fail?   

Or come far from reaching their full potential?

More to the point, why are so many otherwise extremely talented, hard-working, and ambitious entrepreneurs and executives unable to lead their businesses in a way that creates and distributes far more money for themselves and their companies?

This is arguably the most important question of business, because when it is answered,
everything is possible - profits, healthy growth, and more value delivered to customers and stakeholders.

And when it is not,
nothing is possible. 

A business becomes a house of death: operating losses, contraction, dissolution, forlorn customers, scarred employees and wiped out shareholders.

In my 25 years of entrepreneurship and of advising and observing companies that have rose and fell on this spectrum of "Money Machine" success, ranging from those that started out as informal ideas and grew to become some of the most valuable companies in the world, to those with similar promise but instead that fell by the forgotten wayside, I have noted three fundamental factors that separate the former from the latter, the successful from the unsuccessful:

3. They Give their Love to the Money Machine not to its Outputs. I've yet to meet a businessman or woman who doesn’t want to make a lot of money.  
 

And to this fundamental business want and desire, I say so what? 

Because a) it is just so obvious b) nobody cares, especially not those that really matter - i.e. customers and c) the whole conversation around it distracts from the very hard, urgent, and important work always at hand. 

As in the bloody tens of thousands of details, tasks, to-dos, and projects that in their sum is the totality of a great company.

The next product, the next software release, the re-designed organizational chart, the revived company culture, the reimagined brand, the new paths and channels of product and service distribution.
 

All of this and more is where the complete focus of the best and most effective executives goes, which then just crowds out any time or energy to think or worry about what it all means for “their” money!

2.  They Treat their Customers as Honored Guests not as Gods. Healthy customer relationships start with a clear understanding of exactly the makeup of the customers our business is best suited to serve. 

And we then strive to serve only these customers as the most honored and important guests that our business can ever have. 

But our customers are not Gods.  They are not omnipotent or always right. 

Rather, upon them, as with guests to our home, are placed expectations of decorum and reciprocal respect.

And also like guests, they come and go. Both of their own volition and because more than a few of them we just don't want to invite into our homes anymore!

1. Building on the Above, They Have the “Proper” Relationship with Money.  If the company is the loved and cared for money machine into which we invest our sacred life and business force...
 

...and if our customers so appreciate our “machine” that they give to it their ultimate sign of business love and respect, their money.

...then at this nexus exists the proper relationship between our business and our money.

We respect on the highest possible terms the money our customers spend and invest with us, and the profound trust and respect it represents. 

We in turn know we have fully earned and deserve that love and respect.

Through all of the effort, intelligence, and soul we have poured into our businesses over the years.

And through our ongoing commitment to keep pouring more in, forever.

And from this zen and aligned place of customer respect, of self respect, of everlasting effort well...

...money and more money pours effortlessly out of our businesses for as long as the eye can see.

How cool is that?

Is Your Business Humming as a Successful Money Machine? Is all of your hard work yielding the bottom line results you want so bad? Are you able to turn your most important business initiatives into profits, fast and consistently?

If so, great and congratulations!

If not, complete this short questionnaire and give us a brief description of your current situation.

And we’ll reach out with our thoughts to help you.

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The Indispensable Man or Woman


 

Are there really those among us so talented, experienced, motivated, connected...

...that without their dynamic presence our businesses will suffer greatly?

Well, this past week I had two unforgettable experiences that answered this question in an entirely new and powerful way.

The first experience was on Saturday, in my weekend identity as an AYSO youth soccer coach for a morning match against the best team in our region.

When less than an hour before game time I received a call telling me my star player would be unable to play in the game.

And while processing this news, my 2nd best player was dropped off at my house to ride with me and my sons to the field, not in our team's shiny neon uniform, but instead in flip flops,  t-shirt and shorts!

When I asked the fine young fellow where his uniform was, he replied that his mother felt he shouldn’t play because he got hurt playing “American” football the night before!

Now, as a proudly dysfunctional youth coach who hates to lose, this double-whammy talent loss pretty quickly changed my game time mood from  cautious optimism to more than a bit of self-pity and dread.

