Last week, I delivered an elaborate Poultry Layer Farm Business Plan (see below) to a new client in Nigeria.
Since reading it, he has sent me 2 emails (also below).
I now explain why, even with a well written plan, you’ll be wise to rigorously PREPARE yourself to deliver a convincing verbal presentation, to win over prospective investors!
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I spontaneously help others I identify to need it, without waiting to be asked. And I never expect to get thanked for it. I do not need it.
The only way anyone can thank me is by helping others in the same way!
You see, I fear no one, and am never intimidated by anyone’s success, influence or wealth.
That’s why those who know me accept that I will always speak my mind on ANY issue regardless of whose Ox is gored – even if it’s someone who just did me a favour.
I say this especially with reference to instances I’ve seen unfair treatment being meted out to another person by someone I knew.
You see, I believe every living being deserves to be treated with respect and consideration.
But what I have found out about this strange world we’re in is that too many people pay lip service to preserving values like those mentioned above.
I choose to relate with – and acknowledge – people based on who they are, and not some notion of their status.
For instance, back when I still lived in Nigeria, I often went out of my way – sometimes till well after 12 midnight – to help total strangers.
I followed them into the station, and insisted he be released, because I witnessed what happened and he was not at fault.
For over 3 hours, close to 11.30p.m, I left my car parked outside the police station, and engaged the officers in a debate, over the matter, until they agreed to let him go.
They would later seek me out, and do things for me that others had to pay for.
Even when I tried to decline, they would insist.
This is what I teach to my kids to do as well…to stand up and speak truth on behalf of those they identify to need it!
Some people dislike me for it, but that’s the way life is.
Everyone cannot like you. But that does not mean we should fail to treat people right – or stand up for them, when we see them being treated wrongly.
My question to you is this…
I mean in bad times, when associating with you may be perceived as unwise by others, will they STILL stand by you?
What I have learnt is that many people can be amazingly good at hiding their true feelings.
Especially if they feel there is a useful benefit to be had by being on your good side.
So, even when they see you have qualities or faults they detest, they will stick around, and keep telling you they like you.
But that does not mean they will not stab you in the back if they find someone they feel they will benefit more from. Or that they will not look the other way, if they see you getting treated badly.
I certainly hope you do. Like I tell anyone who cares to listen. Every time you do so for someone, you effectively make it possible for someone, at some time in the future, to also do the same thing for you – or for someone you care about!
Know what they about Karma? Well, it’s true. I know, because I have experienced it countless times.
I’m hopeful that you’ll adopt a positive view of all that I’ve said here, and see if there is any truth in it, that you can act on for the future.
My purpose was simply to challenge the reader to RESOLVE to be more REAL in his/her interpersonal interactions.
Too many phonies seem to be around in society these days. As a result too few people are speaking and acting truthfully. The result is that we have a lot of dishonesty, deception, happening across society – and especially even within families.
Only those who take the conscious decision to be different, and to remain that way, will emerge unscathed in the end.
This is because whether they like it or not, there are rules, set by the creator, to govern our conduct here on earth. And every person who flouts those rules will attract what could be considered “hidden penalties”.
That will happen because when they begin to manifest, time may have passed so much that we forget the wrong we did, that triggered it.
You don’t want that to happen to you, because it rarely ends well for those who do things that attract such penalties from the creator!
What follows below, are excerpts from my 30 page Annotated Pictorial Introduction to Feed Ingredients (N7, 500 value). I do NOT sell this report. ALL buyers of my feed formulations handbook (like the Farm CEO I sent a copy to in Abuja-Nigeria, just yester-night) get it as FREE i.e. as a GIFT!
That website became rapidly popular, drawing inquiries from with and well outside Africa (in the Middle East, Europe and America).
Since publishing my popular Feed Formulation Handbook in 2002, I have developed an automated MS-Excel Visual Basic driven Ration Formulation application that works based on the Pearson Square computation method described in my handbook.
That software came to being as a result of repeated requests from buyers of the handbook. Today, they often sell as a bundle.
This document does NOT provide an exhaustive listing of feed ingredients used for all livestock.
