Profit: On the Ball means On the Money

Posted on April 8, 2012 by warren


My wife and I settled in for a rare evening to watch a movie. Our daughter went to bed early. It was a long weekend. We had no other social events. Ahhhh.

We decided to watch Moneyball. (Yes, I am secure enough to sit with my wife watching Brad Pitt for 2 hours.)

Apart from being a good flick, there are some important lessons that justify you watching this. I suggest you do and when you do, look for the following:

First, a bunch of old talent scouts resist the new approach Pitt’s character, Billy Beane, is pursuing. Their view is essentially “This is the way we’ve always done it and therefore it’s the way it should continue to be done.” This is extremely dangerous thinking. Watch for it in yourself and in those around you. If you’ve avoided implementing any of my past tips for this reason, give your head a (gentle) shake. If the way you’re doing things isn’t producing the results you want, change what you’re doing.

Second, his manager actively undermines the changes that Beane is introducing. The reason is very illuminating for every business owner. He didn’t see how it was aligned with his self interest. This was a mistake in Beane’s case. If you don’t consider how the changes you want to make don’t benefit your team (or your customers), it will be tough to get their buy in.

Third, Billy Beane started to understand the importance of “Key Drivers.” While everyone else was jacked up about hitting power, telegenics, and other qualities, Beane and his statistical wizard assistant focused on the things that produce results. Results = Wins. Wins come from runs. Runs come from being on base. Therefore, get people who are proven at getting on base. To succeed, you need to know what the key drivers of success are in your business and then focus on them.

Finally, everything Beane and his assistant do is driven by the numbers. They remove emotion, intuition, superstition and personal preference from the equation. While I believe there is still a role for intuition and emotion in business decision making, you must, must, must…and if I haven’t been clear…MUST run your business by the numbers. Track your key drivers with specific metrics (e.g. lead generation, conversion rate, number of transactions…). Know your financials. Test and measure every change you make.

Take these lessons from Moneyball and soon you’ll be having a ball, being in the money.

Posted in Financials, Goals, Marketing, Personal Growth, philanthrepreneur, Profit, Systems, Team | Tagged , , , , , , , , , | 1 Comment

A Test of Character…

Posted on April 4, 2012 by warren

“But everyone else does it…”

Have you ever heard a child use these words as an excuse for doing something they know they shouldn’t?

How does a parent react to this? It’s usually something like “And if everyone jumped off a bridge would you do that, too?”

Fast forward 30 years. That child is now a grown up running a business. But she didn’t take the lesson from her parent. Her rationalization continues: “I know I broke the agreement, but that happens all the time. “ “Everyone tells little lies in their marketing. It’s no big deal.” “Yeah, I know that subcontractor put in 30 hours on a proposal I never intended to award them. But I needed a quote to keep my current supplier in check. Everyone does that.”

As cliché as the rebuttal question is (“If everyone jumped off a bridge…”), it contains wisdom and insight. Why wouldn’t you jump off a bridge? Because it’s not in your self-interest to do so. Why would you do unethical things, just because others do it? Because it is in your (perceived) self-interest to do so.

Faced with the choice between an act that goes against the principles you espouse because it helps you in the short run and one that is aligned with your principles but that hurts you in the short run, what do you choose?

That is called a Test of Character.

Posted in business ethics, Goals, Personal Growth, Principles, Profit | Tagged , , , , , , , , , , | Leave a comment

Headline, Headline…Do you want to know how it makes you money?

Posted on April 2, 2012 by warren

I was recently asked to review some marketing/communications pieces for a non profit organization. The ostensible purpose of this communication was to reinforce donor relations and to encourage future giving.

The theory seemed to be that if we give them information about what’s going on with projects the group was involved in, people would be more likely to free up the cash.

Among many problems with the piece, the largest was that there was absolutely no reason for anyone to read it.

I don’t mean that there was no valuable information in it. I mean that, in looking at the document, nothing would grab you by the lapels, shake you and say “STOP WHAT YOU’RE DOING. THERE IS SOMETHING REALLY VALUABLE/INTERESTING/ SECRET/ENTERTAINING/MOVING/…IN THIS THING. JUST KEEP READING!

That is the job of the headline. It doesn’t matter whether it’s an ad in a paper, a flyer, a speech, signage in a trade show, an email, a newsletter or just the old brochure, you must have a headline.