I will share how our team did in the game in just a bit, but before I do and to bring it back to business, my 2nd experience on Monday was of our company's Vice President and sales leader departing for his European honeymoon, leaving our team down a key rainmaker during an extremely busy season.

While neither of these scenarios even remotely compare to the loss of an entrepreneurial leader and founder like Steve Jobs, Walt Disney or Ray Kroc, they do shed light on the value creation levers of team and organization, and how to best respond when the vagaries of life and business take a key asset away from us.

Mr. Paul Graham, the founder of Y Combinator, often talks about determination as the key success factor in any entrepreneur, executive or leader of ambition.

I love his definition of determination as "willfulness balanced with discipline, aimed by ambition.” 

And, if there is ever a time where determination is required, it is after the loss of a key contributor, of that man or woman viewed as “indispensable.”

Yes, once the natural and proper state of grieving is worked through (and when it comes to fast-paced modern business that grieving period must be very short),   then leaders of substance and ambition channel losses into:

  •  Motivation to first compensate for and then overcome that loss
  •  Education into an organization’s mission, and into its key strengths and assets that exist well beyond and outside of any one individual
  •  Growth, as in how to become a healthier and more valuable enterprise on a moving forward basis?

Motivation, education, growth.

These are the opportunities for those "left behind." 

It is not just possible, but it has been done again and again.

The Walt Disney Company at the time of Walt Disney's death in 1966 was valued at approximately $80 million, 30 years later it was worth close to $50 billion.

McDonald’s, at the time of Ray Kroc’s death in 1984 was valued at less than $4 billion, 30 years later it was worth more than $100 billion.

Apple, at the time of Steve Jobs’ death in 2011 was worth $311 billion, today it is worth more than $800 billion.

And as for my little soccer team this past Saturday? How did we do playing against our league’s #1 team, short our two top players?

Well, we lost 5 - 2. 

But, our “lesser” players - without the safety blanket of their more talented teammates - competed with amazing heart and passion, transforming themselves in front of their skeptical coach’s eyes from laggards into gritty young footballers. 

And from their effort, new possibilities as to game strategy, player positions, and teamwork were almost magically revealed.

Yes, it is true that so often the best thing for a team or organization are those moments when we must fight on without the “indispensable” among us.

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6 Key Benefits of Building Systems


 

Key Benefits of SystemsI recently attended a presentation by a business systems specialist.

That's someone who builds systems and processes for businesses so they run smoothly.

The system of the day was "how to handle inbound phone calls."

So I'm thinking 2 things...

1) please kill me -- could this be more boring

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The Power of Delusion


 

Great entrepreneurs successfully walk that very fine line between level-headed rationality and...

...utter, charming, frustrating, and complete delusion.

The most successful entrepreneurs, like Steve Jobs, Elon Musk and Jeff Bezos, are so because of their delusions, not in spite of them.

Delusion is defined by Webster as “an idiosyncratic belief that is firmly maintained despite being contradicted by what is generally accepted as reality or rational argument, typically a symptom of a mental disorder.

In many ways, the best entrepreneurs are like children, being assured of things coming to pass that have an extremely small probability of doing so. 

As a little league baseball coach, I so charmingly see this on the ball field with my young players - no matter how small or slow or lacking in hand-eye coordination they might be - so innocently being assured in their self-belief that they will be the next Mike Trout, the next big star.

Similarly - and no matter how old they might be - the best entrepreneurs maintain a steadfast and unshakeable faith that they are immune, above, and separate from the discouraging probability curves of business success and longevity.

Now, so importantly, while all great entrepreneurs are delusional, by no means are all those who are delusional great entrepreneurs.

And it is in this distinction that the more level-headed among us can model and emulate how the great entrepreneurs-the Musks, the Jobses and the Bezoses, utilize delusion to serve their businesses while...

...not trying to be someone they are not, nor be counted among the foolish that believe that "faith alone" will propel them to breakout success.

This fine line is best distinguished in the difference between business strategy and business tactics.

In the former, delusion is almost always helpful, while in the latter, it is almost always crushingly self-defeating.

