The Burnout Syndrome & Demise of Salespeople: Recognize, Avoid, and Reinvent Yourself…

“Too little commitment and life becomes meaningless. Too much focus on accomplishment and you burnout. The key is balance–striving for success with gentle self-care.” ~Jonathan Lockwood Huie

‘Burnout’ is a psychological term for the experience of long-term exhaustion and diminished interest. Research indicates salespeople have a high proportion of burnout.  The most well-studied measurement of burnout in the literature is the Maslach Burnout Inventory.

Maslach and her colleague Jackson first identified the construct “burnout” in the 1970s, and developed a measure that weighs the effects of emotional exhaustion and reduced sense of personal accomplishment. This indicator has become the standard tool for measuring burnout in research on the syndrome. The Maslach Burnout Inventory uses a three dimensional description of; exhaustion, cynicism, and inefficacy.

In the article Relighting the Fire – Recovering from Sales Burnout by Ian Brodie writes: ‘Burnout’ – the experience of exhaustion and disinterest – is a debilitating condition in any role, but it’s particularly damaging for those in sales roles. In other professions it’s possible to soldier on at 70% and just about get the job done. But selling is very much a “confidence game” – and a salesman lacking in energy and enthusiasm will get 0% results.

Now I’m no psychiatrist or therapist – but there are two things that have helped restore my energy levels and my enthusiasm – no matter how bleak things are looking. First is learning: I’ve always been motivated by learning new skills and gaining new understanding.

Reading a good selling or marketing book or listening to an audio will often inspire me – or at the very least interest me to try the techniques or ideas from the book. Second is to help others. I find that when mentoring or simply giving advice my cynicism drops and I often rediscover my motivation for selling. Motivating others seems to work to raise my own motivation levels – it’s as if I’m secretly listening to myself… Of course, different things will work for different people. Most important —try & do something

In the article Sales Burnout is Usually a Result of an Imbalance in Your Personal Life by WillFultz writes: ‘Sales burnout’ is primarily caused from an imbalance in your personal life. When you do nothing but work, your mind can become overloaded pretty quickly. When we don’t give attention to our physical and spiritual elements, it ends up draining our minds to the point where our productivity continually gets worse. Of all of the problems that a salesperson can be confronted with, I actually struggle with this one personally more than any other.

However, the path to overcome it is simple: Exercise regularly, eat healthier, take time off to have some fun, spend more time with your family or friends, and give some attention to your own spiritual growth – whatever that might be in your own life. What you will find is that by giving attention to the other important areas of your life, it will in the end actually increase your overall productivity. Sales burnout can be beaten, so when the warning signs begin to show themselves make sure to take action to prevent burnout from taking hold.

In the article Job Burnout –How to Rekindle Your Ambition by Snow, Jan C. writes: ‘Burnout’ is chronic fatigue with no discernable physical cause. Mental fatigue and lethargy — along with increased tardiness and absenteeism, and eventually a feeling of “who cares!” — also point to burnout.  Burnout doesn’t happen all at once, says Frances Svyantek, an industrial psychologist.

“It’s builds up over months and years.”  Overcommitment — a common cause of burnout — can be a serious problem on the job. “Learn to say no, and learn to say it as often as you need to, advises Dennis E. Hensley, author of ‘Positive Workaholism: Making the Most of Your Potential’. Take control over those things you can affect.

Keep a list of your important accomplishments. “When you start feeling that you can’t hack it,” Hensley says, you can look at that list and say, “look how many times I’ve come through. I’ve done it before, and I can do it again.”  Sometimes burned-out is really bored-out. When your job begins to feel stale, look around for ways to expand your horizons.

According to Svyantek, there are just three ways to deal with any stressful situation: You can change the situation. You can change your external response to it, such as hiding your annoyance and reacting calmly. Or you can change yourself — and not permit yourself to be annoyed.”  Whatever you do, it’s up to you.

In the article “Ways to Reinvent Yourself” by Seth Godin writes: “Now–right now–is the best time to transform your life.” I’m not talking about polishing yourself, improving yourself, making things a bit better. I’m talking about the reset button—a reinvention that changes the game. That means an overhaul in what you believe and how you do your job. If you’re up for that, then right here, right now, you can start. How? “Do work that matters”. Those four words are available to anyone; they’re available to you if you want them.

The economy just gave you leverage—the leverage to make a difference, the leverage to spread your ideas and the leverage to have impact. More people have more leverage (more chances and more power) to change the world than at any other time in history. What are you going to do about it? When?

And, you already took a first step. You read something that challenged you to think differently. The path to reinvention, though, is just that—a path. The opportunity of our time is to discard what you think you know and instead learn what you need to learn: Every single day.

In the article “5 Steps to Reinvent Yourself” by Tiny Buddha writes:  ‘Change means reinvention’. Each time a major shift happens in our lives—leaving a job or a relationship, moving, losing a loved one—we have to take control of who we will become or risk never reaching our full potential. I’ve reinvented myself several times in my life. Each time I’ve done it, I’ve forged my new path deliberately and with foresight. These are 5 steps I’ve identified to reinvent yourself:

  • Create a vision for your future.
  • Write about your reinvention.
  • Surround yourself with visual reminders of the life you’d like to create.
  • Now that you have a vision of your future, break it up into workable tasks.
  • Every day, go back to that vision of you walking towards your future.

Reinvention is neither easy nor always smooth. Often we encounter resistance. We don’t want to let go, even of things that cause us pain or that are obviously already out of our grasp. We often struggle with limiting beliefs or stories about ourselves that hold us back from trying new things. Just ask yourself this: “What can I do in this moment to keep moving forward?

In the article “Burnout” by Jim Porter writes:  ‘Burnout’ has been described as the erosion of the soul, a cross between helplessness and hopelessness, a severe loss of motivation and/or a mismatch between the employer and the employee. Burnout can come about as the result of stress, low morale, poor working conditions, a bad boss, or simply having too much to do and not enough time to do it.

The profile of an employee who burns out may surprise you. It is often a person who cares deeply about his or her job but hits a roadblock somewhere along the way and simply stops caring – sometimes as a matter of self-defense.

And it is often the rising stars within an organization that are at the greatest risk for burning out. These are people whose careers were on fire at one point – fueled by idealism, dreams, and the desire to really make a difference in the world. Experts disagree on the remedy, some focus on the individual and others focus on what the organization can do.

Whether it’s developing coping skills, cutting back on excessive hours, getting organized, redefining your personal life, requesting a transfer or even spearheading a committee to initiate changes within your organization, this process of reinventing and retooling yourself (and your job) will help you begin feeling better almost immediately.  Think about the things that will motivate you to make a change.

Give yourself rewards for moving in a new direction. Look at your life and ask yourself what can you do to put a couple of logs under your fire? What makes you tick? What gives you hope? What is something you could get really excited about? And if after careful consideration this means looking for a new job – pursue this option with a passion.

Burnout always involves a feeling of loss. But once you start focusing your energy on making some gains – you can reverse this process of erosion and turn your life in a new direction filled with hope, promise and considerably less stress…

Many theories of burnout include negative outcomes, such as;  job function (performance, output, etc.), physical health (stress, heart disease, circulatory issues, etc.), and mental health (depression, anxiety, etc.). The term burnout in psychology was coined by Herbert Freudenberger in his 1974 ‘Staff Burnout’ presumably based on the 1960 novel ‘A Burnt-Out Case’ by Graham Greene, which describes a protagonist suffering from burnout.  High stress and a sense of loss of control over one’s life and business contribute to stress and the ‘burnout’ syndrome.

According to Mary Rau-Foster, “the cause of  burnout may be traced to perfectionism (trying to do too much because they expect it of themselves), business hero complex (feel that others expect it) or poor communication (failure to clearly define their limits)”. ‘Burnout’ is preventable. It requires an understanding that ‘heat’ in the form of enthusiasm for a job is good for the employee and the business, but too much or prolonged ‘heat’ can result in a scorched (burnout) employee…

“People constantly go on and on about how burnt-out they are by everyday life. I find this endlessly annoying, for I see that none of them are doing that which they love passionately everyday. The only people that can truly burnout are those who are pursuing what they love with all their might. Only those who’s hearts and eyes are ablaze can burnout.” ~Clothing

Another Financial Bubble Waiting to Pop: Likely Candidates — Social Media, Credit Cards, Student Loans, China Economy…

The bubble is the result of financial madness; it’s a market aberration manufactured by government, finance, and industry, a shared speculative hallucination and then a crash ~Eric Janszen

An economic or financial bubble is created when any asset — be it tulips, homes or dot.coms — is allowed to irrationally and unsustainably increase in value. In the late 1990s, the United States witnessed the inflation and subsequent deflation of the dot-com bubble, marked by outrageous market speculation on the value of unproven Web companies.

Most recently, the global economic crisis was spurred largely by the collapse of the housing bubble after a meteoric increase in the price of real estate. From a purely economic perspective, bubbles aren’t necessarily bad or good . They’re just natural extensions of free market forces.

People, for better or worse, tend to flock wildly to the latest hot idea. When speculation on that idea reaches a tipping point, the market corrects itself, often with devastating results. The real trick with ‘bubbles’ is predicting which will be the next one to pop…

In the article “The Next Economic Bubble To Burst? Take Your Pick” by Mark Koba writes: The next economic bubble is on its way—the problem is there’s no clear consensus on ‘what or when’. But there is a feeling that another crisis is about to burst. And as analysts debate over which bubble will break, they also differ on the impact it will have on the economy. “Bubbles are neither good nor bad,” says Ed Greback.

