5 Tips to Success in Business – Part 2

Lesson #3: Long-term Planning

The last lesson touched on this, but it’s important enough to reiterate. Taking the time to put together a long-term strategy is vital to your success in business. This means before you do anything else in your company, you come up with a plan, beginning with a reason for existence. Figure out your values; having these in place will end up shaping how others will perceive your business. Finally, lay out long-term goals and strategy. For us, this was to go high-end and focus on organic growth rather than a skimming approach (while our competition focused on grabbing as much territory as possible, we focused on penetrating the markets we were already in). Once these are in place, stick to it. One of our competitors, when reflecting on their business decisions, noted that they had initially developed a strategy which they had failed to follow. They experimented with different things, and doing so killed them.

Lesson #4: Focus

A Marketing 101 lesson (from freshman year Intro to Marketing professor Dr. Powell) is to stay focused; if you try to get too fat too fast, you’ll fail. We knew this, but failed to take it into account. Our initial product offering was diverse, and the consequence was, well, no sales. We corrected this and remained focused on our core strategies (back to the long-term planning), allowing us to do significantly better than our competition financially.

But at the same time, we were also able to recognize opportunity. While focusing on our core strategy, we realized that the only way to catch up to our competition (who were significantly ahead of us in market share at the time) was to slow them down. Therefore, we launched a new product in their primary product category (our primary product was in a different market than their’s), which succeeded in stealing market share and slowing them down (even better than anticipated). The quarter we launched this new product was the quarter everything changed and our growth skyrocketed (note here that this radical turn-around was a combination of the new product launch as well as having remained focused through quarter after quarter of struggle to get the right systems in place).

Lesson #5: Cash is King

Cash! The lifeblood of every business. I mentioned previously our struggle with cash flow. We had practiced careful cash management since the beginning, and it paid off. But the lesson we really learned came through reflecting on the actions of one of our competitors. This team came out badly at the end of three years of business. They ended up negative, thus losing their own investment as well as that of their investors. Part of the reason, as previously mentioned, was not sticking to their plan. But the biggest cause of failure was only taking the cash they needed when offered money by investors. They were offered $5 million (the maximum any team could get), but turned it down because they felt they only needed half that amount. The result: they burned through the cash and spent the rest of the simulation desperately trying to keep the business alive, rather than being able to focus on product improvement or stronger marketing campaigns. Only accepting the cash they needed sucked the life out of their company, which had, by the way, started out the strongest out of all the teams. The moral of the story is that you will always need more cash than you expect, and it is better to seek cash when you are in a position of strength than when you actually need the money.

In our business, these lessons enabled us to bring in an overall return on investment of 422%, crushing our competitors. Implement them, and you’ll be set for success.

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Q&A from Last Post

After the last post, I had a great question from a subscriber that I’d like to address. Here it is:

Q: “Where would you put your emphasis in creating value added; Face to Face interaction or the booming, untamed world of Social Media?”

I want to try to answer this question from both sides, both from the perspective of the marketer as well as the perspective of the customer.

From a marketer’s perspective, face-to-face is the most expensive per-customer form of advertising, yet it has the highest conversion rate. The reason is rather obvious: from the customer’s standpoint, face-to-face builds trust as it shows that the marketer values them enough to make a personal investment in getting to know them. It becomes personal. On the negative side, creating the atmosphere where you can be intentional in meeting customers face-to-face is becoming more and more difficult. Customers want nothing to do with marketing that feels invasive. If you watch customers around salespeople, you will see the customers intentionally go out of their way to avoid the salespeople. People don’t want to be bothered. However, creating a way to draw in potential customers so they actually want to talk to you (such as being at a location where people expect to interact with business owners/marketers/salespeople or using point-of-purchase displays to attract attention) will overcome this.

Social media, from the marketer’s perspective, provides an amazing platform for building relationships with potential customers. While it doesn’t allow for as high a conversion rate as face-to-face, it does allow for a much broader reach (for much less expense). Another advantage is that social media is where people are. An increasing number of people are chilling on social media sites (between 2007 and 2009, for example, according to a report by Nielson released in January of 2010, the number of global visitors to social media sites has increased from 210,928,000 to 307,428,000 and the average time spent on SM sites per month has increased from just over two hours to five and a half plus hours (source:http://www.briansolis.com/2010/02/time-spent-on-social-networks-up-82-around-the-wrold/)). Up until currently, Face Book’s friend limit has been 5,000, meaning as a marketer you could have 5000 “friends” (implying loyal supporters) that all see when you post something. And anyone who “likes” that post will then spread it to all their friends. You could hold a conversation with several thousand people at the same time. To top this all off, you can also maintain close relationships with many of these people.