What I have tried to do is focus on those main and more popular ones used frequently by most farmers and which are readily available in adequate quantities in the marketplace.
Where appropriate I have mentioned the need to explore potential alternative ingredients to certain high demand ones like Maize/Corn.
But I did not provide any details about those alternatives.
Instead, I plan to discuss potential alternative ingredients with potential to effectively replacing existing expensive or high demand ingredients, in a series of articles.
Read my article titled at http://tayosolagbade.com/sdnuggets/reducing-catfish-feeding-costs-a-secret-weapon.
It’s published in FULL as a guest post on www.africabusinesscommunities.com in 2 parts:a.Reducing Catfish Feeding Costs (A Secret Weapon) – Part 1 of 2
b. Reducing Catfish Feeding Costs (A Secret Weapon) – Part 2 of 2
To get a complete and FREE PDF version of the above linked article with clickable URLs to many useful reports, publication and websites that offer even more data, send an email to tayo at tksola.com. This offer is ONLY for owners of the feed formulations handbook.
In the process of actually carrying out the feed compounding, most of the ingredients mentioned in the foregoing discourse – if in solid form – are usually ground using a Grinder and thoroughly mixed using a Mixer.
However, for ingredients like Oyster shell, bone meal, meat meal etc, they are milled using a Mechanical Miller before being mixed with the rest of the ingredients.
Poultry feeds can be prepared as mash, crumbs or as pellets. Pellets production is not very common for poultry, and requires the extra effort of adding fat under high temperature and pressure, so as to concentrate the nutrients/constitute the mash into particles. – See page 54 of my handbook.
Learn how you can purchase the Feed Formulation Handbook and Software on my Cost-Saving Farm Business Ideas website (click).
“Patience is a virtue that carries a lot of WAIT” – Unknown
Not everyone in paid employment gets to that point when they feel they need to jump ship and go solo (i.e. resign to start a business of their own). But some do. And when the bug bites, it can leave you feeling impatient, and hungry to get started like yesterday.
We are not all equally gifted with (or able to acquire) the same amount or mix of skills and abilities needed to succeed in the world of business.
While some are quick learners, others tend to take a while to get to grips with the requirements for running a business well enough to earn a living by it.
In other words, they WILL struggle to succeed at it, if not well prepared.
I discuss 2 reasons this happens…which is why I recommend careful planning, and bucket loads of PATIENCE – no matter how eager, excited or driven you feel!
Most conventional schools teach learners to become employees, and consumers. A person who wants to go into business must change any of that programming to succeed.
In other words, you want to think like YOU are the boss, and believe that you CAN be successful at being BOSS.
You will also need to become focused on creating for others (buyers) to consume.
But making those needed mindset changes will not be easy for everyone.
By implication, quitting a job to start a business before you learn how to deal with the controlling effects of “school programming” can lead to problems.
This is why I encourage anyone I notice is experiencing such eager-to-start-but-being-held-back frustrations, to WAIT and do it gradually.
For instance, the assurance of a future inflow of money in form of salaried income makes many people unwilling to control their spending.
As a result, they excessively indulge themselves in spending that adds little tangible value to them.
Most times they spend impulsively; to acquire things they can do without.
The desire to own things, and show them off to admiring others. The need to keep up with Mr. X and his wife drives many salary earners to make often unintelligent spending decisions.
Such habits are the greatest enemies of a business owner who seeks success. Especially when you’re just starting out and not yet a billionaire, like Richard Branson.
Unless you misbehave badly at work, it is unlikely that an employer you serve responsibly will lay you off. The only exception being of course if there are bad times.
Other than that, it’s best you quietly – and unhurriedly – make your plans to leave.
And in order to boost your chances of success, you will be wise to begin TRAINING yourself to DROP the habit of making unplanned expenses.
James R. Cook was right, when he wrote in his “Start-up Entrepreneur” New York Times best selling book, that you can get by on far less than you think.
My experiences actually convince me that cutting down spending by 80% can be good for you, in starting up after being in paid employment.
So before you actually find yourself without salaried income, I urge you start cutting down your spending.