Great business strategy is focused on big picture vision, product and service benefits to customers, and company culture, and is best approached from a place of and with the strong spirit of possibility.

Possibility is the realm where the very belief of things coming to pass has a profound and meaningful impact on their actually doing so - or for that matter of them being even conjured or dreamed up in the first place.

This can include a business possibility like growing sales by a 10X factor over the next few years via providing customers with extraordinarily high quality products and service, and enabled by a company culture attractive, admired and emulated by all those who touch and come into contact with it.

Visions and goals like these sprout from those human qualities best demonstrated again, by children.

A sense of wonder, of the feeling that we are in fact special and destined for great and inspirational things and experiences. 

This is the world of the supernatural, of the transcendent, mythical, and heroic.

And like in the science fiction that many of us love so much - remarkable, improbable, magical things, thoughts and feelings are created and experienced.

Like the development of the personal computer.

Or flying cars.

Or a cure for cancer.

Or, on a more mundane, but not less profound level,  the building of a profitable, growing business, a company at which many good people love to work and with monies earned build and support their families and communities.

All of these beautiful business things are only possible with, against the odds and reasonable belief, one or several courageous souls delusionally dreaming and willing them into being. 

This is a necessary, but not sufficient, condition to build and sustain a real business.

No to do this, and not just live in that dewey, but ultimately imaginary world of children, of dilettantes, of hot air merchants and purveyors of nothingness...

...well this requires the delusional dreams and visions be referenced and remembered daily yes, but only briefly so, and then with the vast majority of the business day being given over to hard, rational, intense, consistent, incremental, and repetitive work.

The key insight is that we don’t have to choose between flighty, crazy delusion...

...and "it is what it is” cold-eyed realism and spirited hard work.

We should, must, and can easily have both.

So let’s honor the delusional among us, and feed and nurture the delusion
in all of us.

But let's do the same for the heads-down plotters, for the conservative, calculated risk takers, for the “lunch pail” workers that just go to work every day.

They are both beautiful and admirable in their own way.

And completely and necessarily complementary.

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The 6 Untold Reasons Why Businesses Fail


 

I originally wrote this article years ago (which is why there are many old comments at the bottom). But I just updated it (even though 99% of what I wrote years ago is still 100% valid today).

Reasons-Why-Businesses-Fail There have been many articles written on the subject of why businesses fail, and most of them point to the same reasons, such as:

-Inadequate funding
-Bad location
-Lack of a well thought-out business plan
-Poor execution
-Bad management
-Expanding too quickly
-Insufficient marketing or promotion
-Inability to adapt to a changing marketplace
-Failure to keep overhead costs low
-Underestimating competitors

These reasons are widespread and no doubt cause many businesses to fail. However, the reason for a company’s failure is not always something so obvious.

 Below are 6 lesser-known reasons why a business might fail.

Why do these reasons remain untold?

Simple. Most of the time, the business owner doesn’t realize that these reasons are what caused their failure, and consultants generally don’t ask the kinds of questions that would identify them.

1) Focusing on Short-Term Profits Rather than Building Long-Term Value

It’s important to be profitable, but NOT when short-term profits come at the expense of the long-term value of the business and the lifetime value of the customer.

Here’s a real-life example: In the late 1990s, there was a franchise of a national smoothie shop located in West Los Angeles, CA. At this store, smoothies sold for about $4. They cost only around $1 to make, resulting in a solid profit. However, certain ingredients, like mangoes and berries, cost more than the other ingredients, such as juice and frozen yogurt. Since juice and frozen yogurt were cheap, the franchisee put more of these ingredients in their smoothies and less of the expensive ingredients. By doing this, their profit margin per smoothie grew by approximately 20 cents, which seemed great… on paper. Unfortunately for the store, customers weren’t satisfied with the taste of the lower cost smoothies, people stopped going there, and the store eventually went out of business.

As you can see here, it’s important to consider the lifetime value of a customer. Repeat business is way more valuable than short-term profits. Saving 20 cents on a smoothie today will cost you big in the long run.

(Another great example of this concept is Google giving preference to relevant ads in order to improve the user experience, even though there are less relevant advertisers willing to pay a higher price per click.)

