A few people have asked me to post a video from one of the episodes I was on. I hope you find some value in the thoughts shared (plus my blatant self promotion).
http://www.youtube.com/watch?v=JAhDPGSh3Dc&feature=related
There are a few other episodes I was on that I will share down the road.
Showing posts with label new business. Show all posts
Showing posts with label new business. Show all posts
Wednesday, February 27, 2008
Wednesday, August 15, 2007
Win on 1 of 3, Lose if You Try To Do More
No one can be the best at everything... obviously. If you think about it, no one can be the best in the world at more than one thing. Well maybe someone is, but I have yet to hear about it.
A business entity is just like a human entity, it can only be the best at one thing. So why do businesses try to be all things to all people? Probably because it seems like the right thing to do. But it isn't.
In my experience, when it comes to a company it can only differentiate on one of three things. Quality, Price or Convenience. Pick one and dominate it. Try to do all three better than anyone else and stick a fork in you, your done.
A classic example is McDonalds. Clearly they differentiate on Convenience. It is important to note that they don't ignore Price or Quality. But they surely don't lead in Price or Quality. McDonald's definitely does not have the best Quality burgers (any local diner will serve you a better tasting burger) nor do they have the best Prices (you can go to the local supermarket and buy 6 frozen burgers for the cost of a BigMac). McDonalds is Convenient though and they lead in that category. You can get a burger within 30 seconds of walking into the place. Actually you and I judge them some much by convenience that if it takes 2 minutes to get a burger - we're pissed.
Could you imagine McDonald's giving up their lead in Convenience by offering better Quality (maybe they could cook your burger to order. Medium rare?) or if they become the Price leader (you cook your own burger, but it only costs $0.20). Nope they would fail. But with their exclusive near manic focus on Convenience, they maintain a lead.
Examples are all around us. Walmart - Price Lead, Virigin Atlantic - Quality, Home-Depot - Convenience, SouthWest Airlines - Price, the list goes on and on.
As you build your business, which is the 1 you will chose to lead with. If you are committed to just one and do everything you can to foster it, you will win. If you try to lead on all three, you are in trouble.
The final thought: Every decision you make must always foster your lead differentiator (Quality or Price or Convenience). When you Lead with 1 (and pay attention to the others) ...you are on your path to a successful launch!
A business entity is just like a human entity, it can only be the best at one thing. So why do businesses try to be all things to all people? Probably because it seems like the right thing to do. But it isn't.
In my experience, when it comes to a company it can only differentiate on one of three things. Quality, Price or Convenience. Pick one and dominate it. Try to do all three better than anyone else and stick a fork in you, your done.
A classic example is McDonalds. Clearly they differentiate on Convenience. It is important to note that they don't ignore Price or Quality. But they surely don't lead in Price or Quality. McDonald's definitely does not have the best Quality burgers (any local diner will serve you a better tasting burger) nor do they have the best Prices (you can go to the local supermarket and buy 6 frozen burgers for the cost of a BigMac). McDonalds is Convenient though and they lead in that category. You can get a burger within 30 seconds of walking into the place. Actually you and I judge them some much by convenience that if it takes 2 minutes to get a burger - we're pissed.
Could you imagine McDonald's giving up their lead in Convenience by offering better Quality (maybe they could cook your burger to order. Medium rare?) or if they become the Price leader (you cook your own burger, but it only costs $0.20). Nope they would fail. But with their exclusive near manic focus on Convenience, they maintain a lead.
Examples are all around us. Walmart - Price Lead, Virigin Atlantic - Quality, Home-Depot - Convenience, SouthWest Airlines - Price, the list goes on and on.
As you build your business, which is the 1 you will chose to lead with. If you are committed to just one and do everything you can to foster it, you will win. If you try to lead on all three, you are in trouble.
The final thought: Every decision you make must always foster your lead differentiator (Quality or Price or Convenience). When you Lead with 1 (and pay attention to the others) ...you are on your path to a successful launch!
Saturday, August 11, 2007
Blood Money - A "401K" Savings Method for Your Business
I recently received a notice congratulating me on donating a gallon of blood. I quickly did some research on Wikipedia and learned that the human body has slightly over a gallon of blood pumping through it. Clearly, if I gave a gallon of blood in one sitting I would be a goner. Shoot, even if I only donated one third of my blood (approximately 3 pints) in one sitting I might suffer some tough consequences. But since I donate one pint of blood at a time, my body hardly misses it and I can donate as frequently as seven times a year without missing a heartbeat (pun intended). My blood donations have quickly piled up and in a very short time I have given a gallon.