You only lose indulging yourself in some excesses. Otherwise, this would only mean that you’d end up with a LOT more funds in your account by the time you actually quit your job.
And that’s what you really need, to make a success of going into business for yourself. Aim to use that job you hold as a fund raising source.
Otherwise, you will find it useful to start something close to what you plan to do, on the side – as a part time venture.
While still earning a salary, you would easily raise the funds needed to launch that part time business, and even easily take care of cash flow challenges that may arise.
Get your spouse or a relative to help, so you don’t have to spend much on personnel. This will depend on the kind of business you choose to start though.
They are still employed full time in mostly high paying jobs (banks, oil companies etc). But they have launched poultry and/or fish farming businesses of various sizes, which they run (often profitably) with their spouses.
Many come to me when they need to expand, and want my Ration Formulator software to begin compounding their own feed.
Sometimes they want my Poultry Farm Manager software.
And at times it’s a business plan they want me to help them prepare.
And sometimes one or two share with me the conflicts they are going through.
Recently, one such individual told me how he was finding it frustrating to keep working for his employer. He said it was preventing him from having enough time to devote to finishing off tasks related to launching a scaled up version of his new venture (a poultry layer farm).
Something about the way he said it howver got me worried that he could end up creating avoidable trouble for himself e.g by getting accused of negligence or divided loyalty.
James Cook called it a “gnawing dissatisfaction”.
But I had to force myself to be patient and do it right. And I managed to leave in a way that earned me exciting accolades and enjoyable send forth parties etc.
Those memories made me decide to offer him some advice – in an email. Later on, I re-read it and decided others in similar situations may find it useful.
The message is don’t burn your bridges with your employer, in a bid to pursue your dream. Even if you don’t need him/her later on, it’s best to leave on good terms.
After all, you would not want YOUR own employee acting selfish and inconsiderate while still taking a salary from you?!
===Starts===
Dear S.
I know what you mean. I felt the same way in my last few years in Guinness.
But here’s my honest opinion.
Like it or not, being in that job is still good for you at this stage of your planning.
It gives you easier access to cash to do most of what you want to do, including the runs to start this new venture.
You must therefore strive to maintain a Positive Mental Attitude about still being there, even when every fibre of your being is screaming to get out.
You know your plans and where they are taking you. Keep them to your chest, then FOCUS on what you are required to do at work, until you have done it to your boss’ satisfaction.
Like Jim Rohn said: Wherever you are, be there.
Make sure you don’t let yourself feel, speak or act resentful about having to work for the company during this transition period.
In fact, I recommend what I did in my final years in Guinness, even after I’d set all my resignation plans. It was then that I even worked hardest and made sure I went the extra mile on every single task I was assigned.
That way no one could accuse me of divided loyalty when they eventually heard I was leaving.
And that enabled me leave with praises showered on me by colleagues and Ogas at 2 levels of send forth ceremonies I was treated to.
You should aim to do something similar or better where you are. Make it a goal to leave with such a positive bang, that even the MD will openly acknowledge you and lament that you’re leaving.
Funny enough, when you leave in that manner, it gives you powerful bragging rights anytime you are asked about your former workplace. You would be able to confidently say that you were in relevant, highly valued and in demand by the company, when you chose to leave.
===Ends===
That happend because the ideas I tried on the side proved to be difficult to develop on a 9 to 5 job.
But I did try for about 2 years – whenever my job freed me.
Lord knows I tried.
Eventually, I had to quit. I was just not making the kind of progress I wanted. It became obvious I had to take the leap of faith.
But one thing I had – and that made me confident – was that I knew I was tough enough to deal with any hardships that my decision would bring my way.
And believe me, they came in droves!
I however doubt that many of those I relate with could endure the kind of unrelenting pain, suffering, humiliation and frustrations that I went through to succeed.
I had a family that experienced major LACK in every sense imaginable during the time I struggled to lift myself.
It was something I never imagined would happen.
That’s why whenever someone say s/he’s impatient to quit work and start a business, I say what I’ve said here…
Take it easy. Take it slow. Start something on the side first, and build it gradually. When it gains enough income generating momentum to cater for your needs, you can take the next step.