In a multi-device, multi-channel, multiple media world, there is a lot of competition for your attention. So you need to do something to grab that attention. That is the job of the headline.

A headline can qualify someone, as in “Hey, Expectant Mothers.” Anyone who isn’t an expectant mother or very close to one is unlikely to read the ad or listen to the spot. Would you care? Of course not. You’ve captured the attention of the market.

Or you could offer a benefit, as in “No more sore feet for expectant mothers.” Any expectant mother who has had sore feet or is concerned about getting sore feet will listen.

It can create excitement with news, as in “Just announced! 7 ways to make pregnancy easier”.

The Headline can also attract with social proof: “85% of Expectant Mothers Said This One Tip Changed Their Lives”

I could go on. There are tons of resources out there about headlines and good copywriting. Not all designers, web companies, social media consultants have taken the time to study this.

Make sure you do. The reason is simple. If the headline doesn’t stop them, they don’t read the ad. If they don’t read the ad…

Posted in business ethics, Financials, Goals, Marketing, philanthrepreneur, Profit, Uncategorized | Tagged , , , , , , , , , | Leave a comment

Profit: Mark-up vs Margin

Posted on March 26, 2012 by warren

Does this sound like a boring, watch the paint dry, kind of topic. Think again?

If you want to increase your profits, the distinction between these two concepts is extremely important. It is often very misunderstood and that misunderstanding can cost you a bundle.

Mark up is the percent of the cost you are adding to that cost. So, if you pay $100 for a product and you sell it for $190, you have marked the product up by 90%. That’s clear right? 90 divided my 100 gives you 90%. Easy peasy.

Margin is the percent of the price that is profit. So, on that same product, you make $90 out of the $190 price. What is your margin? 47%, right? That is, 90 divided by 190.

Now let’s look at what can go awry when you misunderstand this. Usually the misunderstanding is assuming they are the same thing. So, let’s say someone with a 90% markup decides to have a sale to clear a few things out.

“Well”, they might say, “let’s do a 50% off sale. That will leave us 40%”.

Wrong. Very very wrong.

What is 50% off of $190? It is $95 right.?

What is $190 less $95? $95 right?

What was our product cost again? Oh yeah, $100.

That means our 50% off sale just earned us a $5 loss on every product sold.

Ouch.

By the way, this concept doesn’t just apply to product sales. People mark up the cost of the labour working on projects too.

So, you must know which concept you’re talking about before you go making pricing decisions.

Posted in Financials, Goals, philanthrepreneur, Profit | Tagged , , , , , | Leave a comment

Personal Growth: Your Story

Posted on March 23, 2012 by warren

So, there I sat. Sitting in front of my computer. Preparing to share some insights into personal growth for the Friday Personal Growth blog.

I thought I’d review a couple of my favourite blogs first. I read this one by Seth Godin and put my notes away. It’s brilliant and spot on. A lot of the work I do on personal growth is to help people:
a) identify their story
b) change their story if needed.

Seth masterfully explains why.

Enjoy. Think about your story. What parts of the story serve you? What parts don’t?

Have a great weekend.

Click Here

Posted in business ethics, Goals, Personal Growth, philanthrepreneur, Principles, Uncategorized | Tagged , , , , , , , , | Leave a comment

Principle: Share Your Principles

Posted on March 21, 2012 by warren

I had a very interesting conversation with a client recently. Let’s pretend her name is Andy.

Andy had hired some folks to administer a project that had been proven successful in the past. It was built on certain core principles that were identified as critical.

Out of a desire to add value or be creative, this team started adding elements to the project. There was nothing malicious or unprofessional about their suggestions. But they would have the effect of slowing growth.

When confronted with these changes, the team was upset that Andy was restricting their freedom and seemed not to appreciate the value they were bringing. Andy couldn’t fathom how they didn’t see the downside.

I’ve seen this a number of times. People lose sight of the actual objectives because they have a desire or need to make a change. Then, when the “boss” objects, there is a trail of resentment. “I’m not allowed to be creative.” “It always has to be his way…”

This happens simply because the objectives aren’t clear and the principles aren’t articulated.

Remember that your team and those that you hire are not mindreaders. If you want them to play by your rules, make sure they know what they are.

Posted in business ethics, Goals, Personal Growth, philanthrepreneur, Principles, Team | Tagged , , , , , , , , | Leave a comment

Profit: Design vs Conversion?

