Before You Can Multiply You Must First Learn To Divide
Not too long ago, I was having a conversation with an event organizer about his revenue model. He told me that he hires speakers, paying them a flat fee for their time, and then launches an aggressive marketing campaign to put butts in seats.
He also told me that most of his events lose money.
Why?
His business has significant fixed costs. Therefore, he needs to continually be at maximum capacity in order to just break even.
To assist him in overcoming this challenge, I shared some simple yet powerful advice that I had personally received while traveling in Asia a few years back:
“Before you can multiple, you must first learn to divide.”
Because small businesses are always trying to control costs, our natural tendency is to avoid sharing any of the profits. We want to keep it all to ourselves, since there is often so little profit to begin with. However, if you wish to be successful, find a way to take a smaller slice of a bigger pie.
In the example of the event organizer, instead of paying a fixed fee as his current model dictates, he could pay speakers a percentage of the ticket sales. This puts the speaker’s skin in the game. More attendees, equals more money for the presenter. He or she now has a vested interested in the success of the event potentially creating a bigger pie to share.
Instead of a high fixed advertising model, find a way of sharing ticket revenues with those who sell tickets. This could be done through online affiliate programs where the website that drives the traffic gets a percentage of the value of the tickets sold. Or you can give commissions to people who make the sale.
In another example, a friend of mine runs a successful family-owned restaurant. Although she had been profitable in the past, her margins were razor thin. For the last couple of years, economic conditions have reduced her revenues, further eroding her margins.
What was her solution?
Instead of simply cutting costs, she found ways of increasing revenues by partnering with people who charge her only when her business is growing.
She uses iDine® and OpenTable to drive traffic to her restaurant. Although they take a percentage of every customer that they deliver, the extra traffic helps to cover her large fixed costs.
It is natural for a small business to be conservative with their finances. But sometimes the best way to make money is to first give some away. Unless your fixed costs are low and you are continually at capacity, it makes sense (and more importantly dollars) to find creative ways of partnering and sharing your wealth with others.
Read the rest of this article on the American Express OPEN Forum
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See Me In Action in Cambridge Apr 7
It is not often that I do events that are open to the public. So I am thrilled to be partnering with The Big Studio to bring you a special Personality Poker session.
There is no cost to you. In fact, the first 50 people who register will get a copy of my Personality Poker book at the event, thanks to a generous donation by The Big Studio.
If you will be in the Boston area on April 7th, be sure to register for this event at the Cambridge Innovation Center from 6PM – 7:30PM.
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The Key to Overcoming Roadblocks: Innovation
In Wisconsin, the Republicans wanted to eliminate the collective bargaining rights of most public employees as a way of cutting the budget. This was hotly contested by the Democrats to the point where all 14 Democratic senators left the state, refusing to vote. They did this knowing that at least 20 senators needed to be present during votes authorizing the use of money. This meant that the Republicans would be one person shy of a quorum.
What was the Republican’s creative solution?
They met in a committee to strip several financial elements of the bill and argued that the quorum rule no longer applied as a result. The bill then quickly passed and was signed into law by Governor Scott Walker.
This caught the self-exiled Democrats off guard.
What did the Republicans so skillfully do that made this coup d’état a reality? They were innovative about the way they achieved their objectives.
Typically, when we think about creativity, we tend to focus on the result: the new product, process, service or business model. But sometimes it is incredibly powerful to innovate the means in which you implement your solutions.
Another recent example of this involves the National Football League (NFL). The NFL owners and players have been in arbitration, trying to resolve disputes over how to split the $9 billion in annual income. When the collective bargaining agreement expired, the owners instituted a league-wide lockout. As a result, the players no longer had health insurance, were not paid, and were banned from entering any team facilities or having contact with any team staff.
What was the creative response of the players?
They “decertified” the players union (the NFLPA). By eliminating the union, the NFL was then considered a monopoly. This allowed the players to invoke the Sherman Act, a federal antitrust statute limiting monopolies, which paved the way for the players to file a class action lawsuit seeking triple the amount of damages they’ve incurred.
