Average

As we explore our Time Management and how it impacts bottom line results, we need to talk about the Average. In this case, we are talking about the Average Hourly Wage. Last time I blogged about Zero Basing and one of the challenges that people have with learning how to Zero Base is where to start. Well, Average Hourly Wage is a good place to start.

The way to look at Average Hourly Wage is to answer the question: “How much would I pay a person to do that job?” You do this will all of your activities that you do on a weekly (or monthly) basis. Then you assign percentages of time to each of the activities and you come up with what your Average Hourly Wage.

Now that you have this number, you have to look at how to raise that number. Higher Average Hourly Wages will lead to more Revenue and Profit for your business. This is a quantitative way of analyzing your personal productivity. You can apply this technique to your employees and see the value that they are bringing to the firm.

Now nobody is going to have no low-value activities, there is always a few things that you need to do. But if you can optimize your time by focusing on high Average Hourly Wage activities you will have a great start. Now if you can lay some of these activities out with other people then you can arrive at some larger business processes and systems that you might want to eliminate or reduce. If people are spending time on these low-value activities across a firm, then you may wish to rethink that process as part of your Zero Basing.

This is really the difference between Zero Basing and Average Hourly Wage. The former is a Company Wide view and the latter is a personal (or a person at a time view). Needless to say, Company Wide reductions are better, but can be hard to start with. By focusing on Average Hourly Wage, we have a good starting point even if you don’t reach nirvana in productivity. Starting out is the best way to get done. You can do the first pass using Average Hourly Wage and then use that data to Zero Base the business.

Now these are both quantitative views of time and time management. Next week, I want to look at a qualitative view.

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

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Net Neutrality Friday

This has been an extremely busy week in the regulatory issues in for the Internet and Telecom.  I am going to start with the smaller of the two largest pieces of news and then move to the smaller.  There is enough to talk about for a few weeks here and we will have lots of ground to cover.

The small news is that Google Fiber has pulled back on its expansion plans and is laying off around 9% of its staff.  This makes a lot of sense to me, as I always thought that this was an experiment.  People call it a science experiment, but I call it a business experiment.  Google makes so much money that they look for ways to deploy their capital effectively.  This leads them to try lots of things.  When I was at Red Condor, we competed against a company named Postini.  Postini became part of Google and is the spam filter for Gmail.  After spam filtering became an extreme commodity, Google stopped selling Postini as a separate product.  You can only get Postini if you use Google Docs.  I used to use a login landing portal called iGoogle and Google sent me an email and turned it off a year later.

Why does Google do this?  They are all about advertising dollars.  They are willing to invest and play to figure out to see if a technology or method will eventually get them those dollars.  Youtube is an example of this.  At one point, Google was losing $150M per month on Youtube.  Things are now very much different and Youtube is a great money maker for Google.  But if the investment does not pan out, Google exits.  I suspect that Google will look for a buyer for Google Fiber over time.  One of the overbuilders might be interested, it is too sporadic of a network for an incumbent to purchase.  The better option, to sell to incumbents, would be to sell one property at a time.  The incumbent for that territory can choose to use that construction instead of doing its own.  More to come on this in the future.

The larger news is that AT&T is buying Time Warner for $85B.  The deal is 1/2 stock and 1/2 cash.  I think that is interesting as I am sure that came from Time Warner.  The idea would be to provide a huge benefit now, with upside that Time Warner is not sure of.  If they thought AT&T was a growth stock, it would be an all-stock deal.  More importantly for us, this is a move similar to Comcast’s purchase of NBC-Universal.  There will be plenty of uproar over it, but I think the deal will go through.  All AT&T will have to do is point at Comcast and nobody (okay Trump has called for it) has asked for Comcast to be broken up.  Comcast has a lot more broadband subscribers and so it will be hard to say that the combination will impact consumers more than Comcast did.  There is a lot here as well to discuss whether this is a good idea to why it is happening to what we should expect next to how Google, Verizon, and other companies might react.

Have a great weekend!

Jim Sackman

Focal Point Business Coaching

Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

 

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Zero

I have spent the last few posts talking about the importance of time in business. This week I want to talk about a larger scale tool to help businesses get time back. That tool is zero. Well, it is zero-basing your business. Zero-basing is the notion of answering the question: “Knowing what I know now about my business, would I still do…?” The idea is to find things to stop doing. Those things that are not in alignment with your core business. Think of this as a cleanse for your business.

