How to Become a Subject Matter Expert in Your Niche

Becoming a subject matter expert (SME) doesn’t just happen. It requires a lot of hard work, time, and effort. However, if you want to make progress in your business and become a big success, you will have to become an SME so that when the other person needs what you are offering, you will be the one that he or she chooses to hire instead of someone else.

What is involved in becoming an SME? 
If you get to the point at which the other person chooses to hire you or to buy whatever you are selling (product and/or service), some really significant things have already been accomplished previously. First of all, you succeeded in getting the other person to trust you. Second, you have established enough credibility for the other person to understand that you truly know what you are talking about. If you are considered a subject matter expert, that means that in the eyes of the other person, your knowledge is what they need and nobody else will do it better than you will. It is really that simple.

Because the competition is so fierce, both in and out of your particular niche, you will need to work really hard at establishing your position. There are certain truths that you must follow in order to truly become an expert in your niche.

  • Have a deep understanding of your niche: Before you can do anything, you will need to establish the topic(s) that will be desirable to other people. The way that you approach that is by choosing a niche that is focused and not overly broad or general. It is almost impossible to become an SME in a niche that is particularly broad. In that case, there is just too much to learn (and to master). On the other hand, you don’t want your niche to be so narrow that you will run out of topics about which to write. Your choice will largely depend on your knowledge of those topics. Before you do anything, you will have to have to have tremendous knowledge of those topics (intimately). You will also need to find your voice and you will have to establish what makes you unique. That is exactly what will get you noticed by the other person and it will keep the other person captivated by your knowledge and by your unique perspective.
  • Become an authority figureThere are many different aspects to becoming an authority figure. Just like you have a brand for your business, you also have to have a brand for you. It has to be a brand that is unique and you will have to communicate clearly exactly how you are going to help the other person to solve his or her problem. You should think carefully about how you can help the other person and you should think about how your expertise will help you to get noticed and retained. It isn’t enough to merely consider yourself an expert in your niche. A claim is one thing. However, you really do need to put your money where your mouth is. The truth is that people don’t generally part with their money easily. If they are going to be willing to spend money, it better be for something of value to them.
  • Be patient. It takes time: When you first set out to establish your position as a subject matter expert, you will have your work cut out for you. You will need to get people to notice what you are doing and what you know. That means that you will have to write and post content that is appropriate, compelling, and valuable. You will also need to establish a significant following. Of course, that will not happen overnight. It takes time. However, before you even to any of that, you will need to be certain of your target audience. If you don’t have the appropriate target audience, they will not be interested in anything that you have to say. If you are able to be patient, all of the time and effort that you put into it will reward you. People will start to interact with you and you will start to establish meaningful, mutually beneficial relationships.
  • Time to get startedNow that you understand what you need to do to lay the foundation for becoming a subject matter expert, there are some specific steps that you will want to follow:
    • Build a blog: Remember, it is important to start to get your content out there so that others can read what you are posting and understand your values and your knowledge. It is also really important to promote discussions with your blogs. Many valuable things will come from those discussions.
    • Build an ever-evolving Email listEmail addresses are one of the most important ways that you will connect with your target audience members. Of course, they are not the only way but they are absolutely effective. If connections are not established through Email, perhaps those individuals are not meant to be your target audience members.
    • Give them an eBookWriting an eBook probably sounds a lot more intimidating than it actually is. If you have written a large number of appropriate, related blogs, you have already written an eBook. The only thing left to do is to choose exactly which blogs you want to include in your eBook and arrange them in the most appropriate order possible.
    • Contribute valuable information in discussion forums and blogsIf you want people to start considering you an SME, you need to give them the benefit of your knowledge. Let them hear from you often.
    • Make sure that you have a strong presence on social media: Hopefully, you already have complete profiles on your chosen social media channels (including regular status updates). Well, now you need to work it. Make sure that you connect with people through social media and allow them to get to know you better.

Conclusion
Establishing your status as an SME is critical to the continued success of your business and of your brand. A part of the equation is also people. You will want to network as often with other people as possible because the relationships that you establish are critical to your success. If you are consistent in your efforts and the time that you are willing to devote to acquiring knowledge, it will pay off. With a little patience and a lot of hard work, you will get there and other people will be eternally grateful for all that you are able to give to them.

Michael Cohn is the founder and Chief Technology Officer (CTO) of CompuKol Communications. He has over 25 years of experience in IT and web technologies. Mr. Cohn spent a significant amount of time at a major telecommunications company, where his main focus was on initiating and leading synergy efforts across all business units by dramatically improving efficiency, online collaboration, and the company’s Intranet capabilities, which accelerated gains in business productivity. He also reduced company travel and travel costs by introducing and implementing various collaboration technologies.

His expertise includes business analysis; project management; management of global cross-matrix teams; systems engineering and analysis, architecture, prototyping and integration; technology evaluation and assessment; systems development; performance evaluation; and management of off-shore development.

