Mike Michalowicz's Blog, page 73

The Increasing Cost Of Doing Business

Have you ever noticed that the majority of business articles point to the (very real) fact that it is getting more expensive to run a business? Your employees don’t ask for salary cuts, they ask for raises. The landlord for your office space, will never come to you and say they are cutting your rent in half. Your vendors will send year end notices about their new (more costly) price structure. Increasing costs is just part of being in business. Or is it?

Just because increasing costs are the natural tendency of business, does not mean you need to get caught in the current. The next time you feel yourself settling for increased costs, ask yourself this question:

How do I double my results with half the costs?

That is right, a 200% increase in the margin between result and cost. The solution may not be obvious (or perhaps may not even exist). But if you ask a better question, you are sure to see a better result. Even if you don’t experience a 200% improvement, any improvement is a good thing.

Naysay The Naysayer

When the naysayer says, “What if it’s a flop?” Ask them, “What if it isn’t?”

When the naysayer says, “What makes you think you can do it?” Ask them, “Why would I ever think I can’t?”

When the naysayer says “You will never succeed!” Tell them, “I think you have me confused with someone else… yourself.”

Episode 70: Loss Aversion and Profitability with Nick Muzzatti

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Show Summary

This week Mike Michalowicz, Chris Curran and Kristina Bolduc interview the Operator of Carnival Day and explore what it’s like to be a manager of a business, but not the owner – and what your relationship to money and profitability is as a result. In this episode we dispel the value of making bold decisions and loss aversion. In Nick’s case, selling his truck may be the best decision of his life. We also discuss feeling the pain in purchasing and the 5% rule when you make a purchase on behalf of the company. Welcome to Episode 70 if the Profit First Podcast!

 

Our Guest 

 

Nick Muzzatti is the operator of an entertainment rental business in Rockville, Maryland. What started as an inflatable rental business, primarily serving backyard birthday parties, has grown in to an entertainment rental company that serves clients across the country. Nick began his career in the events industry as a “vinyl technician”, which basically means he set up moonbounces for a living! In time, he developed relationships with many of the event planning firms in the DC Metro area, as well with other clients across the country. By listening to his customers, and investing in new and unique rental pieces, his company has become a sought after provider for event entertainment.

Nick is passionate about business. He reads business books like other people check their facebook feeds; often and to a fault. Now, Nick is ready to take this knowledge and apply it productively to his current business and all future business ventures.

 

Show Links

Website: www.carnivalday.com

Facebook:  www.facebook.com/carnivalday

Instagram: @carnivaldaymd

Twitter: @carnivaldaymd

 

Corporate Partners

Nextiva – VOIP phone providers for small businesses.

Fundera – Single source online funding for entrepreneurs. Also offers an adviser program for CPAs, bookkeepers and business coaches.

TSheets – The #1 customer rated time tracking solution!

Fundbox –  the simplest and fastest way to fix your cash flow by advancing payments for your outstanding invoices.

Facial Cues: How To Detect If A Client Is Lying

It was going to be the biggest client engagement of my life. After eight months of wining and dining my prospect I had received the nod to deliver a proposal. Three months later he had our agreement in hand and we were meeting to finalize the deal.

I sat across the conference table from John and he gave me a big smile. “I can’t tell you how thoroughly impressed we are with your proposal. We have made the decision to proceed with your firm. I am signing off on the agreement today and you will have the contract with our check by tomorrow morning.” For a fraction of a second he looked down and his mouth curled down. I never heard from him again.

I never got the signed contract. Never received a deposit. Never even got a call or email. In retrospect I knew the truth the moment he looked down. He had made a micro expression that revealed the truth – his firm had decided not to use our company, and he didn’t have the courage to say it face to face (or even over email for that matter).

Looking back, I could have saved my nearly year of effort if I just paid attention to his facial cues at our first meeting. When words don’t match the simultaneous facial expressions, it spells trouble.

Over time I have learned that the truth is not what people say. It is what they say AND what they do while they say it that speaks the truth. The truth is revealed through microexpressions, subtle changes in the face that happens for only a fraction of a second. A microexpression is just like any other facial expression (e.g. a wide open slacking jaw expressing utter surprise) it is just expressed momentarily, before the person “recovers” to a lying expression that matches their lying words.

Once you understand how facial cues work, you can match your clients words to their actions and “hear” the truth every single time:

Your client can’t afford your proposal – When you offer something that is more expensive than your client expected, it will trigger a fear or surprise response. Look for a microexpression where the person opens their eyes wide, crunches their browline and opens their mouth. This indicates surprise. Alternatively the person may open their eyes, crunch their browline, keep their mouth shut tight and stiffen their entire body. This is a fear response. Either way, they can’t afford your offer regardless of what they say.

