Serial entrepreneur, celebrated advisor to millions of small business and mid-sized company owners, and author of the NO B.S. GUIDE TO RUTHLESS MANAGEMENT OF PEOPLE AND PROFITS, Dan Kennedy says:
I have long accused business owners of playing “Blind Archery.”
In their marketing, they pour endless sums of money into advertising, marketing, promotion, employing salespeople, going to trade shows and on and on, without clarity about precisely who they are trying to attract and appeal to (and repel). Few can get beyond very simplistic demographics in attempting to describe either their current or ideal customers. My books NO B.S. GUIDE TO DIRECT MARKETING (FOR NON-DIRECT MARKETING BUSINESSES) and the newest NO B.S. GUIDE TO MARKETING TO THE AFFLUENT both address this in considerable detail. As I am writing this, many business owners are feeling effects of a quasi-recession fueled, pardon the pun, by skyrocketed gasoline and thus transportation costs, consumers’ negative emotions about gas and groceries inflation, a credit crunch, and media hype. This is all the more mandate not to waste any of your resources.
In managing their businesses, owners are in search of profit without clarity about what it is or useful tools for predictably measuring it. In Chapter 42, I describe different kinds of profit and different attitudes about profit, as well as revealing the most important and typically overlooked asset in business. Then in Chapter 43, I present and explain thirteen critical numbers your bookkeeper, accountant or CPA never talks to you about, and probably does not understand. Most business owners have piles and files of accounting records and financial statements utterly useless to them in their prime role of managing their business for maximum profits. These historical records are confusing, mind-numbing, too late to do any good, and consequently, stacked in the storeroom “in case” they’re ever needed. I am not talking about those kinds of numbers! There are certain numbers that allow you to predict the future and micro-manage the present, to ruthlessly assess and improve the value of every advertising or marketing investment, every prospect, every customer, every product or service and every employee.
In addition to the practical aspects of ruthless management for profit, there are philosophical and psychological aspects – barriers, really, to doing what you need to do in order to achieve best possible profits and extract maximum personal wealth from your business. That’s why I call this book the business owner’s long-awaited permission slip to manage his business for him, yours to manage your business for you. If you find this helpful, a good companion book is the NO B.S. GUIDE TO WEALTH ATTRACTION FOR ENTREPRENEURS.
Here and now, we should agree on two things. First, it is up to you to define what the ‘profit’ is that you seek from your business. To one business owner, being closed on Fridays and for two weeks in July may be a greater and more important profit than greatest possible dollars of revenue or conventionally measured profit, and as long as you are conscious and thoughtful about making such a determination, it’s fine. Second, once you determine what the ‘profit’ is that you desire, it is your business’ purpose to provide it. And you should ruthlessly hold it and everything and everyone that comprises or connects to your business to that standard. You should accept nothing less and tolerate nothing working at cross-purposes or insufficiently contributing. You should constantly assess: is this creating the profit I’ve defined, or is it detracting from it, distracting from it, diluting it?
It is not enough for somebody to show up at work and do work all day; at day’s end, there must be clear and measurable contribution to profit. In the nation’s capitol, Washington D.C., where I have one of my homes, when snowstorms hit, notices are announced on the TV stations that “only ESSENTIAL government employees should report to work tomorrow.” The obvious question is: why are NON-essential employees reporting to work any days? Chapter 6 guides you accurately calculating, probably for the first time ever, the true, actual and full cost of each of your employees. Only by doing so can you determine the profitability of the employee and the jobs he is doing, and then try to improve that profitability. Your task is to make the spread between cost and value as large as possible, but if you don’t even know what it is, how can you improve it?
It is not enough just to take any and all customers, clients, accounts you can get. Some are infinitely more valuable than others. But most owners have not analyzed which ones are most and least valuable, why, and where they came from. Only by doing so can you systematically get more of the best and fewer of the worst, thereby improving your average profit value per customer – the only sure way to improve overall profits; otherwise you may see sales rise but need for infrastructure and investment rise right along with it.
Ordinary management takes a very casual and uncritical approach to these and a number of other parts of the business. Ruthless management is much more discerning and demanding. While ordinary management is blurred vision, ruthless management is crystal clear vision from piercing eyes, laser focused.