How Zuckerberg Has Undermined Trust In The Facebook Brand

How Zuckerberg Has Undermined Trust In The Facebook Brand

In 2018 Mark Zuckerberg showed the world how a steady stream of blunders and insensitivity to consumers’ concerns over privacy and fake news has tragically damaged trust in the Facebook brand. The Facebook founder and CEO essentially traded a core value, privacy, for profits. His performance last year provides a classic case study for all companies on how to manage brand risk, or at least what not to do.

Facebook’s new mission statement says it seeks “to give people the power to build community and bring the world closer together”. A brand is basically a promise designed to create a trustful bond with customers. Facebook users provide personal data with the expectation and trust that Facebook’s promise to build this community would be delivered with full privacy protection. However, Zuckerberg’s actions in 2018 have created a perception that he has chosen profits over people, a misalignment negatively viewed by the public that is tarnishing Facebook’s brand reputation.

In general, the brand risks from social media firms like Facebook have become more disconcerting, as users all over the world have become aware of the cyber security issues and how easily their private data can be exposed. The 2018 Edelman Trust Barometer found that trust in social media is only 41% globally. With this declining trust, consumers have become intent on wanting brands to pressure social media platforms to more effectively:

• Safeguard personal data – 71% 
• Curb the spread of fake news – 70% 
• Shield them from offensive content – 68%

The deceitful performance of Zuckerberg last year has undermined trust in Facebook and reminded many of his arrogant behavior portrayed in the movie “The Social Network”. It started early last year when it was revealed that a third party had gained access to the personal data of 87 million Facebook users in 2015, but the company did little to address this. It seemed there was a privacy or fake news scandal every month in 2018. A few highlights:

• March – the world learned that Facebook exposed private data from 50 million users to an academic researcher who sold it to the analytical firm, Cambridge Analytica. Upsetting consumers more was the fact that this data was used in Trump’s Presidential advertising campaign.

• April – appearing before Congress, Zuckerberg tried to convince the world that Facebook “doesn’t sell data” to advertisers, stating this 8 times in a condescending way. This may be technically true, but the public didn’t buy it in light of the sad reality of these data breaches.

• July – when Zuckerberg was asked why he would not ban an extreme conspiracy theory guy like Alex Jones, he dug himself a deeper hole by bringing up Holocaust deniers as an example of false news he would not take down. This explanation resulted in Facebook suffering the biggest stock sell-off in U.S. history, down $119 billion in one day, reflecting investors’ losing faith in the brand.

• December – despite ongoing promises by Zuckerberg to add controls for privacy, it was disclosed that Facebook continued to grant access to personal data to other tech firms like Microsoft, Amazon, and Spotify.

This disturbing practice of making promises but not delivering on them has freaked out users, as well as the Congress which is calling for greater oversight and stricter privacy laws. Zuckerberg may not have blatantly lied, but he was not forthcoming with the whole truth and his statements were often misleading, even deceitful. Facebook has since acknowledged that it cannot maximize both privacy and profits at the same time.

So what can we learn from this steady flow of brand risk scandals? Some suggestions:

1. Preparation – clearly Facebook underestimated their ability to control access to private data and the adverse reaction from consumers when these data breaches were exposed. A detailed assessment of such vulnerabilities would have led to a more observant company culture and tighter controls throughout.

2. Timing and Credibility of Responses – after each scandal, Facebook waited several days to officially respond. These delays allowed the bad news to spread and fester, exacerbating the growing perception of deceit. While Zuckerberg did eventually admit fault (“I’m responsible for… ), he should have been more specific.

3. Apologize Convincingly – a sincere, direct apology can be a credible gesture of humility as the first step in restoring trust, something Zuckerberg never adequately conveyed.

4. Proactive Redemption – perhaps most important, detailed corrective action must be outlined to convince users that these problems would never happen again. Such preventative steps represent a promise which must be delivered, something Facebook failed to do.

Social media is a powerful, engaging and enjoyable communication tool, but success will be accomplished only if users trust the brand behind it. It is not only what a brand says; more important is what it does. This defines a brand’s integrity and trust.

The Right Reasons for Rebranding Your Business Logo

The Right Reasons for Rebranding Your Business Logo

Thinking About Changing Your Marketing Graphics?

Over time, your business will grow and evolve. You may offer new services or products, enter different markets or target another demographic.

If this happens, you might need to consider changing your marketing graphics.

However, you need to be careful you’re not undoing all the hard marketing and branding work that you’ve done, and that you fully understand how to rebrand for the most effective results.

Your brand tells a powerful story, and you don’t want to dilute that by fixing (or breaking) something that doesn’t need fixing!

Here are a few times when rebranding your business logo is a bad idea:

1. You’re tired or bored of the colours, image or font and want something new. You may have built up a lot of brand equity, which refers to the value of having a well-recognized name and reputation.

By not rebranding your business logo for the right reasons, you could dilute all this equity you’ve accumulated. You need to take a look at your ideal customer and data before you make any big decisions.

Here’s Gap’s “old” look on the left and a new one they tried to roll out in 2010. The negative feedback was so overwhelming that they soon reverted back to the classic one.

2. Customers don’t understand what you do. Before you start working on your graphics to clarify what you offer, take a step back. Is there something unclear in your positioning statement, mission or website copy that’s confusing people?

