Mike Michalowicz's Blog, page 92
May 8, 2015
Sticky Note Your Way To Mastery
Step 1 – Take 10 sticky notes and write one of the ten most important things your company does on each individual note.
Step 2 – Now stick each one of these 10 important things on the wall.
Step 3 – Of the 10 on the wall determine the 3 that are comparatively the least important. Take them off the wall and throw them out.
Step 4 – Of the 7 remaining notes take 4 of the least important ones off the wall and discard them too. I understand that this is hard, but do it nonetheless.
Step 5 – Of the 3 remaining remove 1 that is the least important of the 3 and put them in the trash.
Step 6 – Yes, it is time. Remove and discard the lesser important of the two remaining.
Step 7 – Stare long and hard at the one remaining sticky note on the wall. This is the most important thing your company does. Your company’s survival and success depend on your absolute commitment to it.
Step 8 – Devote every resource at your disposal to being the world’s best at that one thing. Period.
May 7, 2015
One More
The best athlete takes one more lap than the other guy.
The best student studies one more hour than the other guy.
The best entrepreneur does one more thing than the the other guy.
The best isn’t a thousand times more. It’s usually just one more. But it is always more.
May 6, 2015
Your Long Term Business Strategy According To Vilfredo Pareto
Okay, here’s your history lesson for today … with a practical application to your business, of course! In 1906, an Italian economist made what seems like a simple observation, but it was one that immediately resonated with his fellow economists and has been codified into a principle named after the man who first stated it. Vilfredo Pareto observed that 80 percent of the land in Italy was owned by 20 percent of the population, and furthermore, he observed that the same ratio was applicable to other areas of economics.
The Pareto Principle – also known as the 80-20 rule – doesn’t just describe the way things are; it can also be used as a powerful tool to help you focus and redirect your energies, becoming more efficient and more profitable … in the long term.
The reason Vilfredo Pareto’s observation is so powerful is because it applies far more widely than he originally imagined. The 80-20 rule holds true for wealth distribution in many countries, to economic principles in addition to wealth distribution, and even … wait for it … in Signor Pareto’s garden. That’s right, Pareto observed that 80 percent of the produce he grew came from 20 percent of the plants in his garden.
Pareto’s Principle even holds true for things that seem trivial. If you were to look at what you’re wearing today and at your entire wardrobe, you’d almost certainly discover that you wear 20 percent of your clothes 80 percent of the time.
So what does Pareto’s Principle have to do with your long-term business strategy? Here goes: we’ve been taught to treat everyone equally – that every customer is valuable. We’re encouraged to devote equal amounts of time to every client, simply because we don’t want to appear elitist, giving preference to some customers over others. We want to spread our time and attention around.
But we’re doing it wrong! If we heed Pareto, we learn that 20 percent of our customers do 80 percent of our business. Wow. The vast majority of our revenue comes from a small minority of the clients who walk through our doors. If you spread your time and attention out evenly among all of your clients, you’re missing out on the enormous opportunity you have to maximize the business you do with the customers who matter most.
And that’s a fact – some customers do matter more than others. The customers who generate 80 percent of your revenue – the ones who spend the most with your company and who purchase your highest dollar, highest profit offerings – those are the ones who deserve the lion’s share of your time and attention. Those clients are the ones who would seriously damage your profitability if they left to patronize another company. Those are the ones who keep the lights on. Your best long-term interests are tied to those customers, and you must focus additional resources on ensuring they get the very best service you can provide. You want to keep these clients.
Additionally, you want to find MORE of these clients. One strategy I’ve found useful is to sit down with my heavy hitters and interview them. I ask questions to find out who they are and learn where I can find more clients like them. How did they hear about my company? What clubs or organizations do they belong to? Can they refer me to friends or associates who might benefit from the services I provide? If you’re looking to lengthen your list of powerful, profitable clients, it’s worth your time to ask for referrals from the folks who already spend the most with you.
Another way you can incorporate the Pareto Principle into your long-term strategy is by looking at the clients who consume the most of your time and attention. You’ll nearly always find that 20 percent of your clients take up 80 percent of your resources. Make a list of the squeakiest wheels on your client list and compare that list to the list of the clients who generate the most revenue. If you discover you have exceedingly demanding customers who don’t contribute much in the way of income, you might want to look at ways you can decrease the resources you expend on keeping these costly customers around. Conversely, if you discover you’re spending most of your time tending to clients who generate the most profit, then you’re spending the resources of time and attention wisely.
