Zane Safrit

Highlights from My Conversation with Jason Sadler, founder of IWearYourShirt.com

Jason Sadler, announced his startup, IWearYourShirt.com in November 2008. That was during the worst recession in the past 50-60 years.

Every day since January 1, 2009 he has a worn the shirt of a sponsor and blogged, tweeted, facebook’d, ustreamed and YouTubed about his experience wearing that shirt.

By June 2009, he was a media sensation. He sold sold out his products in his first year. The demand for his product is so strong in this his 2nd year that he raised his prices...! Not just a little bit. He doubled them. In a recession!

Demand continues even stronger. He’s almost sold out his products for this year and the year is only half over. And he’s an even bigger media sensation. 30,000-40,000 people a day now wait with bated breath for his latest daily story. And he started a non-profit organization to...give back. Oh. And he’s still having great fun.

I met Jason first on Twitter. I think. In November 2008. I saw where this creative audacious guy was planning to wear anyone’s shirt. For a price. And use social media to tell the story of that day as he wore that shirt. I thought...crazy. Funny. Audacious. Let’s do it. So he wore my shirt on January 19, 2009.

We’re going to hear more about what’s happened in this past year. How he’s been able to grow his business in the worst recession in 50 years and how you might be able to do the same thing. And we want to hear about his non-profit organization 1 Million Shirts and see how we can join that journey, also. ( You can listen to our conversation here. )

Jason! How are you? Welcome again to the show.

I normally don’t encourage stalking of our guests. But I think you might encourage them to follow you. Where are you, whose shirt are you wearing today?

You can find all of our links at our site I Wear Your Shirt.

Today’s t-shirt is from Be Real Be You. It’s sponsored by the Girls Can Do Anything magazine. It’s just about empowering the youth to understand that they don’t need to be anyone else. They just need to be themselves.

Now. You’ve had over 500 days of this journey. What’s been the best day?

Oh, c’mon! That’s impossible to answer. Every day is its own unique story. This is the one thing that I’ve done for those 538 mornings straight where I wake up and think Ok, let’s do it. what’s happening today.

I’m not unhappy. I don’t have creative blocks.

I do work long hours. I have worked a lot of days straight.

I’m addicted to my clients sending me emails and saying they got so much more than they expected.

I’m not passionate about wearing t-shirts. But I am passionate about talking with people, sharing what I’ve learned, helping people.

All my business is is customer service. Customer service is enormous...it’s the best form of marketing you can do.

When was the day you had the idea...I think I’ll wear someone’s shirt, talk about it all over social media and have them pay me for it? Describe that day for us.

It was September 21, 2008, about 3 AM. I’m a night owl so I’m up late. It wasn’t on the toilet. A lot of people think it was in the bathroom.

I owned a web design company at the time. I was thinking about how people were cutting back. There’s gotta be another solution for small business and have a fighting chance.

Social media tools are free. Businesses don’t have the time or money to promote these things in a award-winning way. Where I could do it in a creative and engaging way that could live on in all this digital content. All this stuff lives on forever.

Then the pricing structure was key. I started it at $1 on January 1, 2009. I had no following. I had 200 friends on Facebook. Started small and grew towards the end of the year.

I don’t want to cut out the small business. Yeah, I love wearing shirts for big companies. But I also want to help small business.

I’ve had small businesses send out an email blast and put up a blog post. Yeah, the big clients are nice...but getting the small companies out to talk about is part of the overwhelming success.

You know my friend, Erika Andersen, coined a great phrase in her book Being Strategic. That phrase is reasonable aspiration or hoped for future. What was your reasonable aspiration or hoped-for future with IWearYourShirt.com.

I never do anything without thinking I could be successful. That’s how I was raised.

I still want to stay as humble as possible. But I want to look forward to this thing selling out.

We have two people wearing the shirts today. And we’re opening it up for hiring for next year. What if you had 50 people around the world wearing your t-shirt?

What are more signs or metrics that point to you’re making progress towards that future?

2011 is going to be the big year. Each year the calendar opens in August. I have 5 months to sell advertising ahead of time. I have 13 days left on this year. I’m selling way in advance this year.

There’s a lot of things swirling ahead. I’m hiring people in August, launching the calendar in August. Next year I’ll have 5 people wearing the shirts ...

Every entrepreneur overcomes obstacles in their journey. What’s been the 3 biggest obstacles in your journey to-date. And how did you overcome them?

Understanding the way media and print want to talk about something. They want a full complete story. I thought the story was the idea.

All this traditional media stuff has been fantastic. But it hasn’t really impacted the business. At the end of the day the actionable items from being on CBS Evening News wasn’t that much.

It’s very hard to understanding how people consume media.

Explaining to people what they should expect to get. Everyone’s been very happy. I’ve had maybe 4 people not happy and that was because I wasn’t clear.

Katie Couric interviewed you?

Actually, Steve Hartmann, does a segment called Across America. He came to my house with a video guy. They were here for 8 hours and most of that was in my closet which was hilarious. Just told the story, talked about it and ended up being a 4-minute segment.

It’s surreal turning it on and hearing Katie Couric talk about me.

Bruce Springsteen sings his concerts to one person in each audience. Who was that one person for you on that first day, January 1, 2009?

I think it really is the previous Jason Sadler. It’s the guy working a 9-5 job felt suppressed and this gives them inspiration to reach for their goal.

I took something so simple as t-shirt and built my brand around it and monetized it. If you don’t see that then you’re not seeing the picture.

You can read and understand more and get your self into situations where you’re happier and doing the things you love.

When did you know, how did you know, that this thing was going to work?

When I started in 2008 I put up a site and emailed my friends. There wasn’t a big aha when it got started and rolled through. But when January 1, 2009 came around and I had 5 1/2 months sold...I thought When did this happen?

Even for this year, there wasn’t one moment. It’s really been a daily grind. It really comes down to the long hours and the hard work and dedication you put in.

When did you know you had to hire someone? What was the data, the experience, the headache or missed opportunity that pushed you to hire one more person?

It was more of a should than I had to. Evan was behind the scenes from the beginning. He worked at Ustream at the start and he was there every single day and introducing me to people and helping with ideas. After so many phone conversations I said I can’t think of anybody better than Evan.

You use social media a little bit, right? What all do you use?