Sometimes a picture isn’t worth a thousand words-you may need to figure out how to rebrand your written marketing materials rather than your imagery.

So, when should you think about rebranding your business logo?

I’m going to use a really personal example! We are going through a change. We originally chose the Emperor Penguin after Daniel and I went to see March of the Penguins.

We realized that these majestic creatures were the symbol of qualities we stand for: Strength, Endurance, Pride, Dependability, Commitment, Loyalty, Togetherness and most importantly, Nurturing.

We are built on nurturing our clients into success and being the support system a company needs in this technical day and age. The Emperor Penguin was the perfect symbol to portray these qualities.

So why change it?

We want to appeal to our existing demographic plus a new demographic: people who are leaving the corporate world for the exciting world of entrepreneurship plus micro-businesses who are looking for outside help to achieve their goals.

As we move forward targeting a fresh market, we wanted to showcase our services better and modernize our imagery.

Starting with our logo, we recently posed the question to our Facebook followers: which one do you like best?

We had some interesting responses: those who knew us and what we do tended to gravitate towards the most familiar design (A). Others didn’t see a penguin in some of the designs or saw a woman’s face and hair in others.

While we’re now back at the drawing board so to speak, this was an incredibly valuable exercise. If we had picked the one we liked best and threw it out there, we could have alienated and confused the very people we want to attract.

Once our logo is finalized, we’ll then move on to updating our website and other marketing materials.

Some other reasons why changing your logo and marketing graphics can be a good idea:

• You need to better differentiate yourself from another company-your colour, imagery and/or font is too similar.

• If your look is outdated, it could be turning off clients. I did say that tweaking things up for the sake of change can be a no-no, but if your 1980s colour palette or ancient font type is making you look bad, it’s time to take a long, hard look at your marketing materials.

• You’re in the middle of a merger or acquisition and need to balance two companies in one design. When United and Continental Airlines merged, their creative did too: you see the word UNITED with the globe that came from Continental Airlines’ collateral.

• Your organization’s personality has changed. Maybe you were a start-up on a shoestring budget when you began your journey, and now you’ve grown your profits, clients and employees.

Investing in your look and feel may be a necessity if you want to stay ahead of the competition.

There are many situations where you should switch up your creative. But you must focus on why you’re doing it or you could be damaging your reputation, brand equity and revenue. The best way to go through the process is to hire a professional marketing company to do it.

Personal Branding Tips to Boost Business Success

Personal Branding Tips to Boost Business Success

Never Forget: You’re the Face of Your Business

If I asked you what you could do to be more successful as an entrepreneur or small business owner, you would probably list off things like advertise or network more, improve your website or marketing materials and close more sales, right?

Would your answer include personal branding? It should, because it absolutely impacts your success.

First, it’s important to clarify we aren’t just talking about big brands. It’s the personalities that represent them that help these companies create a brand.

Why Branding is Important

When you purposely create a brand representation for your business, you’re incorporating several factors, including:

• How others see you

• What sets you apart (your USP)

• Your values

• Your expertise

• Your personality

• How you represent yourself in person and online

If done correctly and consistently this builds trust, loyalty, leads and sales.

Why else should you care?

• Research from Nielsen shows that only 33% of buyers trust messages from a company while almost 90% of customers trust recommendations from someone they know.

• 53% percent of vendors have lost orders based on information found or not found about them online. (Source: Kredible)

• 77% of all discussions on social media are folks seeking advice, information or help. This is much easier to answer and interact as an individual as opposed to a company. (Source: Mention)

How to Incorporate Branding into Your Marketing

Firstly, I’ve said it before, and I’ll say it again: you need to know your target audience. These are the people you want to appeal to and have on your side.

Let’s say you’re a career coach who is trading the corporate world for entrepreneurship. Your target audience may be other professionals who are leaving corporations to fly solo. From your marketing materials to how you present yourself on social media, you always want to keep them in mind.

Here are 3 other ways to create a successful brand and stand out from the competition:

1. Share Your Expertise

You want to be an expert in your field. Stay on top of the latest news and trends, understand who your competitors are and attend events. Use what you know and learn to educate, inspire and mentor others whenever and however you can.

The more visible you are the more people will associate your face with your product or service and trust what you’re selling.

2. Choose the Right Platforms

First, having a website is important! With any of your online marketing efforts, your goal should be to drive traffic back to a website that represents your brand positioning well. If your website falls short of this, your target audience will not resonate with your business and will leave.

Next, find out where the people in your target audience spend their time.

Let’s say that career coach I mentioned earlier targets professional women between the ages of 35 and 55. If research shows her target audience uses Facebook much more than Instagram, she should focus a large chunk of her efforts on creating Live videos and stories as well as participate in targeted Groups on Facebook.

3. Be Yourself… to a Certain Extent

Don’t be afraid to show your personality and use your own voice when creating and sharing content or meeting people.

However, be cautious about sharing content that is political, religious or some other topic best avoided at dinner parties-unless it is part of your persona and/or mission and values.

