Tag Archives: Business and Economy

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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Filed under Consulting, Reality checks

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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Filed under food, Helpful Hints, Consulting

No Waffling Here

It’s Foodie Friday and this week I’d like to have us reflect on that great Southern institution The Waffle House. It seems that one trips over a Waffle House every few miles here in the South and there’s a reason for that. It is a beloved place and not just among the stereotypical audience one might suppose. Watch this clip from his Parts Unknown show in which Anthony Bourdain discovers the wonders of the place and you’ll see how even chefs respect it. As the clip hints, there are few better places for one to land having been a little overserved and possessing an appetite.

Photo courtesy Nick Gray

What can any of us learn from this? A few things, I think. First, consistency. You can say you don’t like the food but you can be sure that whenever or at whichever Waffle House you order it from you’ll get the identical dish. It is consistent beyond belief, including how each dish is plated. That’s hard for a single restaurant to do all the time. To have over 2,000 places doing it is pretty unbelievable.

It is efficient. There is a code for servers and cooks involving placement of jelly packs, butter, and other condiments on the plate that allows cooks to work on many orders simultaneously without messing anything up (check out the photo).

It is clean. One might think that a place open 24 hours a day would begin to get a little worse for wear. Not a Waffle House. They are constantly sweeping and cleaning. I think we’ve all experienced something “off” at less-upscale restaurants. Dirty silverware, food residue on a plate or a grimy floor. Not here. I get that your business might not be serving food, but a sense of order reflected by attention to detail is a trait your customers want, something the constant cleaning provides in this case.

It is transparent. Because the kitchen is open, you can see the wonder of each order being made. It instills a feeling of confidence since the kitchen has nothing to hide. The eggs are fresh (I’m told the chain uses 2% of all the food service eggs in the country), not powdered and the other ingredients are clearly fresh as well.

It is personal. Because every plate is cooked to order, it is made exactly the way the customer wants it.

It isn’t vanilla. What I mean by that is that it has its own style and even its own language. Where else can you go and order something smothered, chunked, covered, diced, and several other ways as one can with Waffle House hash browns?

Finally, it is reliable. It’s always open, so much so that there is an unofficial “FEMA test.” If the local Waffle House is closed, a location is undergoing some sort of disaster which may require FEMA intervention.

Each one of the aforementioned qualities is one our own businesses should possess.  Ideally, they have them all. Does yours?

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Filed under food, Consulting, Thinking Aloud

Actions And Words

I’m a believer in watching what people or organizations do as opposed to what they say. Words are too easy while actions are often difficult. Words can also distract from actions that belie the message the words are attempting to convey.

English: This icon, known as the "feed ic...

(Photo credit: Wikipedia)

No, that’s not a political statement (although feel free to take it as one). It’s more a response to a couple of things that happened this morning while I’ve been going through my morning email. Like you, I subscribe to quite a few newsletters as a simple way to stay on top of industry news and developments in technology. I also use a newsreader (Feedly, which I highly recommend) to digest dozens of websites in a brief period of time.

I was reading a newsletter from a respected site for digital mavens. It tries to help those of us on the digital side of things to grow our businesses. The lead article in this morning’s newsletter caught my eye. It was about strategy and leadership in data and actually was important enough for this organization to use it as the subject line in today’s email. I read the blurb and clicked on the “read more” button. In response, I got a “404 Not Found” error. The redirect URL was empty. I tried clicking the headline and that did, in fact, get me to the article, but the call to action wasn’t the headline. What happened here was just someone being sloppy.

The same sort of thing happened when I clicked on an article in my RSS feed. The article headline – about some people receiving promotions at a former competitor – got my attention so I clicked through to read the article. Whoever set up the RSS feed for the publication had this link click through to the publication’s homepage, and the article I wanted was nowhere to be found. I’m not sure if this is willful or sloppy but, as in the previous example, it’s a bad user experience and makes me less likely to click through in the future.

Broken links suck. Besides frustrating the reader they carry an SEO penalty. They’re also easy to check – there are several free tools to do so. Misleading links – or headlines/teasers for that matter – are just as bad. While they might not hurt your search ranking they will hurt your reader. Which really leads me full circle to actions speaking louder than words. If you claim to be a leader in digital marketing, you can’t put broken links into your newsletter. If you claim to be serving the advertising and marketing community, you can’t serve us by forcing us to look for the useful information with which you’ve teased us. The same holds true for any business, by the way. Customers see what you do and that makes it easy to discount whatever it is you say. Does that make sense?

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Filed under digital media, Huh?

What Restaurateurs And Founders Share

It’s Foodie Friday, and this week an article on a restaurant trade site caught my eye. It’s all about the things restaurant owners wished they’d known when they decided to open a place. Having spent a lot of time working with startups, what I find interesting is that many of their statements are not unique to the restaurant business. In fact, I’m willing to bet that you will nod your head in agreement with these if you’ve even started a business or worked with one in its early stages. You can read the entire piece by clicking through here.

Photo by Bank Phrom

First and foremost, the time involved. One owner said she wished she’d known “That I was going to spend the first couple months basically living in the store and two years married to the business. 86 my social life!” I’m often amused at the founders who still have side gigs, especially if those gigs are not consulting positions that are very flexible. One startup with which I’m working has two founders who don’t seem to be able to focus enough time on their company, and as a result, their progress is very slow. What should have taken them several months has taken them a couple of years. In part it’s a financial decision – the gigs help fund the startup – but I sometimes feel as if they don’t really get that you need to be married to the business, as this owner says.

