By Dr. Burt Smith August 19th, 2010
“You own the business, managers run the salons!”
That’s one of the value propositions expressed in an ad for Great Clips franchise ownership in a business magazine. Doesn’t that sound like the ultimate passive income? A business that you own, but trained managers run it and you basically just oversee it and cash your checks?
Undoubtedly, it’s not quite that simple, but the idea is a good one and that’s why franchises work! Because franchises are a SYSTEM that is overseen, modified, and improved by a leader like YOU. You spend more time making sure the business does what it is supposed to rather than having to actually “do” so much in it.
While the promise of a business that just runs on its own, apart from you, basically, and then sends you a nice check without you having to do much at all may be a bit of a long shot, working to systematize your business so that it can be run by someone other than you is a good idea. By building a business that is dependent upon the systems you put in place, rather than YOU having to be in place, you build a business that can grow and expand more easily. You build a business that is replicable (or “scalable” if you prefer the $3 MBA buzzword). That way, the business reaches its full potential. You’ll also find that a highly systematized business has a higher sales price when you get ready to exit the business because a good system will help the new owners recoup their investment and realize a profit that much quicker.
Warren Buffett once said he invests in businesses a fool could run, because someday one will! You know that in the long run it’s going to be tough to find managers who are going to be as good as you, so why not build a system that accounts for that? Then you can get on with enjoying the life the business was meant to give you in the first place!
If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.” - Red Adair
By Dr. Burt Smith July 9th, 2010
This just seemed like the coolest thing to me, how the space on hotel key cards is now being leased out for advertising. Brilliant! Brilliant because it’s a source of revenue for the hotels, and brilliant in its simplicity! It’s one of those ideas that makes you do an Aggie high five (that’s where you slap yourself in the forehead) and say, “Why didn’t we think of that?” Talk about creating money out of the thin air!
Key cards are being used as both a branding vehicle and a billboard. In some cases the key cards are “designer grade” and potentially even collectible. Of course, the ultimate measure of whether this is really “good marketing” or not will be measured by how many customers the advertising delivers for the organizations using the cards to send their message, but it sure gets kudos from me for how hotels are profiting from this otherwise underutilized space.
You can read about it at the Fast Company Website here if you like.
By Dr. Burt Smith June 22nd, 2010
Answer: Yes!
Technology can be both an opportunity and a threat. On the one hand, it’s a threat because a new technology can kill a great company or even an entire industry, regardless of how big a player in the industry an organization is. Imagine being Smith Corona and being a market leader in typewriters, then to make the transition to word processors, only to get slaughtered by the personal computer.
On the other hand, technology is a remarkable opportunity, because it lowers entry barriers! Just about any size business or organization can afford a computer, and there are tons of free software applications out there from business plan templates to free accounting programs. FREE! Check out places like Quickbooks and Google Docs before you spend a dime! Technology has lowered transaction costs and entry barriers in more ways than we can count!
On the other, other hand, it’s tough to compete on just technology. If we try to differentiate ourselves through our “fancy website” or that we offer “secure shopping,” before too long, the consumer says, “So what? So does everybody else!” thanks again to the prevalence of technology. Plus, because technology is changing so rapidly and so vastly, it requires an ongoing investment that we have to consider in our strategic planning. Warren Buffett avoids investing in the technology sector for this very reason.
As you might have guessed, whether techology is a threat or an opportunity largely depends on whether it’s in the hands of a capable leader like YOU!
Here are some other examples: http://www.drburt.com/Blog/?s=threat
“You can’t direct the wind, but you can adjust the sails.” - Christophe Poizat
By Dr. Burt Smith June 11th, 2010
As J.D. Rockefeller built his fortune around the turn of the 20th Century, he was often accused of exploiting immigrant labor. His critics said he hired those who had immigrated to this nation from other countries because he could acquire their labor cheaper than that of their domestic counterparts. While it is true that he could acquire immigrant labor at a discount, that wasn’t the real reason he hired them.
As H.W. Brands points out in Masters of Enterprise, the great appeal of immigrant workers was that they were not only remarkably dependable and eager to work and learn the skills required of the new jobs they sought, they were actually often more productive than the more experienced workers because they were both willing to be coached and they didn’t have to un-learn any bad habits or be re-trained! They delivered real VALUE to the organization not so much because of what they brought to the job, but because of what they didn’t bring!
