Business plans everywhere. I’m reading, annotating, filling in score sheets, and getting cranky. I explained that on this blog last Monday.
So what’s with the unrealistically high profitability projections? This year it seems like I’ve discovered a new 50-50 rule of profitability in business plans, as in, 50% of the plans I’m looking at project 50% or higher profits on sales.
That reminds me of a song my youngest daughter used to play: “That Don’t Impress Me Much.”
Occasionally a very successful startup will come up with something so new that it can, for a while, chalk up very high profit margins. That’s extremely rare. Out here in the real world, though, nobody really makes much more than 5-8-10% or so profits on sales. The real startups might make 15% or even 20%.
Projecting 40%, 50%, and even 60% profitability on sales doesn’t tell me you have a great business; it tells me you haven’t done all of your homework. You’re underestimating cost of sales, expenses, or both.
I find this particularly galling in business plans with some social implications, related to health care, or education.
What would I like to see instead? First, find out average profitability for the industry you’re in. Put that number into your plan. Then explain why your company’s projected profitability is higher. Proprietary technology, specialty niche market, new processes? Okay, I can take that; just be aware of what the normal is, so you know what you’re up against. Please.
Standard financials are available from several vendors, for less than $100 per industry (and here I can’t resist adding that they’re bundled with Business Plan Pro, my company’s software product. Sorry. I’m an entrepreneur. I can’t help it.) You can also get those from Oxxford Information Technology, or the Risk Management Association (RMA).
To me it used to be about well-known experts whose names became brands in an almost-traditional business sense: Guy Kawasaki, Seth Godin, Tom Peters; they were experts whose names sold books and speaking engagements. Lately my view of personal branding has expanded as I start following John Jantsch, Anita Campbell, and Pam Slim, for example; bloggers, tweeters, authors, and experts.
I like to think that my favorite experts, my favorite personal brands, are authentic. Guy Kawasaki really is an investor, really was an Apple evangelist, and believes every word he says. Seth Godin has built his remarkable name around remarkable marketing. John Jantsch lives for Duct Tape Marketing, and Anita Campbell for Small Business Trends. These are real people.
And, whether you like it or not, you too are a personal brand. Much as I dislike the phrase personal branding it’s not just for big names any more. It’s for just about everybody who has enough online access to be reading this post.
Whether you like it or not. Which brings me to Me 2.0, Dan Schawbel’s new book — due out today — on personal branding.
Reading Dan Schawbel on personal branding is something like a mirror image of a mirror. He has a great personal brand. He’s always on Twitter, often on major business blogs (not to mention his own) and is frequently quoted in business magazines. And he’s only 24 years old.
Like his book, and his quick career success, Dan is completely immersed in the realities that have grown up in just the last few years: Facebook, MySpace, Twitter, LinkedIn, and so on.
It may be that being young wasn’t even an obstacle, in his case, because that whole world began on college campuses (mostly) and then spread to the old folks like me. So of course he’s only 24. How could he not be?
And he’s got some very good advice to share. Beginning with his main point, the “like it or not” truth about it. Personal branding is no longer an elite concept reserved for a few big-name authors, columnists, or experts. The new world of the 21st century, with social media and Web 2.0 and Google and friends, makes it a fact of life for just about everybody. He tends to focus a lot on the Gen Y college student looking for a job and starting a career, but he would, wouldn’t he. There’s a lot of specific, detailed, real-world advice here about how to get your first job and manage your career, in the context of social media, blogs, Facebook, Twitter, and friends. And a lot of what he says applies just as well to an old guy enjoying his journey into social media. I had to chuckle: what is “Me 2.0” to Dan is something like “Me 11.0” to me. I’ve been around longer.
I still hate the phrase. Personal branding sounds to me like white suits and pink ties and gold chains. I wish we’d called it personal footprint, or something like that. Maybe just engrave the phrase “this goes on your permanent record” on every keyboard.
When I started in journalism close to 40 years ago, one of the better teachers suggested that we also keep an ego file, always, of things we’d written. Today it’s almost reverse — Google and friends keep the file of things you’ve written, whether you like it or not. And Dan points out that you should think about it ahead of time, and make sure you like it.
He tells some good stories: Facebook stupidity, for example — the guy who was convicted for a crime from evidence he posted on Facebook, and the almost-urban-myth of the woman who skipped work because she was “sick” but posted her free-day fling on Facebook.
Much more important than that, however, is a well structured review of how the new world almost requires an awareness of personal branding. Unless you’re outside that new world you can’t escape it, and you can, with some good thinking and organization, manage it. Visibility is there.
Some key points that apply to me and my baby-boomer friends as we enter into social media:
Authenticity: You can’t fake it for very long. You have to actually be yourself, or the effort to be that other person is overwhelming.
You have to live with who you’ve made yourself to be in things that show up in Google and friends.
Better to think about it and organize it — like a standard profile, picture, and personal statement — than to let it be random.
It’s amazing to me that Dan is only 24 years old. But maybe that’s the point. He’s onto something.