The truth is that some of us have to take those risks, and walk those lonely paths to success. And what we learn gives us unique insights to help others who may not be able to handle the same pressure.
Good luck to you!
You can publish a physical book at zero cost, and earn passive income from its sale, for life – IF you know how. I explain how I do it, in this special report.
Below, I show screenshots of how I earn such passive income using publications I write and publish at ZERO COST via Print On Demand publishing.
It could be a book to inspire, inform, educate or all of the foregoing. The stories could be told to show how people hit by storms of life were able to survive and move on – maybe with support from you, or your team/organization.
Persons who need the inspiration, information and education you offer may not be geographically able to benefit from you in person (due to distance).
That’s why writing a book is great.
Those who cannot reach you directly can still buy your book and find it quite helpful. Plus, you can also generate valuable passive income in the process.
The key to business promotion success is to – as INEXPENSIVELY as possible – get your target audience to notice – and eventually pay conscious attention to – you on a continuing basis.
For years, I have deliberately studied him in developing ideas and strategies to reach my own target audience. And I continue to record uncommon marketing success from doing so.
Certain unique factors matter the most in achieving this kind of success.
I discuss 3 main ones based on my experience based observations over nearly a decade.
“Don’t Copy. Create!” – Unknown
Notice what I said about studying Branson. I did not copy him. What I did was/is to creatively adapt what I learned from observing him, to suit my own peculiar marketing needs.
That eventually resulted in something almost entirely different.
If you run a farm business for instance, you’re better off developing real world relevant strategies that help you better reach and impact YOUR target audience.
Don’t waste valuable time copying methods employed by a friend who runs a restaurant.
If s/he places ads on TV/Radio, it (hopefully) would be because s/he has done the needed homework, and is sure the patronage to be reaped will offset the relatively high costs.
Margins from sales of your kinds of farm products may make it unwise to do same.
You may be better off making potential bulk buyers offers (e.g. restaurant and hotel owners like your friend). Let them do the heavy duty advertising. That will GROW your profits by reducing your cost of sales. So you will not need to increase your price to cover ad costs.
Rather than burn time, effort and fuel going round town at the initial stages, you simply need to create, publish and relentlessly promote the right kind, and mix, of content via multiple channels.
Every now and then, you would make an offer and follow it up with a call to action
Here’s an Example Offer You Can Make: “Do you regularly buy large quantities of? Our farm offers a special bulk pricing with doorstep delivery of high quality eggs anytime. Never again have to worry about getting enough quality eggs when you need them. Contact us today…!”
In yesterday’s article, I shared an excerpt from a pep talk I gave to my kids. What I told them was based on my experiences running my own business for over a decade now:
“Even when you can afford it, you can get MORE done with LESS money, if you learn to apply Critical Thinking. Do NOT fall into the habit of throwing money at your problems…” – (me to my kids)
They do so because it is EASIER to sit back to wait for the adverts paid for to bring people in.
The problem is however that just like you are placing yours, so are others who think like you…and MANY people think like THIS!
Unfortunately, since the ad limits the space you can use, based on how much you pay, you will often be unable to say (and/or show) as much you’d like to say, to convince a potential buyer who sees the different adverts that YOU will be a better choice compared to your competitor.
Indeed, if the competitor has more financial muscle, most buyers may conclude s/he offers better value than you do.
But that’s not always true.
We all know the story of David and Goliath…which brings me back to Richard Branson again.
You see, the David vs. Goliath strategy is what he has always used, and advocated.
After reading Branson’s article on it, I began applying it to suit my own unique circumstances.
So, I’m saying you need to realize that you can use creative Critical Thinking, to achieve profitable business promotion for yourself.
Consider Branson. He always finds a way to get zero cost attention – including media exposure. Many times he has used publicity stunts, which he deliberately wrote about/shared – via multiple online platforms – to create buzz (aside from that resulting from free media coverage he got)!
Every situation in which you interact with others, is a potential opportunity to get share of mind (which is what marketing is about).
The more unusual your strategy, the more likely you are to get noticed. Just be sure to find a way to do so without having to dip your hands in your pockets all the time.