It’s also important to always be honest as the face of your organization, as vegan influencer Yovana Mendoza Ayres is finding out. She was recently filmed eating fish in Bali, which caused a huge uproar among her plant-based fans and followers.

You can’t neglect your personal brand if you want to grow your leads, sales, loyalty and reputation.

It’s not a nice-to-have, it’s a must-have. People no longer look to big businesses to tell them what to buy; they want to see a face and personality that represents the product or service.

If you want to stand out from the competition, you need to an effective strategy. From your logo to your website to your social media presence, find the expertise to help you market yourself and your organization today and in the future.

Susan Friesen, founder of the award-winning web development and digital marketing firm eVision Media, is a Web Specialist, Business & Marketing Consultant, and Social Media Advisor. She works with entrepreneurs who struggle with having the lack of knowledge, skill and support needed to create their online business presence.

As a result of working with Susan and her team, clients feel confident and relieved knowing their online marketing is in trustworthy and caring hands so they can focus on building their business with peace of mind at having a perfect support system in place to guide them every step of the way.

7 Steps To Make Your Brand Stand Out

7 Steps To Make Your Brand Stand Out

It’s important to find ways for your brand to stand out over other brands. You want your brand to be particularly distinctive and individual so that your audience has no doubt about whether something was put out by your company or not.

1. Match Your Branding Throughout

Remember that your brand should match whether you’re online or offline, on Facebook or LinkedIn, or publishing an article or an eBook. Your branding should be the same no matter where you are. The colors, fonts, mood, feeling, and thoughts your audience gets from your work need to match.

2. Be Active on Social Media

The more people see you sharing, the more they’ll get to know you and the more you can demonstrate what your brand stands for. Each share, comment, or response is a chance to show what your brand is about and how it’s different from others.

3. Understand Your Audience

It may seem strange to focus on your audience when branding yourself. But how your audience sees you is what’s important. Doing activities, publishing content, and responding to people in the way your audience wants you to, needs you to, and expects you to, is essential to show your distinctive differences.

4. Know How You Solve Problems

Your job for your audience is to solve their problems within the scope of products and services that you offer. You can solve those problems via your own products and services or by promoting someone else’s. But you should know how to solve their problems, and that requires knowing what they are.

5. Use the Right Language

The language you use should match what your brand voice is, and what your audience uses as well. If they have terms that they use (keywords) to find you, you should be using those too. Plus, use them in the right way, and the only way to do that is to know your audience and how they communicate.

6. Pay Attention to Your Voice

Your brand should have its own voice. That voice often matches your personal voice, and that’s okay. However, do pay attention to that voice, ensuring that it fits in with what you are trying to project to your audience and that it remains consistent throughout.

7. Be Consistent in Your Messaging

Keep every message you send consistent. If you say something that contradicts something you said yesterday, you need to have a good reason and explain, otherwise people get really confused about who you represent and who you are.

Branding is important for small businesses as well as large companies. If you have a limited budget, smart branding is perhaps the most inexpensive business tool you can create.

Even More Ways to Dramatically Reduce the Cost of Using Outside Experts

Need an expert? You know many of them

Who? Think. To start with, how about your suppliers? They know a great deal about your market and your competition. They can provide you with a wealth of information and advice. They know sources, they may know what works and what has failed. They may be aware of similar problems to yours and they may know what the resolution is. Don’t underestimate them.

Other free outside experts include: Other businesses in your industry, books and trade magazines.Many top business people offer advice in the form of columns and interviews, SBA, SCORE, your employees are an often overlooked and invaluable source, your banker (they have a vested interest in your success), your insurance agent, and federal and local government agencies and your local Chamber of Commerce to name but a few.

Let me give you an example of what I am saying. I once called my attorney to ask a question regarding hiring a teenager to work part-time in our company. The lawyer told me he would have to research the question and get back to me. In the meantime, I called my insurance agent and got the answer in minutes at no charge and he faxed me a copy of the law that applied within 30 minutes. A day later the lawyer called with the same answer and sent me a bill for 1.5 hours of research. This was over $200. He probably just called my insurance agent for the answer.

I could have also called the unemployment department and obtained the answer for no charge. Remember, these sources may not have the answers to all your questions but they can provide many answers and for those questions they cannot answer, they may point you to someone who can.

Let me give you another example. I was recently looking into a new typesetter and, quite honestly, did not know where to start. So I started by calling in sales representatives of the major typesetting equipment manufacturers. This only served to confuse me more since they all professed to have the best system and best prices and, of course, all pointed out the shortcomings of each other’s systems.

They also got much more technical than I needed or wanted them to get. I decided to ask some of my other suppliers who they knew that had recently bought the type of equipment we were considering or who they might know that was looking into purchasing this type of equipment.

I quickly secured the names of four companies. In turn I called each to see if they would share their knowledge with me. I simply explained that I was looking into purchasing this type of equipment and found myself very confused. I asked if they could help me. This was a very sincere request on my part and since most people are happy to help others and since all people love to talk about what they know, it wasn’t very long before I had a great deal of information.