Flickr, Youtube, Facebook, Ustream, Twitter, the website is built on Drupal.

If you were paring it down to just three tools or resources, which ones would they be? Why?

Ustream, Twitter, and the website.

YouTube is great. But I haven’t had anything amazing happen there. I’ve had videos with 20-30,000 views. But Ustream is more social. I have all these people come through and watch. I chat with everybody I can. It gets hectic.

Twitter. There’s 70 million people on it.

Facebook is much bigger. But it’s more closed-off.

What are your three social media tips for nascent media empire-builders?

I have a personal YouTube video where I share stream of consciousness content. Peter Shankman talks about good content = viral content.

Give people a schedule. Give them something they should expect. People need structure. There are 30-50 people waiting on my live video show.

Don’t be someone you’re not. You have to be yourself. If you’re a sarcastic guy, then be yourself. If you’re not an entrepreneur then just grasp that and hold on to it.

The next question is either tricky-sounding or very simple. You walk between two distinct worlds: traditional and innovative. You’re business model is innovative, but its operation is still traditional. You use social media and then traditional media interviews you while they scratch their head, filled with envy perhaps.

There’s no way you can say social media is bigger than traditional media. But social media is so fast.

There’s a fine line between using social media to get yourself in front of traditional media. It’s not about being extravagant.

You need the balance of traditional media. that was the thing for me. Has it effected my business as far as sales go? Probably not. But has it helped with speaking gigs and consulting? Yes.

Social media opens the door to traditional media. Peter Shankman is a great example. He’s using traditional email list with HARO, Help a Reporter Out, to help people get in front of a Wall Street Journal reporter.

You really have to use both. You can't sit in just one.

This is the world of startups and entrepreneurs. This is where jobs are created. This is where our economy recovers. Yes?

Let’s say President Obama is on the line for you right after the call. He wants you to come share your successes, tips, knowledge. You do. Right in the Oval Office. First thing he does is give you a T-Shirt, right? What would be your first three tips you’d share with him to help more people have your success?

That’s a very loaded and tough question. I’m very young and new to this business stuff.

The one thing I don’t understand is why...they don’t give more money to entrepreneurial people. I’d rather see some of that bailout money go to the entrepreneur who has that renewable energy to power that car with no carbon footprint.

I wish there would be a little more slice of the pie for small business and entrepreneurs.

You have all these people who are hungry out of work and talented. But you give these people some kind of chance. You take a great mind and a great thinker...

Tell us about your non-profit organization. What is it? What’s its reasonable aspiration or hoped-for future?

Two months ago I could have told you this very quickly.

Our original goal with 1 Million Shirts was I thought we’d take these t-shirts to a village where poverty is high, not so much clothing. The original goal was to ship t-shirts to rural villages. Very quickly the aid and non-profit world came thundering down on the detrimental qualities of dumping t-shirts in rural areas.

Since then, I’ve been talking to people and we shifted focus. T-shirts can be used for disaster relief. They need clothing on their back and possibly they’ll be distributed to homeless shelters.

But the big thing is that now it’s going to be 1 million shirts for 1 million minds. The goal is to create scholarships and look forward to the next 5-10-15 years of schooling.

That’s unbelievably is There are over 500 million kids in Africa under the age of 15. There’s a huge group of people who need and want education and be the forward thinkers in their area.

I want everyone around the world to mail a shirt in and you include $1. All of the money will go towards awarding scholarships.

Everyone can get involved. You can go in the closet and grab a couple of shirts and throw a couple of dollars in a package and help bring education to those who want it and need it.

Let’s say we talk again next year, 2011. What will talk about with you, your success?

I really hope that when we talk June 2011 that I can sing the praises of 4 other people and sing their praises of how awesome they are. I hope I’m still happy putting on a t-shirt every day. I’m helping small businesses share their message.

I just want to have fun, create great, great content, enjoy what I’m doing and continue to give value back to people.

You’re a leader. Leaders are readers said Jim Rohn. What are you reading that’s wowed you this year? Books, blogs, mags, whatever.

I’m not a huge reader just typically for the sake of time. I get my news from twitter and my facebook news feed.

Crush It, by Gary Vaynerchuk. I bought 40 copies and gave away to my followers.

Linchpin, by Seth Godin.

Delivering Happiness, a pre-signed copy. I hope to be able to read it on a flight this week. Anything going on with Zappos is going to be great.

Where on the web can we find you?

Everywhere with IWearYourShirt.

• Facebook
  

• Twitter

• Ustream
  

• Website

• YouTube

Thanks, Jason!

What? 50% Of Companies Use Social Media With No Strategy?

While 78% percent of corporate respondents say their company is using social media, only 41% say they have a strategic plan in place to guide such activity, according to a new study from marketing firm Digital Brand Expressions. via www.mediapost.com

Huh.

Now, factor in a recent study for Institute for Corporate Productivitywhich reported that:

84% of organizations queried have a mission statement in place, 62% of those companies said that just half of their employees could repeat the company mission statement if asked....

The result is a lot of businesses talking about a lot of things that no one either cares about or understands.

No wonder we're in a recession.

The 4 criteria prospects use to judge you and your proposals

Jill Konrath, author of SNAP Selling: Speed Up Sales and Win More Business with Today's Frazzled Customers , joined the show recently. You can listen to our conversation here.

I asked her about creating useful value propositions, useful for the prospect's needs. And we first discussed the criteria prospects use to evaluate our proposals. Here's what I asked:

Let’s talk about this value proposition and how people fail to create one that’s useful. What are the 4 criteria prospects use to judge us and our proposals?

Here's what Jill answered:

Most people have a mental checklist for people who approach them.

The 1st criteria is:

Are you aligned with my needs? They are saying is this aligned with my business objective. This is the number one criteria.

I wouldn’t talk about my sales training programs., I would talk about their need to speed up sales.

The 2nd criteria:

Is this a priority issue...for me? They already have so many flames going up in their office they may still delete you.

The 3rd criteria is:

Does this person sound like an invaluable person? Does this person sound like they bring expertise to this situation? Clients are so busy they want to know does this person bring some expertise for me.

The 4th criteria is:

Does this sound too complicated? Is this something I can grasp?

We’re trying to impress people. We feel an extraordinary need to tell them everything we offer.

Which one is the most important or prevalent?

The most important is the first one: alignment. You may be simple but if you’re not aligned then it’s irrelevant.

