Tag Archives: news

A True-Story Reminder About Pricing In Consulting

True story: back in my business planning consulting days, 1983-1994, Apple computer was by far my best client. I worked for the Latin America group, then Apple Pacific, then Apple Japan, and a bit for Apple USA and Apple Europe. I facilitated a lot of business plans, and did market research and some country plans, single-issue plans, and so on. I also worked with other clients, of course; but I depended on Apple.

money trapI priced my consulting by the engagement. The client would describe the job, I’d write a proposal, set a pricing and billing schedule, and then stick with it.

There was one person, among several dozens I worked for, who had a pattern of scope creep: meaning that after we’d agree on what was to be done for how much money, as I delivered the work in stages, he’d consistently want more than what had been agreed. It was always “But what about this” and “have you followed up on that?”

And it’s hard, as you know if you’re in this kind of expert business, to tell the client too often that what he or she is asking for is beyond the scope of the project. Sure, you have to sometimes, but it’s never easy.

So here’s my nugget about pricing: after I worked with that person and had that happen once, I was concerned with the problem. The second time he asked for a job, I wrote the proposal much more carefully, trying to block out scope creep; but it happened anyhow. The third time he asked, I calculated what I would normally charge, and tripled it.

That pricing idea worked. I didn’t want to have an enemy embedded among my favorite clients. So he didn’t accept that proposal, and I didn’t do any more work with him after that. But we remained on good terms at meetings, and he didn’t lobby against me when my name came up.

The worst I heard he said about me, second hand, was “how can you guys work with him so much? He’s really expensive.” And that was fine with me.

5 Steps for Dealing with Social Media Malice

Let’s say you’re involved in social media for your business and you’re the victim of a social-media attack. Somebody you don’t really know singles War Gamesyou out because he’s mad at your company, or had a bad day, or whatever; and launches an attack out of the blue, mentions you and the company you work for, and claims you treated him badly. Ouch.

So you’re just doing your job, doing your best, dealing with a lot of people at once, and suddenly somebody targets you. They are messing with your business reputation. It happens a lot. People whose job involves dealing with a lot of people do become the target of personal anger that’s really directed at the company, the situation, or life itself (sometimes it’s one of those bad day things, a last straw situation) and it ends up feeling really rotten, like having an enemy for no good reason.

So let’s say that has happened. You’ve been blindsided by one of these attacks. What do you do now?

1. Stop, breathe, think.

Remind yourself that the meanness usually shows. Assume you’re dealing with an idiot. At least the smart people who encounter one of these attacks will see through it. They’ll click links to see where it started. They’ll see the malice if they look.

2.  Don’t take it personally.

I know this is hard. We talk about thick skin, but jeesh! People can be really mean sometimes. Why do they take their anger out on you? Remember that if part of your job is dealing with a lot of people, then these things come with the territory. You have to have thick skin about it because if it spoils your day then that’s bad for your health on the long term and it makes you unhappy. The idiot had the power to make you stop and think about a response. That’s all. Don’t give him the power to ruin your day, or even your hour. He ruined your moment. That’s all.

3. Decide whether or not to respond.

Sometimes the most eloquent response is silence. Be careful, though, because more often than not, silence gives the wrong impression. And it might even be bad for your health too.

Remind yourself that you can’t argue in social media. Like it or not, what you put in Twitter or Facebook is publishing, and it lives forever. Angry words are not biodegradable.  Like in the movie War Games, the only winning move is not to play (by the way, you can click the picture up above for the Youtube video, or just scroll down).

4.  Settle your anger and hurt first, then respond professionally.

If you should respond, take your time, be careful, clear your head first, and give a single response you can live with forever. Don’t argue, apologize. If an apology makes sense – don’t take it personally, this is business, you didn’t mean to offend, you didn’t realize, it was accidental, part of your job – make it a clear, clean apology that covers the whole issue. Make it one you can live with, without further comment, forever. Make it a response that shows the world that this was one-sided only.

