Thursday, May 9, 2019

Lesson #312: Don’t Let Short-Term Thinking Hurt Long-Term Success

Posted By: George Deeb - 5/09/2019

I recently met a business where the owner made 100% of her decisions based on how it impacts the immediate cash flow of the business.  A...



I recently met a business where the owner made 100% of her decisions based on how it impacts the immediate cash flow of the business.  And I mean every decision!  Whether it was hiring business professionals like accountants or lawyers that were advising the business.  Or, making marketing decisions based on what drove revenues this minute.  All the way down to minute things like figuring out which credit card to use, to drive immediate cash back rewards on expenses.  Some of this is admirable.  But, most of this was completely short-sighted and hurting the business long term. 

I get it.  Most entrepreneurs are cash starved and looking to save every penny they can.  But, in this case study post, you are going to learn that cutting pennies today, could be costing you millions of dollars tomorrow.  Allow me to explain.

DON’T MAKE SHORT TERM DECISIONS THAT HURT LONG TERM GROWTH

One of the actions this entrepreneur made was only investing in marketing tactics that would drive an immediate sale and immediate return on marketing investment.  The problem with that focus was that she was running a B2B business, where the highest ROI spend this minute, may not be the best tactic for maximizing long term sales, given the long sales cycle lead time of B2B.  For example, if you focus on driving sales, profits and returns today, you would most likely select Google as your primary marketing channel.  And that will most likely result in lower ticket transactions, where the client budget is already in place and can be spent today.  If she was focused on the long term, perhaps she should have invested in big trade shows in her industry, where very large ticket orders could be secured, albeit on a slower and more patient timeline.  So, yes, trying to drive an immediate return is nice.  But, not if you are sacrificing 10x that amount of sales and profits down the road.  It would be more ideal, to better capitalize the business to better focus on the biggest long term ROI opportunities, even if it requires needing some short term working capital to bridge the gap.

DON’T BE CHEAP ON STRATEGIC ISSUES, YOU GET WHAT YOU PAY FOR

When I presented this client with around 10 accountants and 10 lawyers to consider to help her business, I gave her a complete picture of the strengths and weaknesses of each of these professionals, and gave recommendations on which ones I thought were the best to help her business and her specific needs.  For example, I knew she was going to need advisors with a lot of M&A experience to help her accomplish her desired roll up strategy.  But, the only metric she focused on was price.  She ended up picking the cheapest lawyer and the cheapest accountant on this list, neither of which had the required M&A experience she was going to need, which came at a slightly higher hourly rate.  That is like cutting off your nose to spite your face!  You need advisors that know your business needs or industry.  Engaging human talent should not be the same mindset as buying a commodity, like loaf of bread.  With human talent, you really do get what you pay for, based on their expertise.

DON’T PICK THE CHEAPEST SOLUTION, PICK THE BEST SOLUTION

Then I was helping this client with setting up various off-the-shelf technologies, service providers or other point solutions for her business.  This included things like her advertising agency, her CRM software, her SEO firm, etc.  And, again, like with the lawyers and the accountants, it was more of the same.  She would see five options for every need, would ignore the strengths or weaknesses of those solutions, and focus only on price.  She didn’t care that there may be better options out there, to help propel her business to new heights.  All she cared about was how the investment would impact today’s cash flow.  Stop the madness!  Price should be one of the major considerations when picking solutions, but not the only driver.  It is much more important you find solutions that present the best value—offering the most advantages and least disadvantages at the most acceptable price (which is not necessarily the cheapest price).

DON’T LET SHORT TERM DECISIONS, HURT YOUR CUSTOMER EXPERIENCE

One of the short term decisions she made was in picking her shipping provider, moving goods from her warehouse to her customers.  She considered around five solutions, and again picked the cheapest, trying to maximize gross margin.  The problem was, she didn’t investigate other important data points, like the percentage of successful online deliveries of each vendor.  It turned out, that the cheapest shipping vendor, was also the one with the highest instances of late deliveries to customers.  And, guess what happened next; customers started complaining about missing shipments, which put the company in a negative light, and they started to lose repeat sales.  Again, vendor decisions should be much more than simply a price-based decision, to avoid customer facing situations like the above.

DON’T BE SO FOCUSED ON THE WEEDS, THAT YOU LOSE FOCUS ON THE GOAL

This entrepreneur was so focused on short term cash flow, that is was like an obsession.  It just entirely consumed her and drove all of her attention.  She would pull out her monthly income statement, run through every expense item, line by line, and figure out how to drive down the cost of each item.  She put hours and hours of work into that sole goal.  Congrats, you saved a few bucks.  But, shame on you for not putting those same hours into figuring out how to propel your revenues to newer heights, which to me, should have been an even more important area of the business that required her attention.  You may have saved $10K in monthly expenses, but you probably hurt your revenues by $100K per month had you focused your energies there.  The point here: you need to prioritize your time and invest it in the best ways possible.

CONCLUDING THOUGHTS

So, the moral of this story here:  don’t be a cheap ass!!  Yes, you want to keep your expenses as low as possible.  But, you don’t want to make cash flow driven decisions that end up slicing your own throat.  Each business decision needs to do what is right for the business, overall for the long term.  Not, simply what is best for the bottom line in the immediate term, for the reasons summarized above.  Instead, make sure your business is properly capitalized to allow it to afford the “right” solution for the business, that will help give the business the highest odds of long term success.  And, remember, it is impossible to maximize long term growth and short term profitability at the same time, you have to pick one or the other.

