“How much does it cost?” Such a simple question.We all want to know our costs because that’s what we subtract from sales to see if we made a profit. No problem there, just add up all our expenses and that’s our total cost. But many of us also use cost to price our bids and products.
That requires a different understanding of cost, and that’s where the confusion sets in.
Read MoreIn our pursuit of more sales, most (all?) of us have resorted to price concessions - discounts. Many of us still do. We do it, of course, in the belief that customers will close more deals if we’re “flexible” on price.
That may be true, but it is also true that discounts can devastate our margins and profit, and, even though we sell more, we wind up working harder for less profit.
Read MoreI am a business coach by trade, but I am also an amateur painter. I learned a lesson from that hobby that I’ll never forget.
I said: ”I know what you’re thinking.” “Oh?” she responded, “What’s that?” “You’re thinking that’s a lot of money for a painting. How about I knock 20% off the price?” “Thanks,” she said. “I’ll take it. But just so you know, I was thinking about how to get it home. I measured, and it won’t fit in my car.”
Ouch!
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Could you imagine Russell Westbrook, the 2017 NBA MVP, playing without a scoreboard? No doubt he would play hard all the time, but he plays differently when he knows the score. We know that because he is constantly checking the scoreboard for the score, fouls, time remaining, time outs - the information he needs to manage his game.
The Balance Sheet is the ultimate scorecard for business. As a business coach, I’ve noticed that owners, like Westbrook, manage their businesses differently when they understand the score.
Read More“Our income statement shows we’re making a profit, but it sure doesn’t feel like it.”
It was a contractor’s wife who had a pretty good feel for how their business was going.
The P&L and the math are simple, but depending on how they’re prepared, P&Ls can show wildly different results. To get an accurate, useful report, we have to understand what goes into it and why it matters. My experience as a business coach has shown that there is a lot of confusion about that.
Read MoreThere is a saying often attributed to Edwards Deming that “We cannot manage what we do not measure.” Numbers are the measurement that make management possible. The corollary of the quote is: “If we don’t manage it, everything that happens to us – good or bad - is an accident.” We might survive by accident, but we cannot thrive, which means we cannot thrive without numbers.
Now don’t panic. As business owners, WE do not have to collect and compile numbers. We don’t even have to know how it’s done, but we do have to understand what numbers tell us.
Read More“What parent,” he asked, “wouldn’t run into a burning house to save his child?”
It was my mentor describing what he called Save the Baby Syndrome.
“But that doesn’t make good parents,” he continued.
“It’s the little things like regular bedtimes, brushed teeth, homework and curfews that make good parents - and good kids.”
The same is true in business.
Read More“I’m planning on running a promotion this weekend.” It was a former client of mine who owned a retail store in a university town.
“What sort of promotion?” I asked.
“I don’t know. I've been thinking maybe a 25% percent discount on everything in the store. There’s a game this weekend and I want to pack ‘em in.”
“Are you open to discussion?" I asked.
“Sure, what do you have in mind?”
Read More“It's important to keep the right people on the bus, but more important to keep the wrong people off.”- Reed Hastings CEO, Netflix
When I first met the founder, he had grown his company from start-up to eight-digit annual sales in under nine years. It appeared to be a tremendous small business success story, but things were not entirely what they seemed.
The company had an insidious flaw which even now threatens to destroy it.
Read MoreMy father piloted one of the first American airplanes to land in Japan after their surrender in WWII. As he parked the C47 cargo plane, a Japanese man approached on a bicycle.
Hanging from the top tube of his bike was a sign that read “Watanabe Trucking Company.” He was looking for work.
“Do you even have a truck?” asked my father through an interpreter.
“No,” replied the man, “but my son will.”
Read MoreHe sat up straight in his chair with his arms rigid at his side lifting himself slightly out of his seat. Brian was getting mad again. I would have worried about his coming over the table at me, except I’d seen him this way before. So had everyone else in the office.
“So, what’s the problem?” I asked.
Read MoreAs a business coach, I often quote Mark Twain who is rumored to have said: “I don’t want to know when I’ll die, I want to know where.” His point, of course, was that he could influence his location, but not time. He was right that we can’t influence time, but we can certainly manage our allotment.
Managing time is work until it becomes habit, and work requires incentive. Jim Rohn says that ”If the promise is apparent, the price is easy.” His genius was saying in simple terms what we all know is true: If we are complacent, unimaginative or completely satisfied, we will not do the work necessary to change.
Read More“What do you want?”
“You mean for me or for my business?”
“Either. Both. What do you want?”
“Man...That’s a good question…”
As a business coach, it’s the first question I ask every prospective client. Such a simple question, yet very few of the business owners I meet have a clear idea of what they want or where their businesses are going.
Read MoreA prospective client called me in February a few years ago.
He had opened a new business in July, and by the time we talked he was selling over $100,000 of merchandise per month. Going from zero to $100,000 per month in seven months is a good thing, right?
Not this time.
Read MoreIt sounds too good to be true, but have you noticed that some homebuilders thrive while others never seem to get ahead? I mean really ahead. The difference is that builders who thrive have figured out how to build houses for free and to pocket the gain as profit.
So how do they do it?
Read MoreI went back to January, but I didn’t stop there. By the time I’d been through five years of bank statements, I had found more than $340,000 missing, stolen by the most trusted member of our management team, our in-house bookkeeper. In the end, her father paid back the money, but she got jail time and ruined not only her life, but the lives of those most dear to her as well.
Read MoreAs a business coach, that is probably the number one question I am asked by business owners. Payroll this week, suppliers next week, debt service the week after, and tax deposits, seemingly, all the time. Everybody wants our cash. If you own a business, you know what I mean because you’ve asked the question yourself. Even when we make a profit, it feels as if business is a perpetual scramble for scarce cash...
Read MoreThere may come a time that you want to bring investors into your business. You may want investors to provide money, or expertise, or a combination of the two. Yes, you will need a business plan, but the process always begins with a conversation. This article is about that conversation. Having participated in hundreds of them, I have noticed that investors want five questions answered early, before they put a lot of time into detailed analysis of your offer. It is highly unlikely that they will even look at your business plan, let alone invest in your business, until you have answered the five questions...
Read MoreThe value (price, if we’re selling) of a business is what a willing buyer and seller agree it to be. However, assuming both parties are informed and rational, the value of most small businesses is calculated by multiplying annual profit times a “multiple.” The multiple is a number that reflects buyer confidence and often falls between one and seven. So, for example, a business with annual profit of $100,000 at a multiple of two would be worth $200,000.
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