Whether you’re looking for a new job or are looking to hire, consider how much more valuable being able to forego having to break old habits would be to your organization or employer. A lack of experience might turn out to be the exact reason a candidate is suited for the job!
By Dr. Burt Smith May 25th, 2010
A couple of weeks ago I had the opportunity to serve as the auctioneer for the Mark Harmon Celebrity Weekend Benefit. I’m happy to report that we raised over $100,000 at the auction event and that the money will go to benefit some great causes, including one of my favorites, the Ronald McDonald House.
I am fortunate to get to work with local and national celebrities from time to time, and people always seem to ask the same question: “So, what are they really like?” What they’re really asking, in reality, is about the celebrity’s BRAND. A brand is really nothing more than the collection of stories the customers tell about the product, when you get right down to it. Or as Amazon founder Jeff Bezos says, “Your brand is what people say about you when you’re not in the room.”
Well, here’s what I have to say about the brand called Mark Harmon. He’s simply a class act all the way. I only got to visit with him for a few minutes and found him to be very gracious and appreciative of my efforts as his auctioneer (maybe that’s why I’m so red in the face in the picture), but the lasting impression I have of him was how engaged he was with all the attendees. From the time he walked through the doors of the event he was set upon by legions of fans. They wanted their picture taken with him, they wanted his autograph, they wanted him to autograph the camera they used to take a picture of him, and on and on and on. And Mark did it all. And cheerfully! He seemed genuinely concerned that every single attendee he met went away with a good experience. So when people ask me about Mark Harmon, my assessment is that he’s simply a good sport and a class act all the way.
He even promised me I’d get a guest spot on NCIS! I’ll be playing some kind of fancy foreign diplomat, or something like that. A “cadaver,” I think he called it…
By Dr. Burt Smith May 16th, 2010
Really effective organizations recognize that marketing is not a department, but a philosophy that permeates every aspect of its operations. They don’t just decide to “do” some marketing, marketing impacts every decision that is made. Really great organizations are the by-product of great systems.
Marketing author Philip Kotler said, “The company that will win is the one with the best system.” To be competitive, we have to constantly look at every touch point, every interaction, and every component of the delivery of our brand into the mind and life of the customers we serve. We have to look at it as a system and work to hone the system so that it’s not only efficient, but is replicable across the organization, in multiple markets, etc.
Consider McDonald’s. We can probably think of a lot of restaurants where we can get a better burger, but because McDonald’s has dissected and continually improved every aspect of its system, it understands how to cost-effectively and consistently deliver a value “quick service” (which sounds better than “fast food”) experience anywhere in the world where we see the golden arches. The system involves how they buy, how they market, where they locate, and how they train their employees.
Wal-Mart is a similar example. They compete in the crowded retail sector in a number of categories, and though they sell the same merchandise as a lot of their competitors, they have the more efficient and more profitable system.
Note also how many small businesses fail because they’re overly dependent upon the owner. Because the owners don’t make deliberate efforts to replicate themselves, the business condemns itself to not being able to grow effectively and often creates its own undoing. As Michael Gerber describes in the E-Myth, small businesses can learn a lot from large ones. Great businesses are essentially the by-product of great systems.
Just as a brand is the sum total of the customer’s experiences with us, investing in a systemized approach to building those experiences will pay great dividends for us regardless of our industry!
By Dr. Burt Smith May 6th, 2010
With storm season upon us in our Great State of Oklahoma, we can count on the weather being at the center of a lot of newscasts. Ever notice how each station does their own variations of basically the same kinds of teasers?
For example, if there’s a storm approaching, they’ll say, “There’s a storm on the way, and it could be severe. We’ll have the full story for you at 6″ or “A powerful storm system is making its way into the state. How you’ll be affected and what you need to know to stay safe coming up…” If there isn’t something scary, but the weather conditions are in fact changing, they try to make the story compelling. “Weather changes are on the way. What will that mean for your weekend plans? We’ll have details at 6.” If there’s nothing but good news on the way, they’ll still try to grab us. They never say, “Nothing but beautiful weather in store for the next 10 days, so don’t bother watching the weather again until , oh, probably Wednesday or so of next week…” They’ll say, “It’s been a picture perfect day…but will it last? Tune in at 6 for the full story…” Leading us to believe that we’d be horribly irresponsible if we didn’t be sure to tune in.
