Wouldn’t You Love to Raise Your Prices?

Not that it’s worth much, but I was an Econ major in undergraduate and grad school. I do remember Macro Economics 101 – supply, demand, and price elasticity (not sure how much more I remember). J

I mention this because of a recent Puget Sound Business Journal article that started with, Jody Hall has never cried more about work than she has since Seattle implemented the $15 minimum wage.”

It seems Ms. Hall, the owner of six Cupcake Royale stores, was in front of the Seattle City Council sharing her story of multiple, personally guaranteed leases, the rising costs of ingredients, and how the council’s raising of the minimum wage to $15 per hour would add $1 million to her costs, and ultimately mean less jobs.

The response from one council person was, “Just raise the price of your cupcakes.” FYI, this council person is supposedly an Econ major and taught Economics at the Community College level.

News flash: If it was that easy to raise the price of cupcakes she would have done it already (and make more profit).

Hall’s response to the raise your prices comment, “That reveals a basic lack of business knowledge, [I] can’t just raise prices. Cupcakes aren’t a necessity. People will go elsewhere or go without if prices rise too much.”

I am not against fair wages and at the same time I feel government officials, most of whom have never had to worry about making payroll, much less even had to think about it, shouldn’t be micro-managing businesses and treating them in a one-size-fits-all manner.

Look around at low-wage and entry level food service jobs as they disappear. Airport restaurants, Panera Bread, and others in their stores have kiosks to place your order. Many casual restaurants (including Homegrown and Starbucks) let you order and pay online, so you can simply walk in and pick up your order. Kiosks and the Internet don’t ask for wage increases, take sick days, etc.

Given the choice, many businesses are opting for more technology and fewer people, and not just in food. Amazon uses robots in their warehouses and most manufacturing business have for years used machines that do the job of multiple people.

I guess I’m saying be careful what you regulate because as we know from Newton’s Third Law, every action has a corresponding reaction.

Fake News is Not New

The new buzzwords of 2016-17 are “Fake News” and “Alternative Facts”. Hey, this is nothing new. Politicians, and others, have used an alternate reality of information for centuries. Let’s ignore the politicians and look at three common examples.

  • How did used car salespeople get a bad reputation? (I should say salesmen as when the reputation was earned it was almost all men.) From telling car buyers all kinds of things about the car they were trying to sell, ignoring the car’s actual condition. Technology, starting with Carfax (remember fax machines?) did a lot to level the playing field.
  • Look at the Gallup list of least respected professions and you’ll see insurance sales people just above car salespeople, third from the bottom, with members of Congress being in the cellar. Now, I know from previous reading people don’t like insurance people in general, but think their insurance agent is pretty good. Is this because it’s a product we know we need to pay for but hope to never use? Is it the horror stories some agents tell to “sell” us on more coverage? Tough to really know but I’m guessing a lot of people feel forced into paying a lot of money for insurance and wonder why.
  • Now let’s look at my primary industry, the buying and selling of businesses. Business buyers often focus on one blemish in a business and try to magnify it to make a good business look weak, and get a better price. On the other side, sellers tend to inflate their bottom line via every trick available. They try to tell buyer’s their salary, for their job as CEO, isn’t necessary and is therefore profit (and the business is therefore worth more). They’ll also do the same with the cost of their benefits, cell phone, and anything else they think a buyer will fall for. Yet, I’ve never seen a bank or a (legitimate) business appraiser fall for this. They all put back in a fair market salary for the job the owner does.

Bottom line, all industries, even those well respected like clergy, bankers, teachers, doctors, and others have used things we now call fake news or alternative facts for a long time.

“Is it the truth?” First item of Rotary Internationals Four-Way Test

Why Do People “Disappear?”

I recently met someone I considered an “A” prospect. We met, he heard me speak, we met again with his wife present, and I gave him a proposal on how we could work together. He sent me an email saying he’d, “…get back to you next week.”

When I didn’t hear from him I called and left a message. Two weeks later another message and finally an email saying I’d left two messages and the ball was in his court if he wanted to get back to me.

Assuming he’s alive and not severely disabled it means he disappeared on me. Not even the courtesy of an email saying he’s not interested.

And it’s not just him or me. Everybody I know in the employment field (applicants, coaches, recruiters, etc.) say this behavior is very common in the job industry. People at companies don’t reply, leave applicants hanging, etc.

It’s a form of passive aggressive behavior (and being in Seattle, the passive aggressive capital of the world, it’s not unusual). It’s also rude and unprofessional, and probably speaks to the self-esteem of many people as they can’t say no, even in writing (it’s called Minnesota Nice in that part of the country).