Posted on March 19, 2012 by warren

This one may tick off a few people. But it’s definitely worth considering. I’ve had debates with designers about this topic before.

There can be (but doesn’t have to be) a tension between the aesthetics of design and the objective of conveying a message that connects, communicates and persuades. Unfortunately, many designers have been weaned on the creative of big brands without studying the nuances of direct response or testing how people respond to different imagery and placement.

(And, by the way, eye tracking testing is not the same as testing on predisposition to buy.)

Read this article and share it with your designer/agency before you do any work on your web site or any other marketing creative. (Just don’t tell them you got it from me. ☺ )

http://blog.kissmetrics.com/shocking-truth-about-graphics/

Posted in Financials, Goals, Marketing, philanthrepreneur, Profit | Tagged , , , , , , | Leave a comment

Personal Growth: No News is Good News

Posted on March 16, 2012 by warren

Some of you who know me will be surprised to see the title of this blog.  So let me explain.  There is a balance to be struck between two responsibilities.  The first is your responsibility as a citizen in a democracy to remain sufficiently informed about current events to make informed decisions about where to vote and to advocate for change where appropriate.

The second is your responsibility to yourself and those around you to remain optimistic, proactive and energized by the belief in the possible.   This will fuel your growth.

There are some in the personal development world who advise shutting out news altogether.  I don’t go that far because I believe that if we accept the benefits of living in a free society, then we must also accept the responsibility of participating in our democracy.

However, that responsibility doesn’t mean filling your mind with salacious details of crimes, the cacophony of voices shouting out the latest doom and gloom, in an apparent attempt to convince you all is lost.  The news media presents a horribly skewed view of the world; one that doesn’t serve your long-term success or happiness.

So, I’d like to share with you two links. One is a blog by Darren Hardy, publisher of Success Magazine titled “Is Wolf Blitzer Hurting America?”  He gives a great overview of this dynamic of the media.  Click here and enjoy.

The second is a TED talk by Peter Diamandis, one of the founders of the X Prize Foundation and Chairman of Singularity University.  Man, he is one smart, informed and optimistic dude.  He notes the media’s corrosive influence and then shares incredible information, insights and perspectives on why, like the song says, “the future’s so bright, we gotta wear shades.”  Click Here You’ll be glad you did.

Between these two pieces, I hope you’ll try to minimize your intake of fear and anger, choosing instead to focus on what is great and what may yet be great.

It will make you happier.

Posted in business ethics, Goals, Personal Growth, philanthrepreneur, Principles | Tagged , , , , , , , , , | Leave a comment

Principle: No Slip Slidin’ Away

Posted on March 14, 2012 by warren

And I know a father who had a son
He longed to tell him all the reasons for the things he’d done
He came a long way just to explain
He kissed his boy as he lay sleeping
Then he turned around and he headed home again

~Simon and Garfunkel

We all talk a good game about living according to our principles.  How about we step it up a notch in practice?

If you’re like most people, you talk about how certain people are more important to you than anything else in your life.  If that’s true, then live it.

I issue you a challenge; one that I hope will bring you more happiness.  For the next week, minimum, try this.  Choose at least one important person in your life: a spouse, a child, a sibling, a parent, a best friend…  Everyday, consciously do at least one thing for that person.   Don’t tell them about the challenge; don’t tell them what you have done.  It doesn’t have to be big and momentous; it just has to be genuine and for them.

Then take note of what it does for how YOU feel and what it does for the relationship.

Have Fun!

Posted in business ethics, Goals, Personal Growth, philanthrepreneur, Principles | Tagged , , , , , , , , , | Leave a comment

Profit: Raise Your Prices

Posted on March 12, 2012 by warren

When was the last time you raised your prices?

For a lot of businesses, this is the shortest distance to greater profitability.  But you’re reluctant to do it because you’ll lose business right?  You might.

But the real question is if you’ll lose profits.

Did you know that if your gross margins are 30% and you raise your prices 10%, you could afford to lose 25% of your business with no impact on profits?

How cool is that?

And you know which customers you’ll lose right?  Disproportionately, it will be the pain in the butt ones who suck up tons of your time and don’t fully value what you uniquely provide.

Now, if you’re afraid of doing this because you believe your service/product isn’t good enough to be worth that price, guess what you better get to work on…

Posted in Financials, Goals, philanthrepreneur, Profit, Uncategorized | Tagged , , , , | Leave a comment