We’ve all heard that cash is the lifeblood of our business. I think it’s hard to argue otherwise. Shouldn’t we treat our money like our business’s blood? Just like a medical emergency, a business in need of fiscal attention often requires an infusion of capital.
Medical needs sometimes can be predicted and sometimes can’t. Regardless of the timing, with a pool of easily accessible blood reserves the chance for survival dramatically increases. Sometimes our business problems are predictable and other times they blindside the living crud out of us. Regardless of the timing, with a pool of easily accessible cash the chance for business survival dramatically increases.
That’s why you need to regularly “donate” business cash flow to your reserves. The best method is by taking your profit first. What do I mean by this? Every time money comes into the business, and I mean every time, a percentage is automatically transferred into a separate account. Just like a pint of blood, a healthy business will hardly feel it being withdrawn. I like to call this reserve the Profit Distribution Account (PDA).
How much money can be transferred to the PDA without threatening the health of the business? Most stable companies should be able to post a profit of 10% to 25% after all expenses. So trying starting with a low threshold, maybe 5% of every inbound dollar goes to the PDA. Over time slowly increase the percentage and monitor closely to see if your business gets woozy. Once you have consciously (more often subconsciously) adjusted expenses and cash outflow to sustain your PDA withdrawals, you will quickly accumulate a tremendous cash reserve. Be cognizant not to stow away too much money too quickly. Just like donating blood, the rapid drain of cash exiting from business operations will cripple or kill your organization.
Should tough times come upon your company, and they often do, you now have a source of funds that you’ve built up. The PDA’s dinero reserve will see you through these times. On the bright side, as these funds grow they will ultimately be in excess of any imaginable rainy day needs. At that point you should take portions as an equity distribution. Trust me, it’s a real nice way to reward yourself for running a healthy business. There is a nifty little process I recommend on how to do this, but I’ll save that for another article.
If you’ve never given blood, I strongly encourage you to do it. There’s no question it saves lives. If you don’t currently donate to your company’s PDA account, I strongly encourage you to start. There’s no question it saves companies.
Start a PDA for your company...and you are on your path to a successful launch!
We’ve all heard that cash is the lifeblood of our business. I think it’s hard to argue otherwise. Shouldn’t we treat our money like our business’s blood? Just like a medical emergency, a business in need of fiscal attention often requires an infusion of capital.
Medical needs sometimes can be predicted and sometimes can’t. Regardless of the timing, with a pool of easily accessible blood reserves the chance for survival dramatically increases. Sometimes our business problems are predictable and other times they blindside the living crud out of us. Regardless of the timing, with a pool of easily accessible cash the chance for business survival dramatically increases.
That’s why you need to regularly “donate” business cash flow to your reserves. The best method is by taking your profit first. What do I mean by this? Every time money comes into the business, and I mean every time, a percentage is automatically transferred into a separate account. Just like a pint of blood, a healthy business will hardly feel it being withdrawn. I like to call this reserve the Profit Distribution Account (PDA).
How much money can be transferred to the PDA without threatening the health of the business? Most stable companies should be able to post a profit of 10% to 25% after all expenses. So trying starting with a low threshold, maybe 5% of every inbound dollar goes to the PDA. Over time slowly increase the percentage and monitor closely to see if your business gets woozy. Once you have consciously (more often subconsciously) adjusted expenses and cash outflow to sustain your PDA withdrawals, you will quickly accumulate a tremendous cash reserve. Be cognizant not to stow away too much money too quickly. Just like donating blood, the rapid drain of cash exiting from business operations will cripple or kill your organization.
Should tough times come upon your company, and they often do, you now have a source of funds that you’ve built up. The PDA’s dinero reserve will see you through these times. On the bright side, as these funds grow they will ultimately be in excess of any imaginable rainy day needs. At that point you should take portions as an equity distribution. Trust me, it’s a real nice way to reward yourself for running a healthy business. There is a nifty little process I recommend on how to do this, but I’ll save that for another article.
If you’ve never given blood, I strongly encourage you to do it. There’s no question it saves lives. If you don’t currently donate to your company’s PDA account, I strongly encourage you to start. There’s no question it saves companies.
Start a PDA for your company...and you are on your path to a successful launch!
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