Archive for Business Philosophy

Thinking sideways

Sometimes the answer is right in front of you, but most of the time the answer is right next to you.

Lateral thinking is an important part of business agility.  While many businesses only think in terms of “forwards and backwards”, the business world is multi-dimensional.  Many business owners only measure along one axis.  The pitfall of operating a business on one axis is that your problem-solving skills are reduced to one axis (your intellect becomes a product of your practice).

Rockets travel a trajectory (and very few businesses are like rockets).  A business can’t travel on a straight mission line.
Business is more like sailing - traveling from one point to another requires a series of course corrections – tacking left, then right, then left again.

Maybe you’re stuck with 1,800 branded racquet balls from a past event because of a quantity typo on the production order?

Thinking forward and backward makes that error a net loss…by creating “garbage”…all because someone hit the ”zero” key one too many times.

Thinking sideways provides for creative “recycling”.

Example: Charge another client a discount rate to add their logo to your overstock and give them away as promotional items (branded stress relievers?)…and use them to market the stress-relieving component of your business (product or service).  You have to advertise anyway, right?

Nothing is garbage until it is completely destroyed.

Gardeners, for example, appreciate the value of thinking sideways (because recycling is part of their craft) – what one person considers “waste”, a gardner would consider “fertilizer”.

Maybe I should make an illustration of a guy in cover-alls standing under your business with a bucket?
Nah – I think you get the picture.

Mark

(reprinted from 1/21/11)

Success & Failure

By · January 21, 2013 · Filed in Business Philosophy, News & Thoughts · No Comments »

Anyone who tells me they have tried and failed gets the same response: “Congratulations”

It isn’t that I’m insensitive.  I just happen to see great value in failure (and people who learn from failure).  One doesn’t become an expert marksman or a genius inventor without failing more times than they succeed.  If you can still walk, breathe, eat, crap and clothe yourself after a failure, what have you really lost?  Your failure isn’t going to eat you…it just smacks you around a little.  You’re not dead – you’re smarter.

I would also like to reassure potential clients that I have never failed for a client (I actually have great track-record).  I have, however, experienced countless failures as a result of things I took on myself (or with a team that was willing to test the waters with me on an “idea”).  I openly admit it though – The thing I’ve personally invested most in is “failure”.

Some of my greatest ideas and efforts resulted in my most expensive failures.  I simply consider it tuition (paid to “The University of Mark Mahar” – I’ve rung up quite an acumen from that institution).

Those failures - which I funded myself (or that our team has tested at our own expense) - are precisely what every MEINC client is getting when they hire  us.  Our consultants are chosen for their failures as well as their successes.  Cumulatively, we’ve achieved some wildly incredible things for pennies on the dollar (or that others said simply couldn’t be done at all).  We didn’t get there without failing.  Companies don’t typically admit their failures, but I see no reason to hide behind them.  It is this willingness to punish ourselves (in order to improve the chances of success) that our clients NEVER have to be a “test case”.

For every product, service or licensing deal that feeds me, there were 20 before it which took food off my table.

Similarly, every dollar of exploitable value that our team sees in distressed properties (real estate, planes, businesses, brands, commodities, etc…), exists because of how the product of failure/adaptation equals success.

As a business owner, inventor, artist, etc…you have probably tried and failed more than you want to admit.  Is there not value in those failures?  You are good at what you do because you can run across the minefield of your industry or craft (at a full sprint – doing in a matter of seconds what would take someone else several intense and fearful hours).  Why is that?

With rare exception, success is just a collection of failures which are put to good use.  Failure is an opportunity to learn.

I try to learn something every day.  I embrace failure.  Failure is my friend.

Failure is wisdom.  Learn, adapt and succeed.

In business, the easiest manpower recipe for success is to rent someone else’s failures (and rely on them to make it look easy).  That’s why we hire experts.  That’s how we make it look easy.  That’s why our clients hire MEINC.

As an apprentice Carpenter (15 yrs old) I learned a valuable lesson - There is no such thing as flawless work.  The important thing is to achieve a flawless looking result.  It is how well you adapt to your inevitable mistakes that makes you a craftsman.  EVERYONE makes mistakes.  Not everyone knows how to dodge the big ones or salvage the small ones (or hide the irrelevant ones).

The point of all this is that no MEINC client should ever feel shame in communicating a failure.  The fact we’re talking about it means we’re about to resolve it (learn from it and adapt to it…closing in on success).