“They are simply a normal market reaction to freely available funding or lack thereof. We can’t stop bubbles. It is human nature to keep creating boom and bust cycles” says Matthew Tuttle. And as for stopping or containing a bubble, Steve Wallman says “government can play a role but seldom does; its leadership”. Here’s a look at some of the trouble spots the experts see coming:

  • Treasury bonds: “The next bubble could be in Treasuries: America remains dependent on huge inflows of foreign capital to finance debt … if foreign capital inflows were to slow even a little, there could be a sudden drop in Treasuries and dollar-dominated assets.”
  • Commercial Real Estate: “Half a trillion dollars of commercial loans financed on historically low rates, are due for refinancing in the next three years. The negative impact of these shopping center mortgages is enormous.”
  • Health Care Technology: “Continued spending on health care technology with a lack of improvement in care is driving an unsustainable cycle.  The same dynamic and meltdown that hit the tech, real estate and finance industries is happening in health care.”
  • Student Loans/credit cards: “Two out of three college students graduate with debt and those who graduate from public schools owe $17,250 in student loans. Ten years ago it was only $8,000. Add the student credit card debt and this has the potential to collapse on it.”

In the blog “Spotting the Next Economic Bubble” by Jeremy writes: A cooling economy is not hard to spot, amidst the serious debts, stuttering GDP, and increasingly antsy creditors. But there’s more than one way for an economy to go wrong, and it’s easier to spot the cooling ones than the overheating ones. If you’re growing fast, everyone’s optimistic, you’re a good news story, and the money is pouring in.

But it’s highly likely that some of the world’s booming economies are just as unstable as the declining ones. There are tell-tale signs. “Credit lending running ahead of GDP growth suggests that banks are throwing more money at an economy than can be productively used”. That can lead to overvalued assets and a property bubble.

“Growing current account deficits during boom years are another thing to look out for, meaning a country has been seduced into demanding more services than it can afford”. “Lower than average unemployment might look like good news, but it might also suggest a labour shortage, which in turn pushes up wages and costs of production”.

The ‘Economist’ recently attempted to combine these various warning signs into an ‘overheating index’, checking emerging economies to see how sustainable their growth levels might be. It concludes that Argentina, Brazil, Hong Kong, India, Indonesia, Turkey and Vietnam are all “flashing red”.

We know that bust must follow boom, in what Hyman Minsky unapologetically called ‘ponzi economics’. We should spend less time fretting about stimulating growth and delaying the inevitable down cycle, and more time working out how to create a stable and sustainable economy that doesn’t require the impossible in the first place.~Jeremy

According to a recent Report by Moody’s Analytics, there is record ‘borrowing by college students’ who are graduating without jobs could lead to major problems in the nation’s economy, and “the long-run outlook for student lending and borrowers remains worrisome,”  The Moody’s report points to the fact that student loan volume growth, unlike other lending, has accelerated during the recession.

This is due in part to people seeking more education and retraining as well as some students opting to remain in college longer to avoid poor job prospects. The report indicated that in addition to college enrollment tripling over the past four decades, “demand [for student loans] is driven by the cost of education, which has grown at an extraordinary rate over the past three decades.”

Based on Consumer Price Index (CPI) data, the cost of tuition and fees has more than doubled since 2000, and has outpaced inflation across all goods, health care, housing and energy. The student loan debt load now outpaces credit card debt, and according to Mark Kantrowitz, who publishes the financial aid websites ‘’ and ‘’, the average 2011 college graduate carries $27,200 in student debt.

“Fears of a bubble in educational spending are not without merit,” the Moody’s report said. Using consumer credit data from Equifax, Moody’s noted the original borrowing amounts taken out by students have risen significantly over the past two years…

In the article “Is China Building Next Bubble?” by writes:  Will the next pop you hear be the sound of the China bubble bursting? A few of the world’s savvier financial minds think so. The China bubble talk is mostly focused on the country’s real estate sector, where property sales jumped 76% in 2009 and prices in some markets have recently been rising 8% to 10% a month.

But the fear is that a meltdown in the real estate market could take down the rest of the Chinese economy with it, as has happened in the U.S. and Japan. The roots of the problem lie in China’s aggressive response to the financial crisis. To make up for reduced exports, the government ramped up domestic spending and what ensued was the “mother of all stimulus projects,” says Nicholas Lardy.

The roughly $575 billion in direct stimulus doled out by China’s central government represented 15% of its GDP.  In response to concerns that it’s inflating a bubble in real estate, the central government has begun taking steps to cool things off, but to date its more talk than action. But there are several key structural differences between the U.S. real estate mess and China’s situation:

  • Leverage is muted: About 25% of Chinese buy their homes outright with cash, and among borrowers, a 50% down payment is typical. China’s household debt as a share of household income runs about 40%. U.S. household debt to income was 130%.
  • It’s not a blanket bubble: Beijing, Shenzhen, and Shanghai are China’s Florida, Nevada, and California; speculation and overbuilding have clearly fed bubble valuations.  
  • The ubiquitous demand argument: China actually needs more construction, not less, to accommodate the mass migration of Chinese from their rural past to their urban future.

In the article “Social Media IPOs: The Next Bubble or Economic Salvation?” by Todd Wilms writes: ‘LinkedIn’ started the latest round of Social Media IPO mania with a now $7.11 billion valuation, followed quickly by Groupon’s SEC announcement of its intent to raise $750 million for their IPO.  2011 is the “Chinese Year of the Bull” with RenRen, Kaixin001, and several other social-media knock-off companies following suit.

Twitter’s much anticipated IPO and recent estimate of Facebook’s IPO to exceed $100 billion will occupy our attentions for months.  Will this be the “Great Social Media Bubble” or economic salvation? Are we setting ourselves up for another bubble or is this ultimately good for our economy?  There is little doubt that values of these companies are mathematically inflated, with LinkedIn trading as high as 31-times its annual sales. 

Groupon’s intent to raise $750 million comes under speculation as the company still can’t reach profitability with its $644 million in revenue in Q1.  RenRen was just recently stalled as they were given a ‘Hold’ rating by underwriters Deutsche Bank, who helped lead their IPO to $14 and are now down to just under $9.  The others will rush to market prior to Facebook’s much anticipated 2012 IPO.

“The system is built on a monetary system where the Fed creates money out of thin air,” “You have to stop doing that, because that is what caused the deficits to pile on and the financial bubble.” ~Ron Paul

In general, bubbles occur when high volumes of trade occur at values of an inflated nature.  The bubble rapidly inflates by the high volumes of trade, but is unable to sustain itself and collapses, also known as “boom and bust.” ‘Bubbles’ are not a new phenomenon.  The term was coined from the South Sea Bubble in 1720, from the over-valuation and speculation of the South Sea Company.

Most of us now know of ‘Tulip Mania’ from the 1630s, where a single bulb was valued at roughly $37,000.  There has been a major bubble each century, with at least 3 major ones in the 20th century (ending with Dot-Com) and at least one major one (Real Estate) in this new century.  While there is great debate on how to predict bubbles, they can appear without warning, have damaging long-term effects, and have the ability to baffle even rational, intelligent people…

If anything will prevent the next financial crisis, it will be financial firms recognizing bubbles and popping them early, with regulators stepping in to ensure that risk-takers are the ones eating the losses. Vigilance is the word.

Of course, bubbles are virtually impossible to see while they’re inflating—who is to say: What is a reasonable bull market and what isn’t, especially when everyone’s making money? For that reason, we all might be left hoping for nothing more than better luck next time…

 “People tend to extrapolate current conditions indefinitely into the future. Based on the assumption that positive economic conditions will continue; letting their guards down with respect to risk. As each individual takes more risk, the overall riskiness of the system increases.” ~Michael Lewitt

Initial Public Stock Offering, IPO –Great Expectations, Fortune, Fame…: In Reality Most IPOs are Badly Flawed and Fail…including IPOs in China, Europe, Brazil…

Initial public stock offering  (IPO)  is not so much an event as it is a process and it takes many months of planning and a whole cast of specialized characters to prepare a company to ‘go public’… Along the way all types of bad things can happen…

Initial Public Stock Offering (IPO) are perhaps the most expensive way to finance a company. Not only will an IPO cost a significant chunk of the company’s equity–no less than 25% and perhaps a great deal more–but fees and expenses can climb to as much as 25% of the deal.

For a $50 million offering, that’s $12.5 million. An initial public offering (IPO) is the sale of equity in a company, generally in the form of shares of common stock, through an investment banking firm. These shares subsequently trade on a recognized stock market. Going public is one of the most challenging transactions.

There were 154 U.S. IPOs in 2010, Renaissance Capital says, up from 63 in 2009 and 31 in 2008. Many more companies tried but fail during the process. An IPO provides owners and founders an exit for selling their ownership holdings in the business. For entrepreneurs and others who want to go public, their first, most important, task is to find an investment banking firm that will underwrite the offering.