I have many friends who are in the Health and Wellness field and they cleanse a lot. With your business, you don’t have to do it that often. Think about once every business planning cycle. I am not talking about SKU reduction. You should be looking at that in an ongoing manner. I am talking about entire lines of business or customer groups. Separately look at the way you do business and the business processes that you have. Are they still efficient? How about your marketing channels. I got a new Yellow Pages over the weekend. I go through it and find those with display ads. They are spending a lot of money very ineffectively in the vast majority of cases. All of it is about having to justify doing what you are doing today. Start with the assumption that you are going to stop doing things first.

There are also things in your business that you can execute more efficiently. Some of this will require you to outsource activities to 3rd parties. Those are generally non-core activities that you can pay an external party to do instead of having somebody on your payroll doing it. Let me use an example from IT. Many companies still run their own e-mail systems. There are plenty of 3rd party providers that can do it and save you a person to manage it. This creates one of the challenges with these zero-basing projects. Managers tend to protect jobs for existing employees instead of looking at things objectively. They view the amount of budget and staff that they have as a measure of their power within the organization. Zero-basing can change the perceived power structure and this can be a contentious point.

So take a look at your business and see those things that are less part of your core path. You can stop them and get the time back in your organization for things that are of higher value. In these days of tight hiring, you want people executing on tasks of the most value.

Have a great day!
Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

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Net Neutrality Friday

Well since we are experiencing a huge Internet kerfluffle today, I wanted to take some time to explain it a bit and help you with what you can do or might do in the future.

Today a company named Dyn was suffering what is called a DDoS attack. Dyn does most of its business on the infrastructure of the Internet. In this particular case, it was having its DNS service attacked. DNS stands for Domain Name Service and it is the software that translates the URLs that you type in (for example http://jimsackman.com) into IP addresses. Yes, there is more to it than that. But for most people that are a reasonable enough understanding of what it is. So, today you were probably seeing DNS failures for some websites. This was not on your end. Dyn was unable to translate your request into something your computer could use in a reasonable time.

The reason for this is what is called a DDoS attack. DDoS stands for Distributed Denial of Service. If you are older (like me), you might remember trying to call your mother on Mother’s Day and getting an “All Circuits are Busy.” message. Well, that is exactly what a Denial of Service attack is. The idea is to swamp the service with so many requests that very few, if any, get serviced. Since it is relatively easy to restrict access from a single server, people changed the attack to be distributed. This means that the attack came from many places at once and was started by some form of command and control action. Think of this as many computers being infected and they all send out attacks because a 3rd party told them to. That is a DDoS.

Why attack Dyn? Well, it is one of the more well-known companies in the Internet Infrastructure business and it has a business in cyber security. Dyn has published books on how to defeat DDoS attacks. So, this could make the hacker famous or more likely infamous. There are places on the Intenet where these people gather to share war stories about triumphing over evil or companies or just for the thrill of having done it. But it does point out a couple of more challenging issues with being solely dependent on the Internet.

One last note today for your evaluation. Many of these Internet-connected systems are what are called Embedded Applications. These are devices that sit on the Internet to do what you want them to do. These are devices from Connected Cars to that Ring Camera-Doorbell item to Webcams. All of them have a special vulnerability to hacking because nobody takes a look to see if they are infected. This means that hackers might have millions of more computers to go after to run these attacks. Something to think about.

Have a great weekend!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!

Time is Money

I apologize for not posting last week. I had some things going on and I probably should have created and scheduled the posts. But unlike many business blogs, I write all of my content myself. There is nobody out there posting things for me. I write every word.

This week I want to talk about Money and Time but I need to start bringing in some financials to show why this is so important. Productivity must go up every year. What is productivity? It is all about the amount of Revenue that you bring in with a specific number of employees. That is why I talked last time about Revenue per Employee. Well, one of the challenges is inflation. There are inflationary pressures on businesses in Operating Expenses. This included Insurance, Utilities, Rent, and Salaries. Salaries themselves lead to other expenses, like increased Workers Compensation as your payroll increases. When I was at AFC, our best estimate was that costs were likely to go up about 7% a year. You can do your own studies of your own business and I think you will be surprised. But for this post, let me assume an annual cost increase of 5%.

Now if you have a 50% Gross Margin to get an additional 5% Gross Margin you would need to have a Revenue increase of 10% and that is just to stay flat in profit. Now as a business owner, your profit is what drives the value of your company and your compensation. So, think about it. Without doing a lot of math or thinking very hard, we are saying that you should expect to have 10% more revenue year over year and do it without adding any employees.