2) Ego Business vs. Business Opportunity

The foundation of a good business is a good business opportunity. As an entrepreneur, you want to fill a need in the marketplace. Unfortunately, many businesses are started solely to fulfill an entrepreneur’s ego (or, to put it less harshly, to satisfy one of the entrepreneur’s interests).

This can often be seen in the restaurant & bar industry, where too many entrepreneurs open shop because it’s a “cool” thing to do. Such businesses rarely succeed.

3) Life distractions

The best ideas don’t always come between 9 and 5. A person might have a great idea while driving, or in the shower, or while working out. It’s moments like these when an entrepreneur leaves behind the day-to-day tasks of running a business and gains a better perspective of the big picture.

Sadly, there are a lot of things that can disrupt a person’s home life. Illness, death of a family member, divorce, relationship trouble, and problems with a child are just a few of the many issues that can affect a person’s mindset. When things like this occur, moments of clarity are replaced by stress and anxiety.

Many entrepreneurial ventures depend heavily on new ideas and creative thinking, and when an entrepreneur’s head isn’t clear, business can suffer.

4) Bad feedback & white lies

People like spending time with friends and family.

Unfortunately, when it comes to business, friends and family members don’t always give the best advice. This is especially true at the birth of a business. Nobody wants to be a buzz-kill. No one wants to tell an entrepreneur their idea is bad, or their location stinks, or anything else negative. Most people are conditioned to be supportive of their friends and family regardless of the situation.

Plus, nobody wants to be wrong. Imagine your friend has an idea that you think is terrible. You share your objections, but the friend goes ahead with the idea anyways, and it succeeds. Now you’ll always be the naysayer that never believed in them. Nobody wants to be that person.

That’s why you’ll rarely get honest, objective business advice from friends or family members. And yet, oftentimes friends and family are the first people entrepreneurs turn to for advice.

5) Maybe the owner is just a jerk

There are a lot of great people in the business world, but there are also some jerks. And these jerks sometimes start their own companies.

A jerk, in this case, is someone who a lot of people can’t get along with. Maybe it’s because they’re a super-perfectionist, or they yell a lot, or they demand that everything be done in a certain way, or they constantly complain. Or maybe they’re annoying in some other way.

The key is that nobody -- not employees, customers, partners, suppliers, clients, etc. -- wants to give 100% for a jerk. Clients and customers will be turned off, and employees will start cutting corners. Most people believe that life is too short, and don’t want to spend their time working with someone they can’t get along with.

6) The entrepreneur never took the full leap

In most new business attempts, the entrepreneur never leaves their day job, or they create a back-up plan, or they have a job lined up in case the new business fails. In these cases, failure IS an option, as the entrepreneur has a safety net to fall back on. In cases where failure is NOT an option, and the entrepreneur depends on the new business to provide food, shelter and clothing, the business has a greater chance of succeeding.

There’s a great example of this concept in this NY Times article. Xiang Yu was a third century (B.C.) General in the Chinese army. He led his troops into enemy territory by crossing the Yangtze River. Then, in order to inspire his troops, Xiang Yu took some unorthodox measures. He burned all of his troop’s ships and destroyed all of their cooking materials. This left the troops with only two options: Move forward and conquer the enemy, or perish. The maneuver did not make Xiang Yu very popular with his soldiers; nevertheless, the troops advanced and ultimately emerged victorious.

Xiang Yu’s methods might be a little drastic in this day and age, but the moral of the story is what’s important. Author Anita Roddick has said that entrepreneurship is a matter of survival, and the truth is, if you’re not totally committed to your business, your chances for success will be greatly diminished.

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How to Block out the Noise and Grow Your Business


 

If you’re not careful, all the noise, side issues and distractions that attack us all relentlessly can prevent us from propelling our companies forward.

Luckily, there are easy and fun ways to “block it all out” and focus every day on growing our businesses. 

First, let’s go through the “buckets” of distractions we as business people face, as each of them requires its own particular response.

First, there are distractions at the “macro” level - of the sordid and depressing chatter that passes as “news.” 