Your long term strategy should be to maximize your profitability, and Pareto’s Principle can help you selectively cultivate the clients who will help you achieve that goal.
May 5, 2015
The Next Knock At The Door
It is the achilles heel of every struggling entrepreneur. We answer the next knock at the door.
The next prospect that seeks service (and has some money in their hand) gets serviced. Even if what they want isn’t truly what we are good at. It’s money after all.
The next customer who needs a product we don’t make (but can if we stop making what we are good at making, for a while) gets the product they want. It’s money after all.
The next client who will hire us only if we include a service that we have no clue about gets what they want. Even though we will lose money (and lot’s of it) trying to figure it out. And even though we will never do that service again (albeit we will convince ourselves that we will). It’s money after all.
Doing anything for money sounds awfully a lot like prostitution.
Stop answering ever knock at the door. Only serve the prospects, customers and clients that you can serve extraordinarily well, doing an extraordinarily specific thing.
May 4, 2015
Episode 26: Business Appreciation and Profitability with Andrew Moon and Peter Verlezza
Show Summary
Andrew Moon and Peter Verlezza join us for Episode 26 of the Profit First Podcast. Andrew and Peter share their experiences with working on their businesses and increasing profit margins.
Our Guests
Andrew Moon (left)
I’m a serial entrepreneur who has launched and run several successful businesses of my own since age 8. I am the founder of Orange Nomad, a unique business consultancy that takes a progressive approach to educating small businesses and entrepreneurs on all things digital.
I am also the author of “Insider Technology Secrets That Will Make Your Business Run Better And More Profitably”. The seat of my passion has always been the entrepreneurial spirit, which drives me to bring the technology and business philosophies of “The Big Guys” into small business. My goal is to guide small businesses in implementing their business vision, while aligning their digital strategy to meet that mission.
Peter Verlezza (right)
For over 28 years, Peter Verlezza has been the architect of technology solutions that make sense for medical practices, businesses and non-profits. His unique way of approaching challenges comes from a belief that it all starts with people.
In the early years, Peter worked at his family’s deli and catering businesses where the foundation of exemplary customer service was instilled by his family. The value of serving has extended to his professional relationships with clients as well. Peter internally asks the question, “Is this in the best interest of the client?” while remembering the old saying, “You can’t change what you have been handed only how you deal with it.” He approaches both of these with a sense of humor, charisma and genuine care for others – it’s become a way of life.
He is the author of 3 books, “Hassle Free IT MD,” and the 2 Amazon best selling books, “The Tech Multiplier,” and “The Business Owners Essential Guide To IT and All Things Digital.” Peter recently completed an audio series titled “Touching People In Appropriate Ways” a series that speaks to the importance of connecting and communicating with an audience. That series has turned into a podcast of the same name where he interviews movers and shakers around the world to find out what they do in their businesses or professions to “Touch People In Appropriate Ways”.
Show Quotes
When working on your business, document and systematize everything (once process at a time) to bring about repeatability.
Have clarity on who and who not to do business with. Focus on the clients you want to serve, rather than having to spread the love to some people that you don’t want to be involved with.
Make the decision to profit from the business you build.
In order to start appreciating what you have, start rewarding yourself. The small bites that you take will be bigger than no bites that you didn’t take
Lesson of the day – When it comes to profitability there are 3 steps to get there.
1. Cut costs.
2. Build efficiencies.
3. Increase your margins.
Show Links
Andrew Moon
Website: www.orangenomad.com
Linked In: www.linkedin.com/in/orangenomad/in
Twitter: https://twitter.com/theorangenomad
Facebook: www.facebook.com/orangenomadllc
Peter Verlezza
Podcast: www.tpiaw.com
IT Business: www.smbnetworksllc.com
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!
Episode 26: Business Appreciation and Profitability Andrew Moon and Peter Verlezza
Show Summary
Andrew Moon and Peter Verlezza join us for Episode 26 of the Profit First Podcast. Andrew and Peter share their experiences with working on their businesses and increasing profit margins.
Our Guests
Andrew Moon (left)
I’m a serial entrepreneur who has launched and run several successful businesses of my own since age 8. I am the founder of Orange Nomad, a unique business consultancy that takes a progressive approach to educating small businesses and entrepreneurs on all things digital.