Once that task has been done, with a little luck, a strong market and a lot of determination, everything else will fall into place. However, most IPOs die on the drawing board, which is the period of time between when an investment banker issues a letter of intent and the day the offering is filed with the U.S. Securities and Exchange Commission (SEC). Here are the top 10 reasons ‘offerings’ die on the drawing board.

  • Investment banker tells the company founders they must lock-up their shares and agree not to sell them for a period of 24 to 36 months. The founders refuse to do this.
  • Company’s founders hide legal or financial problems that the underwriter eventually finds out about.
  • Company’s financial reporting is aggressive. If upon further analysis it turns out that if it had more conservative accounting policies, the company would actually report a loss, the underwriter will shut things down.
  • Company complains too much about the fees the investment banker is charging.
  • Company’s founders and the underwriter are too far apart on what they think the company is worth and what public investors will pay for it.
  • Lack of salesmanship on the part of the company’s owners or founders proves they are unable to excite anyone about the deal.
  • Company is in an industry that “falls out of bed” with Wall Street.
  • Basic issues about the company or the offering prevent it from getting clearance in a state that contains several or all of the investment banker’s customers.
  • Company cannot afford the $250,000 it will cost to put a preliminary prospectus on the Street.
  • Deal structuring drags on for a long period of time and company sales and earnings begin to fall.

In the article “The Ups And Downs of Initial Public Offerings” by Marc Davis writes:  Many companies pursue IPOs as a means to increase the amount of available financing to the company and possibly generate millions for the owners in the process. The Upside of Going Public:

  • Money to grow the business: With an infusion of cash derived from the sale of stock the company may grow its business without having to borrow from traditional sources, and will thus avoid paying the interest required to service debt.
  • Money for shareholders and others: With more cash in the company coffers, additional compensation may be offered to stakeholders, founders and owners, partners, senior management and employees enrolled in stock ownership plans.
  • Other benefits of going public: Once the company has gone public, additional equities may be easily sold to raise capital.

The Downside of Going Public:

  • Once a company goes public, its finances and almost everything about it – including its business operations – is open to government and public scrutiny. Periodic audits are conducted; quarterly reports and annual reports are required. The company is subject to SEC oversight and regulations, including strict disclosure requirements. The company is subject to shareholder suits, whether warranted or not…
  • Preparation for the IPO is expensive, complex and time consuming. Lawyers, investment bankers and accountants are required, and often outside consultants must be hired. As much as a year or more may be required to prepare for an IPO. During this period, business and market conditions can change radically, and it may not be a propitious time for an IPO, thus rendering the preparation work and expense ineffective.
  • An IPO may look like a great means of making money but close-up, there are many flaws. However, these should not dissuade a company from going public, just keep in mind that an IPO is not a guaranteed money-maker for companies and/or shareholders.

In the article “Nine out of 10 European IPOs Fail” by Elizabeth Pfeuti writes:  Nearly 90% of companies that have sought to list their shares in Europe this year have either pulled the deal or have subsequently seen the shares fall by more than the markets on which they floated. Thirteen of the 25 IPOs worth over $200 Million announced so far this year have been pulled, according to Financial News research based on Bloomberg data. Of the 12 that made it to market, only two were trading above their initial listing price when the markets closed.  Global stock markets have tumbled since these companies listed. But the share prices of all but three of the market debutants have fallen faster than the indices they joined.

The head of equity capital markets at one large investment bank said: “Part of the problem is the slump in the broader market, over which we have no control, but the IPO process does need improving. There is clearly dissatisfaction with what’s being done. But now is not the time to point fingers.”

Among the 13 deals that have been withdrawn or delayed since January, three were potentially worth over $1Billion. The FTSE 100 has fallen 4.7% in the same period. Jonathan Ingram, portfolio manager in the European equity unit at JP Morgan Asset Management, said: “We looked at all the deals that were announced in Europe this year and there was a clear trend running through them, and that is a ‘wait and see attitude’…”

In the articleChinese IPOs Fail to Live-Up to Hype by Matt Krantz writes: Chinese IPOs are turning into Wall Street’s version of fireworks: They go up in a fantastic spectacle, then fizzle and fall to earth. Initial-public-offerings of Chinese companies have been all the rage in the U.S. this year, and are accounting for roughly a quarter of all the year’s deals. Investors have piled-in, pushing the value of most Chinese IPOs up on their first days of trading.

But Chinese IPOs are crashing almost as dramatically. Consider that the year’s 40 Chinese companies to go public in the U.S. are:

  • Lagging the U.S. stock market: Chinese IPOs are up 8.1% on average from their first-day closing prices, say data from Renaissance Capital and Standard & Poor’s Capital IQ. That means Chinese IPOs are lagging the 12.9% gain by the Standard & Poor’s 500 and 18.1% for all IPOs.
  • Posting losses more times than not:  Nearly half the year’s Chinese IPOs, 22, are down from their first-day close, the price at which most individual investors would have had a chance to buy in. And 19 of 2010’s Chinese deals are below their actual IPO prices.
  • Relying on a few success stories:  Chinese IPOs’ performance is even worse if you look past the two that have been big winners, HiSoft, up 184%, and Camelot Information, up 130%. However, Chinese IPOs are down 2.6% on a median basis, which factors out the effect of extreme returns.

The fact Chinese IPOs are fading fast might come as a surprise. These deals have rocketed 16%, on average, their first trading day. Stories of fast economic growth in China have investors clamoring to get into China’s IPOs, says Donald Straszheim of ISI Group. “You’re seeing the money slosh around in the latest hot IPO market,” says John Fitzgibbon of ‘’.

But the realities of supply and demand are setting in fast once the first-day hype wears off and investors who pay attention to valuation step away, says Francis Gaskins of ‘’. Sometimes it doesn’t take a full day for the hype to subside…

In the articleBrazil’s IPOs Fail to Impress” by Jonathan Wheatley writes: Brazil’s new IPO season has got off to less than a flying start, with three out of four offers going to market below the bottom end of their target price range. This year had been billed as a return to the heady days of 2007, when 64 companies went public, raising R$55.6 Billion.

But turmoil in Egypt, coming on top of rising concerns over how Brazil’s government will deal with rising inflation, have dampened investor enthusiasm. If you look at Brazil’s key fundamentals, they are all still in place. If issuers are more realistic about their price expectations there’s no need for delays.

All the offers that I can see and that we are working on are not holding back. In some ways we’re in a more mature market. Investors are maybe not jumping over each other any more but actually running the numbers and making sure of what they’re trying to get.” Does that make this a buying opportunity? Companies must hope so. Six more IPOs are registered at the CVM, Brazil’s securities commission, and five secondary offers.

An IPO is part of a company’s financing strategy. A well-conceived and executed business plan will have specific goals for growth and revenue accompanied by financing needs and options to achieve each step of the path. The rule-of-thumb for an IPO ‘ready’ company include: substantial growth, near profitable, need for funding, good management, good story to tell, and right time in the market for your type of business.

Each industry has different criteria for growth and revenue in ‘going public’; therefore, it is important to research publicly traded companies of similar size in your industry to see there performance indicators (e.g., revenue, profit, market share, etc.) when they went public. One of the most important factors considered in deciding whether a company is ready to IPO (in addition to profitability) is growth rate.

The “ideal” is considered to be what bankers call “40/40”: 40% growth rate and 40% rate of return. Few companies are this dynamic, but potential growth and revenue are critical to how a company will be valued and how much money can be raised by an IPO and, most important, whether they will survive…

“The IPO market gives the outward appearance of a rebound but that is a false sense of confidence. The market is firming up and there are definitely upgrades but not all the signs are clear.” ~David Menlow

Franchise Business Model: Business Success–Rate is Over 90% vs. Independent Business–Rate is About 25%…

“There are many different types of franchises. Many people associate only fast food businesses with franchising. In fact, there are over 120 different types of franchise businesses available today, including automotive, cleaning & maintenance, health & fitness, financial services, and pet-related franchises, just to name a few”. ~Don Daszkowski

Franchising is the practice of using another firm’s successful business model. The word ‘franchise’ is of anglo-French derivation – from franc– meaning free, and is used both as a noun and as a verb. An individual who purchases and runs franchise is called “franchisee.” The franchisee purchases a franchise from the “franchisor.” The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases the franchisee must pay an ongoing franchise royalty fee, as well as an up-front, one-time franchise fee to the franchisor.

Franchising has become one of the most popular ways of doing business in today’s marketplace. In the United States, the Federal Trade Commission has oversight of franchising, rather than the US Securities and Exchange Commission. The FTC administrates oversight via the FTC Franchise Rule.  There is no federal registry of franchises or any federal filing requirements for information. States are the primary collectors of data on franchising companies, and enforce laws and regulations regarding their presence and their spread in their jurisdictions.

In 2007, the Census Bureau surveyed 4.3 million businesses that have paid employees, and its forms included questions about franchising for the first time. The results, which were released in September 2010, show that franchises account for 10.5 percent of all businesses and support 7.9 million workers in a work force of 59 million. Franchising sales account for nearly $1.3 trillion of $7.7 trillion in total sales.

The numbers came as no surprise to the International Franchise Association (IFA) inWashington,D.C., says spokeswoman Alisa Harrison, because they closely match information gathered by accounting firm Pricewaterhouse-Coopers for the IFA’s annual Economic Impact of Franchising reports. The U.S. Commerce Department estimates that 95% of franchises succeed; only 25-35% of independent businesses succeed. Why the difference? Since a franchise is usually a duplicate of an already successful business, it should succeed.

