Having Imaginary Friends Is Good For Business

Changing Business In A Single Bound

I recently read an article in Forbes Magazine that focused on our education system and its lack of teaching or fostering innovative thinking.  It suggested we are focusing on knowledge but knowledge is not what is needed. 

In the article, Harvard Innovation Education Fellow Tony Wagner states; “Today knowledge is ubiquitous, constantly changing, growing exponentially… Today knowledge is free. It’s like air, it’s like water. It’s become a commodity… There’s no competitive advantage today in knowing more than the person next to you. The world doesn’t care what you know. What the world cares about is what you can do with what you know.”  Read the entire article by clicking here.

I believe that we need to allow children to play by using their imaginations at least a little bit every day.  By doing so, it exercises the imagination “muscle” and that is where the seeds of innovation germinate.  I had an imaginary friend when I was growing up and maybe I need to thank him for helping me be creative enough to find unique solutions to problems that businesses face.

I am not going to offer an opinion on our education system today but the article reinforced my thinking about a common theme recently in my business blogs.  Turning Things On End To Achieve Results!  We need to be different and we need to be able to stand out in the crowd from the rest of our competition.  Some of you have heard the business adage; “If we do what everyone else is doing we are in a low margin business.”  Who wants that?  People will pay for different as long as your version of different is better in some way.  Take some time to read or re-read the following blogs from the past two months and start innovating your business to higher profitability.  Click on the links below:

Peanut Butter And Jelly And Other Great Combinations

Bean Counting And Much More

Pizza And Pi(e) Or Who Moved My Cheese (Pizza)

Have a great week transforming your business while playing in the sand box with your imaginary friend.

Peanut Butter And Jelly And Other Great Combinations

A winning combination

The world we live in today is changing and I believe we are going through many changes that are as significant as the industrial revolution.  Even the changes that were brought about by the computerization of businesses due to the affordability of the desktop computer are not as significant or as rapid as what is going on now.  Social media and the connectivity brought about by high speed internet have shrunken the world.  Brick and mortar may be a thing of the past for some businesses.  We need to understand this and be on the leading edge of this change so we can take advantage of it in our businesses.  This means telecommuting policies must be liberalized, use of office building space re-evaluated to maximize efficiency.  If you have a 2,500 square foot office that is used from 8 to 5 for five days a week, it is no longer acceptable to have that asset sit idle for most of the time.   I have listed a few examples below some creative thinking might have to take place to make it work, but it could be worth it:

• A roller skating rink or gymnastics center by night, a day care service by day.
• Public school during the week, college campus or trade school on Saturday – maybe tuition won’t be so high. 
• Use public school space for day care or summer learning by for-profit businesses and use rental income to defray costs or pass savings on to tax payers.  It could be a win-win situation.
• Breakfast and lunch restaurant operated by company ABC and a Dinner restaurant for company XYZ.  Inventory control could be interesting.
• Two firms occupy one space at same time and share usage between first shift and second shift.  If it saves half the rent maybe it is worth it?  Or two firms can offer telecommuting half the time and share the space since they only need half as much space.
• How about an ice cream shop in the warmer months a trendy hot beverage and soup place in the cooler months.  If you are on the hook for rent all year and can sublet it for even half price why not?  Who wouldn’t want a latte or hot chocolate to go with a stuffed pepper soup on a cold winter day?
• How about a bakery that turns into a pizza shop for dinner hours?  The bakery is done by noon and the pizza shop closes by 11 PM; that leaves plenty of time for the transition if you design a streamlined process.  Read about an interesting pizza idea here.      

Perhaps these ideas would not all work but it is time to change the way we think.  Who would have thought that FaceBook would be worth 100 billion dollars? I would be interested in hearing your ideas for business combinations that could take advantage of cost sharing.

Have a great week finding the jelly to your peanut butter.

The Shamrock Shake Incident And A Good Deal Gone Bad

I have some business lessons to share from two recent events that occurred in my life.  Perhaps you will find some value from my misadventure.  The two events are unrelated but occurred within 10 days of each other and have stuck in my craw.

On March 17^th and 18^th I went to 4 different McDonalds restaurants for a Shamrock shake and was unable to get one for various reasons ranging from a broken milk shake machine(this at a store less than 3 months old) , ran out of mix and never were a participant in the seasonal offering.  Needless to say I was frustrated by the situation.  I think we need to take note of this failure and learn from it.

