The 8020Info Water Cooler
Highlights from the latest information
for managers, leaders and entrepreneurs
1. Seven Biggest Financial Mistakes Companies Make
Brian Hamilton has started two companies, and through that process has seen how companies flop. On Inc.com, he shares seven mistakes to avoid:
- Hiring in advance of revenue: Many times in business you receive contracts or the promise of revenue. But there is a major difference between having revenue and almost having it, so don’t count your money until it’s in the bank.
- Borrowing money when you don’t really need it but the bank is willing to lend it: The bank is in business to collect interest, not to optimize your financial performance.
- Not paying payroll taxes on time: Mingling the funds you collect for the government with your own firm’s resources only gives an inflated sense of your true cash balance and inevitably at some point needless anxiety.
- Pricing too low: Unless you’re Walmart it’s almost always better to sell fewer units at higher prices than to sell more units at lower prices.
- Permitting accounts receivable: When you offer credit, you become a bank as well as a service or product provider, a situation with attendant risks. Unless there is good reason, don’t offer credit to customers.
- Counting on one source of revenue: You don’t want a majority or all of your revenue coming from only one or two sources, so if that happens build alternatives.
- Hiring too much overhead: Be wary of hiring people who don’t sell or produce anything directly.
2. Four Pricing Strategies to Consider
Setting prices can often be a nerve-wracking experience for small organizations. On RainToday.com, marketer Eric Rudolf offers four strategies to consider:
- Set your prices relative to value or quality: Determine your price according to how you want to signal quality or value relative to the competition. If you want to indicate higher value, set a higher price. This works when there is a real difference in value or perceived distinction between competitive services.
- Set your price based on relative features and benefits: Take your competitors’ prices as a baseline, and then raise or lower your price based on the presence or absence of specific features and benefits. The method is intuitive, and mirrors the decision-making process by which most customers evaluate offerings.
- Set your price to compensate for discounts to or by resellers: When your product is generally not sold directly to consumers, you may set your list price higher than you would normally if you know resellers will demand heavy discounts from you, and perhaps sell your offering at a discount as well. It allows you to maintain a certain margin on sales, while still giving resellers a standard percentage discount and some room for them to sell at a discount.
- Set your price based on convenience: If your product is more convenient to buy, easier to use, or has a better level of service than comparative offerings, charge more than everyone else. Convenience counts, after all.
3. Make Sure Your New Person Doesn’t Quit
Workplace consultant Andrea Levitt believes it’s a little insane how much time and effort we spend recruiting new people only to blow it with them as soon as they step in the door for their first day at work. On her Water Cooler Wisdom Newsletter she offers this advice:
- Don’t have the new employee start on a week when her direct manager is either out of town or busy with a project deadline. “This will give the new employee a feeling of being disconnected,” she notes.
- Plan to introduce the new person to contacts strategically in the first few days. You want to link her to people who are friendly and positive about the organization, and save her from the cynics.
- Don’t keep the new employee waiting on the first day. It signals how little regard you hold for the individual if she has to spend the first half hour in the lobby with the reception staff, like a piece of furniture.
4. The Fire Hall Approach to Disruptions
Imagine you’re a firefighter, handling your cleaning duties or training at the fire hall, when the bell starts ringing. Everything is overturned, and you respond immediately, without a second thought.
Productivity expert David Allen points to that scenario and asks why you expect your office to be any different from a fire hall. Firefighters expect interruptions and prepare for them, and so should you. “Your ability to deal with surprise, elegantly and proactively, is your personal and organizational competitive edge,” he writes in his Productive Living Newsletter.
