Monday, July 28, 2008

Strategic Thought From Wade Myers

I am doing the monthly graphic design work this afternoon for FPCR's SOS program. Having already created custom templates the monthly switching of colors, dates, and titles is more or less just busy work. So, times like these call for multitasking. Since I am at the computer already I find it the perfect time to put in some of what we, he...hem...used to call "tape time." Technically it's now MP3 time...via Itunes.

I am about 30 minutes in to Wade Myer's, "Building A Business From Start To Finish." One of the lectures from Vision Forum's 2006 Entrepreneurial Bootcamp The CD set is one of their current sale items.

Mr. Myer's is talking about different types of leverage one should take into consideration when examining possible business models and opportunities, defining forms, and offering advice about them.

"Continuing on with the business evaluating metrics, this is something that Arnold in his introduction last night talked about residual income. I refer to this as leverage...what I like to say is create some intellectual something once, create something so you can sell it over and over again and get leverage. That's what I always think about in terms of leverage."

"In terms of leverage there is customer relationship leverage. If you sell one product to a customer how easy is it to sell another product, another product etc.?"

"Think about people leverage. Can you hire people and train them to do what you know how to do, at a lower cost and create leverage. Now again that is sorta my build a big business notion. (He is speaking to homeschooling families on how to start a home-based business) If you are in a family business, think about your sons and daughters, can you start a business where they can do what you do? And if you are a medical doctor you can't exactly have your sons and daughters come into the operating room and help you operate."

Technology leverage. Can you automate away a lot of tasks but still charge the same price. I love that. Most of the businesses that I have built and invested in have been business services businesses where I've harnessed technology to automate away repetitive manual tasks."

Financial leverage. Asset leverage, can you take an asset, can you take capital you have and use that as leverage? So in other words, what I hate to see is under utilized equipment. If you invest in a piece of capital equipment and you are only utilizing it two hours a day, how can you utilize it the other 22 hours a day to get more leverage out of that asset. So any time I think about investing in the company or investing in the asset I always think about the asset leverage."

"Customer leverage: Think about the nature of the sale. I love recurring business models. In fact I almost will not invest in anything personally unless it has a recurring nature in the business model. And what I love about that is every month when you wake up, you start off with all the revenue you had in the previous month, plus any new customers you sold in the previous month. So I always look for, and desire in my business plans, recurring customer relationships. It also allows you to invest in that customer over and over again. And in the nature of the relationship, I love it when it is contractual. I want them to be contracted with me. I want them to have to pay me...whatever that amount is every single month. And so I would say that it's a better business plan, it's a better business idea if you have recurring contractual relationships, as opposed to you have to work hard for every single dollar that comes in. This in it's self is leverage. It's customer relationship leverage and the ability to expand the relationship."

Interestingly enough we utilized all these forms of leverage, as he calls it, in our Internet-based and managed distribution company that my father established in 1994. We've been able to develop monthly reoccurring income that we no longer have to work for. I highly recommend the set to the entrepreneurial minded. This is only a small part of one lecture and this singular lecture continues to get juicier as it continues on... I was able to attend the Bootcamp 2 years ago and it was well worth it and then some.

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