The term franchising can describe some very different business arrangements. It is important to understand exactly what you’re being offered. The franchisee owns the outlet it runs. But the franchisor keeps control over how products are marketed and sold and how their business idea is used. Different types of sales relationships are also sometimes referred to as franchises, for example: Distributorship & Dealership, Agency, Licensee.

The main distinguishing feature of a franchise is its structure–in other words, the rights that the franchisor allows a franchisee to have regarding the franchisor’s products or services. However, a secondary classification of franchise types does exist; it’s based on the type of franchise ownership. The following is an overview of the types of franchise structures and ownership classifications. Franchise structures:

  • Product Franchises: Manufacturer grants a franchisee the authority to distribute goods by the manufacturer and allows the owner to use the name and trademark.
  • Business Format Franchising: Company provides a franchisee with a proven method for operating a business using the name and trademark of the company.
  • Manufacturing Franchise: Right to manufacture a product and sell using the franchisor’s name and trademark.

There a four types of franchising opportunities available with varying levels of qualification requirements.

  • Single Franchise: Franchisee is awarded the exclusive rights to operate a single unit franchise in a specified geographic area.
  • Multi Unit Franchise: Franchisee owns and operates multiple unit operations.
  • Area Development Franchising: The franchisee will own an exclusive territory and will agree to a development schedule for the number of units they must open and operate.
  • Master Franchising: Franchisee has the exclusive franchise rights to a geographic area and acts as business partner for the franchise company in his specific territory or region
  • Absentee Investor: Own a franchise business and not be directly involved in its day-to-day management.

All franchises require a Franchise Disclosure Document (FDD). The Federal Trade Commission (FTC) requires that the owner of a franchise business furnish a FDD to a franchisee at least 14 days before finalizing the deal or signing the contract. As required by the FTC, each FDD will include; license and permit requirements, the business backgrounds of the owner or management team, a list of other current or former franchises, any bankruptcy or litigation history the franchise has been subject to, all franchise fees, and all trademark or copyright information.

The franchisor will most likely require the franchisee to buy certain types of insurance for the franchise as well, which also must be listed in the FDD. Franchise contracts tend to be unilateral contracts in favor of the franchisor; they are generally protected from lawsuits from their franchisee because of the non-negotiable nature of the contracts requiring franchisees to acknowledge, in effect, that they are buying the franchise knowing that there is risk, and that they have not been promised success or profits by the franchisor…. Business franchising is a global business:

  • Europe: Franchising has grown rapidly in Europe in recent years, but the industry is largely unregulated.
  • Brazil: Brazil has about 1,013 franchises with more than 62,500 outlets, making it one of the largest countries in the world in terms of number of units. Around 11 percent of this total are foreign-based franchisors.
  • China: China has the most franchises in the world but the scale of their operations is relatively small. Each system in China has an average of 43 outlets, compared to more than 540 in the United States. Together, there are 2600 brands in some 200,000 retail markets.
  • India: India is in its infancy with franchising. However, it’s one of the biggest potential franchising markets because of its large middle-class of 300 million who are not reticent on spending and because the population is entrepreneurial in character.

In the article “Small Business or Franchise – The Pros and Cons” by Don Daszkowski writes: There are two main options for becoming a business owner: Start your own business from scratch, or invest into an existing franchise system. There are pros and cons to both business models:

  • Starting a Business from Scratch-Pros: Control & creativity; Profitability; Less initial startup expense.
  • Starting a Business from Scratch-Cons: More time & effort; Competition; Higher Failure Rates.
  • Buying a Franchise-Pros: Brand Awareness; Established system & support; Less competition.
  • Buying a Franchise- Cons: Fees; Possibility of poor franchise choice; Less freedom in decision-making.

“Don’t assume a franchise is an easy, risk-free option – you’ll be running your own business with all the responsibility and hard work that running a business entails. Use professional advisers and make sure they’re franchise specialists. Negotiate your agreement and don’t think you have to accept the first set of terms put in front of you.”

In the article “Should You Franchise Your Business?” by Lindenmayer writes: Companies decide to begin franchising for one of three reasons: lack of money, people, or time. The primary barrier to expansion that today’s entrepreneur faces is lack of capital. And franchising allows companies to expand without the risk of debt or the cost of equity. Since franchisees provide the initial investment at the unit level, franchising allows for expansion with minimal capital investment on the part of the franchisor.

In addition, since it’s the franchisee, and not the franchisor, who signs the lease and commits to various service contracts, franchising allows for expansion with virtually no contingent liability, thus greatly reducing a franchisor’s risk….But, “Is Your Business Franchisable?” Franchising is a relatively flexible format, and just about any type of business can be franchised, provided it meets some basic characteristics: Credible; Unique; Teachable; Adequate ROI… 

If your business meets these criteria, then it may be a good candidate for franchising. Properly structured, franchising can allow small companies to more effectively compete with much larger competitors. It can also allow larger companies to gain the advantages of highly motivated unit management while reducing overhead.

As such, franchising is an option that more and more companies should explore… Franchising is being employed by more businesses and more types of businesses than ever before. Today, almost any product/service can be distributed through franchising.  Franchising commands a staggering 43% of the nation’s total retail sales and service dollars. 

According to the Small-Business Association, 41 percent of the nation’s small businesses are unable to secure adequate financing.  Independent small-business owners must cope on their own, while many franchisees will continue to receive help from their franchisors, through direct loan programs or a waiver of royalties and other fees. Franchisors are also helping their franchisees increase sales with new marketing programs and by providing them with new products and/or services to offer their customers.

A creed of the franchising world says: “Never be a pioneer; it doesn’t pay. Let the other man do the pioneering; and then after he has shown what can be done, do it bigger and more quickly. But let the other man take the time and risk to show you how to do it.” However, on the flip-side: The ‘U.S. Small Business Administration (SBA)’s Office of Inspector General’s Inspection and Evaluation Division’ published a report comparing the failure rate of the SBA’s non-franchise loans to the SBA’s franchise loans.

The SBA’s findings:  “Despite the popular view that franchisees are much more successful than non-franchisees, SBA’s experience with defaulted loans does not support this.”

“You can have the best business model in the world, but if you sell it to the wrong kind of person it’s not going to work,”

China Way for Business, Leadership, Ethics, Life..: Still Heavily Influenced by the Philosophies of Confucius & Taoism –I-Ching /Yì-Jīng.

China I-Ching in one word is “Change“. It is clearer in two words, “Handling Change“. In one sentence, “I-Ching is about using unchanging principles to handle change“. “It is about being able to meet life’s ever changing situations, handling them well, and live stress free with abundant vitality.”

The “I-Ching” or “Yì Jīng” (pinyin), also known as the Book of Changes, is an ancient book of Chinese origin. Along with the Bible and the Koran, it is one of the most translated and studied books on the planet. The Book of Changes is epitome of Chinese philosophy, founded on transcendental Taoist understandings and modified by Confucian logic.

It is studied for its pragmatic yet esoteric wisdom and consulted as an oracle for its solutions to life’s problems. It is a book of 64 readings, each chapter made up of a different 6 line Hexagram. The readings include commentaries and advice on all the different archetypal life experiences a person or group may live through. The Book’s origin is credited to the legendary emperor and sage Fu Hsi, who lived approximately 5-8000 years ago. It was he who first found and understood a “line symbol system” inscribed on the shell of a mysterious tortoise. It is interesting that other ancient cultures in the world also used various types of “line symbol systems” for representing primal and universal values.

I-Ching is based on the Taoist concept of the ‘universe’. This cosmology starts with the idea that the beginning of all creation or the ‘absolute’ of reality is unknown. This unknown is called the Tao (pronounced “dow”), which in English is translated as “The Way.” The “Way” is a mystery; it is unspeakable and beyond human thought, it can only be experienced in the present moment.

The Book of Changes is not intended to be read sequentially, but to be consulted in the context of a question. The I-Ching is used to consider a question of current significance to the user – a question about them in relation to a situation. Three coins are commonly used, shaken and thrown six times to yield six lines of a hexagram. There are 64 hexagrams in the I-Ching.  Each hexagram has a name, an image and a judgment associated with it. The judgment and commentary on the hexagram obtained is read: the reading offers the I-Ching’s perspective on your situation and how you might respond to it.

In the Asian world, all of the greatest minds through history have made a study of the I-Ching. Many key decisions in war, business, love, and any other field that requires deep understanding and strategic thinking, have been made based on guidance from the I-Ching. In the Western world, the I-Ching has only been known and used for about 100 years. Deep study of it has been hampered by limited texts until recently.

According to the tradition: Those who use the Book credit it with many life changing ‘correct ’decisions.  As the world moves into a faster rate of change and chaos, the Book of Changes only grows in importance for guidance and wisdom. The’ principles of change’ never vary, history always repeats itself. The application of wisdom based on the interactions of time and space (yin and yang) can only help to illuminate the way through a world made crazy by conceptual thinking, post modern philosophies, rampant greed and unchecked power.

But no matter how difficult the time, there is always a deeper flow of ‘reality’ that beckons us to merge with it and find our way with the fewest bumps and greatest harmony”.