Don’t get mad, get even. Expose the idiot by staying professional and not engaging.

5. Then forget about it. Let it go. Get on with your day.

If you like this job, and you like dealing with people, then of course this hurt your feelings, but you have to get over it or it continues to hurt your feelings. The idiot spoiled your moment, and that’s his fault; but if you brood over it or stay angry or hurt, then that’s your fault. Because what happens now is in your control. You can minimize the damage, or not.

And for extra credit…

Even though it’s been more than a year now since I wrote my 18-point Twitter Etiquette Primer, I believe all of it as much or more now. I did have “don’t argue with people in Twitter,” but I didn’t have “don’t use Twitter as a weapon, a threat for blackmail, or for venting.”

Have you seen that bumper sticker that says “mean people suck?” What do you think of people who blindside other people by broadcasting personal complaints on social media? Pie in the face might be funny when the Three Stooges do it in black and white film, but mud in the face in social media isn’t. It’s meanness multiplied by social media influence.

Now here’s that video:

How to Make Personal Posts Into Good Business Blogging

This is good advice for any father, any day: Top Ten Father and Daughter things to do, by John Espley on an Accent Inns blog;  but I’m posting about it for its blogging and business implications more than just its content. If you’re a parent, of either gender, and whether you have daughters or sons or both, it’s good advice. And whether or not you’re a parent, it’s an interesting example of business blogging.

Here’s why:

1.  Focus is better than general.

Blog screen shotHaving been a father for 38 years now, and a son for 62, I feel like I know this territory pretty well. I’m father of four daughters and one son. The advice John gives on Father’s Day, focused on father’s and daughters, is as valid for fathers and sons, or mothers and daughters, or mothers and sons. Okay, there’s some male gender stereotyping, perhaps, in camping and fishing; but it’s still valid on a larger more generalized scale. By focusing on fathers and daughters, and doing it on Father’s Day, John makes it more powerful, not less.

2. You can’t fake real. You have to be authentic.

I’ve never read John Espley but as I read his post today I totally believe he’s the father of a young daughter. He couldn’t fake it.  That makes his focus in point #1 stronger. He adds real details. His father-daughter suggestions are all things he’s done with his little girl. It’s obvious. And maybe this is why focus works — if he talked about father-son or parent-child, it wouldn’t be as specific, and the details wouldn’t feel as real as they do.

3. Attack the expected. Blow stereotypes apart. Surprise people.

It’s sad that camping and fishing are stereotyped as father-son activities, but it’s also true. So when John leads with camping in father-daughter mode, he goes off track. It’s unexpected. Dog bites man is boring, so this is man bites dog. That’s always more interesting. Screw stereotypes. That makes better reading.

4. Authentically personal stuff can be good for the business

John is business development manager of Accent Inns. Notice that his post isn’t about Accent Inns or the lodging business or travel in British Columbia; and it starts out recommending camping, not staying in an Accent Inn. However, I think it still fits, somehow, with John’s business position. Here I am blogging about Accent Inns, because of his post. I’ll look at them first the next time I’m headed for BC, because I like that post. And camping and fishing gets people out and about, and could involve a stay at the inn as part of the program. I think this is a good example of how personally authentic is also business friendly.

Frankly, I struggle with this a lot. Blogging is a big part of my job, but nobody pressures me to post about the company or the product. Occasionally I do because I can’t resist. But my blog is about me and what I think, stories I want to tell, advice I want to give, mistakes I made that you should avoid, and so on.

Lately I’m watching this same struggle again (and funny how this goes back to the father-daughter theme this post started with) as I watch my daughter Megan blogging as marketing manager for Klout, which measures online influence. She just did a great post on Mashable on Twitter strategies, without specifically mentioning Klout. But metrics are critical to strategy and Klout is the best in the business on Twitter metrics. Should she have mentioned Klout specifically? I doubt it. Does she lose credibility if she does? I think so. No matter how well you do it, if you’re pitching a product people sense it and it diminishes the realism and authenticity.

