Continued from yesterday… a return-to-basics call that gives permission to do the uncommon to achieve the uncommon: consistent profitability (or doubling of it) in 3 months or less.
6. Repetition is Usually Redundant- Good Advertising Works the First Time: Use direct response advertising (call-to-action to a phone number or web site) that is uniquely trackable, fully accountable advertising, instead of image advertising, unless others are pre-purchasing to offset the cost (e.g. “If you pre-purchase 300 units, we’ll feature you store/URL/phone exclusively in a full-page ad in…”). Don’t listen to advertising salespeople who tell you that 3, 7, or 27 exposures are needed before someone will act on an advertisement. Well-designed and well-targeted advertising works the first time. Cancel anything that cannot be justified with a trackable ROI.
7. Limit Downside to Ensure Upside- Sacrifice Margin for Safety: Don’t manufacture product in large quantities to increase margin unless your product and marketing are tested and ready for roll-out without changes. If a limited number of prototypes cost $10 per piece to manufacture and sell for $11 each, that’s fine for the initial testing period, and essential for limiting downside. Sacrifice margin TEMPORARILY for the testing phase, and avoid potentially fatal upfront overcommitments.
8. Negotiate Late- Make Others Negotiate Against Themselves: Never make a first offer when purchasing. Flinch after the first offer (“$3,000!?!” followed by pure silence, which uncomfortable salespeople fill by dropping the price once), let people negotiate against themselves (“Is that really the best you can offer?” elicits at least one additional drop in price), then “bracket.” If they end up at $2,000 and you want to pay $1,500, offer $1,250. They’ll counter with approximately $1,750, to which you respond: “I’ll tell you what… let’s just split the difference. I’ll overnight FedEx you a check and we can call it a day.” End result? Exactly what you wanted- $1,500.
9. Hyperactivity vs. Productivity- 80/20 and Pareto’s Law: Being busy is not the same as being productive. Forget about the startup overwork ethic that people wear as a badge of honor… get analytical. The 80/20 principle, also known as Pareto’s Law, dictates that 80% of your desired outcomes are the result of 20% of your activities and inputs. Once per week, stop putting out fires for an afternoon and run the numbers to ensure you’re place effort in high-yield areas. What 20% of customers/products/regions are producing 80% of the profit? What are the factors that could account for this?
10. The Customer is NOT Always Right- “Fire” High-Maintenance Customers: Not all customers are created equal. Apply the 80/20 principle to time consumption, also. What 20% of people are consuming 80% of your time? Put high-maintenance, low-profit customers on auto-pilot… process orders but don’t pursue them or check up on them. “Fire” high-maintenance, high-profit customers by sending a memo/email/letter detailing how a change in the business model requires a few new policies: how often and how to communicate, standardized pricing and order process, etc. Indicate that, for those clients whose needs are incompatible with these new policies, you are happy to introduce other providers. You may be thinking, “But, what if my largest customer consumes all of my time?” Recognize that 1) without time, you cannot scale your company (and, oftentime, life) beyond that customer, and 2) people, even good people, will unknowingly abuse your time to the extent that you let them.
11. Deadlines over Details- Test Reliability Before Capability: Skills are overrated. Perfect products delivered past deadline kill companies faster than decent products delivered on-time. Test someone’s ability to deliver on a specific and tight deadline before hiring them based on a dazzling portfolio. Products can be fixed as long as you have cash-flow, and bugs are forgiven, but missing deadlines is often fatal. Calvin Coolidge once said that nothing is more common than unsuccessful men with talent. I would add that the seconf most common is smart people who think their IQ or resume justifies delivering late.
originally by Tim Ferriss www.fourhourworkweek.com/blog
About Wendi McGowan
[...] 4. Be willing to say no: In many cases, clients ask us to do things beyond our capabilities or interests. When these new requests are outside the contract agreement, don’t be afraid to say, “I’m just not the person to perform that service.” Don’t automatically say yes just because, “The customer is always right.” (Please refer to yesterday’s post: #10) [...]