Then there are the distractions of entertainment and social media.

And finally there are the “micro” distractions that bubble up from our businesses themselves - i.e. the varying levels of productive and unproductive interactions (texts, chats, e-mails, phone calls, meetings, etc.) with the "human ecosystems" of our organizations - employees, customers, vendors, suppliers and the like.

Now, so critically, when compared to the general public, for business executives having a great defense mechanism to and against these distractions is
extremely important.

For this simple reason that our opportunity costs are much higher.

You see, almost any executive, even those at smaller companies, has the power to effect and create millions of dollars of business value and wealth at any given time.

And the larger the business, the more profound that power naturally is.  At nine figure companies a single executive can make a multi-billion dollar difference in its prospects and value.

So to dither away all of this wealth creation power on...

... tweets and posts and texts and chats and the overall "tyranny of the nonsensical” can easily cross the line from wastefulness into the vexing realms of shameful and sinful.

Too harsh a judgement? I don’t think so!  

Because in a modern business environment where the global opportunities for wealth building have never been greater, staying on task, message, and mindset every single business day is just the right, profitable, and yes FUN thing to do!

So let’s start with news and “political” distractions.  

And now let’s really be harsh - unless one intends to run for office or participate in projects and organizations that are authentically trying to "move the needle" as to our national conversation, then when it comes to modern news as business executives...

...it is far better to just "cold turkey" it all.

Because we have better things to do then to “sit in the stands” and ogle and rubberneck at the unfortunate train wreck that our national discourse has become.

And this “better things to do” meme applies also to entertainment and social media, does it not?

Sure, most of it is harmless and at times numbingly relaxing, but can’t we find more “nutritious” places to spend and invest our precious leisure and “turn it off” time?

The answer for where these nutritious places are different and personal for all of us.

But just like we know when we eat healthy or unhealthy foods, so we also know when we are feeding our minds and spirits candy and ice cream, or instead are vitalizing them with nutritious mental fare and influences.

And finally there are the distractions of the micro, of the day to day conversations and interactions with and among our professional colleagues.

Most of these conversations are what business actually is - i.e. “collections of humans” working together to create beautiful and profitable things and ideas.

But within each and every one of them lies a choice - to lead and participate in them from a place of idealism and possibility, and of “bonding” with the absolute best selves of our “fellow business travelers,” or...

...the opposite - pessimism, gossip, procrastination, thoughtless conflict, and assuming the worst of those in our business circle.

Kind of like how modern news, entertainment, and social media now operate, eh???

The choice is always ours.

And, as business people that choice is just worth a lot more money than it is for everyone else.

Let's always choose wisely.

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Client Referrals: Why You Need Them and How to Get Them


 

Client ReferralsA recent survey of business owners showed that 41.4% of businesses count on referrals for over 80% of their sales.    

I actually don't believe this statistic; I think it's way too high.    

But the statistic is very exciting. Because it means that these 41.4% of entrepreneurs are doing it right; because getting referrals is absolutely critical to your business' success.    

Let me explain.

To begin, referrals generally don't cost you any money. So rather than spending $X to acquire the new client, you spend $0. This dramatically boosts your profitability.

Second, getting referrals boosts your average profit per client. For example, let's say your average profit per client is $50. Now, let's also assume that 20% of your clients refer you one additional client.

What that means is that for every 10 new clients you get, you actually receive 12 new clients (including the 2 referrals). Since each client gives you a profit of $50, you've generated $600 in profit from the 10 initial clients. So, your profit per new client goes from $50 ($500 divided by 10) to $60 ($600 divided by 10).

Yes, it's exciting that your profit has gone up 20%. But what's even more exciting is that you can use this increased profit to dominate your competitors. For instance, if your competitors are still only earning $50 profit per client, they can only spend up to $50 per client in marketing expenses. But since you're earning $60 profit per client, you can actually spend more than $50 in marketing to acquire a new client.

This allows you to advertise in more places and in places that your competitors can't afford. This will drive tons of new clients to you instead of your competition.

In summary, getting referrals can allow you to significantly boost revenues and profits, and allow you to dominate competitors. It's a surefire way to make your business plan more profitable!