For future posts, please follow me on Twitter at: @georgedeeb.


Saturday, April 27, 2019

Good Decision Making Requires Good Data

Posted By: George Deeb - 4/27/2019

Over the years, I have become a “data hound” looking for every morsel of wisdom I can ge to help me make smarter decisions. The good ne...




Over the years, I have become a “data hound” looking for every morsel of wisdom I can ge to help me make smarter decisions. The good news here: accurate data is king. You can’t effectively manage your business without accurate data. Getting it is not always easy but without it you risk making the wrong business decisions -- hurting your business when you thought you were helping it. Allow me to explain.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.


Thursday, April 25, 2019

[VIDEO] George Deeb Discusses Market Research and Business Planning on ASBN

Posted By: George Deeb - 4/25/2019

I was recently interviewed by the  Atlanta Small Business Network  (ASBN), an online "television network" serving the small bu...



I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about business coaches and mentors, and how they can help your business.  I thought this video turned out great, and I wanted to share it all with you, to help you with your market research and business planning needs.  I hope you like!!


The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.


For future posts, please follow me on Twitter at: @georgedeeb.

Saturday, April 6, 2019

Why We Turned Down a Chance to Double Sales

Posted By: George Deeb - 4/06/2019

Back in 2018, we acquired Restaurant Furniture Plus , a B2B ecommerce business that sells food service furniture to restaurants and othe...



Back in 2018, we acquired Restaurant Furniture Plus, a B2B ecommerce business that sells food service furniture to restaurants and other hospitality companies.  We recently received a request for proposal from one of the most recognized restaurant brands in the world. If secured, the project would have doubled our sales overnight. We walked away from the opportunity, which may sound silly to you. But, here’s why.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter: @georgedeeb.


Thursday, April 4, 2019

Lesson #311: It’s Time to Rethink the Pyramid Shaped Org Chart

Posted By: George Deeb - 4/04/2019

I have long thought movie stars and sports heroes were drastically overpaid in comparison to their contributions to society.  For exampl...



I have long thought movie stars and sports heroes were drastically overpaid in comparison to their contributions to society.  For example, teachers are teaching future generations of kids, and get paid pennies in comparison.  And, even well paid doctors saving lives, are paid a small fraction of what a basketball star gets paid to simply play the game of basketball.  In the last decade, these inequalities are starting to be seen in corporate workplace, as well, with rising CEO pay and a mid-level jobs under siege due to outsourcing and technology automation.  I think we need to rethink the traditional pyramid shaped organizational structure to “right size” the work completed vs. compensation paid equations.  Allow me to explain further.

WHAT IS A PYRAMID SHAPED ORGANIZATION?

In most hierarchical organizations, it could look something like the following.  One CEO manages five EVPs who collectively manage 25 SVPs, who collectively manage 125 VPs, who collectively manage 625 directors, who collectively manage 3,125 managers.  As you can see, a very wide base and a very narrow top results in a pyramid design as you move up the organization.



And, as you move up the organization, the compensation dramatically grows with each level, where a manager can make $37.5K, a director can make $75K, a VP can make $150K, an SVP can make $300K, an EVP can make $600K and a CEO can make $1.2MM+.  And, depending on the size of the company, the Fortune 500 CEOs can make $25MM a year, which have dramatically increased to that level in the last decade or two.

PROBLEMS WITH THE PYRAMID DESIGN

The first problem with the pyramid design is compensation disparity from the top of the organization to the bottom of the organization.  In the example above, do we really think the CEO is worth 32x the managers at the bottom layer of the organization?  Or, in the case of a Fortune 500 company, what could be 1,000x the entry level workers?  Probably not, as often times the people in the trenches are doing the hardest work.

The second problem is the caps it creates in upward mobility.  At every level of the organization, there are 5x as many candidates that can be promoted into the tier above them, as illustrated in our example.  Presumably, the 125 VPs are all roughly equal in terms of doing a good job, but only 25 of them will have a chance to get promoted to the next level.  That is like a 20% chance of winning the lottery from one level to the next.  Or, if you go from the bottom level to the top, you have a 32 in 100,000 chance to go from entry level to CEO.  Sorry to the 99,968, you are just out of luck—no lottery ticket for you.

The third problem is the impact that has on the U.S. economy.  The wealth gets concentrated in the top 1% of people and the 99% in the middle class are getting squeezed right out of existence, as inflation-based raises are not keeping up with the rapidly growing cost of living and rising consumer debt levels.  This country was built by the middle class, and with growing levels of outsourcing and disintermediation by technology, the American dream is really becoming a real potential for a very few people that are able to make it all the way to the top.  The old adage is, you need to have money to make money; and right now, there are very few that have it, to give them a realistic chance of making it.

HOW TO FIX THE PYRAMID—BUILD A CYLINDER

Firstly, in my example above, there were six levels of workers, from managers all the way up to CEO.  But, instead of having 80% of workers in the bottom tier, what if each tier was evenly distributed with 16.7% of the workers in each tier, closer in shape to to a cylinder than a pyramid.  But, that creates some interesting management hurdles, along the way.  As an example, you can’t have 651 people acting as CEO or managing the company by committee.  But, you could empower more people to make more strategic senior decisions, with fewer levels of bureaucracy.  Maybe break the business into pieces, in terms of how it is managed by department, by region, by customer, by channel or whatever.  This would require a lot more thought on how best to divide up key decision making roles, to empower more people to take leadership positions.  But, if we can elect our Presidents by democratic vote, maybe there is a way to run our businesses the same way?