Once again, I refer to Mr. Branson.
I’ve seen photos of him playing a guitar on stage in a bar; carrying a uniformed Virgin Airline hostess off her feet…and even kissing Desmond Tutu on the cheek!
But each time he posted the photos, there was a message.
For instance, below the photo on Facebook, in which he was show kissing Bishop Tutu’s cheek, Branson added a message to educate people about the need to tolerate others regardless of sexual preferences i.e. the need to practise unconditional love.
Now, you could argue that THAT had nothing to do with marketing his brand(s). However, if you think about it, he’s still indirectly selling himself to his target audience.
On another occasion, when he shared photos taken during a visit to a country against which some western countires had issued a travel advisory, he linked to an article he had written titled “Why Travel Advisories Hurt Countries and Help Terrorists”.
The above would have won over some people who probably did not reckon with him much in the past.
And such individuals could develop a fierce loyalty to Branson that would make them go out of their way to identify with any companies they know he owns!
In other photos, he makes people laugh, and many comment about how human he manages to stay despite being very successful, and busy.
Again, this gets him more share of mind.
Richard Branson RARELY posts a “come and buy my product or service” message.
Instead, he often focuses on using entertainment to educate and inform, as a means to winning people over to feel like “buying” from his company.
A VERY effective strategy indeed. I know this because I’ve used it for years, and compared to when I used the direct selling approach, I know it yields far superior rewards.
What you do could (should) be a variant of what he’s doing, that lets you leverage your own unique strengths as an individual.
Find what you’re comfortable doing, and then DO IT – in an entertaining way, while injecting some education and information to win potential buyers over.
They can be used offline as well as online.
However my experiences have taught me that you can intelligently use the Internet to achieve much more USEFUL marketing reach and impact faster, and expending less effort, or money.
What’s more, those who encounter your creative marketing online, can over time become your fervent advocates, who go and “preach your gospel” OFFLINE to others – bringing them to YOU!
People contact me saying someone told them to.
This includes people who sometimes use the web ONLY to check mails and struggle to use the PC!
Yet their level of conviction is often so high, that they send FULL payment 100% in advance, to purchase – for instance – my Feed Formulation Handbook, its accompanying Excel-VB Ration Formulator software, and/or my increasingly popular Poutry Farm Manager software.
What I have found from developing WMS for clients over the years is that not everyone easily “gets it”.
They do not readily understand how to use WMS as the powerful timeless marketing (and sales leads generating) tool it is.
And that’s why I offer a Web Marketing support/coaching service to help them.
“Even when you can afford it, you can get MORE done with LESS money, if you learn to apply Critical Thinking. Do NOT fall into the habit of throwing money at your problems or goals…” – (me to my kids)
Here’s how 2 of my sons used critical thinking to solve – at ZERO cost – a recent power “cut” problem, which the neighbourhood electrician had earlier demanded N2,500 for…!
We initially thought it was the usual power cut from the public power company. However, one of the kids coming in from running an errand soon alerted us to the fact that our neighbours lights were still on.
My wife and I went out to see, and soon confirmed it was true. To be sure, I told the kids to start the generator. They did so and when we changed over, nothing happened. It was obvious the current was not getting into the house’s supply line.
However, as I have written severally in past articles, my 11 year old son has shown an amazing flair for fixing things especially electricity related. And he’s gotten so good that in our home everyone (including his mother) readily calls on him to fix damaged plugs, replace fuses etc.
That, in addition to the many instances he had used damaged parts from laptops, mobile phones, phone chargers, and old batteries to build useful contraptions (e.g. a crude but functional rechargeable lamp) made me buy him an electrician’s kit for his last birthday present, when I visited Nigeria.
On my part, I was too angry, indeed frustrated, to get involved. I thought of calling the neighbourhood electrician, but recalled that the last time I’d visited, I had to contend with his excessive and arbitrary pricing of his services.
That day, I’d had to take him down to the ATM to get more cash to get him off my back for fixing a single ceiling fan and a rewriting job. I knew he’d over charged me, but since I did not know how to do it, and I did not want to leave for Cotonou without fixing the problem, I gave in.