In the article “Building Great Business with I-Ching Hexagram 48” by mindvalue writes:  The secrets of building great business can be found in I-Ching and a summary is reproduced below:

  • Business is about delivering value.
  • We must protect and care for our source of supply and our value producing system.
  • We need to invest first to gains later.
  • We need to plan and execute well to completion.
  • Be considerate for the use and benefits of others.
  • Co-operation brings greater success for all.

We can use the above as a reference check list to reflect on our present business. Such as:

  • What is the unique value that we are delivering to our customers? Who are they? How to we reach them? What do they think is our value to them?
  • Are we caring for our production system? Are we keeping them in tip-top operating conditions?
  • Are we upgrading them? Did we invest in the upgrade?
  • Are we planning and executing our plans or are we just letting it run on its own?
  • Have we extended our view of business to take care our suppliers, partners, community, and the environment?
  • Are we getting co-operations from our stakeholders including our owners, staff, customers, suppliers and community? What do they think of us?

In the article “How to Use the I-Ching to Divine Your Future” writes: Here’s how it works: First step is to ask a question of the text about your life. Speak it and write it down. The I-Ching is based on a series of 6 binary (yes/no, true/false) decisions that are often decided by tossing 3 coins to the ground in the same way a person at the craps table in Las Vegas would roll dice. Each one of these coin tosses will produce either a positive (yes/true/yang) or negative (no/false/yin) result. If the coins are mostly tails, you draw a straight line. If they are mostly heads, you draw a broken line.

Continue tossing the coins and drawing one line on top of the other until you have 6 lines. Six lines stacked on top of each other (from bottom to top) is called a hexagram (this is no relation to geometry’s hexagon). In the I-Ching, there are 64 possible combinations of doing this, so hence, 64 different possible fortunes. The actual I-Ching book is a look-up guide book of “reference” for these hexagrams rather then tome that you sit down and read from cover to cover. So after you have your hexagram, the next step is to look it up in the book so you can read its meaning.

The meaning derived from the hexagram is supposed to give you guidance on the future…. ‘Easy enough… but does it really work?’ “Well, let’s just say it hit a little too close to home.”

“When you get right down to it, all subjects of personal human interest boil down to 3 things: ‘Money/Career’ (e.g. what you “do” in life and how well you do it), ‘Health’ (how you feel), and ‘Relationships’ (who you align yourself with and who you make enemies with). So any question you ask of the I-Ching will probably have to do with one of those in some capacity.”

In the article “Leadership, Ethics and the Workplace: An Approach From the Book of Changes” by Glenn Martin writes:  The I-Ching is a Chinese book of divination and wisdom whose roots go back possibly five thousand years. Is it credible to suggest that such a source can be of help to leaders in the current business environment? The business world conspires to limit the scope of ethics.

The words of Milton Friedman are still recited today as if they are authoritative: “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits”. The only qualification that Friedman placed on this maxim was that companies should operate within the law.

Peter Drucker offered an alternative conception of the role of business in society when he said “profit is not the primary purpose of business”. He defined the purpose of business as “the creation of a customer who sees value in what the business offers. The function of profit is to validate the activities of the enterprise and enable it to continue.” The question we need to ask is what kind of world we want to have.

This fact can be connected with the Dalai Lama’s observation that modern western society faces growing confusion as to what constitutes morality and what its foundations are”…The I-Ching promotes the notion that good ethics & morality should be the foundation of business and life…

I-Ching is the foremost of all Chinese classics. Almost all schools of thought in China find their origin in the book.  For thousands of years, the book’s impact on the intellects and social elites in China was clear. It was said that, “if you do not know I-Ching, you are not fit to be a Prime Minister!”  Works of the wisest men of Chinese, from Laozi, Confucius to Sun Tzu, are all influenced by the book in one way or another.  It has also heavy impact on the ordinary people.

The beliefs of ‘Yì Jīng’ are so deeply rooted in the culture that most Chinese think and behave the ways it teaches without knowing. It is in the food they eat, the language they use, and the ways they view the world.  Almost all disciplines of studies in Chinarefer to I-Ching in one way or another.  I-Ching is widely used in Asia by fortune-tellers and futurists alike, the I-Ching “works” not by having any mystical connection to the future but by helping the inquirer understand the potential for change in the present.

This perspective, which is based on an early systems view of the world in which the whole universe is seen as being in a continual state of flux, is appropriate for these turbulent times.

In every age its guidance has been sought by Chinese philosophers, statesmen, warriors and ordinary people when faced with an important decision or major undertaking. The tradition is still maintained today. It is widely studied in modern universities and employed in business negotiations in many parts of Asia…

According to Taoism, the formula for Success is: S=P+O, where ‘Success (S)’ is the sum of ‘Preparation (P)’ and ‘Opportunity (O)’.

Company’s Brand Strategy: Must Embrace Distinctive Identity with Relevant, Enduring, and Credible Promise of Value…

“A great brand raises the bar — it adds a greater sense of purpose to the experience, whether it’s the challenge to do your best in sports and fitness, or the affirmation that the cup of coffee you’re drinking really matters.” ~ Howard Schultz

Your company ‘brand’ is the entire experience your customers have with your company. It’s what you stand for, a promise you make, and the personality you convey. And while it includes your logo, color palette and slogan, those are only creative elements that convey your brand. Instead, your brand lives in every day-to-day interaction you have with your market:

  • Images you convey.
  • Messages you deliver on your website, proposals and sales materials.
  • Employee interactions with customers.
  • Customer’s opinion of you versus your competition.

Branding is crucial for products and services sold in huge consumer markets. It’s also important in B2B because it helps you stand out from your competition. It brings your competitive position and value proposition to life; it positions you as a certain “something” in the mind of your customers. Your brand consistently and repeatedly tells your customers why they should buy from you.

“To capture significant market share, start with a strong and unique brand identity, and a strong brand strategy that successful creates “brand equity” – the amount of money that customers are willing to pay just because it’s your brand. In addition to generating revenue, brand equity makes your company itself more valuable over the long term.”

The American Marketing Association defines a ‘brand’ as a ‘name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers’. The legal term for brand is ‘trademark’. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is ‘trade name’.

The word branding began simply as a way to tell one person’s cattle from another by means of a hot iron stamp. The word ‘brand’ has continued to evolve to encompass identity — it affects the personality of a product, company or service. The word ‘brand’ is sometimes used as a metonym, referring to a company that is strongly identified with a brand.

People engaged in ‘branding’ seek to develop or align the expectations behind the brand experience, creating the impression that a brand associated with a product or service has certain qualities or characteristics that make it special or unique. A ‘brand’ is therefore one of the most valuable elements in any marketing and advertising theme…

Some ‘brands’ have such a strong identity that they become more or less cultural icons which makes them ‘iconic brands’. Examples are: Coke, Nike, Harley Davidson… Many ‘iconic brands’ include almost ritual-like behaviour in purchasing or consuming the products. There are four key elements to creating iconic brands (Holt):

  • “Necessary conditions” – The performance of the product must at least be acceptable, preferably with a reputation of having good quality.
  • “Myth-making” – A meaningful storytelling fabricated by cultural insiders. These must be seen as legitimate and respected by consumers for stories to be accepted.
  • “Cultural contradictions” – Some kind of mismatch between prevailing ideology and emergent undercurrents in society. In other words a difference with the way consumers are and how they wish they were.
  • “The cultural brand management process” – Actively engaging in the myth-making process in making sure the brand maintains its position as an icon.

A strong brand can increase the awareness of a company and its offerings in such a way that establishes strong feelings and reactions and a favorable view towards the company as a whole. To create this sort of “brand awareness” in your market, it takes skillful ‘brand strategy’ know-how. Successfully out-branding your competitors is a continuous battle for the hearts and minds of your customers.

The proposition your brand strategy makes must be very compelling, attractive and unique among competitive offerings. The proposition must also be consistently reinforced throughout all phases of an organization, from senior executives to marketing, sales, customer service, and even your business partners…

“A brand is the sum of the good, the bad, the ugly…it is your best and worst product/service. It is your best and worst employee. It is communicated through award-winning advertising as well as those ads that somehow slipped through the approval cracks and sank anything riding on them. It is your on-hold music and the demeanor of the receptionist who puts that valued client or prospect on hold.

It is the carefully crafted comments by a CEO as well as negative buzz by the water cooler or in chat rooms on the Internet. Brand is expressed through written, audio and visual content. It is interpreted through emotional filters every human being has—where anything can happen. Ultimately, you can’t control your brand. You can only hope to guide it.” ~ Scott White.

In the blog “Building Brand Awareness Posted” by Brad VanAuken writes:  Brand awareness’ is generally viewed to be one of the two most important drivers of strong brands (the other being ‘relevant differentiation’). Past research has shown ‘brand awareness’ to have a high correlation with purchase intent, market share, and other important brand equity and business metrics.

If your company has created a superior product offered at a price that delivers an outstanding value and supports the product by unparalleled service, but no one has ever heard of your company or its products; how many of those products are you likely to sell? Very few, and that’s why ‘brand awareness’ is so important.