Secondly, in my example above, there was a total payroll of around $194,512,500.  If all 3,906 employees we treated the same, the average would be around $50,000 a person, which would be like a 33% raise to the 80% of employees in the bottom tier, and would materially improve their lifestyles.  Now, I am not saying there shouldn’t be a step up on compensation with each tier.  But, maybe it is a 25% bump instead of a 100% bump in my example, to help make more room for the folks in the lower tiers.  And, don’t forget, in the cylinder model, we moved 80% of workers up into higher tiers within the cylinder, so the raises will end up being much higher when combining the salary per tier with the more people in higher tier advantages.  For example, taking a quarter of the bottom tier up to $62,500 (up 67%), another quarter to $78,000 (up 108%), and a third quarter up to $94K (up 151%), as examples, as they were reshuffled upward within the organization.

The natural pushback here will be there are not enough quality candidates for each tier.  To that point I would say: (i) we simply need to make education or training of those people more affordable and more accessible; and (ii) we have a ton of “underemployed” people on the sidelines waiting to get back into the game in a much more material way.  Of course, the current people at the top, won’t like this model, as it means materially scaling back on their compensation, but that is the price of helping to rebuild our middle class.  Instead of having one billionaire Jeff Bezos at the top, I sure he will live just fine on multi-millions of dollars a year, as an example.

CONCLUDING THOUGHTS

So, the points here are: (i) why should the vast majority of the corporate compensation spoils go to elite few, when a business is built on the shoulders of many; (ii) how do we get skyrocketing executive salaries in check; and (iii) how do we save our middle class which is under siege.  I am just trying to think out of the box on how best to reinvent organizational design for a modern 21st century business.  If you have any ideas here, please add them to the comments box on this page.  Together, we may just figure out a way for the anonymous John Doe to get paid the same as Tim Cook, Lebron James or Tom Cruise.

For future posts, please follow me on Twitter at: @georgedeeb.



Friday, March 15, 2019

Lesson #310: Want Startup Success? Keep It Simple Stupid!

Posted By: George Deeb - 3/15/2019

Building successful startups is not easy.  That is why only one in ten startups actually succeed.  But, if you are going to have any cha...



Building successful startups is not easy.  That is why only one in ten startups actually succeed.  But, if you are going to have any chance of success, you need to K.I.S.S.—Keep It Simple Stupid.  You have to boil your idea down to one specific thing, and stay religiously focused on that end goal.  Which means not getting distracted by the various “flavors of the month” that can lead you down rabbit holes and stress out your organization in the process.  Allow me to explain.

A Case Study of What Not to Do

The other day, Red Rocket had a call from a startup seeking to raise capital.  When I asked him to explain his business model, it went something like this.  We are a human services company, and an artificial intelligence company, and an ad sales network, and a consumer marketing brand, and an ecommerce business (in one of the hardest industries to break into).  I kid you not, that was the pitch, trying to be all things to all people in their industry.  And, the problem was: the entrepreneur had no clue there was anything wrong with that strategy.

First, from a business model perspective: the tactics required for successfully running a B2B business is completely different from the tactics required for successfully running a B2C business.  The former is more sales driven and the latter is more marketing driven, as an example.  So, strike one.  Then, drilling down even further, running a B2B services business is completely different from running a B2B technology company.  The former is human driven and the latter is software coding driven, as an example.  So, strike two.  And, drilling down even further, running an artificial intelligence company is materially more complex than building a simple piece of B2B software, with hardcore data science and machine learning required.  Strike three, you’re out!  And, I didn’t even get to drill down on the various B2C complexities here.

When I told the entrepreneur, of the FIVE different business strategies discussed, they needed to pick only ONE, whichever one would be the easiest, most-lucrative one to pursue, I was met with a blank stare on his face, with him not exactly knowing which one was the best, or why he couldn’t reasonably be doing all five strategies at the same time.  I told him, Keep It Simple Stupid; pick one which will be your core competency that you will do better than everyone else, and outsource and partner for the other pieces of the puzzle if you feel they are important.

A Case Study of What to Do

As you may know, we recently acquired Restaurant Furniture Plus.  When the entrepreneur was pitching their business to us, their communicated mission was very clear:  we are the leading ecommerce seller of furniture to restaurants.  And, they differentiated themselves with a “free furniture sourcing service”, to take work off the plate of busy restaurant owners that didn’t have the time to research furniture themselves.

Why did that pitch resonate?  First, the restaurant industry was large, at approximately $800BN a year, so a big business could be built.  Second, all the competitors lead with products and prices, and this company lead with service, as a clear differentiator.  Third, given the heavy B2B services nature to the business, it would be more defensible versus the big ecommerce-only players in the industry, like Amazon, that are not deep in services.  And, the company’s clear focus showed in their financial metrics.  The business was growing very quickly, with a very high conversion rate and many happy repeat customers, both data points which spoke to the high quality of the service and its appeal to customers.  All in all, it was very simple in its design and execution.  And, guess what?  We bought the company!

K.I.S.S. Applies to All Areas of the Business

The above case studies were speaking to high level business strategies.  But, simplicity applies in all other areas of the business.  Is your product offering streamlined?  Are your operational processes simple?  Are your sales and marketing efforts laser-focused on the most profitable tactics?  Is your company culture clearly communicated for all others to follow?  Are your monthly financial statements reporting the most important key performance indicators, so you can best manage them?  Etc. Etc.  So, critically look at all areas of your business to streamline and better focus the business.