If you’re not interested, just say so.

Know What You’re Going to Say – And Say It

On May 10 I was on a panel at the monthly Association for Corporate Growth meeting titled, “Deal Warriors of the Lower Middle Market.” My co-panelists were Lisa Forrest, Greg Russell, Todd Marker, and John O’Dore.

I realized after about two remarks my regular lines, quips, and stories are new to others, no matter how familiar I am with those lines. Statements that make me a “unconscious competent” get laughs and applause from others.

It goes to show how important words are. When used properly they create a full-color, HD picture. Good salespeople don’t just talk, they say the right things and ask the right questions. They know the correct words and how to use them.

No matter what business you’re in, communication is what makes you successful. Think about what you say and concentrate on:

  • Stories of past client/customer experiences. We all remember stories, more than anything else we hear or read. I know my story on the panel about the advisor who didn’t understand transactions but still was “helping” a client went over huge.
  • Statistics that make a point (as to why your product or services make sense). Statistics that are legitimate but show they are legitimate (sorry, but today you must, given all the “fake news,” as per President Reagan, “trust but verify”).
  • Examples of results you’ve generated. Stories tell how things happened, results are what happened. In my book If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want)? I open with a story about George, how we prepared his business for sale, and how he sold it with more cash at closing than the total offer before we started working together.

Time spent on saying the right thing is critical whether you sell your services, machined parts, food, construction supplies, or anything else.

“To overpraise is a subtle form of disrespect.” Mary Gaitskill

 

 

From Fee & Free to Loyalty

One of my sons convinced me to (finally) signup for Amazon Prime Photos, which Amazon defines as, Secure unlimited photo storage and enhanced search and organization features in Amazon Drive for you and the members of your Family Vault.” In other words, a great place to backup and store all your digital pictures, and it’s included in the annual Prime fee.

What are some of the other Prime benefits, besides free two-day shipping?

  • Videos, including free movies, TV shows, and Amazon produced content.
  • Kindle First, a free Kindle book every month (to own, not borrow).
  • Kindle lending library.
  • Some same day, two-hour, and restaurant delivery.

I could go on and on, the above are things we use and the list on their website is about a foot long.

What does this mean? It means they are ingraining themselves into many parts of our lives and creating customer loyalty. Their goal is to have you and me think, when we need something, check out Amazon, which many of us do too often as it’s so easy.

What are you doing so your company is the first, and only, thing people think of when they need what you have? My goal is to be front-of-mind when everybody I know is asked about business buy-sell, exit planning, and related. You do this by:

  • Staying in touch (like this weekly memo, events I put-on, etc.)
  • Offering value, before, during, and after someone hires you
  • Doing great work

This doesn’t just happen. Amazon had a great idea (pay a fee for free shipping), added a lot more to the program, and ingrained themselves into the lives of many people.

“The future is already here; it’s just not evenly distributed yet.” William Gibson

Do More in Less Time

I recently read an excerpt from the book, “Rest: Why You Get More Done When You Work Less (by Alex Soojung-Kim Pang. Copyright © 2016), shared it with a client group for discussion, and I’m now reading the book. BTW, my clients really identified with the topic and had positive feedback.

The title of the excerpt is: “Darwin Was a Slacker and You Should Be Too – Many famous scientists have something in common—they didn’t work long hours.

In simple terms, the book (and article) explain why some of the most productive people ever to set foot on the planet only “worked” (or work if they’re still alive) about four hours a day. The opening of the book is about the science behind this (proving it) and is a bit deep as the author describes the various brain tests and similar.

Charles Darwin is a perfect example of this as he put in three intense 90-minute segments a day of work. The rest of his day was filled with correspondence (email to us), walking, napping, family, etc. During this time, and on this schedule, he wrote 19 books including the famous, “The Origin of Species.”

Other interesting tidbits:

  • Studies have shown there’s an “M” curve of productivity, which peaks at between 10 and 20 hours of work per week. After that, it’s lower productivity. In fact, 60-hour per week researchers were the least productive of all.
  • Great performers (music, dance, sports) didn’t practice more than the average but they practiced more deliberately. This means, “engaging with full concentration in a special activity to improve one’s performance.” It’s more than repetition, it’s focused, structured, and has clear goals and feedback.
  • The biggest factor was rest. The best scientists, musicians, dancers, and athletes, made sure they got enough rest, sleeping an average of one hour more per day than those not as good.

Interestingly, a few weeks ago I returned on Tuesday from a long weekend of fishing and other things, got in my office Wednesday morning about 8:00, at 10:00 I took my first break, realized how much I had accomplished, and noted I needed a break. It hit me how subconsciously I was doing as described in the book.