(ps: thanks to Ross Dunn for putting that post on Twitter. I wouldn’t have seen it otherwise.)

Why Business Planning is Like Regular Exercise

I’ve been meaning to post about this for a couple of weeks now, ever since somebody tipped me off to Gentle Nudges Work to Get People Exercising on WSJ.com. That report cites research showing that regular reminders helped people get regular exercise. Phone reminders from real people worked better than computer reminders. And both kinds of reminders worked better than no reminders. And people exercising in teams were more consistent than people exercising alone.

I’ve often compared business planning to nutrition and exercise. It’s a process, related to good and bad habits, properly applied over a long term; not a sudden burst. And people who cite the misuse of the business plan document as an argument against good planning are using the same faulty logic as people who cite starvation diets and running a marathon without training as arguments against nutrition and regular exercise. In all three cases, what works is the long-term consistency instead of the short-term burst. Good business planning is like regular exercise, not like running a marathon all at once.

Here’s a snippet of the WSJ report:

In the Stanford study, 218 people were divided into three groups. [For a first group], a Stanford health educator called her and other members of her group every three weeks, on average, for a year to ask about their compliance and to cheer them on. A second group of participants received calls not from humans but from a computer programmed to make similar inquiries.

After 12 months, participants receiving calls from a live person were exercising, as a mean, about 178 minutes a week, above government recommendations for 150 minutes a week. That represented a 78% jump from about 100 minutes a week at the start of the study. Exercise levels for the group receiving computerized calls doubled to 157 minutes a week. A control group of participants, who received no phone calls, exercised 118 minutes a week, up 28% from the study’s start.

Think about that related to business planning. Regular reminders worked. The goal was consistency over time. Real business planning for real entrepreneurs and small business isn’t a matter of creating a big formal business plan, but instead, setting goals and metrics and tracking and following up with management and steering. It’s a planning process, not a plan. While the thinking and insight in developing a plan can be valuable, the more more significant value comes from the process of the plan review and tracking and course corrections that follow.

In my writing, my workshops, and whenever I get a chance, I say start a business plan by doing a review schedule first. That’s a good way to establish, from the beginning, that the plan is about planning, and it’s a process, where the value is consistent application of plan review and course correction over the long term. Consider that a kind of pre-scheduled reminder system.

If you’re serious about building or growing your business, build in the business plan review meetings from the very beginning. And remind all the team members. And stay true to that process, so you meet once a month to review and revise the plan.

5 Business Fundamentals I Learned the Hard Way

Two days ago I had the pleasure of being interviewed by John Caddell, founder of the Mistake Bank, for a podcast focusing on mistakes. That made me think about some of the things I learned that came from the business mistakes I’ve made. This is over the more than 27 years since I was last an employee, and 22 years of running my (well, our) own business. And despite a fancy business degree.

1. Your employees can’t also be your friends.

Most business owners want to treat employees like friends. We hire people we think we like, we work with them, we share values, so it’s only natural. But I’ve found, I’m afraid, that it doesn’t work.

Sometimes friends become employees, and sometimes former employees become friends, but don’t kid yourself. People you pay aren’t really friends. And business requires management, which means goals and tracking and accountability and feedback, which, ultimately, means you aren’t equal. You can’t be both equal and effective.

As a test, ask yourself: when those people you thought were friends leave the company, are they still friends?

This was really hard on me because I brought my anti-establishment quasi-hippie former ’60s persona with me into my business. I’m not naturally comfortable with hierarchy. But in a real business, it has to be there. I learned this the hard way.

2. Profits aren’t cash.

Profits are just an accounting concept. You get them by adding up the sales you make over a specified time and subtracting the costs and expenses. But having the sale doesn’t mean you have the money; and the cost associated with that sale might be something you paid months earlier. And furthermore, the money you spend to repay debt or buy assets is completely ignored by profits.