Concluding Thoughts

So, my pitch to all of you entrepreneurs out there: stop what you are doing, take a breath and re-assess everything you are doing today.  Is everything as simple and laser-focused as it can be?  If not, you have some fixing to do.  And, oftentimes, entrepreneurs are simply too close to their own business to clearly focus.  So, maybe you need a non-biased outsider to come in with a fresh set of eyes, to help you “navigate the forest through the trees”.  If you K.I.S.S. your business, good things will surely follow.


For future posts, please follow me on Twitter at: @georgedeeb.

Monday, March 4, 2019

Avoid Internally Shuffling Staff Into Wrong Roles

Posted By: George Deeb - 3/04/2019

The old adage, a “bird in hand is worth two in the bush” may work in some instances in business, but slotting people into employee roles...



The old adage, a “bird in hand is worth two in the bush” may work in some instances in business, but slotting people into employee roles is definitely not one of them.  I can’t tell you how many times I see early stage entrepreneurs slot a person into a role, simply because it is convenient, with them already known and on the team operating in an entirely different role.  Stop this madness!!  Do you want the quickest solution to your hiring needs, or the best solution?  Allow me to further explain.

Read the rest of this post in Forbes, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.


Friday, March 1, 2019

Google, Facebook and Amazon Are The Only Winners in Ecommerce

Posted By: George Deeb - 3/01/2019

I have been a long-time fan of the ecommerce industry. As offline retailers were struggling to compete with online retailers, many large...



I have been a long-time fan of the ecommerce industry. As offline retailers were struggling to compete with online retailers, many large chains went out of business, and an increasing amount of consumer buying moved online. For a long time, ecommerce startups were printing money in what felt like a “can’t lose” industry. But, like with any gold rush, empowered by ecommerce platforms like Shopify -- that made it quick and inexpensive to get your online store up and running -- ecommerce attracted a bunch of competitors trying to get their products discovered.

But, what happens when millions of ecommerce stores are fighting to get discovered on only three primary websites -- Google, Facebook and Amazon -- where consumers are looking for potential shopping solutions? All hell breaks loose, wreaking havoc on your cost of customer acquisition and your bottom line profits. This means the only long term winners in ecommerce are, you guessed it, Google, Facebook and Amazon. These three keep raking in all the highly-profitable advertising dollars while the ecommerce businesses themselves are starting to struggle to make a profit. Allow me to explain.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at @georgedeeb.


Thursday, February 14, 2019

Lesson #309: The Risks of Candidates Climbing Back Down the Corporate Ladder

Posted By: George Deeb - 2/14/2019

Our brains have been wired to think about our careers going up the corporate ladder over time.  A manager, becomes a director, becomes a...



Our brains have been wired to think about our careers going up the corporate ladder over time.  A manager, becomes a director, becomes a vice president, becomes a president, etc.  But, if you think about that structure, there are a lot fewer job positions the further you go up the ladder.  An example typical company may have 125 managers, 25 directors, 5 vice presidents and 1 president.  So, the odds of moving up the ladder aren’t really in your favor, with 80% fewer positions at each next level.  But, people need to make a living.  What happens when an employee needs to go back down the ladder, to find more open positions?  Is that a good idea for you to consider that candidate as a hiring manager?  Let’s find out.

DOES THE CANDIDATE HAVE THE RIGHT SKILLS?

In this post, let’s talk about the sales department as an example.  Most “upper ladder” sales managers have been “lower ladder” salespeople at some point in their past careers.  So, it is highly likely and logical that a sales manager most likely has the knowledge and skillsets required to succeed as a salesperson again.  But, to be clear, the job of a sales manager is completely different from a salesperson.  The salesperson maintains client relationships and closes sales all day, and a sales manager manages and mentors the salespersons all day, to make sure they are hitting their agreed upon targets.  So, making that shift back down the ladder, really means taking on a completely different job again.  You just have to be sure that candidate truly has the appetite for that change.

DOES THE CANDIDATE HAVE THE WILLINGNESS TO DO THE JOB REQUIRED?

Continuing this example, once a sales manager gets used to the tasks of being a sales manager (more in the office, less travel, less repetitive tasks, the prestige that comes with the role), for many, it is really hard to get back into a quota hitting sales producer role.  But, that is a more of a general guidance.  There are exceptions to that rule.  Maybe a sales manager got promoted, and realized they don’t like managing people, and actually prefer the “thrill of the hunt” of being a salesperson.  So, it is really important you ask the right questions during the interview process to ensure that candidate will actually be happy doing the work required in that “lower ladder” position.  Understanding that many will say whatever is required to get the job, so buyer beware.

DOES THE CANDIDATE HAVE THE RIGHT COMPENSATION EXPECTATIONS?

In addition to the role changing at lower lowers, the compensation is typically lower at lower levels.  So, let’s say that Vice President was making $150,000 and now they are looking at a Director level job that makes $80,000.  Once a worker gets used to living off a higher salary, it is really hard for them to make ends meet on a much smaller compensation.  The only times that works out is if the role is combined with material other incentives (like an aggressive commission plan or equity upside to make up the difference), or if they are older in their career (having built up a big savings account to live off of, and perhaps are self-aware of their need to reset their target role and compensation expectation to have a better chance of getting employed at their age).