It is the cornerstone of strong brands. Research indicates that the primary impact advertising has on brands is to build awareness for those brands.  A strong identity requires a strong icon, a tagline that reinforces the brand promise, a highly functional identity system and guidelines and a champion (‘identity police’) to ensure consistent use…

In the article “The Brand Audit: Key For Determining Brand Health” by Derrick Daye writes: Brands have life-cycles. They begin with excitement and promise; enter their growth phase; reach a plateau, and then slowly lose relevance as customers move on to the latest and greatest new thing. This is as natural as life itself. That’s why it’s a good idea to monitor ‘brand health’ along the way–before sales slip. Completing a ‘brand audit’ is a chance to take a fresh and objective look at your brand from a number of critical perspectives.

A comprehensive brand audit will often reveal new grow opportunities for your brands, and new ways to make your brand resonate with a new generation of target customers who will represent your brand’s bigger future. Periodic brand reviews are critical. Take the time to make a close examination of the strengths, weakness, opportunities and threats facing brand health.

In his autobiography, “Confessions of an Advertising Man,” legendary advertising pioneer David Ogilvy, tells how he was once invited to a corporate meeting to compete for a major account. When he entered in the chairman’s board room, the chairman said, “Mr. Ogilvy, we are interviewing several agencies. You have exactly fifteen minutes to plead your case.

Then I will ring this bell and the next agency waiting outside will follow you.” Ogilvy quickly asked: “How many people will be involved in the decision?” “The twelve members of the Committee here today,” replied the chairman. “Ring the bell!” Ogilvy said, and walked out. David Ogilvy understood the perils of ‘decision by committee’. He knew that this approach to decision-making often failed, especially when it involved issues about ‘brand’.

A study by McKinsey & Company found that companies willing to invest in branding and advertising activities while their industry peers were cutting spending outperformed industry performance averages when the economy recovered.  For many companies, a down economy is an ideal time to invest in the ‘brand’.

Spending on the brand may provide an advantage, but only if that spending is well-focused. When budgets are tight, your objective as the brand manager is to pick the brand investments that will deliver tangible business value, preserve the equity in the brand, and mitigate risk.

In the article “Identity Myths and Storytelling are Keys to Building Iconic Brands” by Martin Roll writes: ‘Brands’ that resonate and show direction to the masses through the brand stories and brand activities gets etched into the culture. These unique brands enhance shareholder value, become catalysts for better leadership, enables shared vision throughout their organizations, and help to balance short- and long-term perspectives and performance: These are ‘iconic brands’ (e.g., Apple, Starbucks, MacDonald…).

Psychological research demonstrates that these brands are durable because people are ‘cognitive misers’. The modern society is overloaded with information, and people seek to simplify the world by relying on a variety of heuristics to minimize the amount of searching and information processing needed to make reasonable decisions. Once people believe a brand works, they are less likely to seek out new information that challenges the assumptions.

Sociological research also demonstrates why people are less-likely to switch brands: Multiple elements like images, stories, and associations are attached to a brand, and shared collectively by groups and networks of people, which then form generally accepted conventions about the brand. Individuals are less-likely to switch these brands and, thereby, abandon the shared conventions. Creating an ‘identity myth’ is critical for perpetuating the brand…

“Successful brands are built on the twin foundations of awareness and relevance. If target audiences are not aware of you; if they don’t notice your message in the cacophony of messages they receive each day, then you will never have a chance to be relevant. And if they become aware of you—if you capture their attention—and fail to deliver relevance, then they will learn to ignore you.”

Game of Inches in Business, Sports, Life..: Its Difference Between –Success & Failure, Winning & Losing, Living & Dying…

“Life is a game of inches – and the inches we need are everywhere around us. They’re in every break of the game, every minute, every second. We fight for that inch – we claw with our fingernails for that inch – because we know when we add up all those inches, that’s what’s going to make the difference between winning and losing – between living and dying.” ~ Al Pacino, movie “Any Given Sunday”.

A game of inches… you may have heard phrases such as: Business is a game of inches… Life is a game of inches… Football is a game of inches… Pick your favorite activity and add the phrase “is a game of inches” afterwards; you can probably find this phrase applied to just about anything in life. Is this really the case though? Is it just about inches?  Doing activities by the inch is painful and tedious at best. The thought behind the phrase is pragmatic, practical in its application, and it usually means:

  • Keep focused.
  • Keep doing the little things and big things will happen.
  • Keep moving forward, before long, you will have moved a distance.
  • Keep doing the detailed work; it will help you achieve something bigger.

However, if we are just focused on inches, we are always looking down and just seeing a very limited view of what is possible. The preamble to “a game of inches” needs to be “the big step, the big idea is…” This delivers the purpose to which the “inch” activities can be applied. It creates the inspiration for the perspiration. No matter what we do or want to do, we need to know the “big idea” or the purpose that is driving us forward or motivating us onward. It is what delivers meaning to living our life as well as setting the direction. Jon Mertz’s key points are:

  • A game of inches applied to any activity without a clear purpose is drudgery.
  • A clear purpose without an “inches” plan is frustrating.
  • A game of inches applied to any activity with clear, accepted purpose is energizing.
  • Only accept a game of inches when a meaningful purpose and direction are tightly wrapped around the actions necessary.

In the article “A Game of Inches” by David Heitman writes: College bowl games…NFL playoffs…this is a great time of year if you’re a football fan. Football is often a game not just of yards, but of inches. Likewise, ‘a game of inches’ is a lot like business. It’s often in the smallest details—and unrelenting attention to them—that separates average from good; but more importantly, good from great. In marketing, it’s about making sure you have precisely understood the motivators and aspirations of your audience: Lots of listening and pondering.

No sloppy guesswork. It’s about using the right words—sometimes the only right word—in a headline or body copy, editing and re-editing until perfect. It’s about timing a media buy with precision and sensitivity to your audience’s cycles of receptivity. The list goes on, but it’s almost always a ‘game of inches’ that separates the champions from the vanquished. For companies that cultivate the precision, ingenuity, and energy to ‘squeeze an extra inches’ out of every carry, the rewards can be record-breaking.

In the book” Smart Risk-Taking” by Doug Sundheim writes: I was spending so much time looking for “big plays” that I wasn’t doing many of the small things needed to move the flags down the field. I wasn’t fighting for the inches – even though I know that’s the secret of success, especially in this market. The inches we need are everywhere around us. We miss them because we don’t think they’ll be enough – they won’t get us to where we want to go. So we don’t fight for them. Somehow it’s easy to forget that they add up over time and make all the difference in the world.

The worst part is that we lose our edge when we stop fighting for them. And we need that edge. It’s what keeps us sharp enough to make the big plays when the opportunities arise. Are you fighting for the “inches” in what you’re doing right now? If not, where are you letting small successes fall through the cracks and possibly losing momentum? Can you identify 1 or 2 areas where you can make progress immediately even if it’s not a “big play”?

In the article “Motivation is Game of Inches” by Paul writes: Designing a great program that helps you achieve business objectives isn’t a matter of big goals and big plans.  It’s an exercise in grinding out the inches. But we don’t like that.  We like big and we like flashy. Unfortunately, big and flashy are low probability plays. Most of us can remember a time in our past when a coach told us – “don’t swing for the fences – just get a hit” – or – “three runs of 4 yards is as good as one play of 10 yards.”  We teach our kids that doing a bunch of little things well will result in success.

Somehow we lose that coaching intelligence when we hit the business world. We want the headline for going big. Look at the steps that lead to success.  If you have a sales reward program, then reward the number of calls, the number of meetings, the number of qualified proposals.  You’ll be surprised how many sales will close if your people are focused on the little things.  If you have non-sales employees, then look at the job functions and the tasks associated with success in the position – reward those tasks. Focusing on the big result forces your audience to take their eye off of the little things that truly drive success.

In the article “Every Journey Begins with a Single Step” by BenchMark Coaching writes: Winning in your business or personal life is all about inches. It means going small distances successfully and then going farther still, one-step at a time. A champion is someone who goes as far as they can and then takes another step to go further. And winners seldom win by a landslide. Successful people simply take the consistent steps needed to get to where they want to go.

If there is something that you want to do or have in your life, begin it. If there is a place that you want to be, take a step toward getting there. Don’t worry if everything isn’t figured out yet. You don’t need your entire plan created in order to get started. Start right now even without the perfect plan. All you have to do to get the ball rolling is take a step forward, even if it is just an inch. Then keep taking steps…

In the articleJust Like Winning in Sports, Generating a Healthy Bottom-Line in Your Business is a ‘Game of Inches’!” by Donald Cooper write:  In most sports, winning is about being a just little bit better than your opponent at the basics of the game.  It’s about blocking, tackling, back checking or hitting just a little bit better. It’s about winning a few more free throws or getting the ball deep into the corner of your opponent’s court. It’s about being a millisecond faster or being just a little bit stronger. Winning is ‘a game of inches’. And so it is in business.

Generating a healthy bottom-line is about being just a little bit better than your competitors at a few key things. It’s about selling just a little bit more.  Increasing sales by just 5% could grow your bottom line by 20% to 40%, depending on your gross margin. Turning your inventory just one more time each year could increase your profit by 25%. So, are you winning the “game of inches” in your business…or are a lot of little things, not done well, eroding your profitability?

The solution is simple. Start a list of all the things that you can do just a little bit better to amaze your customers, grow the business and increase your bottom line. Get your staff involved.  Schedule a two hour “winning is a game of inches” rally (call it anything but not a “meeting”). Remember, businesses do not die from a single shot to the head.  They die, slowly but surely, from a thousand uncompleted tasks.

