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As a business owner, you know what it’s like to lie awake at 2 a.m. Maybe it has happened when you are excited and full of new ideas for your business. More often, it’s because you are worried about issues you will face the next day. Sometimes, it’s because you just woke up with the solution to a problem. I’ve experienced all those emotions about my businesses over the years. Awake at 2 o’clock? is where I share them with you, and hopefully help with answers that will let you sleep.
John F. Dini, CExP, CEPA
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Small business owners are the Hunters of the 21st century. We are 3% of the US population, and yet we create over half of all American jobs. As Hunters, we may not be inclined to manage by the numbers or stick to systems. Are you a Hunter or a Farmer?
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How prepared are you to exit your company?
The Assessment breaks down the four major categories of exit readiness; Finance, Planning, Operations and Revenue/Profit.
Tag Archives: business strategy
A Machine is Coming to Steal Your Business
We accept, almost without question, the idea that technology can make us more efficient. No small business owner would dream of replacing his or her PC, email and copier with a room full of typists. How enthusiastic will we be when a machine can … Continue reading
4 Responses to A Machine is Coming to Steal Your Business
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Invisible Discounts
In the words of the late, great Father Guido Sarducci of Saturday Night Live fame; “I canna teach you everything you need to know about business inna fiva minutes. You buya something, and thena you sell it for more.” A … Continue reading
3 Responses to Invisible Discounts
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Good article, and I agree completely.
A discount is an incredibly expensive give away as it comes straight out of your bottom line. Every penny is additional profit you could be making, and to give away anything you don’t need simply amounts to charity. This is even more damaging when it is what I call a Post-Sale Discount – one you voluntarily offer after the customer has already agreed to buy.
I saw this in all its destructive glory with a client of mine who owned an upscale optical store. He was always complaining about the pressure on his margins and never made the kind of profits he should. We analyzed his problem up and down, but it wasn’t until I bought a pair of glasses from him that I saw the root cause of the problem.
I picked out what I wanted from his inventory and knew the price for both the frames and the lenses before I was measured up. I was happy with the price, but when the time came to pay, he suddenly took 10% off . This took place without any prompting on my part, and I probed into his sales process in a way that I hadn’t thought about before.
It wasn’t just because of our relationship, and it turned out that he did this on virtually every sale. He couldn’t really explain why he did it and while he root causes might lie in a general lack of business confidence, it had simply become a habit that had been integrated into his sales process. His other salespeople followed his lead and the practice was costing him substantial lost profits.
In my case, the sale was $1,000. His gross margin of about 50%, which after overhead probably would have generated a net profit of about 10%. After the discount, his gross margin fell to 40% but his net profit on the transaction after fixed overhead actually disappears, making the transaction a break-even!
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I find this interesting. I am finally at a point where I can honestly give a quote, but I always need time to figure all areas for the final proposal and then I make sure I record all parts of the quote so I don’t end up giving added materials for free. I am a small business, so with experience and time, I will probably have to learn the hard way at times.
Thanks for the blogs!
Cathy -
I agree and I am going to meet with my Mentor today to make some adjustments, I know I am giving discounts and for a small business , I cannot do that. Thanks, great reply.
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Effective vs. Efficient: A Tale of Two Cities
Some organizations are effective. Some are efficient. From the customer’s perspective the two may look very much the same, but the difference to your bottom line can be substantial. A few years ago my wife and I toured Vienna, and … Continue reading
3 Responses to Effective vs. Efficient: A Tale of Two Cities
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I do not think that “effective” and “efficient” are mutually exclusive. Being efficient is largely a product of good processes, procedures and training. It is possible to develop those kind of procedures that also have a healthy dose of effective individuality baked in. Efficient processes should take care of most day-to-day requirements. When customer or company circumstances are outside the procedural box, employees can and should be encouraged to take initiative to be creative and effective.
For example, PEI is a software development company. Employees (including myself) are first expected to be creative. However, strict naming conventions, coding standards, long term maintainability and testing are enforced. While we are more on the “effective” side of the gradient with a healthy dose of “efficient”, there just needs to be some kind of balance.
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Great perspective and a lot to think about. Having spent a lot of time in Europe, I cannot get off the story. I wonder if the tale of two cities might involve a technology gap? Keeping centuries old clock towers and those mechanical time keeping movements in sync seems daunting at best. Transforming from effectiveness to efficiency seems more attainable…
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David’s comment on not mutually exclusive is reality. An organization with a solid base of efficiency certainly relies less on effective individuality, but I believe both are essential.
But this thought provoking discussion also leads me to want to get on a plane and head for Europe to continue my education. Thanks.
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Where are All Those Jobseekers?