So, when this incident happened, I told myself I would rather wait and find someone else to do it.
What I did not expect was that my kids – who I had always challenged to be curious and to think of ways to solve problems without spending money – would choose to apply what I’d told them that day.
I heard her grumble about how I’d not said anything more about the problem. Then soon after, I heard her call the electrician on the phone. He soon arrived, and promptly asked what the problem was.
She replied that she did not know, and explained that current was not getting into the house from either the public power supply or the generator.
I was in the bedroom and listening without saying a word.
“Aha! Your kids must have put one something that’s caused extensive damage. Ask them to tell you what they put on. I’m sure they’ve cause major damage that needs to be traced and fixed”
His voice had assumed a note of superiority. He sounded sure that no one could challenge him. My wife asked him how much it would cost to find and correct the problem.
When I heard that, I screamed to myself silently wondering how he could arrive at such an outrageous sum without even doing any checks to ascertain that his suspicions were right.
Indeed, I wondered how he could be so sure it was not even something worse, that would cost more than what he was quoting.
But I kept my protests to myself. I let my wife respond instead. She soon told him that she could not pay that much, and asked for a reduction.
He bluntly refused and then to apply pressure on her, he said “Look, are you ready to pay or not? I have other things to do. If you’re not ready, let me leave.”
My wife told him she could not pay that much. Without saying anything more, he picked up his backpack and left.
Then I announced that I intended to go out and get someone else to look at the problem and give his opinion. I pointed out how he’d used indirect threats to try forcing her hand, to make her pay up. They nodded in understanding
I returned inside and began dressing up to go out.
Suddenly I heard my 2 sons who had been brainstorming all the while, now screaming excitedly saying “Look, there’s light here!”
In response to a suggestion their mother had made, they had disconnected the plug linked to the panel, and put the wires directly back into the socket.
That had caused the little lamp on the side of the socket to come on – confirming there was current up to that point.
This meant the only reason we did not have current in the house was that the fuse in the 15Amp plug was burnt.
When I joined them, I saw what they were referring to, and told them we needed a new fuse.
He quickly dashed into his room and returned with an old plug he’d salvaged from one of his many “scavenging” walks, and he replaced the bad fuse.
A few seconds later, the lights came back on! This happened less than 15 minutes after the neighbourhood electrician left.
Ecstatic, I called the kids together and said:
“See what I mean about not hurrying to spend money to solve a problem, or achieve any goal? Even when you can afford it, you can get MORE done with LESS money, if you learn to apply Critical Thinking. Do NOT fall into the habit of throwing money at your problems. If we had paid that man N2, 500, he would most likely have made a show of doing a lot of work, to justify taking that much. But he would ultimately, only have replaced this same fuse we have just replaced. And we would never have been the wiser!”
I knew it was a lesson they would not forget in a hurry.
Now they knew the electrician (an “expert” of sorts) could be wrong, and that THEY could solve a problem themselves if he walked away!
Sadly, too many adults easily get stumped when confronted with the unexpected or unusual.
This makes them easily accept defeat when things turn out differently from what they expect. Children who get an opportunity to solve problems that others walk away from – by applying critical thinking – often come away with greater levels of self-esteem and confidence.
That will often prove invaluable to them in their adult lives. Those they relate with will consequently marvel at their seeming ability to defeat failure or setbacks!
That eventually leads them to what we call breakthroughs – like the one my kids had. I’m so excited for them, because it means they are well on their way to success in adult life.
Decide If You NEED To Read This Article (Take A Quick Quiz!): This article features my Layman’s Business Variable Costs Control Systems Awareness Quiz™ below. If you answer NO to even ONE of its seventeen (17) questions, there is a good chance the information contained in this article can help you.
The quiz poses simple questions designed to get you thinking about possible areas in which you can look to apply spreadsheet facilitated VC monitoring/control and reduction initiatives in your business.
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The problem in the latter case tends to be that they still have to spend more to get more sales, and often if not well managed, there may not be any significant difference in bottom line margins achieved, especially when competitors launch a counter event.