Information that saved me dozens of hours and thousands of dollars to say the least. In fact, it probably saved me tens of thousands of dollars because I might have purchased the wrong piece of equipment as did one of the companies I had talked to did.

This one company told me why they bought what they bought and why it was a very costly mistake. This information prevented me from making a similar mistake.Another company had spent thousands of dollars checking out all the equipment including sending someone to 
seminars on the subject and visiting shops that had it in place. He was only too happy to share this information with me for nothing.

The end result was that I ended up purchasing a newer used machine for about one tenth the cost 
of a new machine and it did all I needed it to. In fact, I found out the new machines had more 
capability than I needed and ended up saving over $50,000 on the purchase alone.

Learn from others who have already done what you are trying to do or who have at least already researched what you are considering. This can save you countless hours and a great deal of money. Ask the questions. Who would know this information? Who has already done this or looked into this? You get the idea.

Deal with a specialist when you must seek outside advice for dealing with a specific problem

Yes, you may pay a larger per hour rate when compared to a general practitioner, but in the long run you should pay far less money while getting much more credible and accurate advice.

The lawyer who practices general law may charge you $125 an hour and take twice as long to find you the answer to your question. The specialist may charge you $200 per hour but only take half the time to provide you with more accurate information.

Which is the better value?

The specialist has years of experience in the area of law that you need help with. The lawyer who practices general law will have far less experience in any specific area of law and may not even have any experience in the area for which you are seeking advice or guidance. This lawyer may take 5 or 10 times longer to research the information you are seeking and even then he may not have current or completely accurate information.

Clearly, the cheapest is not always the best for any particular circumstance. After all, despite the fact that a medical general practitioner costs far less than a heart specialist, you would not go to him for your heart problem would you? Well, it is no different than taking an international trade problem to a lawyer who deals mainly in real estate transactions.

Never forget that just because an individual has letters after their name, doesn’t mean that they are good at what they do. It does not mean that they are worth what they are charging. It does not mean that they are right for your needs at this particular time. Just like every other profession, some will be very good, some will be pathetically poor, some will serve you well, some will rob you, and some will be right for your needs at any particular time, while some will not be.

Every once in a while, question a bill using your records as the point of conflict

At the very least, every once in a while mention “that the hours seem high”. This way you will be letting your outside experts know that you are monitoring their time to ensure proper billing. This knowledge will go a long way towards ensuring proper billing of hours. Watch how fast hours start coming down and how much more work you seem to get for your money.

Money Has a Cost

How to Double Your Profits Without Increasing Your Sales

Recent studies analyzing the tax returns of over 1 million businesses have shown that the majority of companies in this country make a pretax profit, as a percentage of sales, of 5% or less. I am not just referring to small companies.

If your company made a pretax profit last year of 5% or less, you can at least double, and most likely much more than double, your pretax profits simply by reducing costs 5% while merely holding sales level.

If you currently enjoy a profit ratio, as a percentage of sales, that exceeds 5%, congratulations! You are in the minority. You are exceeding the average and excelling where others are not. But you can do better. Much better. In fact, unless your profit ratio is extremely high, the concepts I will show you here should prove to be nearly as effective for your company as they are for those companies making a profit ratio of 5% or less.

The way to double your profits is to reduce your costs by an amount equal to your pretax profits as a % of sales while doing nothing more than holding sales level!

If your profit ratio, as a percentage of sales, is less than 5%, you can use it to replace the 5% example I am using with your % and read as though I am talking to you directly. Of course, this will also work with 1%, 2%, 3%, or 4%.

So, while I have called this the 5% solution it could just as easily have been called the 1% solution or the 4% solution or whatever percentage that is equal to your pretax profit as a percentage of sales from your last fiscal year. The concept is the same. Take your pretax profit ratio and decrease costs by this percentage, while holding sales level and you will come very close to doubling your profits.

Let me demonstrate this using a larger company as an example. If you have $100,000,000 in sales and a 5% pretax profit your costs are $95,000,000. This means 95% of the income from your sales goes to cover your costs. Your pretax profit is $5,000,000. If you can lower your costs by only 5% you will increase your profit to $9,750,000.

Your original $95,000,000 of costs times.05 (a 5% reduction) = $4,750,000. This is how much you will have added to your bottom line.Your profits have risen 95% from $5,000,000 to $9,750,000 without a single dollar increase in sales!

You have nearly doubled your profits. Let me put these numbers in perspective for you;with an average of 249 business days a year excluding holidays, this company just added $19,076 per day to the bottom line. This was accomplished simply by lowering costs by 5%! How much per day would you add to your bottom line by doubling your profits?

To realize the same increase in profits at the existing 95% cost ratio, this company would have to increase sales to nearly $200,000,000. Which would you think would be the best way to go? Could they even increase sales from $100,000,000 to $200,000,000? If so, how? At what cost?

Remember, we are talking about nearly doubling your sales to achieve the same bottom line result that can be accomplished by merely holding sales level and reducing costs by 5%. Doubling this company’s sales would be an almost impossible task to accomplish in any reasonable length of time. However, cutting their costs by an amount that will allow them to double, or even triple, their pretax profits can be done in a very short time and quite easily.

