I have customers come into my shop all the time that start their conversations with, "I'm poor. I'm on a fixed income..." Why do they do this? Is it a negotiation tactic? Is it a pity party?
If I was poor I sure as heck wouldn't admit it. I'd be ashamed...ashamed that I didn't have a job, or that I couldn't hack it as a...well...bag boy, cashier or car salesman. Yet these people seem proud of their poverty. What is that?
On top of it, a few of them have declared their "fixed income" from being on disability. Funny how one guy had a truck loaded with drywall for his remodeling project and a second one offered to clean my shop once a week. So, why not get a job at a drywall company? Is it the disability or the laws for getting on disability that causes this?
What's weird is that multiple people who generally have no relationship to each other all behave the same way. The same statements, nearly word for word, about being poor and on a fixed income with no prompting from me. The same statements about remodeling or cleaning. It seems there is a pattern here. It's a pattern of drawing pity and emotion from someone.
It's sad. What happened to the bootstrap mentality? What happened to the attitude of our ancestors who packed up everything to move across an ocean with only pennies in their pocket? Where did that toughness go? How did the pride of endurance and strength morph into a pity party?
Sure we need to care for the poor. However, I think poor needs to be better defined. You see, poor is not financial. It is mental. We should have no obligation fund the finances of able-bodied people. It is the sick, and wounded who require our assistance and even many of those ailments can be overcome.
Believe me, I've overcome them.
5.02.2016
4.11.2016
Don't Let the Ball Control You
Today my shop closed at 5:30. I didn't leave until 6:30. No good reason either. I chatted with my manager for awhile, answered the phone and let a good customer come in and use my tire machine because his broke. Then I chatted with him for awhile.
Then my wife called. Uh-oh!
I let my business control me. That is not good for me, my marriage or my family. It certainly isn't a recipe for growth.
This is a head trash thing that starts with fear. Fear that a customer will leave because I'm not "nice." Or fear of a mutiny from my employees because I'm not "carrying my weight."
In high school my basketball coach always said, "Control the ball. Don't let it control you." To do that you need to practice dribbling, shooting and rebounding. Then you can control the ball and that's how you win. But you can't do that without deliberate, repetitive practice. Same goes for business.
Practice is boring and hard. It is also effective. I think we all need to practice controlling our business (or job) so that it doesn't control us. Anything other than that is unhealthy physically and emotionally.
Then my wife called. Uh-oh!
I let my business control me. That is not good for me, my marriage or my family. It certainly isn't a recipe for growth.
This is a head trash thing that starts with fear. Fear that a customer will leave because I'm not "nice." Or fear of a mutiny from my employees because I'm not "carrying my weight."
In high school my basketball coach always said, "Control the ball. Don't let it control you." To do that you need to practice dribbling, shooting and rebounding. Then you can control the ball and that's how you win. But you can't do that without deliberate, repetitive practice. Same goes for business.
Practice is boring and hard. It is also effective. I think we all need to practice controlling our business (or job) so that it doesn't control us. Anything other than that is unhealthy physically and emotionally.
The Secrets of Gross Margin
Margin is everything in business. It is what you have left over after you've paid for your final product but before you pay for phone bills, rent and yourself. It is more helpful to think of margin as sales than as margin.
For example, if you sell a widget for $100 and it cost you $95 to make it then your margin is $5. That is 5% margin. If you are able to lower your cost to $94 and raise your price to $101 then you would make $7 and your profit would increase to 6.9%...an increase of almost 40%.
Would a 40% increase in profit make your business better? If your business nets you 100k per year you are now making 140k per year. Now your problems are more along the lines of naming your new boat.
Do you see why margin is so important?
It is also helpful to think about it this way:
If you work for 20 weekdays per month and your margin is 10%, then you only get paid on the sales from the last 2 weekdays in the month. So you will spend 18 of those weekdays hoping/worrying if you have customers on the last 2 days so you can take some bacon home.
On the other hand if your margin is 25% that means that all of the sales from the last week of the month are available to take home. That is a much safer and more pleasant way to operate. In a low margin business one day of bad weather, or a holiday, or a broken machine could steal your profits for the month.
When thinking about businesses think in terms of margin. Think about how you can expand it by selling more higher margin products and services, or think of how you can negotiate better costs. Remember the example from above? If you are in a low margin business a 1% decrease in costs goes a long way towards the bottom line. So does a 1% increase in prices.