(Failure+Failure+Failure+Failure)       = Success
(Learn+Communicate+Adapt)

1. Know the difference between an exercise and a mission.

2. Always treat an exercise like a mission or it isn’t worth the exercise.

2. Never treat a mission like an exercise unless you’re prepared to throw a whole lot of resources at it. 

3. Communicate (failure & success – allowing people to learn and adapt).

Either way, congratulations are in order.

-Mark

(reprinted from 1/21/11)

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Motion Matters (get moving)

What gets you off your chair and compels you to act?

Everybody has certain things which feed their enthusiasm and enforces a sense of relevance or passionate action.

I’ve found that when I’m in that state of mind (fire in my belly – a sense of purpose), I really don’t care about things which bother or distract most people…because I’m on a path to greatness – a journey towards an echelon of life rather than a validation of financial worth.  One could also argue that financial greatness is an inevitable reward for such a journey (to say nothing of the more important fruits resulting from a simple willingness to travel that distance).

Maybe I’m insulated (false sense of peace on account of existing in a creative bubble of “ideas”) – in any case the result is “motion”.

Mapping a mission or idea (and proving it is within reach) makes me high.

Putting tools, maps, message, amplification and resources within the reach of creative and motivated people is probably the greatest thrill I get out of my work.

People who have this trait become Motivational Speakers, Priests, CEO’s, Inventors, Advocates, Politicians, Consultants, Campaign Managers, etc…the only difference is the “Map” they use and how they use it as a foundation for communication (bible, industry, law, science, history, marketing strategy, etc…), but at their core these people are simply dedicated students of a “map”…with their specific knowledge compelling them (almost involuntarily) in a direction of action.

Is it uniquely human to MAP THINGS and to FOLLOW MAPS?

I don’t ever need to have the public “prestige” that comes with any of the job titles I mentioned above (which drives some people but not me) because I am content being a reliable resource for those people.  Whether people know I’m involved or not, when my work becomes capable of “compelling people” and “eliminating obstacles”, I know I have achieved my purpose in life/business.  If I continue to do it anonymously I still get to enjoy the result privately.  That is contentment that I’ve known, in great abundance, and will continue to enjoy (privately).

Confidentiality is important in the world of art & innovation.

I know that even some of my closest friends have wondered “Seriously, what the hell does Mark really do for a living – he’s all over the ‘MAP’?”

Blueprints, Designs, Schematics, Architecture, Music, Marketing, Strategy, Contracts, Curriculum, Policies, Procedures, Video, Film, Poetry, Advertising, etc - all just part of a “legend” that makes ideas, emotions and resources more “contagious or possible”…from a specific point of reference (the starting point of my clients…and their intended destination).

I’m a MAP MAKER.  I am “almost involuntarily” compelled to map ideas, communicate them, and see someone arrive at a conclusion or destination.  My life is best spent as the “person behind a leader” (despite how many times I’m forced to lead, how willing I am to lead, or how talented I am at doing other things).

So, from your “all over the map” perpetual servant, here’s the legend/key:

  • Motivation IS Motion.  Motion is EVERYTHING.  Motion is the beginning of a journey.
  • Journies are best executed with a MAP.

MAPS GET PEOPLE MOVING.  I like to be moving:

  • If you don’t have a map, make one (you know where you are and where you want to be - chart it).
  • If you don’t have a destination, define one (unless you can afford to journey aimlessly, in which case, enjoy your ride).
  • If you don’t know where you are right now, there’s a name for that (it is called “lost”).  If you are lost you need to talk to someone (anyone you can trust) and get your bearings.  EVERYONE (no matter how highly regarded) has been LOST at one time or another.  DO NOT pick a destination if you don’t know where you are (that’s like saying you want to go to the Bahamas before realizing that you’re closer to Hawaii).

I cycle through all three things constantly.  Where am I?  Where do I want to be?  How do I want to get there?  When I am working, following or delivering a “MAP”, that’s when the world gets out of my way.

We never stop being students, but there is no greater thrill than applying the knowledge you have acquired:

What gets the world out of your way?

“It’s Map time.” (for me anyway)

Art & Innovation – Learn, Teach, Love (honestly)

Career Clock (wage earners)

Understanding where you are in the arc of your career or project is important to determining your aptitude for risk or earnings (two different things):

1. Your value as an employee

2. Your preparedness for risk as a business owner

I developed this illustration as an answer to frequent clients that are starting their first business. 

I work with many career employees who are making their first risk in business (inventors, artists, startups, technology, etc…).  After years of working for someone else they are ready to strike out on their own.  Many, however, don’t truly appreciate how insulated their life has been as an employee.  Employee positions do not involve any personal risk (one is simply trading time, talent and responsibility for a given wage).   It may be worth discussion, but if you are considering self-employment or business ownership it is a good place to start. 