I describe tested and proven ways by which anyone can intelligently implement Variable Costs (VC) Monitoring/Control and Reduction initiatives – supported by spreadsheet tracking/analyses – to increase chances of routinely recording optimal profit margins even when prices remain fixed and/or competition is fierce.
The ideas, concepts and strategies I advocate for adoption in this article are based on proven practice. In fact, the case study and specific analogies used are based on real-life activities that I personally partook in over a period of six years, as a manager in a large blue-chip multinational brewing company.
Read my article titled “Use Custom Automation Of Your Spreadsheet Reports To Drive Down Costs And Increase Your Profits” for additional details of my experiences in this area, while in paid employment.
What you learn from reading the above mentioned article, will hopefully encourage you to seriously explore ways to put the information provided in this article to good use for your business.
If you need any help with thinking up ways/means of putting them to use, I would be pleased to help out.
Case Study
“Because its purpose is to create a customer, the business enterprise has two – and only these two – basic functions: marketing and innovation. Marketing and Innovation produce results. All the others are costs” – Peter Drucker
What follows is a bit of a simplistic example, but it serves the intended purpose of providing a basis for the following discussion. The logic on which this analogy is based can be applied to any situation.
5 lengths of material A(N2,500.00) + 1 kg of material B(N1,500.00) + 20 pieces of material C(N,2500.00) = 1 unit of Product Z(N6,500.00 Naira or $46.43 US Dollars).
Assume other (say operational and marketing) expenses amount to N500 per unit of Product Z , the Cost Price for one unit would be N7,000.00($50.00) – approximately. That means whenever 1 unit of Product Z is sold, a gross profit of N7,000 (N14,000 – N7,000) or $50.00 USD is made by African Arts Concepts Ltd.
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Now imagine that a staff of African Arts Concepts Limited begins to over use (and this does happen!) material B by say 0.5kg for every unit of Product Z. The usage cost for(i.e. cost of using) Material B per unit of Product Z produced will become N2,250(N1,500.00 plus N750.00).
5 lengths of material A(N2,500.00) + 1 kg of material B(N1,500.00) + 0.5 kg of material B(unrecorded N750.00 usage cost ) + 20 pieces of material C(N2,500.00) = 1 unit of Product Z(N7,250.00 Naira or $51.79 US Dollars).
Adding the other (operational and marketing) expenses of N500 per unit of Product Z, would bring the cost price/unit of Product Z to N7,750($55.4 USD), instead of N7,000($50.00 US Dollars). In otherwords, the company incurs an – unnecessary – N750 or $5.4 US Dollars additional cost to produce EACH unit of Product Z.
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(a). African Arts Concepts Limited may not detect it – except they have monitoring systems(e.g. a custom automated Variable Cost Analysis Spreadsheet) set up to alert them to such occurrences.
That batch of Product Z will therefore still be sold for $100.00 US Dollars per unit(a 20% LOSS!).
(b). Even if it is detected, little can be done to correct it for batches that would already have been produced BEFORE discovery/correction of the problem.
If continued unchecked, this over usage can quickly cause huge losses: Multiply the N750 naira ($5.4 USD) over usage by say 1000 units of Z produced in a month and you get N750,000($5,400 USD) – lost unknowingly.(That $5,400 USD over usage equates to losing 54 market ready units of Product Z!).
What will typically happen is that at the end of the month, the company would find that they have 500kg LESS of material B left than expected. This would subsequently require them to make an additional unplanned purchase of material B using money budgeted for other purposes – thereby disrupting cash flow etc.
The foregoing is one major reason why some businesses that appear to be doing well suddenly go under, or record low profits/losses! They fail to keep a grip on their real costs of operation. What has been described here is applicable to virtually any type of business – be it service or product based. One only needs to change the items of income and expenditure considered in delivering the relevant product/service.
Answer: By Adopting Variable Costs(VC) Monitoring/Control Techniques.
I like to think of Variable Costs, from a lay man’s perspective, as those expenses you incur, which can(and do) vary depending on your ability to find cheaper yet equally – if not more – effective ways to do what you do, when compared to your current methods.