SHOULD I BE WORRIED IF SOMEONE IS WILLING TO TAKE A PAY CUT?

My off the cuff answer is yes, someone willing to take a pay cut could certainly trigger a concern.  But, it doesn’t necessarily mean it is a deal breaker.  As discussed above, if other incentives are in place, or there is a logical “story” with this candidate, you may be perfectly fine.  Remember, what you gain with an “upper ladder” candidate, is all that extra years of experience that comes with that.  So, if you can get comfortable with the situation, it is like getting a Porsche for the price of a Toyota.  But, buyer beware.

DOES THE CANDIDATE PRESENT A FLIGHT RISK, AWAITING A BETTER POSITION?

Based on my experience of hiring people over the years, once somebody gets used to getting paid at a certain level, they are going to try to maintain or exceed those levels in future jobs.  So, if they are taking a job with you at half the compensation, without a matching good “story” or incentives, that opens the door to those candidates continuing to look for new jobs, even after they have accepted yours.  But, again, that is a general rule of thumb.  That may not be the case in all scenarios, so do your due diligence and make a judgement call.  For example, someone approaching retirement looking for their last job before they retire, could be perfectly fine and worth the risk.

WILL THEY HAVE THE RIGHT ENERGY FOR THE JOB?

Generally, a person’s energy declines with their age.  But, that is not always the case.  I have worked with many people in their 60’s whose energy levels exceed that of people in their 20’s.  Another way to think about this:  older “upper ladder” employees are typically more efficient in how they work, so whatever you think they may lack with energy, they should more than offset that risk with efficiencies they have honed with their prior years of experience. 

IS IT POSSIBLE FOR CANDIDATES GOING DOWN THE LADDER TO RESULT IN A GOOD OUTCOME?

As you have read above, a lot of things have to go right for someone going back down the ladder to result in a good outcome for your business.  But, that does not mean you should close the door on that scenario in all cases.  You need to assess each candidate on their own merits.  What is their “story”?  How do they answer your questions on the above topics?  Do you believe they can live on a smaller compensation and have the energy and appetite to be successful in that “lower ladder” job?  This situation is laden with potential pitfalls, but it most certainly can work out for the best.  Do your homework!


For future posts, please follow me on Twitter at: @georgedeeb.



Friday, February 8, 2019

Lesson #308: Want to Grow? Complete One Material Action Per Day!

Posted By: George Deeb - 2/08/2019

When you are running a small business, it is really easy to get distracted.  Firstly, your own CEO job most likely has a lot of differe...




When you are running a small business, it is really easy to get distracted.  Firstly, your own CEO job most likely has a lot of different tasks, from chief strategist to chief bottle washer.  Secondly, your team often has many demands on your time, to help point them in the right direction on their projects.  And, thirdly, it’s just too easy to get sucked into the random inbound contacts that come into your email box or through social media.  All I can say to you entrepreneurs who are “floating in the wind” of poor time management is: unless you are doing at least one material thing each day to move your business forward, towards new revenue or profit heights, you are never going to grow your business as quickly as you could be.  Allow me to explain.

WHAT IS A MATERIAL ACTION?

To me, a material action is something that has meaningful revenue or profit implications from its output.  On the revenue side, it could be things like launching a new marketing campaign, or making a new sales call, or ideating a new product line, or expanding into a new target-customer or geographic market, or hiring a new salesperson, or negotiating business merger opportunities, etc.  Anything that will drive new revenues.  On the profit side, it could be things like cutting your cost structure, or improving your business efficiency, or improving your company morale and productivity, to name a few.  Anything that will drive higher margins for your business.

WHAT IS NOT A MATERIAL ACTION?

On the flipside, there are a lot of demands on your time that you think may be important, but just are not a material action, as defined above.  This could be things like producing your monthly financial statements, or posting to your social media accounts, or writing a new monthly email newsletter, or managing your ad agency, or doing one-on-one meetings with your direct reports, or running payroll checks, or upgrading your systems, or relocating your home office, etc.  Yes, these are important tasks that need to get done.  But, they are not going to propel your business to the next level.

BUDGET MORE TIME FOR MORE MATERIAL ACTIONS

I bet if you did a critical assessment of how you are spending each of your working hours, most of you are spending the vast majority of your time, if not all of your time, on “less material” actions.  To me, if you are not spending at least 20% of each day on “material actions” you will not have a reasonable chance to grow your revenues and propel your business to the next level.  So, it is important that you actually carve out “material action” time into your daily schedules.  For example, maybe you block out 8am-10am each day for you to think and act strategically and materially about your business.  Note that I intentionally did not suggest 3pm-5pm each day, when you are most likely tired and not doing your best thinking.

CASE STUDY—PART 1 (THE GOOD)

We recently acquired a business in February 2018.  At the time, they were doing around $2.5MM in annual revenues.  Within four months of acquiring the business, our annualized revenue run rate had doubled to over $5MM.  How did we do that?  We focused on material actions to drive the business forward.  We quadrupled our marketing budget, hired a new ad agency, we launched an SEO effort, opened new sales and marketing channels, expanded our sales team, grew our margins, etc.  Our focus was on driving revenues as quickly as we could, and our time was firmly focused on making those material actions happen.