“I’m at the point where naps are a necessity not a luxury.” My best friend’s dad to my dad when both were in their 70’s

Controlling Your Customer’s Expectations

On their menus and placemats PizzaVino in Palm Desert, CA describes true authentic Neapolitan Pizza as, “It’s all about balance, The Oven, San Marzano tomatoes, Fior di Latte Mozzarella, and Doppio Zero flour.”

At the end of their description of how the ingredients come together they write,

“If you are looking for lots of pasty cooked tomato with funny Italian seasoning and lot of melted processed mozzarella then you are in for a disappointing meal. We hope you’ll order something else from our menu.”

Talk about a good job of setting customer expectations! Before you order you know you’re not getting assembly-line chain-restaurant pizza. You’re getting an old-world, handcrafted meal.

All (small) businesses should be doing something similar, i.e. letting their customers know to expect high quality (and that’s why the prices are not rock bottom). Small business is niche business and that means quality, value, and service.

Whether you provide a product, a service, advice, or a combination of all three, don’t chase the customer looking for a deal. Do what PizzaVino does – discuss quality and describe what you’re not. It builds better long-term relationships, better customers, and more profits.

“Americans who overslept invented the word brunch.” Joan Crawford

Getting Your Message Across

I’m a member of Seattle Executives Association (SEA) and we recently had elections for the board of directors. Unlike my Rotary club where there’s one person nominated for each position, in SEA it’s truly an election, with two people for president-elect and treasurer and six people for three board positions.

An interesting twist is you don’t campaign for yourself, you give a “speech” telling the group why your opponent (or one of your opponents) should be elected. What I noticed is:

All of those elected had their promotion filled with something a bit outrageous and/or humorous. Those not elected had their promoter give a talk filled with facts (went to this school, worked here and there, has these skills, etc.)

People remember stories and humor is a form of a story. An outrageous action (outrageous meaning a surprise or something unusual but in good taste) is remembered the same way.

The business lesson here is facts may be important but the delivery is much more important.

 

When Rookies Wing It

Every competent attorney will tell you they want another competent attorney on the other side of a deal, whether it’s a buy-sell deal, contract negotiation, family law, etc. They don’t want a litigator working on business transaction or a business attorney doing divorce law.

I write this based on having the experience of a recent conversation with a rookie in my industry. He didn’t understand how things are done, the process, and especially the qualifications both buyer and seller must have. If he’s like this consistently he’ll do his clients a disservice.

My business is not much different that most businesses in that we want a satisfied buyer and satisfied seller (in my business we want them equally, and a little bit, unhappy as that’s when a deal happens). So do people in real estate, retail, manufacturing, and other industries. When perceived equal value is provided and received both sides are happy.

So, what’s my point here? It behooves us all to be competent professionals whose goal is to get the work done efficiently and at a fair cost. If something is over your head, get help. Better yet, don’t take the assignment.

The person mentioned above was new to his business and came from a different industry. He needed a mentor or coach. Contrast this to the class I teach at the local SBA office on, “Dynamically Growing a Consulting Business.” The students are experts in what they do, they need help marketing and securing clients. Big difference. Be an expert first, get clients second.

“You never see further than your headlights, but you can make the whole trip that way.” E.L. Doctorow

Pace Yourself with Urgency

The Seattle Mariners, like quite a few teams, started their 2017 season very slowly, going 2-8 at one point. The press and the casual fans started to panic, then they won 4 games in a row.

You see, the baseball season is like a life, it’s long and has many ups and downs. A baseball team with a 50-50 record at the All-Star break has plenty of time, there’s still a lot of season left.

By contrast, football is like a year of life. There’s 10% of the games (in football versus baseball), and a bad few games, like a bad few months in life or business, can wreck your season/year. A football team that is 5-5 at the same 5/8 point of the season better go at least 5-1 the rest of the way or they’re in trouble.

It’s why, in life and business, we need a balance between the short and long term. We can’t panic every time we lose a deal and we can’t get overly excited when we do get a deal. Our focus should be on what we need to do every day to keep a steady stream of customers coming in our door, which means long term strategy implementation.

However, we can’t lose urgency. Some things need be done now. You can’t put off phone calls for a month and expect potential customers to still be there. I can’t miss three weeks of this memo and then have four come out in one week.

For years I’ve told all my clients (buy-sell, coaching, mentoring, etc.) if they keep doing the things they are supposed to do, good things will happen. Of course, it usually takes someone who knows what the heck they’re doing to make sure the things they’re doing are the right things being done the right way.

“Status quo, you know, is Latin for ‘the mess we’re in’.” Ronald Reagan