Literacy of a different sort

One of the things I’m always pushing clients to do is expand their education.

Naturally, that includes the education of their staff, if they have one.

This education expands well beyond your line of business, because there are valuable lessons from every industry.

Likewise, there are processes in almost every industry that you can learn from, modify to fit your needs and thus use in a completely unrelated business.

What I seldom mention is that you can’t let yourself think you’re so smart that you let your guard down.

While it was more than a decade ago, we’ve seen the same sort of situation lately.

While the Fool has a point, neither they nor I would suggest that literacy on any topic is a bad idea. Financial literacy is their reason to exist.

The bad stuff occurs when you stop doing what got you to the point of being literacy, or even highly literate.

Dancing with “who brung ya”

Another thing to watch out for as you educate yourself is that deciding (or just “forgetting”) to stop doing the stuff to communicate, support and enthrall customers.

No matter how smart you think you are, or really become, you still have to take care of customers. No matter how far ahead of the second place player you are, you still have to follow up and do the other things that got you to number one.

If you aren’t yet number one, you’ve gotta keep doing the things that keep you climbing, much less the things that the current number one is too lazy or sleepy to do.

Lazy? Sleepy? “Too smart?”

We’ve talked about lazy and sleepy plenty of times. I won’t belabor them.

When you get too smart… correction, when you THINK you’ve become too smart, bad things are almost certain to start happening. Even worse, if you really think you’re that smart, you might ignore a failure as an aberration rather than you losing your business mojo.

You make assumptions rather than testing the market, your software, your marketing, or that formula for Flubber.

You think that you’re “Too big to fail”.

Getting better

Focus on getting smarter, but also on getting better.

It’s not worth the time to get smarter if you don’t use what you learn. Think back over your year.

How many things have you done to make your business better? To make yourself better?

Not just reading what will make you better, but DOING it…

Look, even Tom Peters and Dan Kennedy have their bad days. Just the other day, Dan commented in his newsletter (hint…) that he had a bad day because he “only completed 11 of the 12 tasks he’d scheduled for the day.”

He called his day “Unsatisfactory.”

I hold myself to a pretty high standard, and like you, Tom and Dan, I fail myself as well.

The difference between most people and Dan is that 11 of 12 is a great day for most people. For that matter, 6 of 12 is probably a great day for most.

Looking at 11 of 12 as unsatisfactory from a “this was my plan, but this is what happened” point of view is what keeps someone as amazingly smart as Dan from getting sleepy about his business.

Overconfidence

The gist of the Motley Fool article is this, and I quote:

“In 1998, the hedge fund Long Term Capital Management, staffed thick with Ph.D.s and two Nobel laureates, exploded amid an almost incomprehensible amount of leverage. Behind the failure was raging overconfidence. “The young geniuses from academe felt they could do no wrong,” wrote Roger Lowenstein in the book When Genius Failed.”

Berkshire Hathaway CEO Warren Buffett said this about the firm profiled in the Motley Fool article:

“They probably have as high an average IQ as any sixteen people working together in one business in the country … just an incredible amount of intellect in that group. Now you combine that with the fact that those sixteen had extensive experience in the field they were operating in … in aggregate, the sixteen probably had 350 or 400 years of experience doing exactly what they were doing. And then you throw in the third factor: that most of them had virtually all of their very substantial net worths in the business … And essentially they went broke. That to me is absolutely fascinating.”

The EASY thing to do would be to dismiss anyone who is smart, or trying to get smarter, simply because this group of people royally screwed up. Of course, if you’re the type to think that way, you probably aren’t reading this.

I suggest you re-read that Buffett commet.

A final quote from the Fool article:

“LTCM is an example of financial education being overridden by a swamp of overconfidence, hubris, and a lack of common sense. Wall Street in general is another. The folks who ran Citigroup (NYSE: C) and AIG (NYSE: AIG) had plenty of financial education. But in general, they lacked the humility to realize the danger of what they were doing. One has to assume their top-notch pedigrees and financial educations contributed to that lack of humility.”

Like I said when we got started here…continue to educate yourself.

That *always* includes learning from someone else’s mistakes.

Warren Buffett to Josh: Read, read, read

Notturno
Creative Commons License photo credit: gualtiero

Today’s guest post is from Josh Whitford from over in Fargo, dere (hey, we’re both way up north here so I can say that dere).

Josh did a really smart and simple thing to get in touch with – and get advice from – Warren Buffett.

While it’s great to get advice from Mr. Buffett, the key thing here is not so much the specific task Josh was assigned but that he sought out the wisdom in the first place. Constant improvement is not a luxury, it’s a requirement.

Asking questions of those who know more than you (and/or know the success you want) is definitely a good strategy (ever hear of “Think and Grow Rich”?)

Speaking of, I’m on a quest to increase my reading to at a least a book a week this year. While it has impacted some other things negatively (at least from their perspective), I see positive results in my work, this blog (sometimes negative results – like far fewer posts), and life in general. Highly recommended.

And yes, I should be blogging about those weekly book adventures, shouldn’t I?

Business owners: Do the math when putting on a promotional event

I ran across a couple of whining news stories recently that talked about paying celebrities like Paris Hilton or Donald Trump $10000 to $20000 to appear at a party or other event for 2 hours. In Trump’s case, it’s more like $250k per appearance, but it doesn’t really matter.

The news reporters don’t get the big picture because they aren’t looking at the economics. The bright shiny celebrities distract them from the business that is going on.

What Time Is It ??
photo credit: 708718

Let’s consider for a moment that you are having a small business seminar in Seattle, Dallas or Chicago. You plan to charge $3000 and you know for a fact that you are going to deliver far more value than that.

Your problem is this: demonstrating that you’re going to deliver $3000 worth of value.

Certainly you can do that, but look at what it might take to allow you to get Trump at your event – for free.

If his price is $250k, then you need to get an extra 83 people to show up at your event. In a city of 3-5 million people, are there 83 business owners, real estate people or entrepreneurs who would be interested in hearing Donald Trump speak, get a photo with him and have a brief word with him?

Sure there are. 83 people gets Trump at your business event for nothing out of your pocket.

People line up to pay $25k to have lunch with Warren Buffett every year. He donates that money to charity, but the concept is the same – and in fact, you could do this at your event with Trump (or whoever).

So when you read these celebrity stories (regardless of where they are – even in the WSJ), don’t gloss over them and think those people live in another world. Business-wise, they don’t. They are making hay while the sun shines. They know that you only need to get (for example) another 83 people there to pay their fee and they know what that does for you, your business and your event.

You simply have to do the math to make it easy to get someone like that for your promotional event.

What does this have to do with your small business? Lots.

Local businesses have promotional store events all the time. Anyone can do a live radio spot. Do the people in your market really want to talk to the DJ? Who in your market can you get at your store for a big event that will blow away your local market and position you as the only place to do business with?

For example, if you’re an attorney and you held a private event for your best clients, what would it cost you to get George Ross (Trump’s attorney) there? On the other hand, what positive can come of it? Be sure that you think that part through. Your guest needs to be strategic to your long term business goal, not just someone to ooh and ah over.

Think bigger and do the math to make amazing things happen when you hold a local promotional event.

PS: Don’t forget to record the event on digital video and put pieces of it (drip, drip, drip) out there on all the social media sites you use to promote and position your business (ie: Facebook, YouTube, and so on). Your event isn’t a one time thing. It should pay dividends for a long time.