Too many sales people think that what they’re selling is important. But they don’t realize that what they’re selling is irrelevant.

Instead people want the results that deliver for them.

Sales people think their job is to tell the client about their product and services. But that’s the last case. If they want information they go online. You don’t need a sales person to go into excruciating details.

Jill's an expert. Her success comes the increase in sales she generates with sales training she delivers for her clients. You should listen.

3 Ways to Increase Return on Assets (ROA)

Paul R. Williams, CEO of Think for A Change, LLC, and author of The Innovation Manager's Desktop Reference, and one of the Top 10 Innovation Experts To Whom You Should Be Listening joined the show last week. You can listen to our conversation here.

We talked about this statistic shared by John R. Hagel, co-author of The Power of Pull: How Small Moves Smartly Made Can Set Big Things in Motion

Since 1965, return on assets has collapsed by 75% - it has been a sustained and substantial erosion in performance. There is no evidence of any flattening of this trend, much less turning it around. - Economic Recover? Don't Count On It

I asked Paul:

On a national level, you’re sitting in the White House and the Council of Economic Advisors reports this statistic for the nation. And President Obama turns to you and says Paul...what do you think? What are three steps the nation can take right now to reverse this trend or accelerate the embrace of sharing ideas.

1. Start changing our educational system We’re still teaching our kids rote memorization skills. We’re producing factory workers for an economy that no longer has factories. Start there, plant a seed for the future.

2. Invest more in entrepreneurs. At least get out of their way.

3. Third, we miss nowadays, our national BHAG, big hairy audacious goal. Until we find something we all can get behind and crank up the ingenuity of the nation we’ll struggle.

Now. How does that help you generate a higher ROA, return on assets, for your company?

1. Create a culture of learning within your organization. Gary Harpst discussed this in our recent conversation and in his book: Six Disciplines of Excellence. As you grow, you will find newer and bigger obstacles to face. A culture of learning creates a culture of solutions for those ever-bigger challenges.

2. Get out of their way. Let your organization members pursue their ideas, their solutions, their passions. Google gives 20% of each week to its employees to pursue their ideas. That seems to have worked.

3. Set YOUR BHAG, Big Hairy Audacious Goal? That's what rallies and inspires your people, keeps everyone moving towards a common goal, gives purpose when otherwise it's missing.

4 Steps to Boost Your Cash Flows and Balances

Cash is King.

Cash, cash flows and cash balances, makes and keeps you king of your business. Positive cash flows and positive cash balances give you ownership of your company, control of your destiny.

Here are 4 steps I learned and followed as retail prices dropped by over 70% and still we found steps, albeit with a few scrubbed knees, to grow revenues by 80% and maintain positive cash flows and cash balances.

1. Sign the checks yourself.

Every check. Big or small. Make sure you sign them. That means you and only you.

This seems obvious. But many small companies allow their book keeper or accountant to sign the checks. Don’t. This creates a fundamental disconnect between your decisions and their costs. It is one thing to agree to buy a new server and see its price on your computer screen. That number and its impact become more real with the check you sign for its payment. And the connection between your decision and its cost and impact on your cash balances and cash flows grows stronger with each check you sign.

Sign the checks yourself.

Disclaimer: I have at times offered that option to the bookkeeper when a check needed a signature and I was away from the office. But I was blessed with an excellent bookkeeper, whose husband was a CMA, and said ‘no’. I’m glad she did.

2. Look at cash balances very regularly.

How regularly depends on your company’s situation. If you’re in dire straits, then you need to make that very regularly. A company in bankruptcy will look at their cash balances throughout the day.

I know of companies not in bankruptcy who manage their business daily, if not hourly, by their cash balances. Their company survives, but does not thrive. They have no time to look to the future much less plan for it.

I looked at our cash-balances monthly.

Why? If you sign each of the checks then what is the point?

• you see a bigger picture of the results

• this serves as a simple cross-check confirmation

• cash has been known to leave a company without a CEO’s approval even when he signs the checks.

3. Look very closely at your cash flow statements regularly.

I looked at our preliminary cash flow statements monthly. I reviewed, compared with previous quarterly results and discussed them in great detail with executives on a quarterly basis. That included my signing off on their results and their impact.

Those last two sentences are key. That gave ownership and accountability. Sometimes it gave great satisfaction. Sometimes, not. Given the disruption in our industry, it spurred changes in all areas of our operations and marketing. Doing the same thing and expecting different results in an industry changing as rapidly as ours would clearly not work. These last two sentences made that very clear every 90 days. Also made clear were the changes we implemented and their impact. They pointed us in the right direction, kept us pointed in the right direction, every 90 days.

4. Talk about cash with your organization

Disclaimer: I’m not a fan of open management where you share salary and bonus amounts.

Talk about cash and its role in your organization’s success. Talk about it in ways and terms that are meaningful to your members. Show what allows. Show what its absence prohibits. Do this for them and their world: their work, their tools and resources, their chance to grow. Incentivize with rewards meaningful to your members for reaching goals with cash balances and cash flows.

An old saying goes What we put our attention on grows stronger in our lives. Putting your attention on cash with these steps makes cash and its opportunities grow stronger in our lives.

No small business lending; no recovery.

Two stories this week on small business lending caught my attention. The first one was titled: Lending to Small Business is Declining Even Though Economy is Improving

Small businesses — more so than big companies — rely on bank loans to expand operations and hire. Small businesses usually help drive job creation during recoveries but credit clogs have hurt hiring.

Lending has dropped from almost $700 billion in the second quarter of 2008, a period when the country was embroiled in a financial crisis, to $660 billion in the first quarter of this year. - Link

The next one was from the Wall Street Journal, Obama Urges Congress on Small Business Proposal:

WASHINGTON—President Barack Obama urged Congress Tuesday to pass legislation that would create a $30 billion fund to incite banks to extend credit to small businesses.

Mr. Obama outlined the proposal in February and it is part of a broad effort by the administration to spur small-business growth amid a lending slowdown caused by the economic downturn. Such efforts include several tax breaks and changes to Small Business Administration lending programs.

The legislation will help the government "knock down the barriers that prevent small-business owners from getting loans or investing in the future," Mr. Obama said while speaking in the White House Rose Garden Tuesday.

