Sometimes technology is driven not out of necessity or productivity, but simply in the name of technology. I will let you decide on this one. Earlier this year, Papa John’s Pizza initiated a partnership with a private firm called trackmypizza.com. Drivers carry GPS-enabled handsets that feed location data to a TrackMyPizza server. There, the data is coupled with the customer’s phone number, providing location updates every 15 seconds. Customers simply go to www.trackmypizza.com, order their pizza and can then watch their delivery in real time.
Not all franchises have adapted it as of yet, but an eleven store chain in Alabama that did the initial test roll out experienced a 100% increase in online orders, which provides substantial savings to the chain versus the traditional order taking. Not to be outdone, Dominoes is supposed to unveil its own on-line pizza tracking system which will even track the pizza through the kitchen as it is made. One can only imagine what is coming next.
Thanks to jean poole for permission to use this Photo.
I’d like to discuss the challenges of accounting for stock options used as compensation. Stock options are very popular with start-ups and firms expecting high growth. The reasoning is simple. Both types of firms have huge cash flow needs today. If they had to rely on salaries to attract employees, they most likely would not be able to afford the talent they really need to grow the business. By awarding their employees stock options, the right to buy stock in the future, they delay part of their compensation expense. Stock options give their holders the right to buy stock in the future at a specified exercise price. Typically, the exercise price is higher than the current market price of the stock. This gives employees incentives to take actions that will raise stock prices, including actions that favorably distort earnings.
The problem with stock options is that the company records no compensation expense for them. When an employee exercises an option, the firm must have a share to sell to the employee at the exercise price. Usually employees do not exercise their options until they are “in the money,” meaning the market price is higher than the exercise price. At this point, the company has to buy back stock at the higher market price to sell to employees at the lower exercise price or issue new shares or issue shares from treasury stock. In any event, this is a real cost to the firm. Currently, this expense does not appear on the income statement. It has only recently become a requirement to disclose the expense in the footnotes to the financial statements. For a company like Microsoft that makes extensive use of stock options, this severely overstates reported earnings.
I discuss a couple of increasingly popular tricks used by struggling companies to boost reported earnings in your lesson reading assignments. The first is stock buybacks for the purpose of reducing the number of shares outstanding. By reducing the shares, the EPS rises. This causes the stock price to rise. The important point is that no value is created in this transaction. The same earnings are now concentrated in fewer hands, so price per share will go up even though total market value is constant.
Another troubling development is the creation of earnings definitions other than net income. In order to distract attention from earnings reported according to GAAP, companies will often present alternative definitions of earnings such as pro forma earnings, core earnings, or EBIDTA. Their argument is that GAAP earnings are not representative and the firm is trying to present a more accurate figure for its true earnings potential. The problem with this is twofold. There are no accepted definitions for any of these alternative earnings measures. Second, in practice, the items excluded from these earnings calculations tend to be ones that lower the firm’s earnings in that accounting period. Beware of the firm that presents “pro forma” earnings. The correct use of that term means forecasted earnings in the future. Firms today are increasingly using the term to mean, “This is what our earnings would have been if all these bad, non recurring things had not happened to us.” Often these things include depreciation and interest—I certainly don’t think these are non-recurring expenses!
Consumer confidence (the term used by the Conference Board) and consumer sentiment (the label used by the University of Michigan) are not quite at their all-time lows, but they are very close to them.
This seems a little odd because two of the biggest elements of consumer attitudes, unemployment and inflation, are quite benign.
Unemployment, at 5.5 percent, is a hair below its long-run average (5.6 percent). Inflation (all items) is 4.1 percent, only a little above its long-run average of 3.7 percent.
When I was the account executive on Mr. & Mrs. “T” Cocktail Mixes, the responsibilities of the advertising agency extended beyond creating advertisements. The agency also prepared shelf talkers, table tents, and other point-of-sale items. The client directed us to produce these promotional items because he wanted the product advertising incorporated into all trade and sales promotion materials.
For example, “T” ran print ads in trade magazines targeting the grocery trade and the retail trade. The objectives were to convince grocery buyers to carry the Mr. & Mrs. “T” brand of cocktail mixes. For the retail trade, the objectives were the same: to convince bars and restaurants to buy and sell the “T” line of products. These advertisements utilized the same visual as the consumer ads. This strategy recognized that trade buyers were also consumers, and likely to see the same ads. However, the ads included modified copy, which spoke directly to the trade audience by addressing their needs. The copy detailed the advertising support behind the Mr. & Mrs. “T” line of products. This information was included to encourage purchases by demonstrating a consumer pull strategy. The copy encouraged grocery chains and retail outlets to carry the full line of products to fulfill anticipated consumer demand.