First and foremost we need to be able to adequately stock our shelves so we have product to sell.  I can’t imagine how a company like McDonalds could allow this type of inventory ordering gaffe to occur.  Let me point out that I did not buy anything from McDonalds on those days that they were out of Shamrock shakes.  Most people have already formed an opinion of McDonalds and if this happened sporadically throughout the country it probably will not hurt their image or future earnings potential.  If this happens on a recurring basis it might signal a problem to people so the free pass does not exist forever – even for the Golden Arches.  How much goodwill do you have built up?  Do you have more than McDonalds?  Do you get a free pass from your customers when you fail?  My advice is to do everything in your power to not have to depend on your goodwill.  Stated another way; don’t make this mistake in the first place.  This failure is shocking because it is at the core of their business.  

The second bad customer experience I had was with a technology/electronics company with 23 locations in 16 states.  They had an offer for a coupon for $15 off any item in the store and it could be $15 off a $15 item.  This sounded really good so I decided to take the trip a little out of my way and get 2 flash drives for about $16 after using the coupon I would only pay $1 and life would be good.  I was a little leery of the promotion so before I started my purchase I asked an associate and he said that I did understand the coupon correctly.  WRONG!  I went up to the counter to pay for my 2 flash drives and was told that the item had to be $15 individually not more than 1 item adding to $15 or more.  That was very inconvenient and I was in a bit of a hurry so now I had to decide what I was going to purchase that cost over $15.  Of course I actually had to want or need the product for the transaction to make any sense.  As I rushed around I could not believe that a store with thousands of products could have so few that I wanted that fit the constraints of the coupon. I finally ended up buying a battery charger that came with 4 AA batteries that cost 14.99 plus tax.  I left the store somewhat satisfied but after I got home and had time to think about it,  I really did not want or need the batteries and I did not get what I really wanted – the flash drives.  The lesson to be learned in this instance is never turn a good thing into a bad thing.  So many times a company will try to do something nice for its employees or customers and it backfires.  This is one of the worst things that you can do because an expectation is created and then is not met.  Not only is it not met but you feel worse about the company than you would have if it did nothing at all.  It is a lot like a pass into the end zone being intercepted by the other team and returned 100 yards for a touchdown – very deflating.   Many people call that a game changer.  Watch what I am talking about here.

Yes, I finally did get my Shamrock shake but I had to go out of state to get it.  Have a great week and beware of the Shamrock Shake Incident and other game changers.

Bean Counting And Much More

Where do the beans come from?

“It is not enough to count the beans you must know where they come from.”  I heard this when I was working in a CPA firm all the time from a partner who apparently had a lasting impact on my business philosophy. The essence of his message was that a business owner needs to know the customers, product lines or service offerings that are the winners and the losers in his business.   

One way to do this is to dig a little deeper into your business.  By digging deeper I mean to analyze what the most profitable business activities are.  You can do this by using your accounting software to its fullest.  Go beyond the standard reports and look at what your customers are buying and what you make on each item you sell to them.  Many small businesses use inexpensive accounting software such as QuickBooks or Peachtree to track their income which is fine.  They offer good reports and the ability to export data you select to excel for analysis.  Taking this concept further you can look at what ZIP Codes you are selling to and adjust your sales efforts to tap into new, underserved markets. You may also want to run a report or create one that will tell you the date the last time you had a sale to a customer.  If it has been a while since their last visit or order, a follow-up postcard or special offer might be a good way to make sure you don’t lose contact forever.

What else can you do?  The ideas are only limited to your imagination, the time you have to spend to investigate and your appetite for digging into details.  What about average sales order per delivery or by sales representative?   Why does Sales Rep A have a higher sale per order than Sales Rep B?  Is it luck or is it something that you can learn from?  How about looking at trends?  Run a report and see how many units you sold to your top 10 customers over the past 3 or 5 years.   Which direction is each customer going – up or down and what are the reasons?   Many times a small business owner has a good idea of the answers to these questions but sometimes there are surprising results. 

A good accountant can help you with this and you should ask these types of questions if you are not getting this information.  Ask your accountant about Turning Things On End To Achieve Results! 

Have a great week, elbow deep in beans.

Pizza And Pi…Or Who Moved My Cheese(Pizza)

Pizza Pi(e)

Today’s blog is about pizza!  I love Pizza, you love pizza we ALL love Pizza.  However; there is a lesson to be learned from Pizza and how most restaurants sell it.  I recently got a deluxe pie at our favorite local shop and discovered something that I would like to share with you.