The $30 billion would come from the Treasury Department and would go to small, community banks that want to increase small business lending, said Gene Sperling, counselor to Treasury Secretary Timothy Geithner, in a conference call.A few thoughts:

A few thoughts:

The banks that want to increase small business lending are the banks that want to invest in their community, our community, our nation.

These banks, that want to lend to small business, are the banks that want to help small business perform their role in our economy: create jobs.

These banks are the banks then that received...less than 5% of the amounts we gave...Wall Street banks who:

• Did not want to increase small business lending
• Did not want to invest in our community, our nation.
• Did not want to invest in that part of our economy that creates jobs, affluence, stability, growth: small business.

I’m not a fan of bank bailouts or their recipients. I am even less a fan of the outcomes had we not done that.

I am a fan of free-market, laissez-faire, solutions.

However, what we have here are signs our credit markets are not free, do not operate on these principles of free-market, open competition. And what we have then is the illusion of both a free-market economy and a free society where the best solutions find an advocate, a customer and a community.

And what we have is an unsustainable recovery.

What are you reading, Gary Harpst?

Gary Harpst, author of Six Disciplines Execution Revolution and Six Disciplines for Excellence, shared an hour of his time to discuss his solutions for one of business' biggest challenges: execution. You can listen in streaming on-demand here. (If you have challenges in execution, I encourage you to listen.)

Guests on my show are leaders. They lead with a vision of possibilities for solving challenges, removing obstacles, reaching our goals. I started asking each of them about their reading lists. One way to align ourselves with leaders is to read what they read.

I asked Gary:

Jim Rohn is quoted as having said Leaders are readers. You’re a leader. What are you reading?

Here's what Gary answered:

I really like books that help me understand the human side of business.

• The 5th Discipline: The Art and Practice of the Learning Organization by Peter Senge. He talks about the human condition and how you build learning organizations.

• The Strategy Focused Organization, Kaplan & Norton

Thanks, Gary!

You can read the highlights from our conversation here.

3 Keys for Small Business to Seize the White Space

Small businesses may best understand the benefit from white space, or business model, innovation.

Many have yet to see the first few steps to take on this journey and that these steps can be inexpensive, requiring no line entries on a budget or P&L report.

If you are one of those companies, then, maybe I have an answer and a resource for you:

Mark W. Johnson is Chairman of Innosight, a strategic innovation consulting and investing company with offices in Massachusetts, Singapore, and India. He's also the author of an excellent book: Seizing the White Space:Business Model Innovation for Growth and Renewal.

He shared an hour of his time, wisdom, insight, resources on business model innovation as a recent guest on my radio show. You can listen here.

I asked him:

What are three keys to insuring small business can always venture into their own white space?

And he answered:

1. Focus on real value. The first and foremost is to start with a real customer who has an important unsatisfied job to get done.

2.Embrace learning. Your first steps shouldn’t just be about developing the standard business plan. The plan is best served when answering:

• How will I best learn?
  

• What assumptions should I test?

The first business model that is formed is never quite right. They have to embrace learning.

3. Recognize that it will be about where you start and how fast you stage the effort. Companies that are starting up should not go to scale until they are clear about what they have learned. They are also confident on the knowledge side to overtake the assumption side so they can accelerate to become a large business.

You can read highlights from our conversation here.

4 Business Books to Keep Close-at-Hand

Keep your friends close and your enemies closer. - Sun Tzu.

Well, Sun...I'd say:

Keep your friends close and your enemies closer...and your best books closest.

There are many great books for businesses. I read most, if not all, of a new business book each week.

There are 4 books I keep close-at-hand. Some I have kept close at hand for 6+ years.

If you're a small business owner, leader (...if you work in a small business... you are all of those...you have no choice, really...) keep these books closest at hand.

STRATEGY

Being Strategic: Plan for Success, Outthink Your Competitors, Stay Ahead of Change. Erika Andersen, its author, is one of those rare authors who offer a clear vision of possibilities and a means for everyone to map their way there. That vision of possibilities is OUR possibilities. Her mission in life is to help people have the life they want and figure out a plan about how to achieve it. She accomplished that with this book. Her book and its methodical, daily, approach to Being Strategic can be used for having the career we want, the business we want, even finding the love of your life.

I met Erika 18 months ago. I read her book then. I have kept it close at hand since then.

She was a guest recently on my radio show. You can listen here.

EXECUTION

Six Disciplines of Excellence: Building Small Businesses that Learn, Lead and Last. Gary Harpst is the author. He, too, offers the tools for small business to articulate their shared purpose and the means to reach that shared purpose together. Gary has laid out a plan of strategic execution with six disciplines where businesses create a culture of learners and leaders. This is employee engagement taken to a higher level. This culture of learning and leading sustains their ability to find new solutions as their growth brings greater challenges.

I read this book 3-4 years ago when I was CEO of a small company. I have kept it close at hand since then.

He was a guest recently on my radio show. You can listen here.

TALENT

The Smart Interviewer: Tools and Techniques for Hiring the Best. Brad Smart is the author. This book presents the CIDS interview for hiring new employees. CIDS stands for Chronological In-Depth Survey.

I used CIDS 4 times. 3 times I found a great, A-Player, person who was welcomed with open arms and made tremendous contributions. The other time I was able to avoid making a disastrous hiring decision.

 

That kind of success is rare with any resource. But from a $13.00 book....? Figure the ROI on that! Just the savings from avoiding that one hiring mistake brings an astronomical ROI percentage.

Brad was a guest on my radio show. You can listen here.

MARKETING & SALES

Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force, by Ben McConnell and Jackie Huba. This is the end-goal isn’t it? Create customer evangelists who volunteer to generate referrals, sell your products and put their reputation at risk in the process.

The conversion rates are higher as are cross-sells, repeat purchases, upsells and customer loyalty.

Lower metrics are seen as result in marketing and advertising expenses, customer churn, employee churn.

All this translates to...higher profits, higher cash-flows.

This book and its authors continue to play a huge role in bringing companies back in touch with us, their customers. Maybe, that’s why their website is Church of the Customer. Maybe, that’s why they have 100,000 people who subscribe to their blog?

I could and have in the past testify for them. When all marketing tools and resources generated zero results as industry in which my company then raced to commodity-hell...Ben and Jackie appeared with some timely support. And truth. Again and again.