In the article Life is a Game of Inches (So is Football)” by Matt Cheuvront writes: We’ve all been stuck in a rut, down on our luck, out of a job, going through a bad break up, losing a loved on – each of us has experienced a sense of personal ‘hell’ and when you’re in it – you feel like you’ll never get out, that it’s all too overwhelming to bear. It’s so much easier to give up and say “I can’t”–but it’s the individuals, the entrepreneurs, the businesses who face adversity and journey through hell, yet have the patience and persistence to move forward, inch-by-inch, who will stand above all the rest and see the most success in the end.

“You find out life’s this ‘game of inches’. So is football. Because in either game, life or football, the margin for error is so small — I mean one-half a step too late, or too early, and you don’t quite make it. One-half second too slow, too fast, you don’t quite catch it.”

Some believe in fate, some in free-will. I’m a proponent of opportunity. We are given choices and decisions throughout our lives – some small, some much more substantial. And then we’re asked to make a choice. Life isn’t about fate or free-will; there will always be results of your own actions, and some things that will ultimately be out of your hands.

But what we can control are the choices we make; e.g., the 4th and Goal, or the 3 seconds left in the biggest game of your life, or should I run or should I pass decision that will define you. Focus less on the things you can and cannot control and instead, focus on the choices you make.

In any fight, it’s the guy who’s willing to die who’s gonna win that inch. And I know if I’m gonna have any life anymore, it’s because I’m still willin’ to fight and die for that inch. Because that’s what livin’ is: The ‘six inches’ in front of your face!

I’ll replace the word ‘die’ with the word ‘fail’. It’s the guy who’s willing to fail that’s ultimately going to succeed. We are all inherently afraid of failure; nervous about walking the first step and taking a leap of faith into the unknown. But the people who get it understand that fear of coming up short of the goal-line doesn’t mean they should automatically play it safe and kick a field goal.

They understand that sometimes, you just have to go for it; and that fear can be a motivator that drives success. For everyone who is thinking about trying something new; the only person holding you back is yourself. Don’t let fear take control of your life; and understand that even the best of them, even the most successful win, inch-by-inch…

“Football is a game of inches and inches make a champion.” ~ Vince Lombardi

Company’s Urge to Merger –Truth Be Told: Its Ego, Panic, Stupidty, Greed, Hubris; Even Valid Business Reasons…

“To grow to be an organization operating on a global scale, it is almost impossible to do so quickly enough through organic growth alone. Mergers and acquisitions have in many ways become necessary. Interestingly, evidence is now mounting that the deals conducted in the current merger wave may be different. Across a broad range of industries throughout the world, lessons learned are being applied.” ~Marco Boschetti

Most economists agree that mergers offer no sure solution to the troubles or shortcomings of a company. Nor do they guarantee growth and a big rise in earnings. But they can often help a bright and growing firm to grow even faster. The global business environment dictates that companies have to grow to consolidate their footprint in the market place.

If they cannot do this organically they have to look to acquisition to broaden their perspective through; new products and technologies, new markets, reduced costs through economies of scale, or simply eliminating competition. While executives may dream about a merger made in heaven, however, analysts report that up to 75 percent of acquisitions fail, but the statistics seem not to put anybody off.

The British 19th century politician Benjamin Disraeli said there are three kinds of lies; “lies, damned lies, and statistics.” So do the statistics lie? If the majority of mergers and acquisitions are alleged to fail, there must be more than statistics behind the drive to keep on doing it. It may well be that analysts who judge the success of an acquisition look no further than to compare the revenues of the merged company with the cost of its union. However, Is there more to the success of a merger than numbers?

In the article “The Urge To Merge” by Max Fawcett writes: There are some clear trends emerging that can be reliably counted on to define the course of M&A activity in 2011. Here’s a snapshot of what lies ahead for buyers, sellers and everyone in between:

  • Hoarders: Public companies worldwide are sitting on $3 trillion in cash, with private-equity funds armed with an estimated $500 billion more. All told, it’s the biggest so-called “cash hoard” in 50 years, according to Bloomberg…
  • Widening the Yield Field: When it comes to financing acquisitions, cash will always be king, but right now debt is nearly as attractive, given that interest rates are still hovering near once-in-a-generation lows.
  • Go With The (Cash) Flow: Free cash-flow has always been an important metric for investors. At any given time, it provides more predictability and certainty to acquirers, knowing that they can pay off their debt and continue to have cash for other strategic initiatives.

In the article The Desire To Acquire & The Urge To Merge” by Cliff Kurtzman writes: I’ve put together some of the more common reasons companies enter into M&A activity:

  • Need for speed: In a world where everything is moving fast, making an acquisition can instantly open the door to new markets, new geographic locations, and new business models, as well as new customer and business relationships.
  • Avenues for revenues: Companies with publicly traded stock, or private companies that find themselves cash rich but revenue poor, can buy companies with solid revenue streams that will instantly boost their earnings.
  • Dash for cash: Public companies can use their stock to acquire cash rich companies, thereby trading their stock for cash without having to make a new stock offering.  
  • Expand the brand: Companies may seek to acquire people with unique capabilities, relationships, and positions of leadership, unique assets such as domain names and web sites, or brands.
  • Prepare to gain market share: Sometimes companies see an acquisition as simply a way to get more of a good thing and capitalize on the economies of scale.
  • Reduce costs and control quality: Companies acquire other businesses within their supply chain to reduce costs, control quality, and increase profits.
  • Preempt unwanted competition: Sometimes companies acquire other companies to prevent a potential competitor from deeply entering their market.
  • Add critical value to an under-performing organization: Sometimes a company will be floundering by itself but in the hands of an acquirer with the right resources and connections, it can be turned into a much more profitable venture.
  • Diversify and reduce risks: In the online world, we sometimes see companies diversifying by making acquisitions in related offline businesses that offer synergistic business models with less inherent risk.

Okay, these are the “official reasons.” Yet you probably won’t be surprised to find out that the reality is that deals get put together in some very strange ways and are motivated by some very odd reasons. Here are some that undoubtedly also take place:

  • Our stock is floundering and we’ve got to do something about it, FAST: Making acquisitions can seem a straightforward way to show that management is working hard to make deals and take the company to a new level.
  • Competitor envy: Seeing that a competitor is making acquisitions and wanting to not get left out of the game. This is the “lemming suicide syndrome” and it is a poor reason to make an acquisition.  
  • Empire building: Often coupled with competitor envy, this is a CEO’s desire to build as big an empire with as many employees as quickly as possible…
  • Convenience: Making a deal to acquire an organization that you know and have worked with can in fact reduce risks and ease the transition. Familiarity with an organization does not necessarily imply that they will provide the good ROI.
  • The FOR SALE sign is out: Sometimes an organization actively looking to be acquired can offer valuable assets at fire-sale prices, while other times all they are doing is trying to find a way to make their problems someone else’s.

Sound M&A practice involves:

  • Defining clear objective: The acquirer needs to have a plan for where they are going and then design pathways and alternatives, along with associated costs and timetables, for achieving their goals.
  • Investigating and researching multiple alternatives for achieving success: The acquirer should never allow themselves to be held hostage to the closing of any one particular deal. If the cost of “Plan A” gets too expensive or the risks start appearing too great, then the organization should have other alternatives to pursue.
  • Knowing when to walk away from the table: If the deal isn’t making sense, then it is important to be able to walk away without regret because there are better alternatives to pursue to reach an objective.  
  • Developing a detailed plan for post-acquisition governance and cultural integration: Acquisitions rarely fail because one or both parties didn’t perform adequate due diligence. Acquisitions tend to fail due to inadequate leadership, governance, and difficulties in integrating disparate cultures.
  • Getting outside help: An organization should consider support from consultants with deep expertise in selecting and evaluating the business models of potential acquisitions, and in putting together effective post-acquisition management and integration plans that will allow the investment to achieve its potential.

In a paper titled Who Makes Acquisitions? CEO Overconfidence and the Market’s Reaction”, the researchers found that ‘overconfident’ CEOs were most likely to make acquisitions and mergers, and often destroy value for shareholders. The authors, Tate & Malmendier, measured overconfidence by assessing how CEOs, in a sample of Forbes 500 companies, handled their stock options.

If a CEO held options in his company until the year they expired, he was classified as overconfident. Why? “Previous literature in corporate finance shows that risk adverse CEOs should exercise stock options well before expiration,” the authors write. “Holding an option until its final year, even when it’s highly in the money, indicates that the CEO has been consistently ‘bullish’ about the company’s prospects, and that could cloud their judgment.”

When the authors compare the behavior of these CEOs with the more cautious ones in their sample – they call them ‘rational CEOs’ – they find that ‘overconfident’ CEOs are more likely to conduct mergers than ‘rational CEOs’ at any point in time. Tate and Malmendier also found that overconfident CEOs were most likely to make acquisitions when they could avoid selling new stock to finance them, and that they were more likely to do deals that diversified their firm’s lines of business. Prior research has shown that ‘diversifying’ mergers are the least likely to create value…

According to Jeffrey Pfeffer, research consistently shows that most mergers fail, from falling stock prices to lower profitability. Yet, even with suffering capital markets, a recent Hewitt Associates study found that more than half of the 70 senior executives and board members surveyed planned to step-up merger activity during the next three years. Why? Call it executive hubris.