5. Zingers
- Need to set some priorities for today? Answer the following question: What would I work on if I only had two hours for work today?” (Source: The Positivity Blog)
- Here are three reasons to enjoy failure: You’re closer to your destination; failure means you’re trying; failure can be a wonderful grounding experience. (Source: Winning At Work newsletter)
- The hardest workers in your organization may not be the top performers. Often the hardest working performers are in the middle group of an organization, wedged between the top performers and the poor performers. That may include people who just started or those having a challenge finding the daily habits for success. These people want to achieve, and are encouraged by recognition — it doesn’t have to be extravagant, even just a handwritten note to sustain their efforts to attain success. (Source: The Fortune Group)
- When dealing with customers, you want to be a trusted advisor. And customer service consultant Jeff Mowatt says it comes down to six words, the same six words you would expect if you asked for advice from a close friend who had travelled in a country you want to visit: “Knowing you, here’s what I suggest…” You need to develop that same level of knowledge and trusting, personally relevant relationships with your customers. (Source: Influence With Ease Newsletter)
- The first sign a project is in trouble, says entrepreneur Seth Godin, is when your subconscious starts poking around for excuses. Indeed, sometimes we are so eager to grasp on to excuses that we start developing them even before the project begins! Instead of seeking excuses, he suggests we need to be obsessed with avoiding them. (Source: Seth’s Blog)
6. Q&A with 8020Info:
Starting a Book Discussion Group
Question: I have been talking with a few friends about starting a monthly business book club. Any suggestions?
8020Info Associate Harvey Schachter replies:
You can probably save yourself some grief by clarifying your intentions. Is it to get each of you reading 12 books a year, or is it to probe and discuss ideas?
Book clubs vary widely. In some cases, one person might take on the reading for the month, and then start the session by giving a solid summary, which leads to discussion. In other clubs, the most common form, everybody reads the same book, which allows for a rich discussion as everybody shares their own interpretations.
The latter approach worked well for a group I belonged to, albeit not on business books, since it was always fascinating to see what aspects of the book struck each of us and how we could come to such different conclusions from the same words. That group eventually decided, however, it really preferred discussion to the reading (and some members were finding the reading burden heavy), so now we discuss interesting articles on a theme, or videos, or a single chapter from a book. It’s a discussion group now, rather than a book group, and is another model that might be worth considering.
So spend some time probing your intentions, concerns, and ability to commit time to this venture.
As for book selections to take on, I’d suggest keeping it varied. Books vary not just by subject area (leadership, marketing, or strategy) but by style. You may want to mix those up — for example:
- a personal biography
- an academic study
- a how-to book
- something written in the style of Malcolm Gladwell, with gripping storytelling
- a journalistic account of a company’s rise or fall
- an account of a consultant’s work or research.
Increasingly, I find people I respect saying they learn about leadership better from reading standard biographies — not necessarily business biographies — and so you may want to consider choosing from a broad base of books.
Recent books of interest might be The Progress Principle by Teresa Amabile and Steven Kramer; Designing For Growth by Jeanne Liedtka and Tim Ogilvie; Drinking From The Fire Hose by Christopher Frank and Paul Magnone; A First-Rate Madness by Nassir Ghaemi; Enchantment by Guy Kawasaki; or Have A Nice Conflict by Tim Scudder, Michael Patterson and Kent Mitchell. Steven Covey’s new book, The 3rd Alternative, will hit the shelves in early October, and has an interesting approach to dealing with differences between people.
For some older books, you might look to 10 classic book reviews I recently compiled for The Globe and Mail:
http://www.theglobeandmail.com/report-on-business/careers/management/management-advice/top-10-management-book-reviews/article2148655/.
Good luck!
7. News From Our Water Cooler:
Twitter Town Halls
Recently we’ve been working with Kingston Police on a series of public consultations to inform development of their next three-year business plan. They demonstrated a textbook case on how to turn public sessions into simultaneous Twitter town hall events, tweeting questions and discussion highlights while feeding back online commentary as we facilitated the live session.
It was impressive how their tweets prompted an active social networking conversation on how to improve police services and make the community safer — more than 150 tweets and responses over a couple hours, with input from across the community as well as senior police officers in Toronto, community capacity-builders in Seattle and followers in England intrigued by the dialogue.
So the conversation took place both on-site and online at the same time. And some of those tweeting one night also found themselves persuaded to come out to a live event a couple nights later — the conversation crossed time and channels. We understand the local college may make it a case study for their Integrated Marketing Communications students.
Kudos to the planning team at Kingston Police for the way they leveraged their social media initiative: it delivered exactly the kind of public and social networking engagement that makes a difference when it comes to effective dialogue and collaborative planning with the community.
8020Info helps teams develop, communicate and implement their marketing communications, research and strategic plans more effectively. We would be pleased to discuss your needs and welcome enquiries at (613) 542-8020, or by email at watercooler@8020info.com
8. Closing Thought Top
“To see what is in front of one’s nose requires a constant struggle.”
— George Orwell