Now, if referrals offer such a great benefit, why do 58.6% of entrepreneurs fail to effectively use them?  The answer is that they haven't set up an effective referral system.

So here are the keys to an effective referral system.

Step 1: Make the Client Want to Give You a Referral

Clearly, your clients must be happy in order for them to give you a referral. So, make sure you satisfy their needs and fulfill the promises you made them when they purchased your product or service.

Step 2: Ask for the Referral

With a job well done, some clients will give you referrals on their own. But you'll dramatically increase the number of referrals you receive if you simply ask for them.

Of critical importance is to ask 1) at the right time, and 2) multiple times. With regards to the former, if a client needs to use your product/service in order to be satisfied, then you clearly can't ask for the referral immediately. Rather, you'll have to wait until they've used your product/service and can vouch for its success.

With regards to the latter, it is critical that you ask clients multiple times for referrals. You need to do this for several reasons. The first is that clients are often busy and if you ask at the wrong moment, they simply might not have time to give the referral.

Secondly, it's possible that today one of your clients does not have a new client they can refer to you. But maybe in a month they meet someone that would be a perfect fit for you company. But unless you ask for the referral again then, they'll probably forget to give it to you.

In asking clients for referrals, don't just ask them who they think might be a good fit for your product/service. Rather, it's more effective if you guide their thinking. For instance, you should ask, "I know you're a member of the XYZ organization; do you know anyone else in the XYZ organization that could benefit from our product/service?" This allows your client to focus their thinking in order to find more potential names for you.

Step 3: Effectively Contact the Referral

Clearly, once you receive the referral, you need to contact them and try to close the sale.

A key tip here is to ask the referral source to let the referral know you'll be contacting them. As such, rather than contacting the referral cold, you'll receive a warm introduction that will make the referral more likely to speak with you and buy your products/services.

Step 4: Putting it All Together

The key to a successful referral program is to formalize and systematize it. It shouldn't be something that one of your employees does once in a while. But rather, it should be a sequence of events that always happens.

For example, your system might include the following: Ten days after a sale is made your client gets an email requesting referrals. Fifteen days after a sale they receive a postcard. And then 28 days after the sale, your salesperson calls them to request referrals.

In addition to systematizing your referral program, you need to maintain statistics so you can see what's working and what's not working. For example, you should track each of your referral attempts and see which ones lead to new clients and which do not. And then you should tweak them (e.g., change your email to offer an incentive for the client to give you a referral), and track which tweaks work and which don't (and clearly keep using the ones that did work).

A quality referral program will increase your revenues and profits, and can give you real competitive advantage. So build your referral program today!

Suggested Resource: Growthink's Ultimate Marketing Plan Template allows you to quickly and expertly create your marketing plan; and exponentially increase your customers and revenues by developing your referral program and orchestrating the 5 key marketing levers. Click here to learn more.

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Try this “back of the envelope” Big Data trick


 

The “big data revolution" just keeps getting bigger. 

And more confusing, too.

How can a small business make sense of it as big companies like Amazon, Cisco and FedEx do?

Well, there is a “back of the envelope” trick that can greatly reduce the time and expense of making decisions based on facts and data...

and not just “gut” and intuition.

Decisions like where to spend scarce ad dollars, the right messaging to use in those spends, who to hire, who to fire, which new products and services to develop, and the list goes on and on. 

And it is in this “on and on” element where data-based decision making gets complicated very quickly.

“Split tests,” regression analyses, choices as to which sets of data are important, which are noise, and then which software to use to organize and interpret it, to name just a few.

And even when we get all this right, the business challenge remains of doing something positive and profitable with it. 

The disappointing result of all of this complexity and ongoing intellectual burden is that data - based decision making, in most companies, is done sporadically, poorly, or not at all.

I don't see this dynamic changing anytime soon.

Most companies are just not going to benefit from the big data revolution as it is currently construed without a significant
simplifying of the process.

And a great “back of the envelope” simplification trick is the concept of Expected Value.

Expected value is the idea that for business decisions, there are just
two factors to consider - 1) the probability of the series of outcomes resulting from that decision and 2) their related economic values. 