If you are already an owner (or self-employed…and there is a difference), this illustration may turn your wheels a little about where your value is in a business (and what other talent you may need to surround yourself with, in order to be most profitable).  This is titled “Wage Earner’s Career Clock” for a reason (owners don’t typically derive their income from a wage; earnings and wages being two distinct things).

In this illustration, MONEY exists outside the circle.  Getting to the money requires four things:

  • Time
  • Talent
  • Responsibility
  • Risk

MEINC_CareerClock1 (printable PDF)

“Wing Theory” for Business

…so I was sitting around the other night, thinking about how business navigates the marketplace…and how the market may or may not actually respond as much like a fluid as many market professionals would like to believe.  If it were a fluid…[insert idea].

It occurred to me that Bernoulli’s principle is simply a scientific statement of how fluid reacts (pressure, speed, distance)…and that science is applied with great success for many innovations (not the least of which is an airplane wing).  There you have it:

WING THEORY for Business (TM) – utilizing Bernoulli’s principle as a creative basis to determine strategic modeling for business, where the market is a fluid.  Designing to gain altitude/distance or less pressure in business as a result of an efficient design.

I decided to diagram my thoughts as it relates to “altitude” in business.  A wing is for flight, right?  Let’s give your business wings.

I’ve attached a PDF for the curious and included preview images.

Bernoulli For Business (“Wing Theory” pdf)

 

 

 

In short – the innovative element of modeling a business in this manner is that it places a hierarchy on management, while also labeling (and illustrating) the most important component of a business (the “high spot”).  That “most important thing” is different in EVERY company (something that conventional business modeling doesn’t allow for as efficiently in visual depictions).

The tallest column in the structure of a wing determines both the radius of the wing and the potential for “lift”.  It illustrates a requirement for all the supporting/surrounding elements – what relevance they play in giving a business the shape necessary for strategic “lift”.  Weaknesses in a business model are more visually identifiable as well.

There is way more to it than that, but this 4 page illustration very clearly communicates the broad strokes of adapting conventional business designs, while treating the 21st century marketplace as it should be interpreted (a fluid that can be navigated with the right design).

It isn’t science as much as it is a really just a clever/visual analogy.  In any case, this depiction allows for the most simplistic illustration of three simultaneous components (all of which are sometimes difficult to communicate on their own, let alone together):

  1. linear hierarchy (business processes)
  2. business philosophy (brand & market focus)
  3. management strategy (strengths are strengths)

Enjoy,

Mark

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Valuing a “service”

One constantly shifting factor in a service business is finding that magic “happy medium” between the divergent concepts of “cost” and “worth” (what it costs your business to be useful to a client and what you think your clients are willing to pay for something useful).

In today’s economy, keeping a steady workload can sometimes force you to abandon both of those considerations in favor of approaching the problem from a more survivalist approach: “How cheaply can I afford to offer my services?”

Before you undervalue your services for survival (or undermine the market your competitors have established FOR YOU), let’s take a look at the cost of doing business.  In this example I’ll break down a Owner/Operator service business (Self-Employed “wage earner” as opposed to “business owner” who employs many).

There is a dramatic difference between earning a wage and owning a business – I’ll discuss that in another article.

In either case “time is money” as they say – so I’ll start with wages (and some assumptions):

  • Assumption 1: Let’s say you’re a billable independent service provider w/$15k in supporting equipment and/or software (musician, photographer, videographer, graphic designer, web designer, writer, analyst, etc…).
  • Assumption 2: You don’t have any employees and your business operates with the least amount of overhead possible.  Whenever something gets out of your area of expertise you hire other subcontractors to help you pick up the slack.

TIME: For this example I’ll use a $50,000/year salary as a baseline (rough national average).

For a W2 employee earning $50k/year it would cost the employer about $65,000 per year (taxes, benefits, insurance, etc…).  Sole Proprietors are not W2 employees but they do still have liabilities on their earnings and a responsibility to their retirement planning, all of which will likely make their costs about the same.  That means if you want to earn $50k/year you have to bill $65k/year (that is the base pay multiplied x 1.3).  Want $100k a year? Use $130k for the math.

MATH:

  • $65k/52weeks = $1250/week
  • $1250/36hours = $35/hour

Why 36 hours?  Even if you work a 50 or 60hour work-week it isn’t all billable to a client – you own your business and you don’t charge your customers by the hour to do your own books, deal with your accountant, plan your marketing and advertising, pay your bills and bid jobs, etc…  It is reasonable to assume you will burn at least 10hours a week that you aren’t paid for.