I often wonder if this stuff might not come back to haunt them someday. I am grateful that we have such competent, respected, decorated weather professionals looking out for us in Oklahoma, and I certainly haven’t forgotten that the weather can have serious consequences, but I kind of wish they’d save the drama for when there really was something to be worried about. In fact, it seems like there is a station that says, “We inform you of the weather, not scare you with it” or something like that.” It’ll be interesting to see if that strikes a chord with their audience.
By Dr. Burt Smith April 12th, 2010
There’s no shortage of books on the subject of how to build wealth, and the buzzword that comes up quite often in such books is “passive income.” Passive income is often defined as money that we can make while we sleep. Money that comes our way without us having to lift a finger. Real estate is often considered such a source of income because the rent or lease money comes in every month and the property usually appreciates.
We’re all familiar with companies like Coke and Harley Davidson, who make tons of money just for licensing their brand for use on other products. Imagine the incredible margins they enjoy for just sitting back and raking in license fees from other respectable companies who so eagerly pay them for the privilege of the use of their brand image.
But have you ever considered that YOUR brand could also be such an asset? If you own the company and build such a strong reputation and goodwill in your market and industry, a buyer may show up and want to pay a premium for the valuable customer goodwill you have already built.
If you’re the kind of employee who is exemplary or, for that matter, is just consistent in his or her performance, that may help you stand out and be the kind of asset your current or a future employer values at a premium.
Or imagine being the sales person who never has to cold call. Imagine spending the first few years of your career building your business by taking care of your customers, then being able to reap the rewards of your labor later on through referral business. You could find yourself so busy that you’re almost forced to turn business away, but, fortunately, because your brand is so respected in the industry, you’re able to partner with other vendors or sales professionals and you get to collect a commission or finders fee or whatever. They do the work and YOU get money without having to do anything.
A brand is better than money in the bank! A good solid brand is like having a printing press in your basement and being able to print your own money! Let that guide everything you do, and in everything you do, remember, EVERYTHING IS BRANDING!
By Dr. Burt Smith March 30th, 2010
Most marketing texts offer a nice discussion about why the Lifetime Value of the Customer (Or Customer Lifetime Value if you prefer that term) is a critical consideration in any strategy.
The bottom-line is that it’s just so much more cost effective to grow business from existing customers than to try to go out and get new ones. When you grow the business of the existing customers (whether the frequency of their purchases, the size of the sales, or grow share of customer through the sale of additional or new product offerings), the margins are virtually 100% because there are no acquisition costs associated with that business.
Plus, any business they refer to you is also essentially at a 100% margin because, again, there are no acquisition costs. So it’s not just a nice-sounding thing to say that customers are our greatest, most important, and highest-yielding asset. It’s something we can prove with numbers. They’re our entire future! Customers ARE the answer!
“Captive customers mean stable revenues and less money and effort on marketing, especially if they make it their habit to put in a good word for you with their friends every so often. Allegedly rival products are less tempting to captive customers; therefore, you get more time to respond to competitors’ innovations. They are not so price-sensitive; therefore, you can afford to charge them a little more, and so forth.” - Dan Herman, Outsmart the MBA Clones
By Dr. Burt Smith March 29th, 2010
That’s a common question. That’s what most of the clients I have come to me asking. “I have this amount of business, but what I want is this amount of business. How can I get there?”
If you want more business, do good business. The better the job you focus on doing, the more value you dedicate yourself to providing, the more repeat business you’ll get. Those repeat customers will spend more when they come back, and the more likely they’ll be to tell others who will come do business with you, will give you repeat business, will spend more when they come back and will tell others about you who will come and do business with you, and so on, and so on, and so on.
That may not sound like a glamorous, magic bullet of a marketing strategy, but I’ll bet if you really give it a try, you’ll be happy with the results you get. Granted, it may not be easy, but it really is that simple. Take care of your customers, because in marketing, customers are the answer. If you want more business, do good business.
“The winner ain’t always the one with the faster car, it’s the one who hates losing the most.” - Dale Earnhardt
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