Monthly Archives: December 2017

December 11, 2017 · 11:38 am

The Spanish Inquisition

I’m a big fan of Monty Python, as I am of anyone or anything that provides great insight amidst great silliness. One of my favorite Python sketches is The Spanish Inquisition. Not only is it funny (if you like really silly) but it also provides a great business reminder:

Nobody Expects The Spanish Inquisition

It’s a phrase I’ve found myself saying many times in business as some unforeseen circumstance causes great disruption. You see examples of it every day. Just this morning, there was a report of a newspaper closing in Houston which is blamed primarily on the effects of Hurricane Harvey. I’m sure there wasn’t a business plan built around that sort of natural disaster.

Sometimes, the disruptive event can be seen but its dramatic effects aren’t. Take, for example, the discussions I used to have with some higher-ups during Internet 1.0. One person was totally convinced the explosion in web properties and the dawning digital age was “a scam.” He didn’t believe that people wanted to watch TV on their computers when a brand new HD-TV was in their living room (HD was pretty new at the time). Of course, he also didn’t expect that broadband would make delivering video to any device wirelessly as good an HD experience as that same TV, nor did he understand that it literally was the same bits that comprise the “broadcast” signal.

Those same broadcasters denied that cord-cutting would have any effect on viewing. Nobody expects the Spanish Inquisition, you see. However, ESPN has lost more than 12 million subscribers since 2011. You think the recent waves of layoffs aren’t related to cord-cutting? When cable is losing hundreds of thousands of subscribers each month, you can count on there being an effect on the business.

The hardest part of being in business is seeing over the horizon. Brexit? President Trump? China leading the charge against climate change? The Cubs winning the World Series?? Who expected those things? Equally as difficult can be in believing what you’re seeing. Nobody may expect The Spanish Inquisition, but part of our job as businesspeople is to be ready when it pops into the room. Are you?

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December 8, 2017 · 2:17 pm

The Food Business Isn’t Just Food

It’s Foodie Friday and the topic today is business. I know: that’s pretty much the topic every day, but let me explain. I read an article on one of the restaurant sites I frequent that spurred a thought that goes beyond the restaurant business.

Photo by Helloquence

The piece was all about the financial statistics a good restaurateur needs to watch. I’m always surprised when a place with good food in a great location goes out of business but it seems to happen a lot. Sometimes it’s that the chef leaves and things slide downhill but more often than not it’s because the business part of the food business overtakes the food part of the food business.

One needs only to watch an episode or two of the show Restaurant Startup to see how a food business is not especially different from any other startup. I assume what I’m seeing on the show reflects the new restaurant world at large and today’s article confirms that belief. Many of the contestants have no clue about the first, and maybe the most important statistics any startup needs to grasp: Cost Of Goods Sold. In a restaurant, that’s food. In a service business, we usually call it cost of sales. In either case, it’s the cost of producing whatever it is you’re selling. You’d be surprised how many businesses don’t know this number.

That number is part of a bigger one called overhead, which includes rent, salaries, services such as accounting and legal, and things like keeping the bathroom clean (your restaurant has one; hopefully, so does your office). These numbers are critical because if you charge too little for what you provide you won’t be in business very long, and you can’t figure that out unless you know your monthly nut.

Once you have the Gross Profit (or Gross Income) number, you can subtract your expenses to get Net Income or Net Profit. Divide that by your sales and suddenly you have a profit margin. That’s something you can use to benchmark your results against other businesses of the same type. In the restaurant business, it’s generally not very big, which is all the more reason why a complete grasp of the numbers is critical. There isn’t a lot of room for error.

I spend a lot of time with my clients on their numbers. It’s not just so that they can present themselves well to potential investors either. Like your web traffic or any other piece of data, they can illuminate a lot and help you make critical decisions. Ignore them at your own peril.

By the way, I’m writing this as a sort of thank you to my late brother who was my CPA and who beat accounting into me many years ago. He passed 5 years ago next week and I miss his guidance and the clicking of his calculator every day.

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December 6, 2017 · 12:57 pm

Getting Permission

Some of you send me social media love for or comment about the little photos I generally include with each blog post. Once in a while, you ask about where I get them. That actually prompted a thought in my mind that probably applies to whatever digital presence your business has.

First, let me answer the question. I source my photos from a few sites that offer royalty-free images that are donated by photographers, illustrators, and artists under a Creative Commons license. My two primary sources are Pixabay.com and Unsplash.com, and I highly recommend either or both to you.

Second, the question this raises for me is how many of you are aware that not every image you find via a search is OK to use? More importantly, how many of you realize that not every piece of content a user posts on their social sites or on your site is content that you have permission to use for commercial purposes? If and when you do an image search, you need to filter the results by “usage rights”, located under “Tools” on Google, for example.

I’m sure each of you read the “Terms of Use” for every site you use or every social service. Who doesn’t love a good 20-page legal document? OK, not so much, but contained in that document is some clause that might allow a service (Facebook, Instagram) to use what you post on the service for their own purposes, but that doesn’t mean that you can use something a consumer posts publicly on those services. It also means, even though you do have some permission from the user, that the user may not actually have the rights to give you if, say, they photograph your product along with several other legally-protected things or in a commercial environment (think theme park, store, etc.). If I post something you created that infringes on a third-party’s rights, I”m just as screwed as you are should they come after you.

The thing to remember is that just because something is posted in public doesn’t mean it’s free for anyone to use. Not photos, not videos, and not even reviews. You need to get permission from the creator as well as from anyone or the owner of anything in the piece of content. Overkill? Maybe, but better safe than sorry as my lawyer friends remind me. In a time when content is everywhere and being created by everyone, so too are the potential problems with using it.

BIG LOUD NOTE: This isn’t legal advice since I’m not a lawyer. I don’t even play one on TV. However, I did spend a lot of years going after people who used copyrighted content without permission. Trust me: you don’t want to be on the receiving end of that situation. Heard?

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