We also developed sales sheets for use by the “T” sales force. The front of the sell sheets featured, once again, a consumer print advertisement. The back of the sell sheet summarized the consumer advertising schedule. The Mr. & Mrs. “T” sales force used the sell sheet on sales calls with brokers and retailers to demonstrate the advertising support behind the brand, and encourage clients to buy the “T” line of cocktail mixes.
Furthermore, the agency developed contests to provide additional incentives to the trade to purchase the line of cocktail mixes. The media planners and the account team negotiated merchandising with the various consumer magazines chosen for the media plan. Southern Living and Sunset magazines were included in the media program in part because of their high reach against the grocery trade. (Research had shown that many purchase decision makers in the grocery store business read these magazines to keep informed of product introductions and consumer products for their stores.) Magazine merchandising supplied by these titles included tickets to college football bowl games. The client used these tickets as incentives for grocery buyers to stock and order more of his product. Through this integrated approach to advertising and promotions, Mr. & Mrs. “T” was in a better position to achieve its marketing goals.
The insights of cultural/media theorist Douglas Rushkoff are always contemporary and often prescient. He was deciphering the social codes of the virtual psyche, lifestyle, and marketplace before such concepts were formally identified by the so-called “machine.” TheMerchants Of Cool is a brilliant analysis of the incorporation of youth pop-culture that Ruskhoff created while working as a correspondent for PBS Frontline. This is a very entertaining documentary. You’ll learn a lot too. Let me know what you think in the comments section.
There’s that store over on the corner. It is one of your favorite stores or you just go there once in a while. But the next time you go by, it’s closed. Not just closed for the day, but closed for good. You feel bad as you liked going in there, but you may not have gone in there that often. You think to yourself if you only knew that they were near that point you could have done something – blogged on them, told your friends or simply went in there more.
For me there were 2 such places, an awesome Vietnamese/fusion restaurant and a coffee shop. Now a jeweler and a check-cashing store stand in each respectively. But what if each owner reached out to its customer base for help, would I have responded? I asked myself as I read about Toscanini’s, an ice cream shop I have visited in Cambridge, MA in a recent issue of Inc. magazine. In this case, getting behind on paying their taxes resulted in the store closing, and after an Internet appeal they were able to raise enough money to reopen.
As I said before, you can’t mess with the numbers. However, they did and paid the price for it, literally. Had they reached out earlier to their customers, how would they have reacted? How would I have reacted? Read the rest of this entry »
I think Ashworth University is great! I took the small business management program to help sharpen my small business skills and it really helped me to think about things I hadn’t considered when running a small business.
The name of my business is “NEK BODY ESSENTIALS” and my website is: http://www.nekshea.com
We make 100% All Natural Custom-Scented Body Products for Men, Women and Children. I have partnered with some other small business owners that are making their way as well.
I wonder if there is any students who have taken this great program and felt the same as I? I plan to continue with the Associate Degree program for Business Management. I am fascinated with the business world and my goal is to own several businesses in the near future.
Best of Luck to All!!!
Nekshea
Small Business Management Program Graduate
Ashworth University School Of Business
Thanks to freeparking for permission to use this Photo.
One of the strongest characteristics associated with successful entrepreneurs is the ability to lead. As a small business owner, it’s impossible to be everywhere at once, directly involved in every aspect of the decision making process, therefore you must be able to trust your employees to make sound decisions on your behalf. This is one area where leadership plays such a vital role. Your ability to communicate your business vision and get your employees to buy into that vision is deeply connected to building a productive workplace environment. Here is an interesting podcast interview with Marshall Goldsmith, a leadership training expert who specializes in training small business owners how to be leaders and in turn cultivate leadership qualities in their employees. Goldsmith makes some good points about common issues limiting the growth of small businesses, then prescribes concrete methods to resolve these issues. Click on the image above to listen to this podcast. I think you’ll learn some lessons that will stay with you throughout your career. Take care.
Thanks to Orin Zebest for permission to use this Photo.
When I was a small girl, my family would gather to watch The Art Linkletter Show, a television variety show which aired once a week.
