Business Coach Teaches Opportunity Cost 101
If you’ll pardon me, I’m going to go a little farther into the world of entrepreneurship than most people are comfortable with. Here’s the scoop. On Planet Earth, we all only have 24 hours per day at our disposal. Entrepreneurs tend to be very aware of this fact, while the majority of people in the world are not aware of this concept, judging by their actions. Effective entrepreneurs grasp the reality that they only have a finite amount of time to turn their dreams into reality, but yet they have an unlimited number of choices and ideas. If you are going to become an effective entrepreneur, YOU MUST BECOME OBSESSED WITH BEING THE MOST EFFECTIVE MANAGER OF TIME ON THE PLANET. You must become very good at gathering all the facts and repeatedly saying no to good, average, or terrible things so that you can stay focused on the action items that have the opportunity to produce the most fruit for both you and your organization.
“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.” -Steve Jobs (Co-founder of Apple and the former CEO of Pixar).
As a business coach, I must stress the importance of knowing that your that time is your most valuable resource. You must constantly evaluate your focus to remain committed to things that make the highest and best use of your limited time. Occasionally you may want to schedule a leadership retreat with your team or step away from the daily battle yourself to really analyze where your company is headed and if you are truly directing the company in a way that will offer the most value to your customers and ensure the most profits for you.
As for right now, the business coach in me wants to help you get some big wins and have the data you need to make small or even large changes in direction, if need be. Take a moment and answer the following questions right here in your book.
The questions the business coach wants you to ask yourself:
People – Do you like the people you are working with, or are you just settling for the people you’ve already hired?
Marketing – Who are truly your ideal and likely buyers? What is the best place to most effectively reach your ideal and likely buyers? How good are your marketing materials when compared to your top competition?
Service Quality – Which of your competitors are doing what you do better than you? Is your product or service truly the best in the world? What systematic quality control problems do you repeatedly struggle with?
“The art of leading comes down to one thing: facing reality, and then acting decisively and quickly on that reality.” -Jack Welch (The former CEO of GE who grew the company by over 4000% during his tenure)
Product / Service – Are you making a product that you are proud to make and that really solves a problem in a way that wows your ideal and likely buyers? Which products should you be promoting that produce the highest amount of value for your customers and the most profit for you? Which of the products and services that you offer pays you the highest profit margin?Which products should you eliminate and stop selling altogether because they aren’t profitable, aren’t worth your time or aren’t the right fit for your company for some other reason?
Pricing – How much are your competitors charging for the similar products and services that you offer? How much more could you charge your customers without taking advantage of them? How much profit do you generate per customer? How many customers do you need to have this year to fund the achievement of your financial goals at your current pricing structure? What does it cost your customer to not have the products and services that you offer? What type of long-term financing offers could you offer your customers that would allow you to close more deals now? If the demand for your products and services exceeds your ability to produce, how will you use this to your advantage when pricing your products and services? Why do you charge what you charge? Are you charging what you charge now simply because some strong-willed person who no longer works for you suggested it or because of some other reason that does not make sense?
“You’ve found market price when buyers complain, but still pay.” -Paul Graham (Co-founder of the Y-Combinator business incubator famous for helping to launch Reddit, Airbnb, Dropbox, and Weebly)
“Value is not equated with low prices. Goods and services of high value may carry high or low prices. In fact, customer needs are so different that they are often willing to pay greatly differing prices for a given service, depending on its importance at a given time and place. Because price is only one element of value, it can be influenced as well by the ease of accessing a service. That is, by making a service easier to acquire, it can be made less sensitive to price, thus enhancing margins and profits.” –Service Profit Chain (Harvard Case Study) – James L. Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser, Jr., Leonard A. Schlesinger
Business Coach Fun Fact:
“(Steve) Case (AOL Founder) says that he doesn’t remember the total amount spent on the discs specifically, but says that in the early 1990s, AOL’s goal was to spend 10 percent of lifetime revenue to get a new subscriber. He says that since the average subscriber life was around 25 months, revenue was about $350 off of each of these users. So he guesses they probably spent about $35 per user on things such as these discs.”
“How Much Did It Cost AOL To Send Us Those CDs In The 90s? ‘A Lot!,’ Says Steve Case” – MG Siegler in Tech Crunch
Sales – What is the best way to get your product out to the masses (direct selling, retail presence, Internet marketing, affiliate marketing, etc.)? Should you build a call center team of telesales professionals to help you market your product? Should you use strategic partners to help distribute your product to your ideal and likely buyers? (Example: Dell computers came pre-loaded with Microsoft Products) What is your most effective sales strategy or process that you should focus on turning into a duplicable system? What are ineffective sales strategies that you should stop pursuing? What celebrity could I team up with to dramatically increase my sales now?