Musings on Business Optimization, Economics, and Vocations

This is a re-post from Guy Kawasaki's recent post on LinkedIn - https://www.linkedin.com/pulse/choosing-advisor-separate-contenders-from-pretenders-guy-Kawasaki .   These are almost the exact questions I often receive from growing companies.  Great wisdom as usual from Mr. Kawasaki.   Choosing an Advisor: Separate the Contenders from the Pretenders   Once upon a time there were two engineering PhDs who were clueless about how to start a company. All they knew how to do was code. They were so desperate for money and adult supervision that when an experienced businessperson showed interest and offered to help raise money, they, in their own words, “followed him like dogs.” However, this adult didn’t know much about tech startups and caused them to make many mistakes in legal and financial matters. They parted ways but only after much aggravation and the significant legal expense of undoing incorrect decisions. This is not an unusual story, and it’s an understandable

Dashboards have been a hot topic in business literature lately. Recommendations that business owners implement a dashboard for their business abound; however, advice on how to implement a dashboard is scant. I can relate to this dilemma. Occasionally, peers and potential investors would ask relatively simple questions about my aviation training company like, "What percent of your customers are repeat customers?", "What is your breakeven point?", and "What is your customer acquisition cost?" At the time, I was only slightly embarrassed that I didn’t know the answers to these questions. Regretfully, this led me to dance around the questions a bit, change the topic, and soon forget about my ignorance. I was good at flying airplanes and assembling a team of flight instructors. That's really all I needed to know. So I thought. My ignorance couldn't stay hidden forever, and I soon realized how I was hampering the growth of my company by not divi

In this social media crazy-world, the consequences of not treating our customers well are larger than ever. We, as those running or coaching businesses, need to be fully attuned to the quality of service we are providing. Customers can be classified into four groups: 1) Customers who have been offended 2) Unsatisfied customers who showed up today, but will abandon our business as soon as they get an opportunity 3) Mildly satisfied customers 4) Raving fans who spread word of our product or service every chance they get We shouldn’t rest until all of our customers are raving fans. We need this not only because a word-of-mouth testimonial from a satisfied customer is one of the best forms of marketing available, but also because there is no way for us to tell the difference between groups 2 and 3. They rarely identify themselves.   Consider this scenario: You visit a restaurant that provides inedible food and even worse service—the waiter even openly mocks you. Y

Many times through the classes I facilitate in New Orleans or through my work with Emerge Dynamics , I am asked what the drivers of a business' value are.  There are many.  However, here I describe an often overlooked, yet very important driver: Company Specific Risk. Whether my role is as a consultant or as an investor, I work closely with the companies I align myself with to identify and methodically reduce company specific risk, thereby increasing their valuation.  As described below, a company can increase its valuation by reducing Company Specific Risk, even without growing sales or profitability by one dollar.  But here's a nice perk.  When companies identify Company Specific Risk and then develop an implementation plan to reduce it, not only does that alone increase valuation, but sales and profitability usually increase as well.  A double bonus.   I was facilitating a class this week during which the students were trying to understand the drivers of business valuati

What is wealth? Wealth is often misunderstood.   When the word “wealth” is spoken, people often bring to mind images of opulence.   For me, it used to conjure up images of a cartoon I enjoyed as child, Duck Tales, in which Scrooge McDuck would swim through gold coins in his money vault.   So, if these are the images that come to our minds then it might be natural that when we speak of increasing wealth, one might assume that we are speaking of adding a few more coins to the vaults of those wealthy like Scrooge McDuck.   This isn’t the case.   Merriam-Webster gives one definition of wealth as “abundance of valuable material possessions or resources, abundant supply, all property that has a money value or an exchange value, all material objects that have economic utility; especially: the stock of useful goods having economic value in existence at any one time.” This definition is more appropriate. We are not only talking about the rich getting richer, but also, much more i