The don’t understand the value of your offer – Even though your client may be saying they fully understand your offer, if they show a microexpression of one eyebrow raised higher than the other, the don’t. Look for the eyebrow raise to be matched with a wrinkled nose and a crease between the eyebrows. When you see this expression, make sure you re-explain your proposal, because if you don’t it may be lost.

You didn’t deliver what the customer expected – When someone sees something they did not expect, it triggers a surprise response. Look for wide open eyes and an open (even gaping) mouth. If they are totally shocked they will likely give a small frown along with the wide open eyes. Remember, this microexpression may reveal itself only for a split second. Be on the lookout and if you see it, explain why your proposal is be different than they might have expected.

You lost the deal – They utter the words “you’re our number one choice,” or “I am signing off on this today,” but it is coupled with their eyes glancing down, dropped shoulders and a frown – the microexpression for disappointment or sadness. Often when someone lies in an effort to make you feel good and avoid their own discomfort, the sadness microexpression will appear. If you see this, don’t take their words at face value (no pun intended). You better ask if there is anything else you can do to make sure you get the deal.

They feel you are taking advantage of them – You will only get a deal when both sides feel they are coming out winning. Even if your client says this looks like a good deal, if their nostrils flare and eyes squint their face is telling you the are upset.

They are ready to buy – This is the one you want! When a customer says they are ready to buy and shows a microexpression with a smile where the corners of the mouth turn up, typically with the just the upper teeth exposed – you have a serious buyer. And if the customer is really excited to work with you, the will likely have an open mouth smile with the eyes open to their fullest with their eyebrows up high. If you see that, congratulations, you landed the client!

Your customer has been telling you the truth all along, just not through their words, but through their expressions. Start asking more “yes” or “no” type questions and watch for their microexpressions. If the expression doesn’t match their words, they are lying.

Ultimately, the truth is written all over your client’s face.

If It Hurts…

My wife dresses impeccably. If I criticized her ability to pick a good outfit, or told her that she has no clue how to dress, she would scoff. When you are criticized about something that isn’t true, it may not be fair, but it doesn’t hurt our self-perception.

Conversely, if I criticized her for something that was true (even in part), the reaction would not be a scoff. She would be defensive. She would be argumentative. She would be angry.

Are we  all wired this way? Observe yourself. When you get criticized, does it hurt? If so, it is probably true.

Twisting & Turning Ideas

If you want to get all the juice out of an orange, you first squeeze it. Then you twist it. Then turn it and twist it more.  If you are really working that orange over, you will put some real leverage and weight into it until that last final drop comes out. And that last drop is often the sweetest.

Apply this same concept to your ideas. When you have a new idea, start twisting it and turning it.  Squeeze the idea. Put weight into it. Keep turning it over and around. The more you manipulate your ideas, you will squeeze the juice out of them. And in many cases you will find that your final twist yields the sweetest drop.

What We Have Learned From Failing Restaurants

Notice any of your neighborhood restaurants going out of business in this economy? If so, you are not alone! It is happening everywhere, to all kinds of restaurants. But the good news is that there is actually a lesson to be learned from these failing restaurants.

Keep It Simple

You have probably heard the saying “keep it simple” before, right? Unfortunately, those failing businesses were doing anything but. Research that was conducted to see whether there was a pattern regarding which restaurants survived the economic storm, and which folded under pressure, revealed a lot.

The restaurants that went out of business had a common issue, and it largely centered around their menu. They were offering their customers way too many options. Sounds strange, right? But when you think about it closely, it is easy to see that it makes perfect sense.

Having too many menu options can result in a host of problems that a business fails to see coming at them. Without a doubt, they thought their large menu was what kept their few customers coming back. But it actually had an opposite impact on their business.

The Larger Picture

A restaurant that has too many menu items listed is going to run into problems. A lot of them, including many that you would probably never even realize, even if you were the restaurant owner or manager.

Some of the problems caused throughout the whole restaurant as a result of a menu that is too large include:

● Slower service. Get a frequent customer and hand them a large menu and it may be okay. But the average person is going to take a while to mull over the menu, making the table-turnover rate slower. A slower table-turnover rate means less money at the end of the day.

● Slower cooking. That slower service spills over into the kitchen, as the cooks need to keep shifting gears as they make a wide variety of dishes. When this happens, the dishes are likely to take longer to prepare, which doesn’t exactly keep customers happy.

● More mistakes. When you have so many things on the menu, the cooks have to strive to get a lot of different dishes right. There are bound to be more complaints and more food sent back, costing the restaurant even more money.

● Larger inventory. Can you imagine the inventory that a restaurant has to keep on hand, in order to provide all those dishes, any time someone orders? And if someone doesn’t order all the stuff, it translates to more money lost, as the food goes bad.