Just get these two factors right and we can quickly determine whether or not any decision is a good, or a “Positive Expected Value” one.

From this frame we can break down complex decisions into simple bites.

To illustrate, let’s evaluate a simple marketing spend decision, such as deciding whether or not to invest in a new advertising campaign.

Let’s say we are considering a $15,000 monthly ad spend on Facebook, with the related goal / hope of securing 10 new customers from it that will generate on average $5,000 in profits each.

As we are clear as to the economic value of the success outcome - here, the $5,000 in profits from each new customer (which is usually reasonably easy to calculate) - we can focus on determining the outcome probabilities.

As in what is the probability that we generate zero customers from the spend?  

3 customers, which would get us to break-even? 

5 customers? 10? Or more?

When we grapple with these probabilities, the depth of our confidence or unease will become quickly evident.

More often than not, we’ll get to a vague “feeling,” and depending on how strong the feeling is, we will either just “damn the torpedoes” and plunge forward or get stuck in the dreaded “no decision” mode.

It is at this juncture where thoughtful data analysis can vastly improve our confidence, and speed of decision-making.

Some of this analysis can be benchmarking, as in utilizing the plethora of online competitive intelligence tools to determine marketing spends and yields of companies with marketing campaigns similar to ours.

Some of it can be vendor assessment, as in asking marketing agencies for data - based on examples of successful ad campaigns they have managed, again for scenarios similar to ours. 

And some of it can be internal, as in dispassionately evaluating our appetite for risk and comfort with uncertainty, and our ability to financially withstand losses from campaigns and new initiatives that don’t work - i.e. how much are we prepared to lose before we we win?

All of this analysis is still serious and difficult, but is far more “contained” when we do it exclusively for the determination of probabilities.
 

Try it for your next important business decision.

It allows any executive to quickly start making better decisions based on data.

Without getting lost in all of the numbers and the noise.

Are you facing a key business decision? Considering an important new initiative? Would you like help in evaluating its probability of success? And its related expected value? 

If so, then complete this short questionnaire and give us a brief description of your current situation.  And we’ll reach out with our thoughts to help you. 

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Want to Give Your Business a Quick and Easy Boost?


 

The dream of every entrepreneur is to build a company successful enough so as to one day be able to attract a buyer to and for it.

So as to reap a financial harvest and windfall. Sometimes in the millions of dollars, sometimes in the billions of dollars and at all points in between.

This is really a simple and straightforward goal.  

But one that so often gets lost in the noise, hustle and bustle of the daily business battle. 

This is especially true for closely-held private companies, who have the blessing and curse of not having “quarter-by-quarter” financial accountability as public companies do. 

It is a blessing in that this kind of financial reporting and accountability is a lot of work.

And kind of insulting too.

I mean, do we think that seasoned executives - with lifetimes of industry and domain experience - really want to listen to some “whipper snapper” analyst opine upon and question their strategy and approach? 

But of course this lack of feedback and accountability can be very much of a curse too.

For starters, because of it way too many private companies just don’t do any kind of financial reporting whatsoever. 

And if they do, and if results are disappointing, as opposed to the real time feedback that public companies would get in terms of their stock prices cratering, private company executives instead often get quite skilled at “rationalizing” poor performance on the myriad of usual suspects - economic conditions, overseas competition, employee turnover, product development delays, supply chain snafus, etc.

And as they do, sometimes even unknowingly that beautiful dream of a business exit and financial windfall recedes depressingly into the sunset.

Luckily there is a way to give any business a quick and easy boost.  

A boost toward better financial results.  

And a boost toward a faster timeline and better probability of a business sale at an exciting price.

To illustrate, let’s investigate two typical company scenarios:

Company Scenario #1: A company lacking great financial traction - slow revenue growth, little profit - but one that competes in an industry attractive to strategic and financial buyers.  Many software and healthcare businesses fit this description.

Company Scenario #2: A company with a solid revenue base - say more than $5 million in sales - but competes in an industry not one of great, current interest to buyers / investors.  Many distribution, manufacturing, and service businesses fit this description. 