My conclusion is that, as there are many advantages to each, one should seek to use both (as long as his or her business model will allow this while maintaining efficiency). This might be done, for example, by building a following online then launching a seminar to your “friends” and fans. Those who are really committed to your “cause” through the social media will jump at the chance to be a part of a live event, and that live event will only increase their loyalty to you.

Imperialism in the Corporate World

I’m taking an ancient history class this semester, with a focus on empires and imperialism. Friday, we began a discussion on what makes an empire and the meaning of imperialism. While not a conclusive list to what is inherently part of an empire, we noted the following selection. First is a monopoly of force. An empire, by definition, is expansionist in nature. In order to extend, previously established entities within the targeted region of expansion must be compelled to allow that expansion. In most cases, if not always, compelling someone else to allow you to have some control over them when they had governed themselves previously requires some means of force, whether military or otherwise.

This leads into the second aspect of “empire”: when any politico-cultural unit attempts to take control of another unit, that first unit inherently, whether intentionally or unintentionally, imposes its values on the other. This explains why it is that in most cases force must be used to compel one to allow another control. Consider a master-slave relationship. For any human being who has had his or her liberty removed, he or she will naturally be resistant to the establishment of another’s control. Why? Because their ability to choose how they live has been over-run. Someone else dictates their lifestyle; this eventually affects their attitude, mindset, and worldview, and they adapt to their new lifestyle, even if it is not the one they would choose.

Finally, there is an imbalance of relationship between the two societies involved. For example, in most of Rome’s conquests, the idea of Rome installing political control over another kingdom was sold as being mutually beneficial. The conquered political leader was a “friend” of Rome; the Latin gives us the term “client”, implying that “We are making your life better by establishing our cultural norms as yours.” However, despite multiple forms of relationship between Rome and her subject states (from the conquered “allies” of Italy to the “independent dependency” of Egypt before 30 B.C.), any state who resisted Rome’s leverage (on Roman terms) faced the likelihood of severe reprisals. Therefore in reality, the supposed “friends” of Rome were really her conquests for her own economic and political benefits.

During this discussion, I started thinking about imperialism in today’s context. While it may be a negative term that our modern, democratic society tries to avoid, let’s step back and define it. According to Meriam-Webster, imperialism is:

The policy, practice, or advocacy of extending the power and dominion of a nation especially by direct territorial acquisitions or by gaining indirect control over the political or economic life of other areas; broadly : the extension or imposition of power, authority, or influence.

The term is best represented by the British Empire of the eighteenth and nineteenth centuries. It also stands as a point of controversy in American history; even, it may be argued, continuing up to American involvement in the Middle East today. But I want to look at it in terms of business. When we think of business, we tend to think of the “corporate world”. That carries a certain set of connotations with it. It is the epitome of a competitive culture: competing against one another to climb the “corporate ladder”, competing against other businesses for market share, and competing between departments for any number of reasons. In my mind, this constant “dog-eat-dog” world fits within the confines of our definition of imperialism: “the extension or imposition of power, authority, or influence.” Is this a healthy system? Or is there a better way of doing it? I’d love to hear your feedback on this! Do you see a connection between imperialism and the contemporary corporate culture; and if so, is there anything wrong with that?

Journal Entry #3 – After Camp Reflections

August 19, 2011

Wow. I really did mean to write much more consistently during the camp than I did. But instead, literally every minute was spent either working or investing in relationships with others. The few minutes I had in between were spent sleeping (like, five hours a night). But the investment was so worth it. While the content taught wasn’t particularly new, I did come away with a lot of value. For one, while the project we did was something I had done before, and thus was not particularly difficult, it resulted in some great ideas that I may find to be worth investing in. If I can find one or two business ideas from the camp that actually take off, and can get on board with those ideas as a consultant, that would provide great experience for my consulting firm idea. More on that later.

But of course the best thing coming out of this camp is the relationships I built. From housemates to business partners, hours-long conversations resulted in ties not easily broken by time or distance. Many of these people I will never see again. But I know that if one day I am traveling in places like Brazil, the UK, Bulgaria, Serbia, or Tajikistan, I will have a friendly face to greet me. And the vice versa is also true. A big theme of this camp was (as I’ve talked about before here) adding value to others. I don’t need to measure the investment value before knowing that I would gladly go out of my way to do whatever I could for many of these people. So once again the greatest lesson of business is affirmed: be intentional in investing in relationships. It will always pay off and is always the best investment you can make. There’s your tip of the week, now go live it out.

Journal Entry #2 – Introduction to the Camp

August 11, 2011

“I am here because…” And with that statement, the Blacksmith Entrepreneurship and Liberty camp began. We sat around our dinner tables, each introducing ourselves. Each individual, with all of his or her hopes, dreams, and fears, began to open a door to their souls; revealing just a little piece of what makes them tick. Not very far, but it all begins by cracking the door, right? And with some, I have seen that door open a little further.