One study, by business school professors Matthew Hayward and Donald Hambrick, showed that the greater the hubris of the chief executive, the more a company tends to overpay for acquisitions. The aphorism “Pride goeth before a fall” seems to hold true in business too. When executives are confronted with the appalling statistics, their first response goes something like this: “That may happen to other companies, but not ours. This acquisition will be more successful. We have learned.”

The next CEO challenge is persuading a possibly recalcitrant board of directors to let you pursue your ‘urge to merge’. Hubris, again, returns to center stage. Here’s how to avoid hubris-fueled merger mania. First, follow the adage: “Forgive and remember”. ‘

Go back and evaluate past merger decisions, admit when you were wrong, figure out why, and learn from it. Second, beware of too much agreement in the board room. Find, even encourage, people to disagree with you, so that all sides of the decision are examined.’ The ‘urge to merge’ is an addiction in many companies: Doing deals is much more fun and interesting than fixing fundamental problems…

“Great deeds are usually wrought at great risks.” But too many companies are unprepared for dealing with the complexities of M&A risk. World-class capabilities are not built overnight; they are developed and refined over several years and multiple transactions”.

Product Strategy Determines a Company Fate: Apple Does It Very Well & Other Companies Do It Less Well…

“More than any other factor marketing/product management’s ability to formulate and execute a clear product strategy will be the most critical determinant of a company’s fate.”

Product strategy is perhaps the most important function of a company. In a highly-competitive market characterized by emerging product categories and innovative offerings, the ability to effectively develop and roll-out a market-driven product strategy is not enough.

Companies that have developed an integrated approach to product strategy and innovation are more successful because they understand how new market drivers will affect long-term performance. As a result, they are able to quickly adapt to changing business dynamics so that they can continue to deliver value to their customers. When an organization introduces a product into a market they must ask themselves a number of questions:

  • Who are the target customers?
  • What benefits will customers expect?
  • How is it positioned within the market?
  • What differential advantage are their over competitors?

According to P. Tailor;Marketing is not about providing products or services, it is essentially about providing changing benefits to the changing needs and demands of the customer”.  Philip Kotler in the book “Principles of Marketing” devised a very interesting concept of benefit building with a product where he suggests that a product should be viewed in three levels:

  • Level 1: Core product:  Core benefits.
  • Level 2: Actual product: Branding and differentiators.
  • Level 3: Augmented product: Additional non-tangible benefits.

In the article “Product Life Cycles – Developing Your Product Strategy” by Ian Traynor writes: Understanding how markets change and how they react to your own products and services is a vital part of management and marketing strategy. If you understand the ‘product life cycle’, you will be ahead of many of your competitors!

The ‘product life cycle’ is a description of what happens to anything that we produce and sell, and it applies to all businesses, large and small. Understanding it and taking appropriate action is essential if you are to maximize the sales and profits of your business. Products go through a cycle which can be described in 4 stages: Introduction, Growth, Maturity, Decline. Although, it’s possible to defer the decline of a product by a number of strategies:

  • Increased promotion.
  • Enhancing the product.
  • Introducing add-ons and variations.
  • Finding new markets.

Inevitably, however, the life of the product ends, and unless new products are introduced, the life of the business is at risk. If your business has a number of products, it is likely that they will each be at different stages of their product life cycle. If you are to avoid a decline in overall sales and profits, the timing of introduction of new products is crucial.

A product life cycle is not fixed for all products – it can vary considerably. For example, computer items tend to have relatively short life cycles, whilst some services, such as the sale of property and real estate, can remain relatively unchanged for many years. But they will change!  The key to an effective product strategy and product development is planning ahead…

In the article “New Product Strategy” by Rick Braddy writes:  One way to think about “strategy” is it’s the hammer used to drive a tactical advantage you possess into a marketplace, a concept from the book “Bottom Up Marketing” by Jack Trout and Al Ries. The strategy hammer hits those tactical nails so hard, they just get driven into the market much easier and faster than they would otherwise.

Bad strategies often seem good on the surface, until you try to put them into action… Excellent strategies take proven tactical advantages and make them more powerful product strategy consisting of six areas:

  • Enable Non-Consumption: Enabling non-consumers to become customers typically involves bridging one or more “gaps” that are preventing consumption, including: Wealth, Skills, Time, Access.
  • Nail the Job to be Done: To attract buyers, the product absolutely must get the job done the buyer wants to accomplish. Nailing the job begins with a clear understanding of the buyer’s existing alternatives.  For each alternative, we need to understand the intended “outcomes” that occur as a result of taking this approach, and importantly, the “unintended consequences” of taking this approach.
  • Delight, but don’t Overshoot: It’s important to delight customers with a few “wow” features (sometimes called “Purple Cows“) and a solid product; however, it’s even more important not to over-engineer a product, which costs more money and time and then makes consumption more difficult on a broad scale.
  • Master an Emergent Strategy: Anytime you are entering a market with something new, there are risks and unknowns that cannot be foreseen or planned for in advance.  An “emergent strategy” is one in which your strategy and possibly certain key tactics can only be discovered once you are immersed into the marketplace, where the learning process can begin.
  • Pricing/Segments: The days of attacking a broad, horizontal marketplace are gone for all but the largest corporations. Entrepreneurs and small-to-medium businesses must choose which segments or niches of a market to target and how best to price the product to compete effectively.
  • Place/Promotion: Choosing the places where you will intersect with buyers is another critical aspect of your go-to-market strategy for the product.  How best to position and promote the product is equally important to ensure your advertising, landing pages and sales copy resonates with your target buyers.

In the article “Product Strategy Examples” by Christopher Carol writes: Two major product strategies are price-based product strategy and product differentiation. When developing a strategy, strive to answer the following questions: ‘who is the product aimed at; what benefit the product brings; what your position is in the marketplace; and what advantage the strategy will have over those of your competitors’.

When using a price-based product strategy, the product is planned according to such things as cost-plus pricing; value-based pricing; and target-return pricing. Essentially, your strategic angle in a price-based strategy is to set the price in such a way that you get a competitive advantage over other similar products.

Use a product-differentiation strategy when there are competing products that fulfills the same need. In a product-differentiation strategy, your goal is to put distance between your product and your competitor’s product.

There two forms of product differentiation: vertical differentiation and horizontal differentiation. Vertical product-differentiation strategy focuses on improved features that the customers perceive a difference in quality due to your improvements. Horizontal differentiation focuses on your customers’ preferences when the features of your product cannot differ substantially from the features of your competitors.

In the article “4 Way to Create a Remarkable Product Strategy” by Brian Halligan writes: I think of Inbound Marketing as a step-by-step process by which you; (1) create content, (2) optimize that content for Google and social media sites, (3) promote that content through the social media-sphere, (4) you measure the results to make investment decisions, and then you rinse/repeat.

It turns out that this step-by-step Inbound Marketing process works best when you have a remarkable product to sell, so it makes sense to make step (0) be the process of creating a remarkable product or service offering.  Here are a few ideas on how you might want to think it through:

  • Go Narrow:  The internet opens-up tons of potential customers, but it also opens-up tons of potential competitors.
  • Boundary Buster:  Think outside the box and include not just competitors, but also “alternatives” and innovate across boundaries.
  • “Skate To Where The Puck Is Going”:  Great marketers think about being ahead of the game.
  • Business Model Innovation Is Better:  Many companies focus too much on technology innovation and don’t think enough about business model innovation.

“A flawed product strategy is like a bad haircut:  you just can’t hide it Before you design your product, ‘design your customer’. At the root of many flawed products is a simple problem: there is no customer.”

In reality, developing the product strategy is one of the toughest challenges that companies face. Without a successful product strategy process, most businesses will ultimately fail. In its simplest form, this process is a repeatable, measurable methodology for defining and managing the company’s product strategy and product portfolio. Although, firms will often have a ‘product roadmap’ which undergoes annual reviews among a few key executives during which time resources are allocated and priorities are set.

However, having a roadmap does not constitute a product strategy process. A product strategy process must have mechanisms for incorporating the external factors (competitor strategies, new product announcements, market trends, and market forecasts-the “marketing intelligence” function), internal factors (funding, human/ development resources, access to technology, and paths to market) which will impact the success of the product strategy. It’s very important to recognize that “one size doesn’t fit all” when it comes to product strategy.

Depending on the competitive intensity within your industry, the intellectual property landscape, and your internal resources, your product strategy process may be very simple or it may be very complex. The product strategy process must be crafted to suit the needs and abilities of your specific organization. When developing a product strategy process, it’s important to avoid falling into the trap of believing common myths regarding the product strategy process, including:

Myth 1: Product strategy is only for large multi-national companies with massive budgets and “armies” of internal resources! Wrong! you need a product strategy process-regardless of the size of your company. You must be constantly adapting your portfolio to achieve or sustain a competitive advantage.

Myth 2: I have a product roadmap–therefore, I have a product strategy process. Wrong! While a product roadmap is a valuable deliverable from the product strategy process, much of the value of the product strategy process comes from assessing the market on a regular basis, collaborating with the different functions to develop the “best” strategy, and rigorously validating and revalidating your assumptions about the market. You can have a roadmap without having an effective product strategy process.

”Product strategy begins with a strategic vision that states where a company wants to go, how it will get there, and why it will be successful.”