Although I have watched countless shows since that time, there is one particular segment which comes to mind when considering the many facets of starting and operating a small business. During the segment, Art Linkletter introduced a juggler who proceeded to explain how we all are jugglers. There are those who juggle as a profession; however, the analogy was applied to the rest of the population. No matter your profession, age, or socio-economic status, we can all learn from the juggler’s lesson of “The Spinning Plates.”
To offer a brief synopsis of the lesson, the juggler first began the process by placing a dowel rod on the floor and balancing a plate on top of the rod. He gave the plate a spin with this hand and stood back to watch as the plate, balanced atop the dowel rod, would spin around and around. As the first plate was spinning, the juggler would set up a second dowel rod and plate. This process continued until the juggler had twelve sets of dowel rods and plates spinning. In order to keep the plates from crashing to the ground, the juggler had to run from one to the next to keep the motion going. Inevitably, he would be too slow to attend to all of the plates and one would crash to the ground with the plates shattering into pieces. Quickly, he would set up a replacement and run from one plate to the next spinning, spinning, running, spinning, running, spinning, and running again! I was exhausted just watching the process.
The morale of the lesson is that no matter how wonderful you might be at spinning plates, you can only manage a certain number of plates effectively. Add just one too many plates and they may all come crashing to the ground. The same lesson is especially true for those of us who are business owners.
There are many aspects of your new business which will spin at the same time: financial, marketing, sales, service, employer/employee relationships, customer relationships, deadlines, industry regulations, ordering supplies, overseeing production, submitting bids, and the list goes on! With all of these responsibilities, it is no wonder that we find ourselves spinning and running just to keep all of our “plates” operating as they should. New entrepreneurs are often overwhelmed with the magnitude of responsibilities created when they decided to start and operate a new business. Realizing that all of the different areas must be effectively operating at the same time can create quite a bit of stress for the new business owner. To be successful, it is imperative that we understand our value to the new business. The primary responsibility for the new business owner is to focus time and effort on actions which contribute the greatest value to a new business. So what happens to the rest of the plates left spinning? Ah, that is the portion which must be delegated to others. In other words, the business owner should “spin” the value plates and delegate all activities that others can do. To capitalize on entrepreneurial strengths, new business owners must learn to delegate in order to spend valuable time strategizing and leading rather than doing.
Art Linkletter has been quoted as saying, “I’ve learned it is always better to have a small percentage of a big success, than a hundred percent of nothing.” An entrepreneur himself, Linkletter learned early in his career that the quality of employees he hired was in direct correlation with the success of a venture. Linkletter hired the most creative people he could find to assist with the production of his television shows, “House Party” and “The Art Linkletter Show.” Then, he shared his success with the employees realizing that without creative employees, his ventures would not have yielded the same results. If you were to ask the 96-year old entrepreneur his secret for success, he would tell you that he has learned not to spin more plates than he could comfortably handle. Of the many books Linkletter wrote, it was the title of a book released in 1980 that states the fact entrepreneurs must remember, “I Didn’t Do it Alone!”
As this article comes to a close, I hope that you also learn from the juggler’s lesson and realize that you can not possibly “spin all of the plates” found in your new small business. Instead, learn to delegate responsibilities to others within your organization so that you can concentrate on that which brings your enterprise most value. I’ll leave you with another bit of advice from Art Linkletter: “Things turn out best for the people who make the best of the way things turn out!”
Dare to be different. A look at why advertising professionals should consider standing out from the competition, not copying them. To make your advertising work, follow the principle if your competition is doing it, don’t. To succeed in today’s crowded marketplace where most of the products and advertising look exactly the same, a small business owner must stand out, shouting above the din with a message so clear and compelling that prospects stop and take notice. It’s a matter of business survival. Unfortunately, most entrepreneurs quickly retreat to the supposed security of sameness, soon to be lost in a sea of anonymity and a tidal wave of frustration.
In effect, albeit at a subconscious level, they are saying , “I don’t want to be different”. In back room offices and store fronts everywhere, salespeople are telling business owners they should do this or that kind of ad because it worked so great for their competitor. The owners nod and sign on. It’s already proven to be a winner, right? WRONG! Change the name, background color and a font style and you’ve got sameness. Put those ads in the yellow pages, a coupon magazine or a TV commercial cluster and you’ve got advertising death. Want proof? Get the latest statistics on small business failures.
About the author: Brian Grinonneau is the general manager of McMann and Tate advertising, an agency that works with small business owners helping them stand out from the crowd.
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