My lovely wife and I got a large, 16 inch pie this time and it was way too big so we had plenty of leftovers.  The gigantic size of the 16 inch pizza got me thinking.  “Why does this seem so much larger than a 12 inch size when it is only 33% larger?  My mental math was as follows: 12 X 1.333 = 16.  That math is in fact WRONG!  Here is why:  To determine how much pizza you are getting you must use Pi(e) in the calculation and I was not.  What do I mean by that you ask?  I need to consider the area of each pie to compare how much pizza I am buying.  When I ran those numbers, I was shocked and here is the lesson we need to learn.

The area of a circle or a pizza pie must be determined using the following formula:  πr²   This is where things can get a little too detailed for some people but stay with me it is going to be worth it.  The calculation of the area for a 12 inch pie and a 16 inch pie are shown below and the result of the calculations reveals that there is about 78% more pizza in a 16 inch pie compared to the 12 inch pie.  Here are the details:

Click here to see a website that calculates the area of a circle. 

π = 3.14159 r = radius   The radius of a 12 inch diameter pizza is 6 inches and the radius of a 16 inch pizza is 8

3.14159 X 6²=113.09 = area of 12 inch pizza

3.14159 X 8²=201.06 = area of 16 inch pizza

201.06 ÷ 113.09 = 1.78 or 1.78 X 113.09 = 201.06 approximately

If you assume the price of a 12 inch cheese pizza is $10 then based on area the 16 inch pizza should be $10 X 1.78 = $17.80  At my local shop that 16 inch cheese pizza is only $12.75 If you look at the deluxe pizza we bought the 12 inch was $14.95 and the 16 inch was $19.95  if you applied the same price to the 16 inch pizza it should be $14.95 X 1.78 = $26.61 We were getting a great deal with the large size at only $19.95 – right?

What is the lesson you ask?  The first is that the area of a circle is not linear so you cannot apply a linear relationship to the price.  A 16 inch line is 33% longer than 12 inch line.  But it won’t work for pizza.  Another lesson is the pizza shops are probably overcharging for 12 inch pizzas to subsidize the price of the 16 inch pizza.  I think you would agree with this because it does seem expensive for a 12 inch cheese pizza to cost $10.  Since they probably sell more 12 inch pizzas, they can overcharge a little and that will ease the beating they take on the large size and we are all happy.  From now on I will always order the large size pizza as long as I am getting the greater value based on the math outlined above.  Have you ever had to throw out pizza from the fridge that went bad?  Me neither.  The leftovers will be welcomed by members of the household for late night snacks or a quick snack any time of day.  If you really want to get a headache, try to figure out how they price extra toppings for each size Pizza. 

Another lesson we need to learn is how can we apply this pricing strategy to our advantage?  Can we apply this in our business if all others in the industry are not?  I think the pizza pricing strategy results from the incorrect perception that their customers have in assuming that the prices should have a linear relationship.   In my industry, I believe there is a built in premium on standard rates but they are adjusted up or down based on the number of hours for an engagement.

I hope you enjoyed this topic as much as I enjoyed the pizza that inspired it.  I also hope that you will always keep an open mind and take a different approach to your business.  People who do that typically are successful.  It is easy to do what everyone else is doing but it is genius when you discover a way to Turn Things On End To Achieve Results!  The people who follow the same path as others are lost in the crowd of sameness but those who don’t go down in history.  Some of those names are Steve Jobs, Thomas Edison, Ray Kroc, Sam Walton, Henry Ford and Bill Gates.

Have a great week finding a new way to use Pizza as your inspiration.

Happy Birthday to the love of my life, you are MY inspiration.

Adding Video To Your Website

Lights, Camera, Action!

last June I wrote about social media for businesses and you can read it by clicking here.  I want to briefly speak about one more thing that the small business owner needs to embrace; the use of video for your website.  Today’s topic came from a conversation I recently had with David Clarke with Simply Effective Videos.  He is a friend of mine who is in the business of making videos for the web and other traditional media.     It has become a very effective way to “touch” your customers or potential customers around the clock.  By using video, a person will stay on your website longer and be more apt to do business with you. By creating a welcoming video you can begin building rapport with a potential customer before meeting them in person.

If you do not have video on your website you need to consider adding it.  You can get started for as little as a $300 investment in a digital camera and tripod.  It is also highly recommended to utilize a professional video editor because the last thing you want to do is have a bad video that sends a powerful and lasting NEGATIVE image about your business.  I am contemplating taking this advice so that I can have my commercial running on my website on demand at any time.

How many times have you watched a YouTube video on how to repair,cook or replace something?  I have and if you are a business that has a product line, what better way to demonstrate your best-selling goods than a nice video which shows the benefits of owning your product.  Even a service provider like me can benefit from video.  If a picture is worth a thousand words, a video is worth a million.