I read their book back in....2003. It’s stayed close by since. Now, I’m their customer evangelist and not as often as I should.

Jackie was a guest on the show last summer. You can listen here.

4 Variables That Determine a Successful Profit Formula

Mark W. Johnson is Chairman of Innosight, a strategic innovation consulting and investing company with offices in Massachusetts, Singapore, and India. He's also the author of an excellent book: Seizing the White Space:Business Model Innovation for Growth and Renewal.

He shared an hour of his time, wisdom, insight, resources on business model innovation as a recent guest on my radio show. You can listen here.

I asked him:

What are the 4 variables that determine a successful profit formula?

And he answered:

1. Revenue model
2. Cost structure
3. Margins
4. Resource velocity

This is not meant to be financial 101. I have pointed them out because I think they need to be thought about first and foremost.

A revenue model is how much money can be made in sales.

Cost structure is both direct and overhead costs.

Then I talk about margins and resource velocity meaning the speed by which inventory and assets and utilization happens to cover the cost structure.

The simplest example of these four variables is the retail industry. There was a business model innovation with the discounts stores. Traditional department stores marked up their inventory 40% and then they turned the inventory 3 times over the course of the year which equals 120% return.

Discount retailers changed the game. All they did was decided not to mark up their inventory as much. They turned their inventory faster through their system.

Thanks, Mark.

The questions for businesses today becomes:

• what's your example of these 4 variables?

• which one can you alter to seize the white space, create a new business model, and do to your industry what discount retailers did to the retail industry?

One Step to Boost Your Company's Valuation by 35%

That one step is building a business the delivers predictable results. Recent research showed there were 4 factors used to measure the value of a business. These were:

• Investing in R&D, investing in their future;
• Growth Trends;
• Return on Equity.
• Predictability: How predictable were the results for that business.

You ask What's your source?

Gary Harpst , author of Six Disciplines for Excellence and Six Disciplines Execution Revolution, and founder of Six Disciplines consulting.

During a recent interview with me I asked him:

What’s in it for business? Why should they care about improving their execution, generating more consistent execution? You have to think that if businesses understood then more business wold join your execution revolution.

Gary answered:

Research found 4 factors that determine a business value. Investing in R& D, The growth trend, ROE, but the 4th one was more of an influence than all the others put together. And it was how predictable has this business been.

The business that’s predictable will be valued 35% more valuable, all things being equal, than an identical business who’s performance is not predictable.

Gary Harpst and his team at Six Disciplines offers a proven, methodical, program that can create a culture of learning within your business. That cultute of learning allows you to solve the next problem, always bigger, that comes with your success. Being able to constantly and consistently solve those next bigger challenges is how you generate predictable results.

Disclaimer: This may sound like a paid endorsement. It’s not. The Six Disciplines approach works. And we need more things that work.

You can find out more about Gary Harpst and his Six Disciplines team at these sites:

* Gary Harpst website

* Six Disciplines corporate website

* Six Disciplines blog

You can listen to our conversation here.

You can read highlights from our conversation here.

Sprouts of Growth for Small Business

Some sprouts of growth for small business have started popping up.

 Service Sector Grows at Fastest Clips Since 2006. - Reuters

The Institute for Supply Management said its service index grew in March for a third straight month, jumping to 55.4, its strongest reading since May 2006. That was up from February's 53.0 reading and above economists' forecasts for 54.0 for March.

A reading above 50 indicates expansion in the sector.

Factory Orders Rose for 10th Time in 11 Months - Fox News

Factory orders rose in February, bolstered by strong demand for industrial machinery and commercial aircraft. It was the 10th increase in 11 months as manufacturing provides crucial support for the recovery.

Small Businesses are Hiring - Intuit Small Business Employment Index

MOUNTAIN VIEW, Calif., Mar 29, 2010 (BUSINESS WIRE) -- Small businesses continued to hire more employees in March, extending a trend that began in mid-2009.

The monthly Small Business Employment Index from Intuit Inc. (Nasdaq:INTU), shows that employment for small businesses grew slightly more in March than in February. March employment grew by 0.25 percent, which when projected over the entire year equates to a 3 percent annual growth rate. This translates to approximately 50,000 new jobs in March and a slightly revised estimate of roughly 175,000 new jobs since June 2009.

Retail Sales Take a Surprising Upturn in February. NPR

The Commerce Department said Friday that retail sales rose 0.3 percent in February, surpassing expectations that sales would decline by 0.2 percent.

Planned Job Cuts Fall in February to Lowest Since 2006. Reuters

The number of planned layoffs at U.S. firms fell in February to the lowest level since 2006, and employers appear to have shifted away from downsizing even though hiring may be a while off, a report on Wednesday showed.

There’s Only One Way Out: Entrepreneurship. Blog post by the authors of Grow From Within: Mastering Corporate Entrepreneurship and Innovation.

Entrepreneurship is about more than the stereotype of mavericks risking it all to become the next Steve Jobs. We need people across all sectors to become entrepreneurial; empowered to define visions for meaningful change and then make them real. We need to nurture entrepreneurial capabilities and actions within large companies, non-profits and even governments, not just startups.

As I look out my window...I hope these sprouts keep growing even with a few weeds that need removing or a lawn that needs mowing or a hedge that needs trimming...These are small prices to pay for renewal and bountiful garden of jobs or flowers and vegetables, doncha think?

3 Ways a Business Can Rise Above the Turbulence

 Steven S. Little was a recent guest on my radio show. Steven is the author of Duck and (Re)Cover: The Embattled Business Owners Guide to Survival and Growth

We talked about this turbulent economy and how do businesses survive? I asked him:

What are three ways a business leader can get on top of this turbulence?

Here's what he answered:

1. Get the facts straight first. The most important that a business leader or more importantly, a business owner can do right now is to be sure that their decision-making is based upon logic and fact because that is not always the case when in a crisis. They can’t go with their guts and then rationalize their decision.

2. They have to get up and do what needs to be done.

3. Whatever it is that you don’t normally do, get out and do it. It is those voids that need to be filled.

I like them all.

Gather your data and supporting logic. They should compliment. You cannot take the next step with them.

Do what needs to be done. Tough choices face us all. But the right choices become visible with good date and supporting logic.

Doing the same thing and expecting different results is insane. We're not in Kansas anymore with this economy. Nor will we ever be again. So, doing what worked in Kansas and expecting it to work today is...insane.