I met the first part of the group of students here this morning, as we gathered to head to a local museum in Vilnius. After a brief lunch, we picked up our bags at the hostel and headed for the bus. And yes, four hours allows some doors to open pretty wide.

Stepping back twenty-four hours, I finally ran into the issue I was concerned about.  I knew I had to rush in Amsterdam because I only had fifty minutes to get to my next flight. If I missed that flight (due to delay), I would miss my connection to airBaltic (regional airline). I did make that connection. However, in Riga, I fell asleep at the gate and missed my flight to Vilnius. I had to head into town to buy a bus ticket. It was something of a mess, yet has been worth it. After several hours of conversation, I am very appreciative of the opportunity to be here.

Journal Entry #1 – En Route to Lithuania

August 10, 2011

We drifted higher and higher through strata of amazing landscape. This takeoff has by far produced the most beautiful scenery. Angling away from land, one’s gaze travels for miles across flat terrain and into the North Sea. The Netherlands are, of course, very flat and covered by waterways. Blocks of fields surround residential dwellings.

We broke through the cloud cover. I was slightly disappointed as I hoped to be able to maintain a visual on the terrain, but my attitude received a quick readjustment. Slipping through the cloud cover, a whole new universe opened up. Never has an expanse of clouds looked so like another world; a landscape of valleys and hills, of ridges and ravines. Forgive me for leaving the cloud types and  names back in eighth grade, but the variety between thick and thin created the illusion of a wintered Narnia with the occasional window to another universe of waterways below. In this context, “breathtaking” works quite well.

I am currently making my way to Stockholm, Sweden, where I will pick up an airBaltic flight to Vilnius. It has been about fifteen hours or so since boarding my first flight; in other words, I am running on almost zero sleep, as I only slept four hours the night before. But than, this is travel! Despite the harrowing dash through Amsterdam’s airport (a fifty-five minute layover to cross the airport and get through security), the traditional lack of sleep, and the ear splitting descent into Amsterdam that killed my hearing, I am reminded of why I love travel. And looking out my window, I am reminded of the majesty of God expressed through His astonishingly beautiful creation.

John C. Maxwell – “How Successful People Think” Part 2

While I prefer learning a subject by reading rather than watching a video because I can refer back to the material, I do like to be able to create a clear picture in my mind of what is going on. Thus I’m going to try to create a picture in order to clarify Maxwell’s types of thinking. I’m going to draw from my favorite subject here, military history, so bear with me.

For a moment, join me in stepping back to the first few centuries before Christ, into the boots of a Mediterranean-basin general. Imagine you are planning a campaign. In this process, you must address three levels of planning: objective, strategic, and tactical. The objective is the overall purpose of the campaign. The strategic level is how you accomplish the objective. The tactical is what you do on each battlefield. Before the campaign, you need to establish your objective and strategy. The objective should remain the same throughout the campaign (if the objective is off, a wise general would close out the campaign because the chance of failure is significant) while the strategy will likely evolve as you learn your opponent.

On the objective level, you must use big-picture thinking in order to understand why you are conducting this campaign and to determine if the end justifies the means. You also need bottom-line thinking to determine what qualifies as success and what determines failure, so you know when to cut your losses. You will also need realistic thinking to determine if you are even capable of carrying out this campaign (or, on a strategic and tactical level, whether your forces can carry through with your goals); this requires knowing your own and your opponent’s strengths and weaknesses. Finally, reflective thinking is necessary throughout the campaign, as you consider your successes and failures to determine how you can change what you are doing to accomplish your objectives.

Strategically, you will need possibility thinking to see beyond what everyone else (including your closest peers: your commanders) can imagine. The most successful commanders of history listened to their commanders, but knew when something they said was impossible could be achieved. The best example of this is Hannibal’s famous crossing of the Alps, something no one had ever considered before. But, as mentioned, you will need to take into account your commanders’ advice; this is where shared thinking comes into play. If you know how each officer thinks, this part will be easy.

Strategic thinking is self-explanatory in this context. It is, once again, based on knowing your opponent in order to strip his defenses and manipulate his weaknesses. Focused thinking is necessary to keep your strategy in alignment with your objectives. Distractions will cost you opportunities and give your opponent an advantage.

Finally, as you have created a vision for your campaign allowing you to operate with efficiency, control your enemy’s movements, and gain every advantage, you will be able to draw your opponent into strategic battles of your choice. Now creative thinking will be vital on this tactical level as you leverage all of your previous effort into defeating the enemy on a physical level. You will use it to make every piece of ground and element around you support your goals. You will use it to draw your enemy in and bring about capitulation. And in this moment all of the previously mentioned thinking styles will come to their fruition, and you will have become successful.

Hopefully putting Maxwell’s “thinking types” into this context has given you a clearer picture of the practical applications of them. Let me know in a comment if that makes sense!