Stay tuned as I will keep you posted on my progress towards putting video on my website.  If you are not doing video, you are falling behind a competitor who is doing it.  It is more critical than ever especially when even a small business can compete globally as technology makes it more feasible.  If you are interested in a video for your website I would recommend David’s company.  Click here to see one of his videos.

Have a great week mulling over videos for your website.

Business Lessons From Richard Cory

NOT Richard Cory but the Author of the Poem

Before we learn the lessons from Richard Cory some of you may need a little background as to who Richard Cory was.  He, in fact was a fictional character written about in a poem by Edwin Arlington Robinson and later a song by Simon and Garfunkel.  The song is based on the poem which they studied while in middle school.  I also read that poem in school and it has stayed with me over the years.

I  have included the poem below for you to read and a link below to the song performed by Simon and Garfunkel on YouTube

Richard Cory

Whenever Richard Cory went down town, 

We people on the pavement looked at him:

He was a gentleman from sole to crown,

Clean-favoured and imperially slim.

And he was always quietly arrayed,

And he was always human when he talked;

But still he fluttered pulses when he said,

“Good Morning!” and he glittered when he walked. 

And he was rich, yes, richer than a king,

And admirably schooled in every grace:

In fine — we thought that he was everything

To make us wish that we were in his place. 

So on we worked and waited for the light,

And went without the meat and cursed the bread,

And Richard Cory, one calm summer night,

Went home and put a bullet in his head.

There are several lessons we can learn from Richard Cory.  The first is be happy with what you have and maintain a good balance between work and home life. This is true today.  When the times are difficult we are tempted to put more hours in at the office to land that next sale.  Remember; don’t let your business run you.

The second lesson we can learn is to be charitable to the best of your ability.  Mr. Cory was richer than even a king yet he passed by people on the street that had nothing and ate only bread.  Perhaps he could have employed these people in one of his business ventures from where his fortune came.  Perhaps at least he could have given a helping hand in some way so they could have a little better life through his charity.  Is this why Richard Cory was unhappy, unhappy enough to put a bullet in his head?  In my years as a CPA I prepared many tax returns for many “Richard Cory’s” and have seen a shocking amount of charitable giving on their tax returns – shockingly little.  I have seen tax returns where absolutely nothing was given to charity for people making hundreds of thousands of dollars and worth millions of dollars. 

Yes, we can assume Richard Cory was a very successful business man but the lesson he has for us is to not follow his example.  I encourage everyone reading this to keep working hard but temper your success or failure with a good work and home life balance and to measure your success by making the world a better place, not in the size of your bank account. Doing good deeds for society through the success of your business is an important metric to measure as a business owner.  How do you measure up?

Have a great week NOT following the example of Richard Cory.

More Definitions Not Found In Webster’s Dictionary.

Webster's Dictionary

Last May I wrote a blog about this topic and it has been very popular - getting “hits” quite often.  In the spirit of all movie sequels out there, this week I figured why not try a sequel myself.  I run out of ideas too, just like Hollywood did in about 1982.

Streaming – usually used in the following context:  “The use of mobile devices to watch streaming content increased 55% in 2011”. This means to download and watch movies, television programs or live events on a cell phone, tablet or similar type device instead of watching it on a 55 inch flat panel hi-definition television with Dolby surround sound.  Sometimes this “streaming” occurs within a few feet of the aforementioned television.

Content – See above for use in a sentence.   Until recently, this was generically called entertainment.  For some reason it is now called content.

Mobile device - See above for use in a sentence.   This is what used to be called a cell phone, but can also be anything that has cellular phone or internet connectivity.  These new items have been grouped together but I don’t understand why my old car with a bag phone wasn’t called a mobile device.  Actually, a Winnebago is a mobile device as far as I am concerned.

Tablet - See above for use in a sentence.   This is also a new invention but my definition would be: a computer that does nothing productive.  I believe, when invented, it was designed for how most people use computers and stripped away things that were not used.  After these tablets were in circulation, people realized they could be useful in doing tasks at work so “apps” were created so they could use them for spreadsheets and for letters and other written correspondence.  This phenomenon reminds me of the days when personal computers were first “networked” and it was hailed as a brilliant idea.  IBM kind of thought it was just like the mainframe-”green screen” terminal concept they invented decades earlier.

I hope you enjoyed me poking fun at the world of technology.  I enjoy technology but also find some of the jargon and fads very funny surrounding the latest gadgets.