Now, in both scenarios the likelihood of a third party buyer approaching these companies and making anything other than “fire sale” offers for them is quite low.

And because the executives running these companies think they know what their companies at their current point of development are worth they...

...do nothing. 

Sure, they work hard every day but they don’t make meaningful progress toward their most important goal - increasing the value of their business via improving its financial performance and strategic positioning. 

Now somewhat counter-intuitively, businesses “stuck” like this can, in very many circumstances, give themselves a quick and easy boost, simply... 

....marketing themselves for sale.

To prospective financial buyers. To prospective strategic buyers.  

To this wide and wealthy world of ours. 

Yes, yes, yes, I know there are concerns of confidentiality and distraction when so doing, but these are far outweighed by the vast benefits of putting ourselves out there, warts and all, for outsiders to evaluate and value.

Putting out there what our actual financial results have been.

Putting out there as to what our financial results will be, and why - in the form of well-documented and reasoned financial forecasts. 

And putting out there the “story” behind the numbers - the talent, work ethic, and integrity of our people, the suredness of our IP, the thoughtfulness of our product development roadmap, the sustainable competitive advantage of our operational cost structure, and the like.

Putting all of this out there and SO many good things come back to us.

Ideas. Relationships. Momentum.

All of which come back to us whether or not we actually consummate a business sale.

We will know just like a public company does what we need to do - financially, strategically, culturally - to attain our dreamed of financial harvest.

And we will attract to us new relationships and partners to help us get there.

And oh yes....we just might attract offers for our business at a price exciting to us.

And attain that financial windfall far sooner than we thought possible. 

Does Your Company Need a Boost? Would you like to explore how to accelerate your business down the path to an exit? Curious to know how buyers might value your company now?

If so, send a note to [email protected] with a brief description of your current situation.  I will review and reach out with some thoughts to help you. 

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Is More Software the Answer? Or the Problem?


 

Like most companies, every month my company pays for a lot of business software.

Here is a partial list:

What is this software helping us do more efficiently?

And what is it preventing us from achieving? 

Well, through it we get access to the best thinking and "secret sauces" from the world-class domain and functional experts that designed all of it, and work daily to improve it over time. 

The best research minds.

The best customer relationship and database minds.

The best collaboration and project management minds.

The best accounting minds.
 

The best email marketing and social media minds.

And the list goes on...for just a few dollars per day we can access a software tool - and with the right customization to our particular business challenge - upgrade virtually any under-performing aspect of our business and make it world class. 

But the complexity of all of this software can also easily prevent us from attaining our key business goals.

Webster defines complexity as “the state or quality of being intricate or complicated.”

And anyone who has ever spent a few passing hours trying to understand or customize a piece of business software knows exactly how intricate and complicated it can be. 

However, it is in these frustrating “in the weeds” moments where we most need to step back and connect the dots back to the big values our businesses are all about.

The value we seek to bring to our customers and clients.

And our internal values - the enduring missions and long-term objectives we seek to represent and attain as organizations.

To the degree we have clarity in these two value dimensions, the tactical purposes and connectedness of all of our software will come into simple focus.

And when it doesn’t, we just need to ask ourselves two simple questions.

First, does the software help enhance the value, real and perceived, my company brings to its customers and clients?

And relatedly, does it increase the likelihood of us accomplishing our key long-term goals and objectives? 

Yes, it can be sometimes hard to drill down from the 30,000 foot nature of these big questions to nitty gritty software features and functionalities.

But it’s also pretty straight forward and just requires focused effort on a periodic basis - say once per year - to yield great results.

Less complexity, more customer value, more mission-driven work, more competitive advantage.

Yes, when it comes to business software it is our choice whether we painfully watch it enable competitors to pass us by.
 

Or learn to use it best to help us win.

What about your company? Do you feel your company’s technology strategy is helping you best attain your business goals? If so, great and congratulations!

But if you need help in identifying areas where software and technology can help you reduce costs and increase customer satisfaction, then complete this short questionnaire and tell us about 1 -2 areas in your business that could use help. 

And we’ll reach out with our thoughts to help you.

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