Another owner wishes he’d known “To have enough money reserved to be able to wait to open the doors to the public.” There is something to be said for throwing a lot of tests out there and iterating, but I’m a believer in making sure you’re putting your best foot forward. That doesn’t mean every beta has to be perfect but it does mean, to paraphrase the words of the old Paul Masson commercial, not selling any product before its time. The world is too cluttered and I’m not sure any business gets multiple chances after a bad customer experience (think about how many apps you’ve deleted recently or a restaurant at which your first meal was your last).

Then there is the point never underestimate the value of private dining. As the owner put it, people wanted a place where it was quiet and personal. I think that makes it as much about the experience as it does the product. Personalization is key!

Finally, I love another owner’s point: “To build your squad. We always knew that having good people was important, but I’m not sure we realized how important.” As any business grows, the founders can only do so much and your success is in the hands of the people you’ve brought in and trained. Your job as a manager is to help your team to do their jobs, but it’s also to be sure that every person is carrying their load. Nothing will bring a business down faster than a weak link in the chain that causes resentment among the rest of the team. Hire well, don’t be afraid to admit you’ve made a mistake with a hire if you have, and do everything in your power to retain great talent.

Yes, the food service business is different in many ways (you probably don’t have the health department visiting nor do you deal with many cuts and burns), but as the piece demonstrates, every startup faces many of the same challenges, don’t they?

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Filed under food, Consulting, Thinking Aloud

Bad Coaching

Most of us seek advice of some sort. It can be as simple as reading product reviews before we make a purchase or a restaurant reservation or as complicated as hiring a business advisor or a life coach. It’s information that adds to our own opinions as we make decisions, and one of the most important life skills is figuring out what’s good information and what’s not.

I thought of this while I watched this video from the European Tour. It’s 4 minutes of that tour’s golf professionals giving advice to a series of amateurs. The advice ranges from the nutty to the idiotic and every one of the amateurs follows it to the best of their ability. It’s silly stuff, ranging from stretching your eyeballs as part of your warm-up to piling grass on the ball to swinging blindfolded to throwing the club.

Here is the thing that resonated: the amateurs hung on every word of this bogus advice because it came from credible sources, tour pros. It reminded me of several clients I’ve had who had been given demonstrably wrong information from consultants or companies that positioned themselves as experts. Unlike the golf example, this wasn’t done as a joke and it did have negative consequences for my clients.

So here are a few things to think about. First, do your due diligence. Make sure the person giving you advice is qualified to do so. Not that there aren’t smart young people, but it’s less likely that a person with two or three years of business experience will have the broad perspective of someone with twenty or thirty years.

Next, avoid generic solutions. Good advice is tailored to the recipient. Golf pros who give the same lessons to everyone are generally horrible teachers. Your business is as personal as your golf swing, and any advice you get must be tailored to you.

If your advisor talks a lot more than he or she listens, dump them. In the video, some of the amateurs question the “tip” they’ve been given but the pro keeps chattering away, ignoring the questions.

I think that’s all good advice!

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Filed under Helpful Hints, Consulting

Offer Fewer Fries

This Foodie Friday, I want us to think about less being more. Specifically, it’s the balance between quality and quantity. I’m of the opinion that when it comes to food, high-quality ingredients expertly prepared are more satisfying than a large portion of bland, low-quality food.

Photo by Stephanie McCabe

For example, think about a bread basket that arrives at your table. Rich, dense bread slathered in high-quality butter is not something you’d eat much of. Compare that with a bunch of Wonder Bread and store-brand butter that you might have at home. The latter is tasteless and not satisfying and I’ll bet you eat more of it.

McDonald’s proved this point in 1990 when they stopped frying their fries in beef tallow. It was a knee-jerk reaction to people believing that trans fats were better than natural fats (turned out to be totally wrong). The fries never tasted the same and, more importantly for our discussion today, were not as filling. I’m convinced that the reason we have supersized portions is that the current fries are so unfulfilling. It’s probably why we have an obesity problem as well. I suspect there were cost-savings too, but are those savings worth ruining the reputation of your signature product?

Look at Europe. France and Italy, two fantastic food cultures, don’t serve you big portions and yet it’s hard to walk away from a meal in either place still hungry. The dishes are rich and tasty. High fat? Sure. Caloric? Yes, but you don’t eat as much. For the restaurant, this can mean lower food costs (smaller portions) which might be taken as higher margins or passed along to customers. You can’t really eat a huge portion of fries cooked in duck fat, believe me.

This is a principle which I believe any business can use. Consumers don’t want (or need) tons of low-quality products. Sure, they might be duped into thinking of them as great values (“Look at that portion!”), but over time your customers realize that they’re not really satisfied.

Example: think of Word or Excel. They are extremely complex products and yet most users take advantage of a tiny amount of that complexity. Why not offer a simpler product to the masses that cost less and save the complex version for those people who really need it (and charge them accordingly?). You can find articles dating back over a decade complaining about Word’s complexity and yet it wasn’t made simpler.

Less can be a lot more. Think about offering fewer, but much better, fries. People can be satisfied with less as long as it’s top quality at an affordable price. I’d rather be sated and healthy than hungry and sick. You?

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Filed under food, Huh?