Have a great week and don’t forget that Valentine’s Day is tomorrow.  Maybe you can buy your sweetie a mobile device so she can stream content on her new tablet.

Costs… And Benefits Of New Technology

Hi, I'm a QR code

Technology has created additional needs for businesses and many people, including myself, focus on areas of these new costs that did not exist in the mainstream that long ago.  A few items that come to mind are:

• High speed internet for website, email, Facebook page, remote connectivity to the company network and E-Commerce
• Social media ad campaigns using QR Codes in mobile text messaging, Facebook and Twitter to name a few
• Data plans for smart phones
• Smart phones
• Point of sale technology – “Pay at the pump” etc

The cost of the items listed above are substantial but to be fair let’s look at things that have been reduced or eliminated as a result of the technology.  Employee productivity has gone up simply due to the ability to work when out of the office using remote connectivity to the company network and smart phones for email on the go.  Many forward-looking companies have reduced office space needed by implementing a telecommuting policy.  By doing so, other overhead costs are reduced such as electricity and office supplies since more work is being done at the employee’s home.  The employee on the other hand does not mind because they win by working from home and many times work more just because they can and bottlenecks caused from being out of the office are reduced. See the blog I wrote about telecommuting by clicking here.

The cost of point of sale equipment can be significant but also can reduce the need for labor in the form of cashiers handling customers.  It also increases the speed of the transaction so that more transactions can occur in the same amount of time. Doing more with less without sacrificing service is always a plus.  Think about the swiftness of transaction via debit and credit card versus handling cash and counting out change.  Another benefit is reduced cash drawer shortages since the amount of cash handled has been greatly reduced.  The cost of debit and credit card transactions are not inexpensive, but you must take into the account the positives when counting the cost of the transactions fees that the card companies charge   See my recent blog about credit card company fees by clicking here.

Social media ad campaigns have reduced the need for traditional advertising and marketing media such as the yellow pages and direct mail.  Many studies have also suggested that these new forms of advertising are many times more successful compared to the traditional forms.  Companies with large advertising budgets need to consider reducing their spending in traditional area and taking the savings and devote it to the new social media of Twitter, text/mobile for discounts and coupons using QR codes and Facebook to engage with their customers.

The message we need to understand is that we should be objective and look at the additional costs AND cost savings in the new age of business before making final decisions. I encourage everyone to embrace the technology available today.  If you don’t you may be left behind by your competition and may lose customers who are no longer being reached in traditional ways.

To be fair and balanced, next week I will poke fun at technology.  Have a great week.

What Is Your Most Valuable Business Asset?

Is this your most valuable asset?

How will you answer that question?  Is it your computer system capabilities?  Perhaps, you have manufacturing equipment that is valuable.  Maybe it is a delivery vehicle, bulldozer or dump truck.  You might say how you answer that question depends on the business you are in.  I say you might be wrong.  None of those responses consider human capital, your employees.

Over the past several years the economy has been terrible but you have probably maintained your equipment and machinery to keep it running properly.  What have you done for your employees?  Are your treating them as an asset or as a liability?  The “problem” with employees is they have feelings and are just as easily affected by neglect or abuse.   What can you do to keep them happy and working at top speed? 

First of all, money is not everything.  So I am not necessarily saying to give out raises when the times are tough.  Many studies have shown that money is usually not the number one priority for workers.  What you can do is treat them with respect and be up front with them about prospects for wage increases.  My recommendation is to lead by example and show that the belt-tightening is affecting you as an owner too.  This means you should not be having extravagant expenses such as getting a new company car or a plush remodeling of your office. 

Below is a list of some small things that can go a long way to help morale:

• Recognize employees by “catching” them doing something right
• Be accessible to employees don’t hide from them with a bunker mentality
• Be a leader and keep positive. They should take the cue from you and the positive tone at the top will spread through the company.  You must be authentic because if you are phony it is easy to see and will work in the opposite direction of what you want.
• Relax the dress code if appropriate or offer some flex time or establish a telecommuting policy if applicable.  That will save you some overhead and they will save time and gas money even if only for one day a week. 
• If possible, you can give an early quit day once in a while.  An hour early on a nice Friday afternoon goes a long way and really doesn’t cost much.
• Buy donuts or bring in pizza for lunch if possible.
• Find creative ways to keep the mood light and positive, ask for suggestions.

By the way, all of the above can and should be done during good times as well as the bad.  It doesn’t cost much to be nice.  If you have a happy workforce it will pay dividends through better productivity and happier customers.  Good luck, I encourage you to take a step to keep your most valuable asset running at top speed.

Have a great week applying the soft skills of managing your employees.