The concept is the same no matter what your sales are. For example, if your sales are $5,000,000 and you have the same 5% pretax profit ratio your pretax profits are $250,000, leaving your costs at $4,750,000. If you can lower your costs by 5% they will drop by $237,500. This was arrived at by taking 5% or.05 of your costs which were $4,750,000. Your new pretax profit level is $487,500. You have nearly doubled your profits without increasing your sales a penny.

To realize this same profit increase by increasing sales, you would have had to increase sales by $4,750,000 or, in other words, you would have nearly had to double sales. The way to determine how much of a sales increase you would need to match the added profits realized by cutting your costs is to simply take the added profit realized by your cost cutting efforts and divide it by your pretax profit ratio.

There you have it. You would need to nearly double your sales from $5,000,000 to $9,750,000 to realize the same profit increase that you can obtain by merely cutting your costs by 5%. Imagine that. You can nearly double your profits by simply cutting costs an amount equal to your pretax profit ratio. Compare the effort required to cut costs by a mere 5% to the cost and effort required to double your sales;one can be done very easily and the other can’t. It is just that simple!

It doesn’t matter if your sales are $100,000 or $100,000,000,000, it works the same way.

Double your sales or reduce costs by 5%? Think of the effort and expense that would be required to try and double your sales. Think of the risk. Think of the personnel costs. Think of the marketing costs. Think of the facility and operational changes that would be needed.

Even if you could double your sales, how many years would it take? Just think about our example of the $5 million dollar company. Think about this. Which do you think is more easily achieved, turning this company into a $10 million dollar company or cutting costs by 5%?

Reducing your costs by 5% is not very difficult, can be done in a very short time, involves no growth, and improves your cash flow. In fact, you should be easily able to decrease costs by much more than this. Trying to increase sales by 100% will take a bit more doing.The choice would appear to be a very simple one.

Of course, you can save 5% and a great deal more. There are hundreds of ways, large and small, in which you can save 5% and much more.Yes, I know that in some cases you will be unable to reduce a cost by 5% and, in fact, you will do well just by being able to control them.

But there are many places in which you can easily reduce actual dollar costs by 10%, 20%, even 50% or more.Think overall and not just individual costs. Think of the areas in which you can reduce costs by 1% or 2%, think of the areas in which you can easily reduce costs by 25%, 50% or more.

Think about what I have shown you. Plug your pretax profit percentages into these formulas and see the impact cost control and expense reduction can have on your company.

Money Has a Cost

When I speak about the “cost of money” I am talking about just that. Allow me to explain it here to avoid boring you by repeating the same definition whenever I talk about it. All money has a cost

Money is either used to make you money or you have lost the opportunity for your money to make you money. Or at least to make you as much as it could.

If you are borrowing money to operate your business this money has a price. The price, of course, is the interest you are paying on the money while you are borrowing it. If you have money that you are holding in the form of cash in a low interest bearing account or short term investment, this money may also be costing you money.

How? Simple. Let’s say you are in a good cash flow situation and you have a cash balance of $50,000. You know this money will be needed for operational expenses in the near future so you let it sit in your business checking account or a short term liquid investment account. Let’s say you are earning 1/2% interest during this time.

It might seem that this money is working for you making you money, and indeed it is. But the question is whether or not this is the most effective use of that money. If your money is in one place it cannot be in another at the same time. Obvious right? Well, if your money is tied up in the bank you must ask yourself – is this the best place for it? Is there another use you could put this money to in order to earn more money?

For example, can you pay some bills off early and take a trade discount of 2%. I will cover this in future articles but for now think and understand money has a cost. If your $50,000 sits in the bank earning 1/2% interest you will earn $250 per year. Now I know I have not factored in compound interest but I want to give a simple example of how you should think.

If you have the cash sitting for 30 days you will have earned 1/12th of this $250 or $21. But what if you had used that $50,000 to pay off bills early and get a 2% discount? A 2% discount on $50,000 is $1,000. A simplistic example to be sure, but even using this you have increased the return on your money significantly.

Leaving your money in the bank had a cost to you. A lost opportunity cost. An opportunity to use this money to make you more money. But you must consider your cash flow, no matter how effectively you might otherwise use your money, you only have so much of it to use and therefore the availability of cash must be considered.

Money does have a cost. If I have used $10,000 to pay an invoice early that offered me a 1% discount I have saved $100. If I used that same money to pay a bill early that offered me a 2% discount I have doubled my return on the use of that money as I have saved $200.

Do you see my point? Now put aside any cash flow questions for a minute while I make another 
point.

Now what if I did not pay any bill off early, but instead put that $10,000 in an investment for 12 months paying me 1%? Have I not done well by earning $100 on my money? It would seem so, but this is not the case.

By paying off an invoice early to take advantage of an early payment discount, you will save much more than the discount. When you earn a 2% discount by paying an invoice early, you are earning a return far greater than 2%. Unless you understand this there will be no way you can properly determine whether the best use of your money is to pay the invoice off and take the discount or not.

The formula is simple so don’t despair. Here is the formula:

365 x discount rate 
Effective annual interest = ————————————— 
Number of days payment must be 
made ahead of the due date to earn this discount.