Using the above math we have established that your survival as a “wage earner” (not a business owner) requires you to bill for your time at a minimum of $35/hour and for a minimum of 36hours/week (assuming all client expenses are reimbursed at exactly what it costs you).  That’s the cheapest you can work (before factoring in anything like additional equipment, job materials, insurance liability on subcontractors, etc…).   It doesn’t matter if you work in your business (or on your business) for 60 hours each week – you still have to bill at least $35/hour for 36 hours (or $1250/week).

OVERHEAD / SUBCONTRACTORS:

To determine whether you are charging the appropriate markup on subcontractors/vendors, you simply need to determine three things:

  1. Does the difference between what you pay your vendor and what you bill your client equal your minimum rate after factoring in the amount of time it takes to manage/communicate with that vendor? ($200 in markup in a situation that takes you 10 hours to coordinate the work of your vendor only equals $20/hour).
  2. Can your subcontractors/vendors provide services at lower rates than you presently charge your client? (if there isn’t any built-in margin you will want to either raise your rates to create a natural margin or value a quote using #1 to calculate the margin)
  3. Is the perceived value of what you can provide by using a vendor or subcontractor worth the “perception” it has on your rates? (if you charge a customer $35/hour but your graphic person is charging $100/hour what is the perception of your talents to your client?  This is how you determine whether you quote a “project” or an “hourly rate” because the perceived value of a project may be completely different than the perceived value of your time).

ASK YOURSELF (do these assumptions match your business):

  1. Can I bill 36hours/week in my field? (If not, you need to divide your weekly target by however many hours you can actually bill to a client).
  2. Can the clients that I have access to afford my rates?
  3. Can I deliver my service reliably at this rate? (and have client successes result in more work)
  4. Is my rate too affordable (this is a perception…and is mostly based on the market you work in – sometimes pricing yourself too low can actually hurt your ability to be taken seriously)
  5. Am I valuing the cost of my education?
  6. Do I have more than $15k in equipment?
  7. Are you above or below “average”?

In Short (this example):  The least you can charge is $35/hour.  The most you can bill is 36 hours.  Is that a value for a useful service?  Is that enough to survive in your world?

PERSONAL TAKE:

At Mahar Enterprises, Inc. our base rate is $65/hour (which is based on my personal baseline for all consultants).
The only time we charge more is when we can’t handle a scope of work with our existing pool of talent (or when travel is required).  Travel changes everything – if only because most of the expense of my business is the equipment, software and technology which all live in my office (it isn’t as mobile as I am personally; I still need it outside of my office; and it has to be “duplicated” at a cost that is always applied to client’s project).  We have established a few services which are budgeted lower because we have made them more efficient.

In some cases they have been eliminated as a client expense because it replaces “advertising”  – a cost we would otherwise incur, so we can afford to apply the savings to that service.

Our competitors charge $250/hour for some of the services we provide.  We have chosen to undercut the market so aggressively because the concern of “perceived worth” is less important to me personally.  I prefer to focus on actually “delivering something that any client can afford” (and doing it better than someone who charges much more).

Because our core services are either “Delivery” or “Management”, we can remain focused on the simple cost of “our time in delivering the service” (and not worry about the perceived value of what we are delivering).  Vendors worry about that, not us.

Each business is different.  I value services based on my ideology of “removing handcuffs” from business owners.  Everything has a cost.  We operate on the most basic “Cost +” mentality rather than the value method our competitors and clients use (their method being more of a salespitch or rationalization which says, “this saves you $X so it is worth $X”).

Let’s be honest: If it doesn’t save you money or make you money it’s not worth doing.  The perceived value and the cost are two different things.  I couldn’t care less what someone says a service is “worth”…all I care about is that my clients can afford the “cost” (and that the cost is worth incurring).  In answer to that question we’re always the most affordable and creative solution so I don’t have to defend the perception of “value”.

TO BE CLEAR: We don’t always recommend the “Cost +” approach for our clients in THEIR BUSINESS because the reality is that successful business revenue models rely on exploiting “perceived value” (in my business, however, I’ve reserved perceived valuations for PRODUCTS…not SERVICES).  For the purposes of Mahar Enterprises, Inc. we’ve simply shaped our perceived value as “the most affordable solution for a truly necessary service” (rather than demonstrating “return on investment” in order to emotionally provoke clients to choose us over our competition).  I personally find it easier to clearly say to business owners “once you decide something is necessary to your business, we are without question the most affordable place to get it done properly”.   That approach may or may not work in your business but it works for mine (but I am also a business “owner” instead of just a “wage earner” – as mentioned, I’ll discuss the distinction in another article).