So it’s not hard to go broke while still being profitable. I learned that in business school first but then had to relearn it 15 years later when my company suddenly doubled sales and profits, but it nearly killed us. We were selling through channels, so money from sales came five months later, but we were building inventory and spending on marketing months in advance. So we were spending in October for sales made the following March that generated deposits into the bank in the next July. We nearly went under during our first big growth spurt. So I learned about cash flow the hard way.

3. Good liars are rare but dangerous.

Most liars are obvious and easy to spot, but last week I was chatting with an investor whose firm got into trouble for not catching a problem before they invested. He felt bad. It looked like their “due diligence” process failed. But he said:

“If you think about it, we rarely run across a person who can look you straight in the eye and lie through their teeth without showing it. We’re not equipped for that. When people answer straight direct questions with straight direct lies, they can get away with it.”

That made me think. Lots of people tell lies at odd moments, make excuses, try to squeeze out of things; but with normal people, that kind of behavior trips them up on a regular basis. But the power of the person who lies very well is something else altogether. That’s another one I learned the hard way.

4. You have to live with mistakes.

If you can’t stand mistakes, don’t make them, and don’t tolerate them, then you’re not cut out to have your own business. You are going to make mistakes, you can count on it. You have to be quick and flexible about recognizing mistakes, acknowledging them, and taking whatever steps need to follow them.

In Robert Sutton’s 12 Things Good Bosses Believe, posted last Friday at the Harvard Business Review, he says:

One of the best tests of my leadership — and my organization — is “what happens after people make a mistake?”

I agree. I had to learn that the hard way.

5. You can’t do everything, so at least try do the right things.

I call it displacement: everything you do rules out something else that you can’t do. Every entrepreneur wants to build every possible product to please every possible customer. I do an you do too. But we don’t realize, or at least I certainly didn’t for a long time, that trying to do everything doesn’t work. You end up not doing the really important things as well as you should, getting things only half done.

You try to focus. Take a step back out of the chaos, clear your head, and revisit priorities. What really matters? No matter what brilliant ideas you may or may not call your strategy, your real strategy is how you spend your time and your money. I learned that the hard way.

Can You Have a Business Identity on Twitter?

Imagine a conversation, maybe a group of people standing around talking at a cocktail party or networking event. One of them wears a logo suit, like one of those mascot costumes, that hides the face and presents the person as the logo character only. Maybe it’s something like Ronald McDonald, or Tony the Tiger, the Pillsbury Doughboy, or that Michelin tire character.

Zappos on TwitterWhat sort of conversation is that going to be? If the other people gathered around are people, representing themselves, how comfortable would they be with the logo character?

Let’s assume that all of the others are spouting points of view, equivalent to content. I’m there talking about business planning and small business, you’re there talking about your favorite topics, and we probably share opinions and suggestions about other topics that come up. So we’re aware of our business selves and our various sets of expertise; but we’re still people. And the logo characters aren’t. Or so it seems.

So I’m watching how this works.

I use the Zappos example in the illustration here because that’s an interesting compromise. We see the person behind the curtain, he or she even introduces themselves. That’s sort of like the person in the conversation wearing a company shirt, or name tag. I get it. I’m assuming we follow them, temporarily, if we have a customer service issue.

I see people identified with companies. Scott Monty of Ford, for example. Tim O’Reilly of O’Reilly Publishing. That seems to work well for them, and it works for me too. They’re the person, not the company. I follow them if I like what they’re saying.

I see companies that tweet as companies, announcing deals, sales, products, seminars, and so on, as companies. The moving taco stand tweeting its location. Those tweets don’t seem to come from people. I’d follow them if I had a customer reason to.

I still think the business side of Twitter works best for those individual experts who are there as people, but, when topics come up, people with experience and expertise and opinions. I’d like some, but jeez, I’d need to list hundreds of names. It’s the people tweeting that makes Twitter interesting, not the companies. For the people doing expert business as themselves, Twitter is a very powerful business-related conversational platform. That’s cool. But it’s still conversation that really works.