So if a supplier offers you terms of “2/10 net 30” what is the effective rate of interest? Well, first 
of all, he is offering you a 2% discount if you pay in 10 days. The normal terms are 30 days. This 
means that to get the 2% discount you must pay 20 days early.

For this example we are assuming that you would normally comply with the 30 days terms.

For the sake of this example let us say the amount of the bill in question is the same $10,000 we have been talking about. This is what your formula looks like:

365 x.02 
Effective annual interest = ————– =.365 
20

Your effective annual interest rate is 36.5%. Obviously, even if you had to borrow the money to pay off this invoice your rate of return will be well worth it.

Do not think I am suggesting paying off discounted invoices as the only option you want to look at. I have simply chosen this often overlooked strategy as an example.

You must always consider all your options for using your money. The goal is to seek out the most profitable option available to you at any given time.

Questions Are the Key to Success in Business and Life

Questions Are the Key to Success in Business and Life

It was Kipling who gave us what was perhaps the greatest advice for business success and, in fact, success in life that has ever been given. He told us the key to success in all areas when he said I had six honest serving men. They taught me all I knew. Their names were: where and what and when and why and how and who.”

The late great Earl Nightingale suggested we add two more friends to this group. They are, which and if.

Whether you are seeking to find ways to increase sales or control and reduce costs, questions are the key. Whether you are striving to improve your customer service or the quality of your product, or your life, questions are the key.

Asking the questions and developing the answers are the keys to any and all success you will have in business and in fact life.

Questions like:

If we do this, what happens?

Why do we do it this way?

Why don’t we do it this way?

Who else can we sell to?

Where else can we get this?

What can we do to reduce costs?

What can we do to improve productivity?

What can we do to improve quality?

What can we do to improve our service?

How else can that be done?

How can we do it better, faster, cheaper?

How can we improve quality, service, and profits?

How can we cut costs?

If we do this, will we improve quality?

If we do this, will it improve service?

If we do this, will it increase profits?

Which provides us with better quality?

Which is best for our customer?

What do we get in return for this cost?

Who else can provide what we need?

Why are we paying that much?

Why do we not deal with another company?

Why are we dealing with them?

How many other bids have we gotten?

What if?

How can we replace that with equal or better quality for less?

What are other companies charging for that product or service?

What are other companies paying for that product or service?

Will this process or step add value to our product or service or does it produce added profit?

When would this investment pay off?

You see my point I am sure. You must ask questions and seek out the answers. You must also justify the answers.

You must never stop asking. If you are not continuously asking the questions and reacting to the answers, you are either assuming or stagnating. Either one can be deadly to your business.

You must review every phase of your business. You may be very surprised when you see how little effort it will take to find huge savings and to make major improvements in how you conduct business.

You can always improve how you do things. You must find ways to conduct business more efficiently, eliminate needless steps, improve quality, increase productivity, reduce errors, increase sales, ways to increase profit in a business, reduce expenses, and control costs.

Let me give you one small example of how an assumption proved to be very costly at one company. One of the many products this company offered was a holiday label strip. This was simply a strip of peel off labels to affix to holiday presents showing “to” and “from”. Banks around the country would buy them and give them out one strip at a time to their customers around the holidays.

For years this company shrink wrapped these in packages of 250 and sold them in a minimum quantity of 1,000. The shrink wrapping was time consuming and costly. I asked them why. Why did they need to be shrink wrapped? How did they know if this was important to the customer? What, if any, difference did packaging make to their customers?

They asked the questions and found the answers. The answer in this case was that the customer either couldn’t have cared less about the packaging or did not like the shrink wrap as it simply meant more work for them to unwrap. After years of doing it the way they always did and assuming that was what the end user wanted, they found out differently. They now bulk package. They save between $20,000 and $30,000 per year and their customers are either happier or neutral about this change.

Did this company sacrifice quality in any way to save money? No, they improved productivity, improved customer satisfaction, and, by doing so, improved profitability.

Ask the questions. They are the key to the door of improvement.

You should constantly be reviewing every area of your operation to seek ways in which you can improve. Use common sense. From office expenses to customer service, from distribution and production to quality control and shipping, you will be shocked at how little effort it will take to improve your operations, reduce waste and redundancy, and realize huge savings.

From the way you sell things to the way you buy things, it is up to you to improve things. Improvement is always possible in everything we do.

You possess the greatest power ever created and it sits right between your two ears. You own it, free and clear. All you need to do is put it to work.

The Fear of Failure – Welch Report

The Fear of Failure – Welch Report

Perhaps the biggest mistake you can make is being afraid to make a mistake. What is the worst that can happen? In most cases it will be minor. Don’t be afraid to say “I screwed up”. “I was wrong”.

You might dent your ego and feel a bit embarrassed, but people will respect your candor and honesty and willingness to admit you are not infallible and that you can and do make mistakes. They will appreciate your willingness to accept responsibility. An unusual trait.

Who doesn’t make mistakes? What is the worst that can happen in most cases? Your idea did not work? Your added efforts did not pay off as you had hoped?