Feel free contact me to schedule a valuation study of YOUR RATES.  We can do it under an hour, in real time and it costs $65.  We conduct our services with complete confidentiality.

Regarding MY VALUE: I look at it this way - if a client doesn’t feel it is worth $65 to formally dissect their rates/business and gain access to some really candid/helpful advice, they might as well stop shopping consulting services in general because my competitors start at $150/hour….and I already delivered free advice (above).

Doing business is easy…but only once you’re valuable and useful…as an enterprise.  That starts with “rates”.

- Mark

UPDATE: 9/24/11

After 11 years of operating with minimal overhead and providing all services exclusively with in-house talent, our workload has required that we add production personnel and programmers (all of whom are $100/hour or more).  As a result, we’ve been forced to modify our rates.

Beginning October 1, 2011 our 2012 rates will go into effect at $130/hour (which is a 30% margin on contractors, and includes use of all production facilities at our disposal [no room rental fees for any production, taping, broadcast or commercial media]).

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Wake Up & Dream

By · January 14, 2011 · Filed in Business Philosophy, News & Thoughts · No Comments »

“Wake Up & Dream” – the title of a seminar series I started in 1998.

My ability to inspire a team and execute a plan is a result of my business philosophy.  I have started a topic string in order to elaborate more specifically on the seminars, training and business consulting I do.

At the core of business (consumer, owner & employee) is “motivation”.

After a decade of conducting my career on pure ambition, I totally shifted my mentality and began working differently – it was the evolotion of my own business philosophy (an evolution of my motivation).  At the heart of it was a need for a sense of  justice, value and purpose in business (placing the demand of “satisfaction” on something I could see was going to occupy the majority of my time on earth – work).  Call it idealistic if you like, but I found it to be both pragmatic and genuine (a much needed sense of equilibrium for me at the time).  It was mental reconstruction that included renewal of my ambitions and abandonment of some bad/learned habits.

My business boils down to “opportunity” and a willingness to acknowledge that I’m not a pure capitalist (as much as I firmly believe in the spirit of capitalism).

I’m an opportunist (capital is lower on the list of what actually motivates me).  To rationalize my willingness to abandon what had worked well for me as a business “style”, I had to define my perception of ”opportunity” in terms I could quantify (something I could execute a plan around).  The short version is below.

Life Opportunity: The occasion in life to Learn, Teach or Love.
Business Opportunity: The occasion in business that your motivation (followed by action) will compensate you.

The key is “honesty” – it all starts there.  No lies.  Rule #1.

Opportunity in life and business is about achieving “value”.  If you LEARN something valuable, TEACH something valuable, and LOVE someone/something enough that you are willing to invest yourself into it (which includes learning and teaching)…you’ll become VALUABLE.

Emotionally satisfied people (those who feel valuable and inspired) are also the most financially satisfied people.  Conversely, if you’re not inspired you are essentially useless to your business and those you love (or your boss…or your clients).

I’m insanely motivated (my own resume is source of laughter for me).  I see opportunity in places where many businesses are missing it.

Consider for a moment that the most affordable and profitable change you can make in your business is to create (or bolster) a culture of enthusiasm.  Enthusiasm is a contagion.  Enthusiasm IS creativity (that’s a competitive edge).  However, enthusiasm without order and strategic purpose is just a “pep rally”.  If cheerleaders made businesses wealthy they’d all be CEO’s.  Cheer is not opportunity.  Cheer is a smile or a song.

Motivation is purpose (and contentment)…which makes it a lot easier to be cheerful.

There will be days that suck; people you don’t like; encounters with things that disgust you – life is not easy or rosy.  The act of “thinking positively” is just a tool to overcome a momentary lapse of motivation (using cheer to mask a lack of motivation).  If you are thinking of the OPPORTUNITY that life has handed you (or that you volunteered to chase it down; and believe it is still worth achieving), you won’t have to motivate yourself.  A sense of purpose equips us with the emotional tools to ignore momentary lapses in motivation.  A sense of purpose IS motivation.

Those are the broad strokes of my core philosophy.  Understanding the motivation of Owners, Consumers & Employees has been a centerpiece in my career.  It starts (always) with understanding yourself and indulging in a high level of empathy for others…and it ends with one question: “For whom (and why) is this thing (product, service, business, job, investment) an opportunity?”

True opportunity is GRANITE in a world where there is a whole lot of rose colored painted glass.

A sense of true opportunity is confidence.  (now more than ever)