Change the rules of the game
I’m not making a statement for or against either side or the actions they took. Nor am I an attorney, so there may be subtleties of the laws that I am missing.
Regardless, in both of these cases, the parties involved recognized that they could “alter” the rules of the game. In doing so, they took actions that might have otherwise been unforeseen. The Republicans caught the Democrats off guard by removing the financial elements of the bill. And although this was expected, the NFL players took steps that allowed them to take legal action that was not previously allowed.
This is a powerful lesson for businesses of any size…
Read the rest of this article on the American Express OPEN Forum
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Is It OK to Marry Your Work (part 2)
Last week I wrote an article for American Express about “marrying your work.” Unlike the “ball and chain” picture that tends to pop into our heads, I espoused the merits of loving your job, just like you would marry a spouse you love. Be sure to read that article before reading on. I’ll wait.
OK, now that you read the first part, here is, as Paul Harvey would say, the rest of the story…
I’m on vacation this week in Mexico and I just had an epiphany.
Tonight while cooking up some steaks on the barbeque, I looked through the window and saw everyone else on their computers working. In fact, all day long while I relaxed in the pool with my Kindle, everyone else was busy working away.
Admitted, I work a lot, but I love what I do. I truly do. Regardless, I have not taken a “real” vacation in 2.5 years and I work 80+ hours a week. I use this “dedication” as a badge of honor.
But tonight, while watching everyone work while vacationing in paradise, I realized something important.
You can be married to someone, yet not spend 24 hours a day with them. The best relationships are often those where each individual has their own life in addition to their marriage.
Kahlil Gibran’s “The Prophet” is one of my favorite books. In his poem “On Marriage,” he so beautifully says:
Love one another, but make not a bond of love:
Let it rather be a moving sea between the shores of your souls.
Fill each other’s cup but drink not from one cup.
Give one another of your bread but eat not from the same loaf.
Sing and dance together and be joyous, but let each one of you be alone.
Even as the strings of a lute are alone though they quiver with the same music.
For me, this always described the ideal relationship. A deep closeness that is not TOO close. There is space.
Last night I reread the poem through the lens of “marrying your work,” and it took on a whole new meaning.
You can love your work. In fact, you can be married to your work. This is a good thing.
But just as you do not need to be with your spouse 24 hours a day, you don’t need to be with your work around the clock.
Ok, now I need to get back to my vacation…
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Is It OK To Marry Your Work? (part 1)
I was talking to a Thai friend of mine recently; someone who knows that I work a lot. She also knows that I love what I do.
She said I am, “Thang kub ngaan.” This literally means “marry with work/job.”
We sometimes jokingly say that we are married to our job, but we tend to mean it in a negative way. But in Thailand, this expression is used in a loving way, the same way we would refer to being married to a spouse. When they say you are married to your work, they mean that you are in love with what you do.
Why don’t we have an expression like that here? Maybe because it is culturally not acceptable to love what you do. If you are enjoying your work too much, you are probably not working hard enough. Or perhaps it is viewed as unattainable. We have succumbed to the fact that work is just that, and play is what we get to do on the weekends.
Western expressions here are more akin to diseases. For example, a “workaholic” is someone who works long hours to satisfy a deep-seeded need to prove oneself or become wealthy and successful.
Even the word “work” is defined as to “exert oneself by doing mental or physical work for a purpose or out of necessity.”
With that as the definition, who would want to be married to their work? But is there a way to love your job?
First, figure out what you love. It is important to note that this is very different than what you are good at. Our society places more emphasis on overall skills, than on natural skills and passion. We take strengths-based tests to determine our aptitude. But it is much more difficult for us to determine what comes naturally and what gives us energy.
Read the rest of this article on the American Express OPEN Forum site
[Tomorrow, I will post part 2 of this article here on my blog. Part 2 will not appear on the American Express site]
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