I am also the author of “Insider Technology Secrets That Will Make Your Business Run Better And More Profitably”. The seat of my passion has always been the entrepreneurial spirit, which drives me to bring the technology and business philosophies of “The Big Guys” into small business. My goal is to guide small businesses in implementing their business vision, while aligning their digital strategy to meet that mission.
Peter Verlezza (right)
For over 28 years, Peter Verlezza has been the architect of technology solutions that make sense for medical practices, businesses and non-profits. His unique way of approaching challenges comes from a belief that it all starts with people.
In the early years, Peter worked at his family’s deli and catering businesses where the foundation of exemplary customer service was instilled by his family. The value of serving has extended to his professional relationships with clients as well. Peter internally asks the question, “Is this in the best interest of the client?” while remembering the old saying, “You can’t change what you have been handed only how you deal with it.” He approaches both of these with a sense of humor, charisma and genuine care for others – it’s become a way of life.
He is the author of 3 books, “Hassle Free IT MD,” and the 2 Amazon best selling books, “The Tech Multiplier,” and “The Business Owners Essential Guide To IT and All Things Digital.” Peter recently completed an audio series titled “Touching People In Appropriate Ways” a series that speaks to the importance of connecting and communicating with an audience. That series has turned into a podcast of the same name where he interviews movers and shakers around the world to find out what they do in their businesses or professions to “Touch People In Appropriate Ways”.
Show Quotes
When working on your business, document and systematize everything (once process at a time) to bring about repeatability.
Have clarity on who and who not to do business with. Focus on the clients you want to serve, rather than having to spread the love to some people that you don’t want to be involved with.
Make the decision to profit from the business you build.
In order to start appreciating what you have, start rewarding yourself. The small bites that you take will be bigger than no bites that you didn’t take
Lesson of the day - When it comes to profitability there are 3 steps to get there.
1. Cut costs.
2. Build efficiencies.
3. Increase your margins.
Show Links
Andrew Moon
Website: www.orangenomad.com
Linked In: www.linkedin.com/in/orangenomad/in
Twitter: https://twitter.com/theorangenomad
Facebook: www.facebook.com/orangenomadllc
Peter Verlezza
Podcast: www.tpiaw.com
IT Business: www.smbnetworksllc.com
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!
May 1, 2015
What Are Your Office Traditions?
As I am writing this, I just got back from doing push ups. In fact the entire office just did push ups. Why, you ask? Because it is our office tradition.
If any one of us here asks a question that really didn’t need to be asked (and resulted in unnecessarily shirking work or dumping it over to someone else), no matter how small… we do push ups. Everyone.
It is a fun, goofy tradition now. Every day you will hear someone yell “Push ups!” and everyone hits the floor. It bonds us. It make us unique. It makes us, us. And when a company has traditions and rituals to bond around, the culture gels. And a powerful corporate culture can take on any challenge the competition presents. It is your greatest opportunity… start traditions.
April 30, 2015
The Most Important Conversation In The World
My son played in an 8th grade lacrosse game this weekend. I use the term “played” loosely. He saw seventeen seconds of field time.
When we got in the car to head home he was outwardly upset. He wouldn’t say a word, and just stared out the window. A tear came down his face.
There was silence for entire ride home. After the twenty minute ride home we pulled into the driveway and I turned.
I said, “I love you more than anything, son. I don’t care if you play an entire game, seventeen seconds, or only do warm up drills. I am proud of you no matter what, and you are my favorite player of all time. I want you to learn something from this experience, though. Not what happened on the field, but what happened during the ride home.”
“The conversation during the ride home, was the most important conversation you have ever had about lacrosse. You see, son, the conversation that you had for the last twenty minutes, in your head, will determine your future with the sport.”
“You can say whatever you want in your head. You can say the coach is unfair. You can say that you are not being treated fairly. You can say that others don’t deserve it. And then you can say ‘I don’t want to be part of this.’ and quit (either emotionally or walk off the field). You can say the decision is theirs.”
“Or you can say that you want this. You can say that you will perform harder and stronger at practice than any other player. You can start earlier and end later. You can practice on your own. You can decide to never put your stick down. You can say that your success is your decision.”
“You see, son, your entire life’s experience is a result of the conversation in your head.”
A tear came down my face. I love him with every ounce of my soul. And I pray that he learns this lesson. I pray that you and I do, too.
The most important conversation in the world is the one you have in your head. What are you saying?
April 29, 2015
The 8 Worst Pieces Of Advice Business Owners Receive About Money
I know that advice is free and plentiful, but not all of it’s worth taking. Particularly when it comes to finances, it’s best to take advice from people who’ve successfully been there, and done that. Listen to the experienced experts. That said, here’s my top list of business advice you should NEVER follow.
