Don’t Put All Your Trust in One Person

Put your trust in God, but keep your powder dry.
Oliver Cromwell

I had a good friend who had built a very successful carpet business from scratch. Twenty years later it was netting him over a million a year. This allowed him to open an art gallery, his true love.

Although his carpet business was a fairly large company, he had only one salesman, who was also his best friend. The trouble was, the salesman, as they often do, thought that he was not being paid enough. (He was making $250,000 in his late twenties, and this was 15 years ago.) One day he simply walked out; no comments, no arguments, no blow up, he simply left and started his own carpet business, taking half of my friend’s clients with him. It devastated my friend’s business; in less than six months, he lost everything!

In the karate business, the same story was repeated weekly. The dedicated instructor who had been taught from childhood by the senior master walked out the door with half the students, leaving the senior master devastated emotionally and financially.

I can’t tell you how many smart, successful people I know who have had hundreds of thousands of dollars embezzled by their bookkeepers or managers. (All of which could have been avoided by a 15-minute weekly audit of the financials.)

People are people; they are motivated by love, hate, jealousy, pride, money, ego, revenge, and a million other petty vanities.

Never put all your trust in one person.

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The Power of the Pareto Principle

It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one.
What you’ve got to have is faith and discipline when you’re not a winner.

VINCE LOMBARDI

discipline factor

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that 20 percent of the people owned 80 percent of the wealth. Most people have heard of the Pareto Principle, also known as the 80/20 rule, which says that 80 percent of your results will come from 20 percent of your activities.

More generally, the Pareto Principle is the observation that most things in life are not distributed evenly.

For example:

  • Twenty percent of the customers create 80 percent of the revenue
  • Twenty percent of the input creates 80 percent of the result
  • Twenty percent of the workers produce 80 percent of the result
  • Twenty percent of the bugs cause 80 percent of the crashes
  • Twenty percent of the features cause 80 percent of the usage
  • Twenty percent of your investments will produce 80 percent of your returns
  • Eighty percent of your problems will come from 20 percent of your people

They key to leveraging this knowledge is having the self-discipline to focus the majority of your efforts on the important 20 percent of your activities at the expense of the rest. This law carries across every single aspect of your life, although the actual number could be 85/15 or 90/10.

Take the time to seriously evaluate your business and personal efforts. Getting rid of the eighty and focusing on the twenty can have an exponential impact on most businesses if they have the courage to do it!

Focus your time, money, and efforts only in those places where you know you will get the highest returns. In life, every minute counts. Have the self-discipline to use your time to maximize your business.

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The Persistence Factor: The Turning Point to Greatness

“Success consists of going from failure to failure without loss of enthusiasm.”
Winston Churchill

Running a small business is never easy. It comes with long hours, red tape, unreliable staff or suppliers, and finicky customers. It can be a seemingly never-ending roller coaster ride of emotional and financial highs and lows. In fact, the average self-made millionaire has been broke, bankrupt, or financially destitute 3.7 times before becoming a financial success. Just about every business struggles for survival at some point in its life!

My first karate school was running on air for months before I cracked the code and eventually turned it into a chain of 400 schools. Along the way my savings vanished, my house was mortgaged beyond its worth, and I had $127,000 spread over an ever-expanding collection of credit cards.

On its first day of operation, with a fleet of air freighters flying in from all over the country to its Memphis headquarters, the ground crews of Federal Express waited expectantly. As the planes landed, one after another, and rolled up to the unloading dock, the crews scurried around like ants picking up packages from each plane and taking them to the central distribution center. When they had completed this task, they found a total of 16 packages had arrived. Today FedEx is synonymous with overnight delivery, and a major worldwide success story.

Colonel Sanders, of KFC Fame, was 65 years old sitting on the front porch of his failing motel when his social security check of $105 arrived to see him through the month. Disgusted and with little hope of increasing his motel business since the new Interstate had stolen all his traffic, he thought hard about what he could do well. The only thing that came to mind was his fried chicken, people went crazy over it. Armed with nothing more than a hand written recipe, this senior citizen hit the road and visited 1010 roadside restaurants before one agreed to buy his chicken recipe and pay him a 5% residual fee on the sales. That person went on to be a multi millionaire – as of course did the Colonel. By 1964, Colonel Sanders had 600 franchises selling his trademark chicken. At this time, he sold his company for $2 million dollars but remained as a spokesperson. In 1976, the Colonel was ranked as the world’s second most recognizable celebrity.