CASE STUDY—PART 2 (THE BAD)

In continuing the above story, with an increase in revenues came an increase in time that was needed on “less material” projects in the months that followed.  We learned our CRM could not handle the extra volume, and we needed to upgrade to a different CRM, which needed to be researched.  We learned our product information on the website was out of date, and needed to be updated.  Our product offering needed to be fine-tuned, to make the business more scalable.  Our ad agency suggested we make some technology changes, which resulted in some unexpected hiccups and fixing time required.  In doubling our staff size, came the review of hundreds of resumes and dozens of interviews.  Sometimes those hires worked out, and other times they did not, spinning our wheels right back to where we started.  Quickly, the time I had to focus on “material” projects, started to get consumed by “less material” projects.  And, guess what happened: sales growth started to slow down!!

HAND OFF LESS MATERIAL WORK TO OTHERS

I get it, small businesses are typically under-capitalized and don’t necessarily have the luxury of large teams of staff to help leverage your workload.  But, even in small businesses, you need to figure out how to keep yourself moving the business forward with “material” projects.  Where you can, hand off the “less material” work.  Let your bookkeeper produce monthly financial statements.  Let your head of marketing manage your ad agency.  Let your head of technology review various systems needed.  And, take yourself out of that process, at least until the busy work is done and you can review the final output of that work.  Don’t let the “less material” work get in the way of you having the time required to drive the business forward by completing "material" work.

CONCLUDING THOUGHTS

Executives in small businesses are typically very busy people, wearing many different hats at the same time.  The real challenge you will have is making sure that 100% of your time is not consumed by “less material” projects.  You need the discipline of: (i) knowing what projects have the highest odds of moving your revenue or profit growth to the next level (which is an art of its own); and (ii) making sure that slotted time to work on “material” projects is actually getting reserved to make sure that work gets done.  Remember the scene in the Pixar movie “Up”, where the dog kept getting distracted by the squirrels running by?  The “less material” work you doing are “the squirrels”, distracting you from where your focus needs to be.


For future posts, please follow me on Twitter at: @georgedeeb.


Saturday, February 2, 2019

Don't Let Short-Term Thinking Undermine Long-Term Success

Posted By: George Deeb - 2/02/2019

I recently met a business owner who made 100 percent of her decisions based on how it impacts the immediate cash flow of the business. A...



I recently met a business owner who made 100 percent of her decisions based on how it impacts the immediate cash flow of the business. And I mean every decision -- from which accountant or lawyer to advise the business, what marketing could drive revenue this minute, all the way down to minute things like figuring out which credit card would yield immediate cash back rewards on expenses. Some of this is admirable, but mostly it is completely short-sighted and hurting her business long term. I get it. Most entrepreneurs are cash starved and looking to save every penny they can. But, in this case study post, you are going to learn that cutting pennies today, could be costing you millions of dollars tomorrow. Allow me to explain.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.



Sunday, January 27, 2019

[NEWS] 2019 Triangle Tweeners List Announced--Features Restaurant Furniture Plus

Posted By: George Deeb - 1/27/2019

For the last few years, Scot Wingo , the serial successful entrepreneur in the Raleigh-Durham area who founded Channel Advisor and Spif...




For the last few years, Scot Wingo, the serial successful entrepreneur in the Raleigh-Durham area who founded Channel Advisor and Spiffy, has been keeping his finger on the pulse of all the great startup activity taking place in the growing Triangle-area startup community.  He maintains an annual list of "Triangle Tweeners" that are growing startups with revenues between $1MM and $80MM that are "off to the races" and the local Triangle-area ecosystem should support.  The word "tweeners" means the listed companies are in between early seed-stage startups that have not yet achieved their proof-of-concept, and later stage businesses that have grown beyond venture capital stage and into private equity stage.

Scot published the 2019 Triangle Tweeners List last week.  So, if you are curious which companies to keep an eye on, in terms of future potential investment returns in the Triangle area, this is your go-to list of up-and-comers.

And, as a pleasant surprise, Red Rocket's portfolio company, Restaurant Furniture Plus has made this year's list and was honored at the first annual Triangle Tweeners Awards event last week (see George Deeb accepting this award on behalf of the Restaurant Furniture Plus team in the photo below).



No pressure now, Scot!!  We'll do our best not to let you and the local community down.  Thanks Scot for all the effort you put into maintaining your annual Triangle Tweeners list.  It is a tremendous service to the local community, and helps investors and executives outside the region know all the great startup activity that is happening in town.


For future posts, please follow us on Twitter at: @RedRocketVC.  And, be sure to follow Scot Wingo at @scotwingo for future years' updates to his annual Triangle Tweeners list.


Friday, January 25, 2019

[VIDEO] George Deeb Discusses Business Coaches and Mentors on ASBN

Posted By: George Deeb - 1/25/2019

I was recently interviewed by the  Atlanta Small Business Network  (ASBN), an online "television network" serving the small bu...



I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about business coaches and mentors, and how they can help your business.  I thought this video turned out great, and I wanted to share it all with you, to help you determine if engaging a business coach (like Red Rocket) is right for you.  I hope you like!!



The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.


For future posts, please follow me on Twitter at: @georgedeeb.


Wednesday, January 23, 2019

Lesson #307: Marketing Wisdom from Seth Godin

Posted By: George Deeb - 1/23/2019

I recently attended the annual Internet Summit in Raleigh and had the pleasure of hearing their keynote speaker,  Seth Godin , share his...


I recently attended the annual Internet Summit in Raleigh and had the pleasure of hearing their keynote speaker, Seth Godin, share his marketing wisdom with the hundreds of eager listeners in attendance.  If you don't know Seth, he is an entrepreneur (founded Squidoo and Yoyodyne), blogger, best-selling author of 18 books and a member of the Marketing Hall of Fame.  So, when it comes to marketing, you can rest assured Seth knows what he is talking about and you need to listen.