So what? You may have gained invaluable lessons along the way. Failure can be the best teacher of all.

Never be afraid to try, to stretch yourself, to suggest new ways of doing things or new ideas.

Too many people are so concerned with the possible consequences of making a mistake that they will let an opportunity pass by rather than take a risk.

They will stagnate rather than seek improvement. They will keep silent rather than speak up with an idea for improvement. If your ancestors were afraid of change, of challenge, of failure, we might still be starting fires by banging two rocks together.

Most of us anticipate failure instead of success.

We avoid trying because we fear humiliation or pain. We fear and worry about what others might think if we even try, never mind if we fail.

The fear of what others think is often a key factor in holding yourself back.

The sad truth is that most people don’t think about you or I anywhere near as much as we think they do. In fact, many do not think about us at all.

Most are far too busy worrying about themselves and what they want or don’t have. They have too many of their own goals, problems, and issues to worry about to spend much of any time thinking of you.

So I ask you, why do you care what most others think or what their opinions of you are?

The fear of failure, of others, of ridicule, only exists in your mind at this point. By fearing these things before you even try, you are creating the negativity you anticipate. You are laying a foundation of fear. You are building a reservoir of rationale to draw upon as you convince yourself not to try.

By allowing your actions to be controlled in any way by your fear of what others may think of you, you are directly allowing those people to control your actions.

You are giving them power over you. Never do this!

You are holding yourself back. Your career is being influenced by these people. Your life is being influenced by what you think these people will think of you.

It is this serious.

You may be prohibiting yourself from growing, from moving into the next level of personal capability.

Your fear of what others think can be one of the single, largest reasons why you never reach the level you are capable of. Think about this.

But think about the source of most of these fears. You. Your mind. In many cases, you are the problem.

Yes, in some cases people will scorn you publicly. They will question you and ask out loud who you think you are to think you can do a better job, suggest improvement, become management material or any one of 100 other things. They want to hold you back.

Don’t you dare let them.

Defy mediocrity by defying these people. True leaders, those who pursue excellence, those whose opinions you should care about, do not think this way.

Also, think about the fact that many of these people you are so worried about, whether you will admit it or not, are people that have achieved nothing or very little in their lives. Their accomplishments are mediocre at best.

Let me also give you a tip. Most will not want to see you get ahead. They will not appreciate your drive.

They will not support your efforts to improve. Most will be jealous. They will see you trying to better yourself and will feel worse about themselves as a result. It makes little sense but it is true.

Be careful of listening to these people. They will often tell you why you can’t do things and whether they are well meaning or self-serving, the result may be the same. They will feed your fears and provide you with more self-justifications for not trying or for giving up or settling.

Also, be very careful as to who you ask advice or input from. People often ask advice and seek approval from others but in all too many cases they are asking for advice and input from people who most often have never accomplished anything that qualifies them to offer this advice or input.

Would you ask a poor man how to get rich? Then why would you ask a co-worker, relative or neighbor about something they have never done and know nothing or little about?

Whether it is your fear of what others might think or your fear of failure, by thinking of all the possible negative outcomes, you are providing yourself an inexhaustible pool of reasons and excuses to draw upon to convince yourself how wise you are not to try, not to risk, not to take a chance.

You are feeding yourself the self-serving justifications you need to justify your inaction.

You are your own worst enemy. You have met the enemy within.

You are spending all your time establishing why you can’t or shouldn’t, instead of why you can, could, or should.

Why is this?

We have been conditioned to accept and even strive for mediocrity. To not extend ourselves. To follow and not lead. To risk avoidance. To conform. To be the same. To fear mistakes.

We have been conditioned to this level by many.

Some who are well meaning,some who want to hold us back.

Your fears can be defeated. They can be overcome.

Action defeats fear.

Preparedness defeats fear.

Faith in yourself defeats fear.

High self-esteem defeats fear.

A willingness to risk making a mistake defeats fear.

If you can’t embrace belief in yourself, in your ability, at least suspend disbelief. At least give yourself the chance to improve, to make a larger impact.

Don’t sabotage yourself simply because you can’t envision the things you fear working out right. Don’t hold yourself back by the fears that exist in your mind.

Being known as someone not afraid to make a decision and take action and who is big enough to admit making mistakes and will take action to correct them is a reputation you should be proud to have.

Without some risk of failure or error nothing will ever get accomplished. Playing it safe will not get you or your company anywhere. This is like running on a treadmill.

You go through a lot of motions but you never get anywhere.

Few results, large or small, can be achieved without some risk, some price being paid.

Fear holds most people back. Fear of failure. Fear of ridicule. Fear of risk. Fear of rejection. Most fears are only in your mind.

Stand up and stand out.

Fear is one shore that borders the sea of mediocrity. Defy it.

This edition of The Welch Report has been provided by Derrick Welch the author of ‘In Pursuit of Profits: How to at Least Double your Profits Without Increasing Your Sales’. Including 1,000 Cost Control, Expense Reduction, and Income Producing Strategies You Can Start Using Today To Dramatically Increase Your Bottom Line.