You can listen to our conversation here.

You can read highlights from our conversation here.

You can read my review of his book here.

100 Best Small Business Podcasts

Scheduling changes meant I had an open week on my radio show. Rather than let a Sunday go by without a highlight post I'll share with you a list of 100 Best Small Business Podcasts that was compiled by our friends, colleagues and yes, inspirations at SmallBiz Trends.

Scanning through the list I see some of my favorite shows including:

March 23, 2010 - ADDENDUM:

* Managing the Edge: 

My friends Andy Brudtkuhl, 48web Consulting and Doug Mitchell, CreateWoWMedia, produce a great show on technology and small business. They're experts in both. And their respective businesses reflect their success. And...and...they stream their show live in video. You can watch here.

I created this addendum because I completely overlooked their listing when I published this original post. Their show is great, they're great, they've hosted me on the show before and it was a great experience.

**********************************

* Duct Tape Marketing — By John Jantsch. John provides interviews with influential marketing professionals and those who demonstrate advanced marketing tactics. John's been hosting this show for...4-5 years, John help me remember. He's a great host. Very affable, comfortable, open and always interested in new resources, new tips, new tools and all the time staying focused on his audience and their needs.

* The Engaging Brand – With Anna Farmery. A podcast to motivate, inspire and engage people at work. Exactly. I've listened to many of her shows and found them exactly as described here.

* Entrepreneur People – With Sherry Borzo. Real Stories about real people that teach lessons in business and in life. A neighbor, well, fellow Iowan, anyway. She's a great host, her shows are well-organized and focused and her guests offer real lessons.

* Small Business Trends Radio — Our very own show with Anita Campbell and Steve Rucinski, featuring interviews with today’s professionals on a wide variety of business topics. Anita and Steve have been producing their show for..4-5 years, help me guys, and it's always focused, bringing helpful guests on the show who can help you be successful.

* Business Insanity Talk Radio – By Barry Moltz. This is a business radio show where we talk about all the craziness of small business. Barry's been a great guest on my radio show. While he talks about the all the craziness of small business, he offers sane, rational, useful, doable therapies and some fun stories.

* Blog Business Success – With Wayne Hurlbert. Podcast about business blogging, search engine optimization SEO, marketing, public relations, and entrepreneurship topics that will help your business grow. I'll share with you what I told Wayne privately. Wayne's a big reason why I began my radio show. Each week I'd see he had another guest, another great guest. The conversation was easy, or Wayne's style put the guests at ease, great content was shared. And the same thing would happen next week. I kept thinking...that sounds like such fun for Wayne, I've got to do that somehow.

One thing they all share in common is their uniqueness. Each of them:

• reflects the personality and passions of the hosts.

• reflects the challenges and solutions for small business through their personalities.

• are produced outside the confines of a great big studio.

• as a result are more personal, with a message customized in delivery and content personally for their audience needs and convenience.

• in their own way have served to inspire me. Thank you all!

This list is a good reminder, inspiration to somehow bring them back into my daily schedule. I don't have long commutes or travel as much. Good. But that's when I listened to their shows in the past. I don't wear headphones when I run...So, I'll figure something out.

Disclaimer: I've been a guest on some of these shows. Some have been a guest on mine. And I write a guest blog or column at others. Oh. I'm on this list of shows, too. Thank you!

Running a Business: 6 years, 6 lessons

I wish I had written this post. Lessons Learned from Running a Business.

It is so good, so clear, so helpful.

My favorites , by a thread, are:

2. Communication matters. - It amazes me that we humans still have communication issues. We do more communicating than anything else, yet we are not that good at it. You’d think we would all be experts by now. But the reality is that most of us stink at it.

4. Experts don’t really know. –....

Now, I’m not suggesting experts are not valuable. In fact many have helped us. But what I am suggesting is that at the end of the day, you know your business better than anybody else. So don’t rely solely on experts, because they really, truly, don’t know.

3 Steps to Avoid The Dark Side of Business

Adam Hartung, author of Create Marketplace Disruption: How to Stay Ahead of the Competition talked about the dark side of success in a recent conversation. ( You can listen here.) The dark side of success is when a company' strategy is built around D & E, Defend and Extend. Defend your current product line and Extend it.

I asked Adam:

What are three steps a business leader can take to avoid the dark side of success?

And here's what Adam answered:

1. Who do you have as your advisors that are willing to challenge the way you think?Who will advise them, not patronize them.

2.Start spending time on thinking about the future.

3.Talk about the competition.

Defending and Extending, an incremental approach to brand growth, makes 'intuitive' sense for me. You have a successful brand. You have a profitable brand. You have a dependable brand. You have a dependable means to deliver it. You have a dependable message for that brand. You have careers, perks and incentives, attached to that brand. You invested in that infrastructure of employees, buildings, equipment, routines, incentives, ad campaigns to build that brand.

Who wouldn't want to defend that and extend that?

Adam explains why and profiles companies who chose to and chose not to defend and extend. And he showcased their results.

Read his book. Read his blog. Listen to our conversation here. Or, read the highlights.

4 Simple Lessons About Pricing

Todd Sattersten, author of Four Simple Lessons About Cost, Price, Margin and The Options Available to The 21st Century Business, was a guest on my radio show recently.  (You can listen here.)

I asked him:

What are the 4 simple lessons about cost, price, margin and the options they create now for 21st century business?

Todd answered:

If you are in business you concentrate on these things:

1. Costs - Costs are always going down. You have to manage with that. For the last 20 years the costs of hard drives have gone down 5% per quarter.

2. Price - Price is a signal. One concept I talk about is anchoring and you can sway someone’s perception about cost or product by anchoring them with a number beforehand. For example retail price tags: here is the old price- here is OUR new price.

3. Margins - Margin is when you connect price and cost together. It is the most important measure in business. It is like your weight. How many calories are you taking in versus how many you are burning tells you where your weight is at. You have control over price and costs.

4. Options - You Have Options. There are more ways than you realize how to go to market. Price discrimination is a way to create different price points for the consumer.

Time is another point. I am trying to connect all the commercial aspects of business together: sales, customer service, purchasing and pull these into one bundle and say you have many options and flexibility in terms of how you go to market.