● More mistakes. Waiters are generally supposed to be pretty knowledgeable about the menu where they work. But having a lot of options on the menu means they are likely to make more mistakes, leading to more unhappy customers.

● Lower quality. If a restaurant concentrates on a small list of dishes, they are likely to get better-quality ingredients at a better rate. You lose that buying power when you are purchasing smaller amounts of many different ingredients.

Pair Down, Focus

Now you have a clear idea of just how much of a problem a large menu and lots of options can be for a restaurant. And the same principle can be carried over to your business, regardless of what you are serving or selling.

Rather than try to be everything to everyone, determine what you do best, and then narrow in on that area. When you tighten up your list of options, you will be helping to avoid the sort of problems that arise in the larger picture when you offer too many things. It may be too late for thousands of restaurants to learn from this advice, but, luckily, you can still benefit from it!

Episode 69: Significant Cash Ebbs and Flows with Melinda McCaw

Also Available On

 

Show Summary

Join Mike Michalowicz and Chris Curran as they interview Melinda McCaw, founder of Melinda McCaw Media. In this episode we navigate how to manage a scenario where your company is dependent on one major client (and what to do about it). We explore a simple strategy of knowing when to make that next hire, give some simple tips around profitability, and  share perspective on revenue per employee. Obi Ron Kenobi (Ron Saharyan) makes a special guest appearance and provides Melinda with great advice on how to reduce the pains of  significant cash ebbs and flows. Welcome to Episode 69 of the Profit First Podcast!

 

Our Guest 

Melinda McCaw is founder of Melinda McCaw Media, a full service web development company specializing in building mobile friendly custom WordPress websites.   Melinda started the company while finishing a degree in Interactive Media and over the past 7 years has grown the company to meet customer demands as well as positioning it for future growth.   

During this time Melinda has maintained an outdoor lifestyle following her passion of riding mountain bikes, skiing and just spending time in the Colorado Rockies.  To this end she has completed the Colorado Trail, an approximately 500 mile trail from Denver to Durango following the continental divide.  She is currently working heading back this year to complete the approximately 400 miles of trail accessible by mountain bike, and trail running the remaining 100 miles within a two week period.

 

Show Links

Website: http://www.melindamccawmedia.com/

Facebook: https://www.facebook.com/McCawMedia/

 

Corporate Partners

Nextiva – VOIP phone providers for small businesses.

Fundera – Single source online funding for entrepreneurs. Also offers an adviser program for CPAs, bookkeepers and business coaches.

TSheets – The #1 customer rated time tracking solution!

Fundbox –  the simplest and fastest way to fix your cash flow by advancing payments for your outstanding invoices.

Waves

The marketplace is an ocean and it is the only place you can capture waves.

When you are in the ocean… do everything you can to ride a wave. Don’t try to make a wave (you can’t anyway).

Look for the movements in customer demand (the waves), and get in front of the one you’re best suited to serve.

Capture the energy from the surge.

Why You Should Become An Entrepreneur

You’ve had the moment. I am sure of it. That fleeting thought of a great idea. Or that momentary dream of being your own boss. And maybe, just maybe, you are having the moment right now. I mean, why else would you be reading this?

If that’s true, I have a job here and I need to move quickly. You see, most people (maybe all people) have the entrepreneurial inspired moment but then quickly sink back into “reality.” They let “logic” set in and go back to the “safety” of a job. I mean, what could be safer than working for someone else and letting them determine when you get promoted, if you should get promoted, or if you are even needed any more.

But there is something bigger at play. It’s the WHY. Why are you doing what you are currently doing? If you are working for someone else, the question is why? Are you doing it because it brings happiness to your every day? Or are you doing it for the money?

If you are like most of the world, you are working your butt off. You are working to save as much money as possible, so that one day (often after that magic age of 65) you have enough money to retire and enjoy doing the things that makes you happy. Well, I am here to tell you that is backwards. Instead of working yourself to near death so that you can be happy one day, try this: Get happy now!

And how do you get happy now? You become your own boss and do what you have always wanted to do. Always wanted to scuba dive year round? Start an instructional school. Love watching CSI and Bones? Start your own personal investigation firm. Love fashion? Start a business to finally show people how not to dress like a Wal-Mart super shopper.

Here’s the deal, chiefy. I can’t guarantee your success. I don’t know if you have what it takes. And I can’t even promise that you will want to be an entrepreneur for the rest of your life. But, I can promise this… I have never seen someone’s gut steer them wrong. Maybe it won’t bring you to riches, but if you follow your heart it will bring you to happiness. And after all, aren’t we just accumulating riches so that we can get to the happiness part?