Workers: There are currently 5.1 million job openings in the US; an all time high. While the official unemployment stands at 5.5%, the U-6 unemployment rate, which includes people working as little as one hour a week for “economic reasons” … Continue reading
10 Responses to Where are All Those Jobseekers?
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Glad to see you’ve made the last turn, John. Best wishes!
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John,
So so glad to hear that you are feeling better!
While agree with everything you said in the your this post, I’d like to extend your metaphor of the blindfolded people bumping the room. You and they found the elephant in the room and describe it from one limited perspective.
Yes, education systems are a mess, but that is but one cause. There are many. Here’s another which helps to, but does not wholly explain, our current employment situation. Business has a tremendous responsibility for the state of affairs – the lack of skilled employees. How did the boomers get trained for manufacturing jobs, construction jobs, and other “manual” labor jobs?
Businesses (and often unions) took responsibility for training workers. Starting in the 80s and continuing to today, the emphasis on corporate profit, just-in-time and lean labor forces, caused otherwise repsonsible businesses (and unions) to stop investing in training and cross training.
Today we hear from 10s of business owners hoping to find skilled labor to replace their retiring workforces. Guess what… no one trained them. And to me the chief responsibility for that falls on the people who profit from having trained labor. Stockholders.
Just another reason, I believe, we find ourselves in a pickle. There is a good solution though. Hire for aptitude and invest in your employees.
Keep getting well. Chuck
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Hello John,
I did not know that you had a health problem. Congratulations on your recovery.The college mess is getting worse. Cheap money has enabled colleges to embark on an expansion war, turning campuses into resorts. In Colorado, CU and CSU both have debt approaching $1 Billion. CSU is committed to a $250 million football stadium that the President thinks will elevate the mediocre RAMs from the Mountain West to Big 10/Big 12 status – and consequently boost foreign student enrollment to pay off the bond! (I have to check to see if CSU has an Economics department.) We have let on-line “colleges” entice veterans to spend their GI loans on courses that do not equip them to get employment.
The colleges will not change a lucrative business model. Change will only come when parents stop believing that their sons and daughters deserve the college “experience” they enjoyed or dreamed of. That experience degraded from education to the high life in the 90s when colleges began to be rated for their partying credentials. Parents need to take a hard nosed approach to college selection, and counsel their children against taking on debt without a high probability of quick repayment.
Another solution would be for student loans to be limited to only fund attendance at colleges that have a 50% or greater 4 year graduation rate, and an adequate record of graduate employment three years after graduation. Similarly, GI loans could only be spent on productive on-line courses. Money rules, and we would quickly see colleges actually focus on graduation and employment success.
Regards,
David Cunningham. -
Pleased to read that you are on the mend.
“Ridiculed as the refuge for dumb kids and criminals, manual arts, auto shop, home economics and other non-college preparatory classes were virtually extinguished from high school curriculums”[sic] is not universally factual. While the emphasis on college attendance is enormous, the emphasis on STEM oriented programs and the undervaluation of liberal arts is also to blame. Combined with the nonsensical new testing, the result leaves a diminished effectiveness in the new workforce.
Now layer on HR & owner bias against anyone out of work over one year and you have the genesis for the statistics you report in your article.
This emphasis toward STEM and standardized testing has another painful consequence: critical thinking capability is nonexistent in high school graduates. Do you agree this may be a contributing factor in the reduction in 4-year college graduations?
Our regional high school has a thriving poly-tech program. This is a school with an excess of three thousand students. And yes, counselors get bonuses for the number of students who take AP and honors courses, and likely something similar for the number of grads who attend college. But the vocational training program is excellent and very much in demand.
Lastly I believe this bullet was an oversight: “Fueled by student debt, colleges increased their costs at almost triple the rate of inflation.”… isn’t the equation the other way around? The debt is a by-product of the rising costs to attend college.
And what will happen when the college bubble bursts… the current rate of tuition increases and incurred debt levels in many colleges and universities cannot be sustained. When will be start seeing colleges folding? It may not be very far into the future.
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John — good to hear that you are doing better.
Walter
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As many states, such as my state of FL, are seeking to do away with traditional student testing, more and more students will qualify for college entrance without a clue. High School
counselors need to do more to assess students and work with them and their parents to develop a plan for their continued education. Goal setting and planning need to be a major part of their education.
Good primer on the topic. While raising the issue and educating those around you is good. How far off are intelligent machines? Watch…
Here’s another article on a road test of self-driving trucks from reader Harry Levy IV.
http://www.truckinginfo.com/channel/drivers/article/story/2015/05/hands-off-on-the-highway.aspx
I love technology but what you wrote is scary stuff when you think about it.
Perhaps another and more immediate threat is that technology is enabling global labour sourcing. For example, the development of cloud based accounting packages is promoting New Zealand accounting practices to look to India for routine number processing. Fewer jobs for NZ accountants.