In Praise of Not Knowing

“I don’t know” is one of my favorite phrases. It’s a sign of intelligence. As far as I’m concerned, smart people deal in shades of gray, or better yet, shades of color, but not blacks and whites. People who are sure they’re right about something impress me a lot less than people who recognize they may be wrong.

diceEarlier this week I dealt with a doctor known to be one of the very top people in his field. He was very comfortable talking about what might be true, or what was likely, or what he guessed, without claiming certainty. And he reminded me that true expertise gives people the confidence to recognize limits, and acknowledge so many things that are less than certain.

You know those people who know everything? That must be exhausting. I’ve never found knowing everything an attractive quality in a job applicant. I’m much more inclined to like the person who recognizes a lot of possible alternatives and thinks in terms of “on the other hand” for every question. I think understanding the question is often more useful than knowing the answer.

I’m not advocating ignorance. Of course it’s good to know where you left something, or how to get there, or how to do that. I like it when people know what’s going on, generally, and know their business and their areas of expertise. I want people to know the product they sell like the back of their hands.

I’m not arguing against planning either. In a business plan context, for example, I’d expect you to know standard industry averages, general market data, details about your business offering and your management team, specific customer data, past financial history, competitors, substitutes, and so on. But I don’t want you to be so damn sure of the future. I want you to realize that your plans will probably change. That doesn’t meant you don’t make plans; having them makes them easier to change quickly and effectively. It does mean you don’t get too obsessive about it.

But certainty gets way less attractive when it has to do with business strategy, business advice, planning, motivations, dealing with people, health, relationships … and, yes, of course, even the age-old favorites, religion and politics. Or who said what, when, and what they meant. We’re all guessing. And what you think you heard might be very different from what I think I said. An open mind is a good thing.

And one good way to never make a decision is to wait until you’re certain. Few if any important business decisions ever happen with any kind of certainty. You guess the future. You recognize that you might guess wrong, and that, often enough, even good decisions have bad outcomes. If you have to wait until you’re certain, you’re not making decisions right.

You want an alternate measure of intelligence and understanding? Then ask yourself this: can you see both sides of an argument? Can you understand multiple points of view? If you respect uncertainty, you’ll understand business and your customers better.

3 Things Every Entrepreneur Needs to Know About Exit Strategies

I’ve been hearing that phrase, exit strategy, for about 30 years now. I used it a lot as a standard component of business plans back in the 1980s when I made a living writing them. And I ignored it myself as I built my own business, for really good reasons, for a long time. I figured out what it really meant, fairly late in the game, but in time for me. I think I can make it easier for you.

water cave exit1. The exit is when you sell the business.

Sorry if that’s obvious, but not everybody understands. In the classic high-tech high-end startup context, it’s either going public (meaning you get all registered up and sell your stock on a stock exchange, to anybody who wants to buy it) or being acquired by a larger company for publicly traded stock or money. In the small business, it’s selling the business to a buyer, or, in some cases, passing it on to the next generation of your own family.

If you don’t need outside investment, and you’re in the business for the long term, you might think you don’t need an exit strategy. You’re right, at least for a while. But even the long term becomes short term eventually.

2. Investors need exit strategies.

If you want outside investment then you have to have an exit strategy. Real investors don’t make money on your healthy company unless it sells all or part of itself. It’s cut and dried with outside investors: either you have a believable exit strategy, or investors don’t make money.

By the way, maybe I should say “if you need” outside investors instead of “want outside investors.” If you don’t need outside investors, believe me, then you don’t want them.

And if you don’t need outside investors, exit strategy can wait. But it will come.

3. Every entrepreneur eventually needs an exit.

OK, you’ve noticed I have a theme here. You need the exit strategy for sure, and right now if you need outside investors. But even if you don’t need outside investors, you’ll need the exit eventually.

You get older every day. Eventually you’re going to exit, whether you like it or not. Better to plan it. You get tired, you get health problems, you get older, and life changes. I was lucky, because we had a hard-working, loyal, smart next generation ready to go. That was more from good luck than good planning.