His presentation at the Internet Summit was more of a Q&A format with the audience.  So, it was a little random in terms of the topics discussed.  But, there were some juicy nuggets worth sharing with all of you.  Here were the highlights, paraphrased as best as I could remember it.

BUILD A PRODUCT THAT PEOPLE HAVE TO TALK ABOUT

You want to be building a business that people are talking about at the water cooler; a business that offers the customer "status" for being associated with it and "satisfaction" for solving a real pain point.  He gave the example of people taking out their mobile phones, opening their Uber app for the first time and telling the person next to them to "watch this", as the app summons a car on demand.  The more people that are positively talking about your product, the more free word-of-mouth marketing support you will get.

FIND YOUR NICHE AUDIENCE AND OWN IT--IGNORE THE MASS

The mistake that many companies make is trying to be all things to all people, going after as large a mass audience as possible with their marketing message.  Seth thinks that is a huge mistake, especially for early-stage businesses. You need to focus on one niche, smallest-viable audience and "own it".  Serve it better than all others in that space, while "shunning the non-believers".  And, make sure you are preaching your gospel to the right audience, where your message will most resonate.  Seth gave the example of an English speaking comedian would have little success telling jokes to a room full of Italian speaking attendees that wouldn't understand the jokes.

TELL A BETTER STORY THAN YOUR COMPETITORS--CREATE TRUST

The best way to close a sale is to create trust.  And trust is often a major hurdle in low-trust industries.  Seth gave an example of him personally hiring an HVAC firm to repair his home, having to decides between dozens of options, unclear on who is the best at their trade.  He didn't care that a vendor may have had a higher price, when he saw the names and phone numbers of all his nearby neighbors (that he trusted), listed is references for the business.  That is all he needed to see; if his neighbors were happy with the service, there are high odds he will also be happy with the service.  So, you want to give great service, to get all your customers singing your praises, and serving as references for others.

REMOVE THE TENSION FROM THE SALE PROCESS

Most sales processes create "tension" for the buyer.  Maybe your product will create work for them, or is a risky proposition for their business, or will make them look bad to their boss, or whatever.  And, the bigger the company is, the more tension there will be, with many more decision makers involved in the process and higher levels of bureaucracy.  You need to remove that tension right from the beginning.  You need to share insights and case studies that will calm them, and instill confidence in them that they are making the right decision to move forward with you, despite all the potential perceived hurdles.

INTEGRATE SALES AND MARKETING

Many companies have their marketing teams managed separately from their sales teams, oftentimes pointing fingers at each other when things go wrong, or when there is work to be done.  Seth believes this is a huge mistake.  Marketing and sales needs to be managed together in one department, as they truly feed each other as one well-oiled machine that feeds and learns from each other.

HIRE THE BEST TEAM POSSIBLE

The quality of your team is everything, and you want to hire the best team possible.  Which isn't always easy in a tight job market like today.   Seth gave the example of Intel empowering their employees to hire every smart person they met while doing business with other companies, with the message "you are hired with a 10% raise over your current salary" on the spot--no need to interview, no need to worry about compensation, we love you that much.  Seth also gave the example of him putting a $40,000 full page recruiting ad in the New York Times, where people thought he was crazy.  But, the ad stood out from the clutter of normal job postings, was talked about in the media, and attracted tons of great talent that made the investment entirely worth it.  So, think out of the box in your hiring methods.

MEASURE AND OPTIMIZE EVERYTHING

In most marketing departments, the team believe they can measure and optimize their direct response marketing activities, but they can't and don't measure their branding activities. Seth believes that all efforts inside the marketing department need to be measured and optimized, including branding.  So, refuse to believe branding is unmeasurable, and create the right metrics to ensure your branding efforts are hitting your desired targets.  In today's digitally-centric marketing world, everything can be measured and optimized.


Hopefully, you agree there were some great insights here that can be applied to all of your businesses.  Thanks to the Internet Summit and to Seth Godin for your inspiration to me in writing this post.


For future posts, please follow me on Twitter at: @georgedeeb.


Thursday, January 10, 2019

It's Time to Rethink the Corporate Pyramid

Posted By: George Deeb - 1/10/2019

I have long thought movie stars and sports heroes were drastically overpaid in comparison to their contributions to society. For example...



I have long thought movie stars and sports heroes were drastically overpaid in comparison to their contributions to society. For example, teachers are teaching future generations of kids, and get paid pennies in comparison. And, even well paid doctors, saving lives, are paid a small fraction of what an NBA star gets paid to simply play the game of basketball.

In the last decade, these inequalities are starting to be seen in corporate workplace, as well, with ever rising CEO pay and mid-level jobs under siege due to outsourcing and technology automation. I think we need to rethink the traditional pyramid shaped organizational structure to “right size” the work completed vs. compensation paid equation.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.


Wednesday, January 9, 2019

[PODCAST] George Deeb Presents Startup Sales Strategies on Best Selling Podcast

Posted By: George Deeb - 1/09/2019

This week, I had the pleasure of being interviewed by Vince Beese, a B2B sales expert at Sales@Scale  who produces their Best Selling Pod...