McDonald’s founder, Ray Kroc, was once on the verge of bankruptcy, even with 200 stores in operation. Baron Hilton (Founder of Hilton Hotels) was so desperate for cash to meet payroll at one point that he kept his hotel chain going with a loan from a bellboy of just $300. In the eighties, former heavyweight boxing champion George Foreman was on the verge of bankruptcy. In Foreman’s case, fear of financial ruin proved to be a good thing because it drove him to re-enter the boxing ring at age 45 and regain his heavyweight title against Michael Moorer in 1994. This second chance at success enabled him to pay off millions of dollars of debt and launch a new career as an entrepreneur hawking George Foreman Grills. Millions have been sold, in fact I think we have two!

Before Rich Devos and Jay Van Andel struck diamonds by founding the Amway Corporation, they sold products for Nutralite. Nutralite was a California company that marketed products through direct sales in much the same way as Amway would later do. Shortly after embarking upon their new venture, they held what was to be a large meeting to try to attract distributors.

They ran radio ads and newspaper ads, handed out flyers, and scoured the town, telling everyone about the meeting and the excellent business opportunity they would be offering. They believed wholeheartedly in the products and the income potential they offered to other distributors. Because they felt so good about the product, they felt sure the hall would be filled to capacity with people eager to hear what they had to say. That night, despite their huge promotional effort, only two people showed up in a room set up for several hundred people.

They gave their sales pitch as best they could to these two people and then drove home through the night because they couldn’t afford a motel room. Looking back and laughing at the incident, DeVos said, “We could have done one of two things. Either we could give up, or we could persist. We persisted.” Later, as Amway become a billion dollar corporation, they bought the Nutralite company they had once represented. As B.C. Forbes (of Forbes magazine) said. “One worthwhile task, carried to a successful conclusion, is better than a hundred half-finished tasks.”

It is truly amazing how many turning points in the lives of most entrepreneurs come down to the same decision. Should we try again, or should we throw in the towel and settle down to a life of peace and security, such as it is. There is absolutely no better long-term solution to business success than single-minded, bulldog determination. There must, of course, be a capacity for making changes to deal with fluctuations in market conditions. Constant attention must be paid to implementing necessary changes in strategy, marketing, and sales, but the long-term goals remain the same.

Persistence is the ingredient that truly separates those at the top from the also-rans and wannabes. Like all the other ingredients, it can be easily learned, and putting it into action is as easy as deciding to just do it! Out of the greatest
disasters, come the greatest redemptions. As legendary radio commentator Paul Harvey so aptly put it, “In times like these, it pays to remember there have always been times like these.”

The Desire and Determination to Succeed Must Never Waver!

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Become a Business Sponge

Invest three percent of your income in yourself (self-development) in order to guarantee your future.
Brian Tracy

Before you start your new venture, commit to becoming a business sponge. Soak up every bit of key information you need to rapidly increase your competence in sales, marketing, time management, and other key entrepreneurial skills that will dramatically affect the ultimate success of your business.

It’s a pretty simple yet seldom discussed fact that competence in various disciplines of business brings success, lack of competence—failure.

If you have no money, then you most likely have never studied money, stocks, real estate, or the power of compound interest. If you don’t have enough customers, then you probably don’t know enough about marketing.

If you have customers but aren’t making enough money, then you probably don’t know enough about sales.

If you are having trouble finding time, then you don’t know enough about time management.

In my mid-twenties I discovered the amazing power of audio learning. I simply switched off the radio and swapped it for the power of great minds like Brian Tracy, Tom Hopkins, Dan Kennedy, Jay Abraham, Zig Ziglar, Roger Dawson, Tony Robbins, and a host of others. I quickly learned more about the real world of business in my Audi GT than I had ever learned in school.