For example, if you sell a widget for $100 and it cost you $95 to make it then your margin is $5. That is 5% margin. If you are able to lower your cost to $94 and raise your price to $101 then you would make $7 and your profit would increase to 6.9%...an increase of almost 40%.
Would a 40% increase in profit make your business better? If your business nets you 100k per year you are now making 140k per year. Now your problems are more along the lines of naming your new boat.
Do you see why margin is so important?
It is also helpful to think about it this way:
If you work for 20 weekdays per month and your margin is 10%, then you only get paid on the sales from the last 2 weekdays in the month. So you will spend 18 of those weekdays hoping/worrying if you have customers on the last 2 days so you can take some bacon home.
On the other hand if your margin is 25% that means that all of the sales from the last week of the month are available to take home. That is a much safer and more pleasant way to operate. In a low margin business one day of bad weather, or a holiday, or a broken machine could steal your profits for the month.
When thinking about businesses think in terms of margin. Think about how you can expand it by selling more higher margin products and services, or think of how you can negotiate better costs. Remember the example from above? If you are in a low margin business a 1% decrease in costs goes a long way towards the bottom line. So does a 1% increase in prices.
10.26.2015
Start From Nothing: Nobody Has Started Something From Nothing
That's right. Nobody has started something from nothing.
Without the Napster, Zuckerberg is a nobody.
Without Bill Hewlett answering the phone Steve Jobs and Apple computer are nothing.
Without money from IBM Bill Gates and Paul Allen go bust.
A lucky break is required for success and too many entrepreneurs (with egos the size of Texas) take too much credit for their own lucky circumstances.
I once worked with a guy who claimed he was self-made. Turns out his dad lent him $200,000 to start his business.
There's a billionaire family who lives 20 miles from my house. From all the accolades they receive you'd think they started their $200 million dollar countertop business from nothing. Turns out they invested $34 million before they ever made a dime.
I'm pretty sure that most people could start a business from scratch given a $34 million dollar budget.
Take Steve Jobs. What a fake. Yes he made Apple from "nothing (reread above qualification)" but look at Next. Not even Steve Jobs could turn his money, connections and experience into a successful company. Even Steve needed something more...something unquantifiable.
The truth is you need resources to be successful. Money, experience, and connections are necessary but they are not enough. There has to be an opportunity that can sweep you up in it and that is something that you can't manufacture. It is a meeting of a need, a skill set and a passion all coming together at the same time. For entrepreneurs, they can only supply 2 of those 3 things. The need is illusive. I can only be found by accident. You can set out to discover it but you will fail multiple times before you find it.
Just ask AJ Khubani the infomercial king. He built a multimillion dollar business only to go bankrupt because he hit a dry spell. The need, or demand if you will, is lucky. Not even the experts can spot it. But if you find it it will take you away.
Luck is required. Nothing else matters. Luck supersedes money, experience and connections. It is necessary for success.
Without the Napster, Zuckerberg is a nobody.
Without Bill Hewlett answering the phone Steve Jobs and Apple computer are nothing.
Without money from IBM Bill Gates and Paul Allen go bust.
A lucky break is required for success and too many entrepreneurs (with egos the size of Texas) take too much credit for their own lucky circumstances.
I once worked with a guy who claimed he was self-made. Turns out his dad lent him $200,000 to start his business.
There's a billionaire family who lives 20 miles from my house. From all the accolades they receive you'd think they started their $200 million dollar countertop business from nothing. Turns out they invested $34 million before they ever made a dime.
I'm pretty sure that most people could start a business from scratch given a $34 million dollar budget.
Take Steve Jobs. What a fake. Yes he made Apple from "nothing (reread above qualification)" but look at Next. Not even Steve Jobs could turn his money, connections and experience into a successful company. Even Steve needed something more...something unquantifiable.
The truth is you need resources to be successful. Money, experience, and connections are necessary but they are not enough. There has to be an opportunity that can sweep you up in it and that is something that you can't manufacture. It is a meeting of a need, a skill set and a passion all coming together at the same time. For entrepreneurs, they can only supply 2 of those 3 things. The need is illusive. I can only be found by accident. You can set out to discover it but you will fail multiple times before you find it.
Just ask AJ Khubani the infomercial king. He built a multimillion dollar business only to go bankrupt because he hit a dry spell. The need, or demand if you will, is lucky. Not even the experts can spot it. But if you find it it will take you away.
Luck is required. Nothing else matters. Luck supersedes money, experience and connections. It is necessary for success.
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