This week, I had the pleasure of being interviewed by Vince Beese, a B2B sales expert at Sales@Scale who produces their Best Selling Podcast, ripe with sales learnings for businesses.  You can listen to our discussion about sales strategies for startups at this link.  Thanks, Vince, for including me in your podcast.  I had a ton of fun.


For future posts, follow me on Twitter at: @georgedeeb.  And, follow Vince at @VinceBeese.


Friday, January 4, 2019

Lesson #306: Startup Ecosystems Accelerate Success--Why Bigtincan Relocated from Australia to the U.S.

Posted By: George Deeb - 1/04/2019

I was recently introduced to David Keane , CEO at Bigtincan , an AI-powered sales enablement platform founded in 2012 and now publicly t...



I was recently introduced to David Keane, CEO at Bigtincan, an AI-powered sales enablement platform founded in 2012 and now publicly trading on the Australian Securities Exchange with a $60MM market capitalization.  I learned his story on how he relocated his business from Australia to Boston to give his business a higher likelihood of scaling revenues and startup success.  Since relocating the business to Boston in 2013, the company has seen consistent annual growth in excess of 45% per year (with sales of $13 million in the fiscal year ended June 30, 2018).  In my interview with David, he shared many of the key differences between the U.S. and Australia startup ecosystems, that I thought was worth sharing with all of you.  And, I think this serves as a great case study of how the health of the startup ecosystem you work in, can help or hurt your success.

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WHY MOVE FROM AUSTRALIA TO THE U.S.


After listing Bigtincan on the Australian Stock Exchange, we realized to continue to grow the organization, we needed to expand outside of our current market. As the biggest global economy, the United States was the obvious choice in order to create more opportunities across the world and be part of the open economy. Without the capital, the market or the customers we needed to succeed in Australia, you reach a plateau where you cannot grow anymore unless you expand to a new market, which is what drove Bigtincan to move outside of Australia. We also wanted to expand our customer base globally, especially within the United States, and having that in-market presence was increasingly important to build these relationships. 

SUMMARIZE THE AUSTRALIA STARTUP ECOSYSTEM LEFT BEHIND

The Australian startup ecosystem exists, but it is not as established as the United States. Australia is a developed country with English speaking people and great education along with good government programs that support entrepreneurs and startups. Without Google, Apple and Amazon to compete for resources with, so many startups have the luxury to regularly employ PhD-level graduates with data science experience.  However, despite the sun, beach and a strong talent pool, there is no significant source of venture capital and the overall business ecosystem is not as prolific or mature. 

WHY BOSTON VS. OTHER U.S. CITIES

When determining where to put down roots for Bigtincan, Boston felt a lot more established than San Francisco or even somewhere like Austin, Texas where the business landscape is still very young. The Eastern seaboard still remains a business hub with a heavy industrial focus as opposed to the pure software technology and social network-based companies of the Silicon Valley. Boston itself has decades of experience in both hardware and software and the infrastructure like Internet and fiberoptic to support continued growth. Boston also offers numerous support agencies like public relations firms, capital management groups and marketing agencies that can help companies in the area get started.

Another challenge with Silicon Valley is that the talent market is highly competitive. With new companies and opportunities constantly springing up, you often watch employees leave for next big thing whether it’s a Facebook, Uber or Google. Boston has been churning out superior business and technology hires for decades with a number of the top colleges and universities residing within, or just outside, the city limits. This gives us a huge opportunity to source young, smart employees where they are already residing. A successful enterprise cannot be built alone, overnight – you need to have long term partners and talent to help build great companies.

HOW HAS THE U.S. COMPARED TO AUSTRALIA

When moving from Australia to the United States, you realize pretty quickly the cultural differences between the two countries – and even within the US – which yield varying approaches to business and the global market. In the US you have the big guys like Amazon, Google, Facebook and Apple dominating the tech market, making it harder and harder to stand out if you have something special.

Today's organizations need to think globally and build a more diverse base than enterprises have before. For Bigtincan, Australia was a good place to start, but the entry into the US market has really allowed us to grow. During this process, you quickly realize the cultural differences in another country. Not only did that present a challenge but learning the nuances of the different regions in the United States (Southern hospitality vs. laid-back Californian-style) did take some getting used to. This ultimately helped us establish what locations made sense to house the various teams – sales, marketing, engineers – and determine the location of our U.S. headquarters.

HOW DID YOUR BUSINESS IMPROVE AFTER THE MOVE

No doubt moving Bigtincan from Australia to the United States was the right thing to do for us. It was a wonderful experience to go through and enabled Bigtincan to be successful. Since 2013 the company has seen consistent 45 percent year-over-year growth, which would not have been possible if we had not moved into a bigger market. So many smaller companies and startups don't make it because they neglect to fight in the big markets, where there are more opportunities.

The only way to determine whether an organization fails or succeeds is to have two feet in right from the beginning. Our goal was not just to move to the United States, but truly become a U.S. company - to act and feel like a U.S. based startup. Now that 98% of our revenue now comes from U.S. customers, we truly believe we attained our initial goal.

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CLOSING THOUGHTS

So, the morale of the story here; if you find yourself operating in a city or country that does not have a robust startup ecosystem that can help propel your business to new heights, maybe it is time to consider moving your business to a better location.  Whether that is from a foreign country to the U.S. (or vice versa), or from a smaller U.S. startup market to a bigger U.S. startup market, there are plenty of learnings in this Bigtincan case study that proves where you locate your business really does matter.  Thanks David for all your insights here, it was great learning your story.


For future posts, please follow me on Twitter at: @georgedeeb.


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