The main point remains very consistent for me: 

4. Options - You Have Options. There are more ways than you realize how to go to market. Price discrimination is a way to create different price points for the consumer.

[Y]ou have many options and flexibility in terms of how you go to market.

Explore them.

You can read further highlights from our conversation here.

You can download a free copy of his book here.

What Batting Practice Offers Business Bloggers

Spring is coming...I hear.

That means baseball teams and players are getting more serious now about bat speeds, bat control. And batting practice gets more serious.

Batting practice...all those easy pitches that produce fly-outs and in-field dribblers, singles and pop-ups, strikeouts and the occasional triple or home-run...is in full swing.

For the great players, batting practice takes place all year. Maybe less, maybe more. But the greats are constantly honing their skills, regularly, quietly, consistently.

The results begin to show up even from the first day. The skills and the skills needed. A pitch low and away and that’s going downtown, out of the park. A pitch high and inside and the batter is going down, hard. Opposite field, not so good. Pulling hits? Very good.

The crowds are small. The comments are comments, not cheers and jeers. The followers aren’t strangers.

Then the batter is in front of a crowd. The crowd’s grow. The comments now are cheers or jeers. More strangers. And some new, genuine fans and friends you would never meet otherwise.

Blogging works the same way. You have to take your turn in the blogging cage. Take your pitches, your ideas, and swing away with blog post or two.

That’s the daily blog post.

Some are hits. Some are fouls (some of mine may have been very foul...). Some are strikeouts. And every so often...you write a home-run piece. Some stints, some posts, reflect a blue-collar day. You took the pitch, published your post. And blue-collar days are the unpleasant steps to the days where you hit a post out of your blog-park, or a series of posts out of your won park.

Accolades come from near and far, followers and strangers, readers and those who found your post with a random search. Sure, a few spammers show up. They are blogging’s equivalent of the drunk and obnoxious fan yammerin’ crap that makes no sense, but gets people to look. Free speech and internet anonymity.

But pretty soon you’re hitting home runs regularly. Those are the posts of clarity that help people with tips or ideas pushed forward. You turn to other batters, er, bloggers for their tips on how they became such home run hitters.

Now you’re on a roll. Now you’re invited to the big leagues as either a guest blogger or traffic to your site makes you a star.

But it all comes back to that daily blog post, your batting practice. Practicing, practicing, practicing. Writing, writing, writing. Every day.

* Photo: Renphoto from istockphoto

Highlights from My Conversation with Todd Sattersten, author of Fixed-to-Flexible

Todd Sattersten joined the show last week. We wanted to talk about his new, and great book: Fixed to Flexible: Four Simple Lessons About Cost, Price, Margin and The OptionsAvailable to The 21st Century Business.

You can listen to our conversation here.

I’m a firm believer in that if you admire and respect folks, well, you should tell them. Right to their face or voice in this case. Todd’s one of those rare individuals who...packs a heart with smarts. Intellectually, Todd could hold his own with almost anybody. And those who may not, there may be a few...he’s smart enough to listen until he can.

And for those he clearly surpasses, he’s kind enough and articulate enough to make them feel they are his equal, sharing their unique solutions and views of the world. Those two, the big heart, the sharp mind, get applied creating friends and partners and fans wherever he goes because he helps them reach their goals. And quietly allows them all the rewards.

Any business, any size, can benefit from reading Todd's new book. And it’s free as a download.

Let’s talk about your new book. Fixed to Flexible: Four Simple Lessons About Cost, Price, Margin and The Options Available to The 21st Century Business.

Congrats. When did it go live?

It went up on Groundhog Day – my most favorite day of the year.

Our friend, Erika Andersen, has a phrase I love. The phrase is reasonable aspiration or hoped-for goal. What was your ‘reasonable aspiration’ or ‘hoped-for goal’ in writing this book?

There has been so much conversation around price in the last couple of years. I thought I could connect a different set of pieces together that people may have not thought of or seen before. I wanted people to think differently about what pricing means and what options people have available to them. Understanding that you have more options creates more power as you go to do things.

How will you know when you have reached it? What will change about your life?

I know I have reached it already because of the feedback. I have received more feedback on this project in just two weeks than all the feedback on the 100 Best Business Books of All Time.

Note: Todd co-wrote with Jack Covert of 800CEORead. Also, a great book.

There is clearly something that is ringing true with people regarding cost, margins, price and decisions.

How has it changed your life?

The way it has changed my life is that it make me realize that I need to do more projects.

You compiled a lot of research and case studies for this book. Where were you most surprised? Was it some data or a case-study?

I think the thing I found most interesting was a case study on a company called EverNote. They are a web-based service: I like to call it digital memory. You can upload anything and store it. I think it pulls together a whole set of ideas of the next business models that will evolve. It is a free service – about 2.2 million people utilize it for FREE. It is fully supported by 40,000 that pay $5.00 a month for the premium service. His model actually works and I love seeing that.

Note: Todd's interview with EverNote's CEO

Note: I use Evernote. It’s surprisingly cool, simple and very useful. And I've just touched some of its uses.

Who is your audience? More specifically, describe thereader you had in your mind as you wrote this book.

I was speaking to the sort of person that is like you and I, Zane: independent- creatives that are doing a variety of projects for people, whether they are assisting with customer service or graphic designers, copy writers or people with project ideas they want to commercialize. Pricing is the single most important decision people have to make and I didn’t really see a good resource to help with this. People need to know how to charge, what their products are worth, and different options. I think it ended up appealing to a wider audience but it was focused towards people who are trying to launch a project and how they should go about doing that.

Why do they need this book? What pain of theirs are you solving?

1. The unique connection of stuff. It connects the dots. It pulls together material that probably is spread over ten books and 50 websites.

2. It solves the pain of what am I going to do? They are not sure of their options. I try to convince people that there is a wider array of options available to them in terms of how they are going to market.

What are the 4 simple lessons about cost, price, margin and the options...?

If you are in business you concentrate on these things:

1. Costs - Costs are always going down. You have to manage with that. For the last 20 years the costs of hard drives have gone down 5% per quarter.

2. Price - Price is a signal. One concept I talk about is anchoring and you can sway someone’s perception about cost or product by anchoring them with a number beforehand. For example retail price tags: here is the old price- here is OUR new price.

3. Margins - Margin is when you connect price and cost together. It is the most important measure in business. It is like your weight. How many calories are you taking in versus how many you are burning tells you where your weight is at. You have control over price and costs.

