Tag Archives: management

April 15, 2014 · 8:27 am

The Bottom Line

A business thought for Tax Day found in some dance music!  If you were following music as the punk movement hit in the late 1970’s, you were quite aware of The Clash. You might have even shed a tear when Mick Jones, one of the guitar players and a key songwriter, was kicked out of the band. This TunesDay we’ll use a song from his next project – Big Audio Dynamite – as our jumping off point to discuss business. It’s called The Bottom Line and it’s a fun listen if only for the wacky, mid-1980’s video:

This lyric raises our business thought:

A dance to the tune of economic decline
Is when you do the bottom line
Nagging questions always remain
Why did it happen and who was to blame?

It always amazes me how many smart people forget that “margin” is at least as important as “revenue.”  They spend a lot of time generating revenue from unprofitable activities while ignoring a part of the business that might have a high margin although the revenues aren’t much.  I thought we had all learned about that sort of thing in the dot-com bubble long ago (internet years are like dog years – the intervening 15 years are like a century in real-time).

It takes a fair amount of courage to abandon unprofitable customers or segments of your business which are generating decent revenue.  Revenue is always just one aspect of the business story.  Cash flow and profit are two others which are far more important.  Sure, revenue is the fuel that makes the business engine go, but a leaky gas line almost always results in disaster.

There is also the mistake some folks make in thinking about margin.  They forget that in addition to the gross margin (basically the cost to the customer minus the cost to you) there are other things that are “indirect” costs such as advertising and overhead that should be factored in to prevent the business from losing money on many sales.  Of course I see the need to scale – to build a customer base and generate cash flow – but if it’s not done in a sustainable manner, it’s just an exercise in futility.

The “gross revenue” line is where the head of sales lives.  The bottom line is where great business people reside.  Where are you?

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March 21, 2014 · 9:12 am

Caul Fat And Management

Foodie Friday, and today the topic is caul fat. “Never heard of it” you say?

Photo by Holly A. Heyser

Caul fat is one of those ingredients that is rarely used by the home cook and sort of falls into the “secret ingredient” category along with duck fat.   It’s the web of fatty membrane that encases the internal organs of various animals.  Pork caul fat is the one most cooks prefer but cooks use that of cows and sheep as well.

The cook wraps whatever he’s cooking in the fat before cooking it and it adds moisture and flavor. Most of the time, you see caul fat being used as natural sausage casings in crepinettes (fegatelli for my Italian friends) or to wrap items that lack a great deal of their own fat such as game birds.  It’s also used as an outer shell of sorts for patés when they’re being cooked.

What does this have to do with business?  I think good managers are like caul fat.  They bring things to the business that aren’t always readily apparent unless you dig down into the recipe.  It may be how they set the tone for the business.  It may be how they hold the team together, much as caul fat holds the sausage patties that are crepinettes together.  Caul fat is one of those ingredients for which you have to search.  You probably won’t find it in your supermarket.  Great managers are the same way, and like caul fat, when you first come across a great manager you might be surprised by it.

Secret ingredients are what make any dish really memorable.  After all, if every restaurant cooked the same dish the same way, why would we try new places?  Those ingredients are things that help a dish, a restaurant, or your business stand out in a crowd.  Caul fat’s why one cook’s roasted chicken breast is moist and flavorful and another’s, who cooked it the same time at the same temp with most of the same seasonings turned out a dry, flavorless product.  Great managers are a secret ingredient which, like caul fat, make a huge difference in the finished product even if it’s not clear who that fabulous final product came to be.  They make the difference between a good business and a great business.  That’s my take – what’s yours?

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March 13, 2014 · 10:41 am

Stupid Beer Tricks

I love stories like the one I’m about to share.  They’re the sort of tales that make points that are so blindingly obvious it makes my job as your friendly screed-writer extremely easy.  Well talk about a few of them in a minute but first, the details.

Draft A Bud

(Photo credit: Brave Heart)

Our story comes to us from Boise, Idaho, and the CenturyLink Arena.  This is the home of the Steelheads, a minor league hockey team and the Idaho Stampede of the NBA D League. It also hosts concerts.  Not surprisingly, they sell beer there.  Small beers for $4, large beers for $7.  Not very much unusual or instructive there.  One night at a game, two fans bought one of each size beer and, as fans sometimes do, tried to figure out if they were better off buying big beers or small beers.  As it turned out, although the $4 and $7 cup were different in appearance and shape, they held exactly the same amount of beer.  You can watch the video below to see it for yourself.  When confronted with this, the arena said they’d ordered the wrong size cups.  They’ll have a chance to prove that in court since the fans are now suing them.

The business points are pretty obvious.  Someone thought it would be a good idea to put the arena’s bottom line ahead of honesty with its customers.  They can’t really have thought that no one would figure this out, could they?  As we’ve said quite a few times here, happy customers will sometimes tell someone else but unhappy customers almost always will, and loudly.  As I’m writing this the video has almost 560,000 views and the story has been picked up by major news outlets.

What has the arena done to correct the problem?  Why they bought new cups, of course, and said they’re sorry.  Except in so doing they tried to pull another fast one since there is still better value in the small cups. Forty-eight ounces of beer costs $14 if you purchase two large beers or $12 if you purchase three regular beers.  The management thinks fans can’t do math.

To stay in business we can’t treat our fans as morons.  We can’t try to pull “a fast one.”  We need to provide excellent value for their money and treat them with respect.  That’s not so hard, is it?

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