Learning in your car takes away the excuse that you don’t have time and makes it painless. The car, of course, is not the only place you can rapidly gain knowledge. Books, DVDs, webinars, seminars, and teleconferences can all quickly add to your knowledge base. Focus first on the areas that you know will provide the largest payoff and continue from there.

You must commit a portion of your personal income, 3–5%, and a portion of your week to your own personal growth. If you are not growing, you are shrinking and if you are shrinking you are dying.

The more you know, the more you grow.

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Go Beyond Your Normal Circle for Answers

To solve any problem, here are three questions to ask yourself:
First, what could I do? Second, what could I read? And third, who could I ask?

Jim Rohn

An exclusive apartment building in New York had only one set of elevators, and there were growing complaints from the upscale tenants about the amount of time it took to get up and down in the building. Several engineers, consultants, and elevator specialists were called in to study the problem.

Lots of solutions were generated. Unfortunately, most dealt with adding more elevators, which in an old building was financially unfeasible. Some focused on trying to speed up the existing elevators with smart programming and so on, but this would still not increase the speed enough.

One of the tenants, who was in the television industry, heard about the attempts to solve the problem and put forward a solution of her own. Instead of messing around with the elevators, she simply suggested adding TVs around the elevator waiting area. She surmised the real problem wasn’t the time it took for the elevator to travel up or down the building, rather it was that people had time to think about the wasted time while they waited for the elevator to actually arrive at their floors.
Suddenly people waiting for the elevator could watch the news while they waited and catch up on the day’s events. Now that they had something interesting to do to pass the time, they actually thought the elevators had been sped up!

Sometimes the best solutions will come from outside your organization.

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Suspects, Prospects, Customers, Clients, and Partners

Surround yourself with only people who are going to lift you higher.
-OPRAH WINFREY

I group people with whom I do business into one of five categories. I am interested in all of them since you need all to succeed, but I am most interested in the last category because it’s not only the most profitable, it’s the most personally and professionally satisfying.

Suspects

These are people you suspect might like to do business with you. You identify them because of some factor: They may live in your local area, receive a certain magazine, or be on a list that might make them look like possible prospects. Online , they might frequent the same chat rooms and discussion boards you do.

Prospects

Prospects are people who essentially put up their hands and say, YES, I’m looking for a new place to eat, a carpenter, dance school, or new car. They have the need for whatever product or service you might provide.

Customers

Customers are people who buy from you occasionally, maybe even quite often, but they see you primarily as a vendor. They have no special connection to you or your business and might just as easily shop down the street.

Clients

Clients are people who buy from you repeatedly. They like you. They may be interested in your advice or comments on how to best use your product, or form a deeper relationship with your company. They will most likely refer you to others and some should be cultivated further into partners.

Partners

Partners work for the good of both parties. I call all of my customers partners because that’s really the only type of customer I want. Truly though, only a handful really are partners. Few of your customers and clients will ever become true partners either. They will say they are, they may even want to be, but they are not.

In my marketing business, when a partner is truly involved with us it results in the mutual success of both businesses. We refer business to them, and them to us. The success of our campaigns helps us generate more clients as much as it drives more revenue for our partners. When things don’t go as planned, both sides identify shortcomings rather than point fingers. Partners are engaged in the process of coming up with great offers and executing the programs. They understand that generating leads is only half the battle and that THEY must be responsible for lead conversions (sales).

Most people would rather this was not so. They would rather take all responsibility for success, but blame the “marketing” when things don’t go well. Every one of my partners has my cell phone number. Every one of my partners can call me seven days a week, but few ever do because when they do, they often find out that they have to work—that there are a great many things on their end that remain undone. They have to make decisions about offers, timing, and planning. They have to engage in SALES TRAINING to increase their staff’s performance, and I guess that most would simply rather not. Like most business owners, they are already up to their arses in alligators and they would rather have someone else just fix it.

I will go above and beyond in investing my personal time and effort, as well as leveraging all of my resources and connections, to help a partner succeed. Great partners stimulate each other. They share success stories, ideas, and leads. These are the type of “customers” you must strive to reach and it really doesn’t matter if you are in the marketing business, the restaurant business, or the flower shop business.

Look to cultivate your customers and clients to become partners. That’s where the money and satisfaction will come from.

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