Think ahead. Look for the right opportunities. For example, there are some baby-boomer entrepreneurs feeling the need to sell during the great recession, having to take what they can get during a very bad market. I’m not saying they could have predicted the recession (black swan, in my opinion); but they could have been thinking about exit or succession.

Ultimately, it’s about people. Nobody lasts forever. You can aim for a business that survives a succession, or one you can sell. Aiming and planning doesn’t mean it will happen; but it can help.

(Image: Eugene Sim/Shutterstock)

Bonus material: 6 tips for involving your kids in your business

2 Essential Rules for Giving and Getting Advice

Advice is a part of life. Smart people listen to advice, think about it, and decide later for themselves. I’ve been on both sides of the advice exchange as much as anybody, as a son, father, and grandfather, sure; but also as a business employee, a business founder, owner, and manager. And as a so-called expert, teacher, writer, blogger, and ask-the-expert answerer.

Having dealt with this for several decades, I think there are two absolutely essential rules for dealing with advice. This includes business and personal advice.

1. Give advice like you give a gift.

giftYou choose the gift, wrap it up, and present it to somebody. After you do, it’s theirs. You don’t stand over them to make sure they use it, right? Can you give advice without investing yourself in whether or not it’s taken?

Once you give the advice, let it go. Let the recipient decide what to do with it. With gift giving, ownership changes hands. So too with advice giving. You don’t own it. You don’t care what the receiver does with it. If you do care, then it wasn’t really advice, and it wasn’t really a gift.

Don’t follow up. Don’t ask the advice recipient what happened next. Let it go.

2. Receive advice like a gift.

Don’t we teach children to say thank you and, whether or not they like the gift, to pretend they love it? We say: “That’s just what I always wanted.” We don’t say “that’s the last thing I needed. I can’t use it.”

But how often do people react to the gift of advice by making it clear they didn’t need it? I do it, too. It seems to be some kind of negative instinct. Sure, you know everything, I understand. I do too. But is there a chance that somebody, someday, might be able to offer you something useful? Better to stay open to the possibility, right?

Instead of rushing to show how useless that advice was, if you don’t like or want or need or want to use the advice you’re given, act as if it were a gift. Put it aside for the moment as if you value it, and then let it go. Better yet, you open your eyes, think about it, and then make your own decision. Base it on the merits.

If you don’t follow that advice, don’t mention it again. If the giver asks, explain that you valued it and thought about it thoroughly and finally adapted it to your exact situation. And thank them again.

(Image: Tanya len/Shutterstock)

Business Plans are Never Done

If your business plan is finished, your business is finished.

I’d like to think that this is obvious, but a lot of people don’t get it. A business plan isn’t supposed to be finished, ever. If it’s useful to your business, then you keep it alive. You review it regularly. You check assumptions and how they’ve changed. You compare plan versus actual results and make course corrections.

It’s supposed to be like the farmer’s axe: the handle’s been replaced 10 times and the blade three times, but it’s still the same axe.

Like that axe changing its parts, expect your business plan to change. Parts of it will be replaced as reality rears up its ugly head and messes with assumptions. But the plan goes on and on.

For example, Palo Alto Software is 22 years old. The business plan has never been finished. We take a fresh look at it once a year, and review plan versus actual results every month. When we discover that assumptions have changed, we review the changes and the impact of the changes, and adjust the plan.

Maybe 10 or 15 times in 22 years, we’ve had to dress up the plan and send it to somebody outside the company. We did that to get the merchant account initially, to set up a commercial line of credit with a bank, and when we were looking at possibly taking on investors. Each time we needed to present a plan, we took the real plan — the live plan — and we reviewed, edited, formatted, and produced a document. And that document, once produced, is no longer the plan. It’s just the dressed-up view of the plan as it existed that particular day.

So the plan lives on. Unfinished. 22 years later.