1. Raise lots of money.
The reason this piece of advice is a flop is because it suggests that raising money – in and of itself – is the end result, rather than a means to an end. While there may be times when you do need an infusion of cash in order to accomplish a goal, the mistake is in making money-raising your primary objective. Investors want to bet on success, and the real value of a company isn’t how much cash it can raise, but how much good, successful work’s being done. Don’t spend your time chasing other people’s money (which is far too easy to spend.) Spend your efforts earning, rather than raising, money.
2. Always have five years of financial projections.
Now I get it – you may have had to do some projections for your business plan in order to get some start-up money, but it’s time we called financial projections what they really are – a guess! Trying to forecast where you’ll be in five long years is an exercise in futility, and is often simply a waste of your valuable time. You’re much better off investing your energy in developing an action plan to target a specific market (and then executing it,) rather than piddling around trying to figure out projections that may never come true.
3. To make big money, you need a big business.
Let’s face it, the bigger your business grows, the bigger a target you are for your competitors. In fact, the riches are often in the niches – smaller marketplaces with far less visibility and competition. You don’t have to be big to be profitable.
4. Save money by hiring friends and family.
This piece of advice may actually be the worst, because you can end up wreaking havoc on not just your business, but also your personal life. You may think that hiring a friend – a known quantity – is the safest bet, but you must remember that your shared history isn’t based on your business. Business relationships should be – first and foremost – centered on your business. Hiring friends and family is almost certain to put you in the position of making business decisions based on your emotions and your personal ties, rather than on what’s fiscally sound for your company.
5. Beat the competition on price.
Now it’s possible to win the price game – but those bids are only successful if you’re a big company (think Walmart.) The fact is that low price = low margin, and success only comes when you do huge volume. Small businesses are much better off leaving the price competition to the big boys and focusing on other areas. If you’re selling your brand based on quality or convenience, you’ll be able to charge a premium price, and your margins will look much healthier.
6. You have to spend money to make money.
Yes, money makes things easier, at least in the short term. But here’s the thing: money makes you lazy. It’s when you’re on a tight budget that you’re forced to become innovative – find unique ways to solve problems, and that’s where the magic happens. Throwing money at a problem is rarely the solution. Take a step back and find an efficient, creative way to accomplish your goals, and then the money will start to flow.
7. Leverage your debt.
There nothing more dangerous and addictive than OPM (Other People’s Money.) Once you’ve had it, you’ll continue to crave it – that easy solution that lets you kick the can down the road, rather than doing the hard work of solving your problems. If you continue to spend, thinking that your debt will – at some mythical point – resolve itself, you’re wrong. Don’t jeopardize your future earnings by burying them under a mountain of debt.
8. Pay yourself last.
So many of us started out believing that only by sacrificing our paychecks could we get our business off the ground. This last piece of advice is responsible for more burned-out, bitter, resentful, failed entrepreneurs than I can count. Think about how you’d treat your very best rock star employee. You’d treat ‘em like gold and keep them happy, right? Well YOU are your best employee. You owe it to yourself and your company to pair fair value for your valuable work. Don’t sell yourself short. Your business should support you, not the other way around.
We hear these catchy little pieces of advice so often that it’s far too easy to believe that they must be true. Your company’s future is far too valuable to risk on trite sayings that will create far more problems than they’ll solve. Get your advice from successful folks who have real experience on their side.
April 28, 2015
The Perfect Hobby
I am reading The Miracle Morning by Hal Elrod and it has me thinking (and exercising). I am so focused on work all the time, that it can be exhausting. It’s surely not healthy.
When I am eating dinner, I am thinking about what I can do to improve operations. When I am in the car, I am thinking about clients. When I am working, I am thinking about working more.
In Elrod’s book he suggests along with exercise, affirmations and journaling that we meditate. He suggests that we get our mind off the day to day.
Not thinking about work is really hard for me, and I suspect you too. But I found a solution: a hobby. The perfect hobby, I believe, is really a form of meditation (or at least allows our heads to disconnect from work).
For me the perfect hobby is playing guitar or working in the garden. Both of those things require enough concentration, that I don’t (or can’t) think of work. I effectively meditate and when I am done, I am refreshed.
What do you do that allows you to disconnect from the day to day, and when you are done makes you feel refreshed and energized? That is your perfect hobby.