The best way to accomplish this is to be very efficient in your capturing customers and those customers that provide maximum value to your company. This is why every Sales and Marketing Consultant wants to know your Target Market and your Ideal Customer. These should be slam dunks for you. That is the idea here. Your Ideal Client would be making a mistake by purchasing from a competitor. Your solution should be optimal for this group. Once you are past this focus, then we can start talking about Automation and Business Process Improvement. Those are the steps that in the middle term will be driving productivity improvements. In the long term, it is all about people. And we will get there.

So if you are a really busy business owner, how often do you step back and think about your business and how it operates? Probably not very often. You can see how this will become a bottleneck in your business in the future and we will be talking about this as we go forward.

Have a great day!
Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!

 

 

Net Neutrality Friday

Over the recent past, we have started to see some movement of the ISPs to be more conscious of the Cloud Application and Content Providers as companies to merge with. I think this is interesting as maybe now we can get rid of the notion that the ISPs are going to have some great competitive advantage in the world of The Cloud. Many analysts and planners that I know have thought that the ISPs would be able to set up special business arrangements to help them improve their pricing and help their margins. This has not been proven to be true and in a phrase: I told you so.

Why is this? Well, the other two communities don’t want it to happen and they are Customers and Application Providers. Customers, even business customers, have to evaluate whether they want to have a special arrangement when they push applications into The Cloud. Those special arrangements can be problematic and generally the answer is no. Why is that? Because these arrangements (at least today) are one off. Each ISP does its own thing with a specific application or cloud provider. That means that customers would have to worry about lock-in to that vendor set for what can be a mission critical part of their IT infrastructure. This can be very problematic in a Disaster Recovery scenario. It can also be a problem because there is no assurance that the service will continue forever. If a service turns out not to be popular one side or the other can simply turn off the service. If you bet your company on that functionality, then you would be in real trouble. If you are setting up such an arrangement for a run of the mill application, then you have wasted a lot of money.

From the application provider, there is a similar story. Most every application out there wants to be available to as many businesses and consumers as possible. That means having a special deal with one provider greatly limits the market for their application. Unless there is a specific reason to do so, then why would you do it? So application providers generally make their service work on generic Internet service.

Let me give you a counterexample out of my own background. At Edgewave, we replaced an Internet connection with an Ethernet connection from Headquarters to the nearest Data Center (in that case San Jose). There was a technical advantage in that we could then tell whether a data center connection issue was related to the Internet in general or was specific to us. There was, in that case, a cost advantage as well. But we could use the Internet connection if the Ethernet connection was no longer available.

The result of this is that special connections have had a declining usage and value for The Cloud. So, ISPs are now trying to find a way to be more relevant in the data center, content and application parts of the market. Well, better late than never.
Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

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It’s About Time

With Business Planning in full bloom and a year where we are talking about a very tight hiring market, I think it is time to talk about time. The whole point of this is to focus you on the most important things in your business. The tight hiring means that you will have to pay more for talent than you used to. All of this means that productivity must increase.

When I define productivity, I use a financial metric that is not often used. It is Revenue per Employee. Very simple, just divide Total Revenue by the number of employees. Productivity here is defined by the efficiency that employees produce Revenue. While not an end in itself, it does give some diagnostic metrics to the bottom line. By delivering more revenue without changing the number of employees, you can drive the metric up. As most operating expenses are related to employee costs, you can see how this will make the business more efficient.

The challenge for a Small Business Owner is to know where to start on this efficiency program. The place is Alignment. I talk about Alignment in many ways to try to get people to understand how this works. If you have clarity on who your target market and the ideal client is, then you can build your business to support that group with exceptional performance. You will serve others less well, but some will be served well enough to be clients of yours as well. This is the thing that puts a natural cap on the size of any company. The size of that market that is best served by your business is close to the limit of the size of your business. Now you won’t have a 100% market share of your target market. You will get customers outside of your target market. But put the two together and they are probably close, so that makes the TAM (Total Available Market) of that target market a natural limit for companies.

Let me put this in efficiency terms. To serve a 2nd target market, you will have to replicate some functions of the first company, expend more effort to land customers or sell at a lower price than you would like. All of that lowers the productivity of the company by lowering your Revenue per Employee. That is why this is a great metric to understand productivity. Does adding another person add value to your top line? If not, then you should ask yourself why you are doing it. Many times this effect is indirect. For example, an administrator might lower the grunt work time of your sales team at a lower hourly rate. That adds to your top line by giving your Sales Team more hours per week to be with customers and prospects. So, there are lots of ways that people contribute. But you do want them to contribute to your Top Line.

Have a great day!

Jim Sackman
Focal Point Business CoachingFocal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!