4. Options - You Have Options. There are more ways than you realize how to go to market. Price discrimination is a way to create different price points for the consumer.

Time is another point. I am trying to connect all the commercial aspects of business together: sales, customer service, purchasing and pull these into one bundle and say you have many options and flexibility in terms of how you go to market.

28:57

Which lesson did we, collectively, fail as a country in the run up to this recession?

The one thing that strikes me is that money was cheap. When Greenspan set the discount rate to zero, it was here pricing got way out of whack by the fact that cheap money was available. As we are trying to get back to some semblance of order now, but I don’t think we will get past some of the problems we have been experiencing for the last 20 years.

Does our economic recovery wait while we learn this lesson? Or does one of the other 4 lessons turn us around?

It is interesting watching the status quo and the players in creating the situation we have got ourselves into.

We have a ton more options available to us.

Let us believe that we are smarter than we were. We need to understand that emotion is a powerful driver in decision-making and we need to have some speed bumps – breaking mechanisms in our free market system and they need to be balanced to stop the things that have happened over the past couple of years.

Do the 4 lessons apply equally to small businesses and large?

Yes they do. The power of the e-book is that I believe small businesses have a greater ability to apply these lessons than big business. Big business runs a little differently and small businesses are more flexible and creative in going to market. In the digital realm you have even more options, especially in book publishing. You can choose your price. I think small business has the ability to be more creative, but you have to get over the fear of pricing and product offering.

Let's say you're founder of a startup. Which lesson would keep you awake at night wondering if anybody gets it at your startup?

It continues to be price because there is no perfect answer to price. On the cost side, you can price shop the cost of the needed product. You can pay what you want to pay. When you get into the pricing aspect, there are many things that don’t have a set price – like a home or a car. There is plenty of leeway.

I am a big fan of cash-flow. That's the number I always talk about. Cash makes you king. Keep the cash flowing in and you are the king. And with banks no longer lending to small businesses, it's even more important. You reference a quote from Bo Burlingham of Inc magazine that says gross margin is the most important. Why is gross margin so important?

It tells you how hard you have to work. It tells you how many sales you need. As a business owner, at the end of the day you need to know that you make enough money to thrive. If you don’t understand the margin, you can very easily get yourself under water. Companies go out of business because they run out of money. The margin is what you get to take home at the end of the day. Margin tells you time. You need to be bringing in more money than you are spending.

44:47

In your book, great book again, you talk about an experiment by behavioral economist Dan Ariely usingWalt Whitman’s Leaves of Grass. What was that experiment?

Dan has done a lot of interesting experiments on how we perceive value. He wanted to see how his students would perceive value. He told them that he was going to have a poetry reading and it would cost $2.00 to attend. He sent out an email and only 3% would attend. This was not very promising. He made a second offer – which was free attendance. The percentage jumped to 35%.

He approached a second set of students and told them that he would pay them $2.00 to attend. 59% said they were interested. He then made a different offer, saying that the event would be free. The attendance rate dropped to 8%.

The response rates depended on the initial offer. The point is that you have a much more significant ability of how people value your product than you realize. You can construct value around what you do.

As I read it, I kept thinking about the efforts of the Big Three recently to offer more and more incentives to buy. Yes, they increased sales. But did they create repeat customers? Would making their products free have helped? What would have happened if they let the buyer determine the price of the car?

You have to understand that if it is a pay what you want, you may not recover your costs to provide the product or service. You might need a “lower limit.” I think it is tough for someone who offers a physical product to use this methodology.

What books are you reading?

Most books that are coming out are around the idea of action and work. It started with Dan Pink’s Drive: The Surprising Truth About What Motivates Us. It was a simplified model of how we should think about motivation.

Seth Godin’s book: Linchpin: Are You Indispensable? One of the ideas is how when we used to go to work, someone always told us what to do. Now we have to create our own maps. Defeat the “lizard brain.”

2 days ago I talked with Chip Heath, co-author of “Switch: How to Change Things When Change is Really Hard” which is about change.

(Listen to Todd's interview with Chip Heath.)

Rework by the guys from 37 Signals. It is about work and how we do stuff.

Thanks, Todd.

My testimonial for Todd's book. This is a short book. But I found the content and ideas and yes formulas made it a powerful book. A book I wish I'd read...a few years ago. All of it was so good, compact, crisp, I first grumbled what a headache. Disclaimer: I'm an art major. But as I read it again and again I saw the beauty of it. It opens the door to seeing your business in a brand new light, a light that can allow you to create new products, new services, new markets, with compelling gross margins and cash-flows to make and keep you king.

Listen...so your profits grow

Raise your hand, privately where you’re reading this post, if you want more profits? ( Okay-y-y...almost everyone. )

Clap your hand if you are looking for that one lever that can generate more profits? And you want to see data to support this claim? Clap twice.

Here it is. Listen.

No, that’s it. Listen. To those who generate the profits.

Here’s the data:

80% of your employees can predict your failure. Stephen Lynch, COO for Results.com.

60%+ to 80+% of corporate projects fail. BusinessWeek

Are these two points...coincidental?

80% of your employees have no clue... what your mission statement says nor what it means. Institute for Corporate Productivity The operative word is ‘your’. It is your mission statement because you were the only person who contributed to it.

71% of your employees could care less. Paul Herr, author of Primal Management.

1. There’s only one way to show you care. Listen.

2. There is only one way to create mission statement that reflects everyone's mission and input. Listen.

3. There's only one way to avoid an 80% failure rate for your new projects. Listen.

Listening is an act of respect. It shows you care enough about that person to invest your most precious resource: your time. You honor by listening to, those whose skills and talents and dedication create profits for their company. They would anyway if you would but...what, I can’t hear you?

Let's add those three, together:

1. Show you care. ( Lower employee recruiting costs + lower employee turnover + lower training costs.)

+

2. Gather everyone's input into building your shared brand from the same page. ( Greater operating efficiencies + fewer errors + fewer internal problems from poor communication or silo mentalities + faster to market + more innovations)

+

3. Lower costs from fewer failures. ( lower cost-of-goods sold + lower returnables + lower R&D costs per project...)

Add them together, and...shhh....

Listen. You can hear your profits grow.

Now. I will be quiet. And listen. What do you think?