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The Thanksgiving Blog

11/27/2013

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I usually try to write about business and lending in what I consider a humorous way.  At least I find it funny.  Believe it or  not, my little column blogs (Cogs, Coogs or Blolumns?) take a long time for me to write; sometimes four or five hours from thought to publishing.  I have put in the same amount of time this week, but I really have not found a topic that interests me as much as the Thanksgiving holiday. Christmas gets most of the publicity.  Heck, Christmas basically starts the day after Thanksgiving.  Black Friday has become a holiday on its own and I know for many of our retail  clients, it kicks off the make or break portion of the entire year. It may even be the make or break day for the year.  
 
In this short little column, before the shopping season begins in earnest, I want to wish all ten of you reading this a very joyous Thanksgiving and I truly hope everyone out there can find at least one thing to be thankful for.  Today I am going to throw away the yoke of cynicism and curmudgeoniness (so not a word) and be thankful for my blessings.  Before the craziness of the holiday shopping season begins, maybe take a deep breath, look around and give thanks for at least one good thing.  
 
Next week I will bring more informational witticisms to the world of commercial, debenture based SBA lending.  Now that’s funny. 
HAPPY   THANKSGIVING!
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Hard Work is Overrated

11/20/2013

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 Albert Einstein described insanity as doing the same thing over and over again and expecting different results.  However brilliant many people believe Einstein to be, he cannot hold a candle to the brilliance of my favorite philosopher, George Costanza. Here is a conversation George had with Jerry Seinfeld that reinforces and expands upon the famous “Eisteinian” postulate.   In the conversation, George theorizes about his decision making process and Jerry offers a
solution…

George:  "Why did it all turn out like this for me? I had so much promise. I was personable. I was bright. Oh, maybe not academically speaking, but I was perceptive. I always know when someone's uncomfortable at a
party.  It became very clear to me sitting out there today that every decision I've made in my entire life has been
wrong. My life is the complete opposite of everything I want it to be. Every instinct I have, in every aspect of life, be it something to wear, something to eat - it's all been wrong.
" 
 

Jerry:  "If every instinct you have is wrong, then the opposite would have to be right." 
 

When considering business management, George and Jerry (ok… and Einstein, if you wish to include his inferior mind) are absolutely right. Working harder does not necessarily improve performance, especially when all of the assumptions are wrong.  It can actually be even more disastrous.  Here is an example (this anecdote sounds crazy, but I consulted on this case and, I swear, it is absolutely true).

The client, a manufacturing concern, was losing money hand over fist.  It was not a slow leak, but a Titanic-sized rupture in the hull of the business and I was called in a last ditch attempt to right the ship. I reviewed product cost information (no financial statements existed, note: see a previous post on the value of financials) and very quickly realized that cost for the product was a least 40% higher than the product price. When I pointed this out, they stated that they had been working harder to get more product out the door to increase revenue. Yes, their strategy was to literally “make it up in volume.” In this case working harder was worse than having everyone in the business doing nothing other than sitting in EZ chairs drinking beer all day (not a terrible Saturday afternoon strategy, but it is seldom successful in a manufacturing environment). After I explained my (insert air quotes here) “brilliant” findings to them, I then then sprinted out the door to cash the check they gave me as soon as possible.    

This is a perfect example of how working harder did not improve the situation at all.  It only made it worse.  Instead of doing the same thing over and over again expecting different results, take a breath and ask for help.  Sometimes a fresh set of eyes and a new perspective on a problem is just the thing to improve performance.  Talk to a banker, a business consultant, a friend or even another business owner to get their opinion.  Slowing down, in many cases, is better than charging blindly forward.  Taking the time to identify problems, set goals and work toward solutions, though not as glamorous as making a wild charge into the breach, is a great first step to improving business performance.

Work a little less hard.  Not that there is anything wrong with that.
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Remember to “P”

11/13/2013

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So many new age marketing gurus tout the wonders of the Internet to sell products and services, and without a doubt, the Web is a remarkable  promotional and delivery vehicle. However, Google, Bing, Twitter and all the rest are, simply, newer media outlets providing the same service that was first filled by newspaper, then radio and then television.  Like a syringe, the medium is the delivery system, but the message is the medicine.    
 
When contemplating marketing, think about the “P’s” (though not traditional, I have added a fifth) to help you hone and deliver your message.  The 5 P’s are Product, Promotion, Price, Place, and the newest member of the “P” club (wait, does that sound right?), People.

The “product” is the goods or services that you are selling.  What need or want does it fulfill?  Why is it better at fulfilling those needs than competing products?

 “Promotion” is the effort you make to let the customer know about the product.  It might be advertising or direct sales.  It might be in store sales or search engine optimization. When people think of promotional activities, they immediately think that the idea has to be clever.  Every promotion does not have to include an office full of monkeys (Career Builder) or cowboys herding cats (EDS). Often times, the most effective promotional activities are straight forward, honest and obvious messages to the client.

 “Price” may seem obvious, but understanding how to price a product or service is critical. Remember, price is not only a function of cost, both direct and indirect, but also a function of the customer’s perception. For example, customers perceive high cost products as higher quality or higher status than less expensive products.  To some people, these perceptions are critically important.  To others, they make no difference at all. Pricing can tell a story.

“Place” is sometimes more difficult to understand. Place can mean the way the product is delivered (distribution and  logistics), the location or address of the business or it can mean where the product is physically located in the store.  Why do you think products targeted at adults are usually located at eye level and children’s products are usually located nearer the floor? Understanding optimum placement is critical when marketing a product or
service.

 The final “P” is “people.” This is often lumped with promotion, but I think it deserves its own category.  People refers to customer service and not necessarily direct selling. I know I often choose one business over another simply because the employees are nicer.  Many years ago there was a store in the mall that encouraged its sales people to “hound” customers, never allowing a moments rest in the store.  Most people that I know stopped going to that establishment because it never felt like you were receiving customer service or creating a relationship with the staff.  Never underestimate the importance of a friendly smile and a nice greeting. Remember that an attitude of service will often lead to a sale more quickly than high pressure tactics. There are times for the sales person to ask for the sale, or push for the “no,” but it can be done with a service attitude in mind.

When considering a marketing message, remember to “P (product, promotion, price, place and people).” At some point I will discuss Financial Assets’ Revolving Timetables.  It is always a popular topic with my clients and family (think about it….).
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