To implement a VC Monitoring/Control system, you can follow the steps outlined below – making needed adjustments to suit the peculiarities of your unique situation or need (Note that the use of spreadsheets is integral to the approach I recommend, as it facilitates sustainability of systems set up).
Start recording and analysing your business revenue and daily operating expenses, including variable cost elements such as how much you spend on marketing, transportation, phone calls, materials usage etc.
You can easily do this by creating Excel spreadsheets with raw data entry interfaces linked to standard reporting templates(which generate meaningful output from formulas applied to your raw data).
For best results, you might find recording materials usages in the same spreadsheet, with their corresponding prices helps in deriving expenses relevant to materials usages(by simple linking of cells to be multiplied e.g.”Kgs” used by price per kg).
You will also need to do some benchmarking by obtaining detailed industry data for businesses similar to yours. Using that data, you would derive weighted averages, upper and lower control limits etc.
These could then be charted in your spreadsheet using actual data you would periodically post. Your objective in managing your business/process would then be to ensure your Key Performance Indicators(KPIs) fall between the established control limits implying that it is performing optimally.
If during your daily, weekly or monthly recording and monitoring, you then notice any of your charted KPIs deviating outside the favourable range, you would be able to quickly investigate and correct the problem before it goes too far.
In the case study used above for example, if a target usage rate of material B per unit of Product Z produced had been routinely recorded in a spreadsheet, and plotted on say a Schewart chart, the CONTINUOUS over usage of 0.5kg per unit would have reflected in the slope of the chart – and therefore led to early detection.
Again, this is a simplistic approach. More effective methods(e.g. automated plotting of a Cusum – Cumulative Sum Deviation chart) can be easily employed using spreadsheets with about the same effort. I cover Cusum charts, and how to use them, in considerable detail in a new PDF report I’m working on.titled “Simple Performance Measurement/Process Control Tools You Can Use In Your Business”.
Answer: By Applying Practical Variable Costs(VC) REDUCTION Techniques.
As I earlier stated, your variable costs are those expenses you incur, which can(and do) vary depending on your ability to find cheaper yet equally if not more effective ways to do what you do, when compared to your current methods.
Adopting this strategy means you will actively encourage/engage in the routine search for quick, easy, practical, inexpensive, and sustainable ways to drastically cut down on the expenses required to make and/or deliver your products and services to those who want them.
The foregoing underscores Peter Drucker’s assertion that Marketing and Innovation are the two basic functions in any business which can enhance its profitability. All others are costs.
Therefore To Increase Your Profits Without Raising Prices :
Find more NEW customers more frequently. But in doing so, think up cheaper and more effective/efficient ways to reach more people who fit your target audience profile. Even if you already have a website, chances are there are still a number of viable ways you could use it to achieve this purpose, that you are YET to explore. Take it from me. I get so so much done at little or no extra expense using my website resources more creatively.
One reason why this is possible is because I have devoted hundreds of hours to learning web design, custom CGI programming and web marketing techniques.
If you actively work to find new customers, you create a growing pool of clients from whom you can generate referrals and repeat businesses resulting in higher sales volumes/turnover. Also, it helps you cover gaps that will occur periodically from client attrition or turnover.
Traditional methods of business marketing and advertising can be quite expensive especially when used for protracted periods. The dilemma of the business owner who seeks increased exposure therefore tends to be, finding a reliable way to stay in touch with(or visible to) her target audience without going bankrupt.
The answer, from my experience lies in learning how to intelligently leverage technology and the Internet to complement the marketing efforts being made offline, in a way that cumulatively lowers overall expenses incurred – resulting in increased profits over time.
Read my article titled “Zero Cost Methods To Boost Your Business Marketing and Cuts Your Costs Using Your Website” for tested and proven ideas, methods, tools and resources you can use.
Actively work to discover and implement quicker, cheaper and easier ways to deliver the same products/services to those who want them. Assume you previously could only turn out 1000 units of your product per month at a cost of $5.00 per unit(to sell at $5.75 per unit).
Then following a change in your procedures, suggested by one of your employees – who gets rewarded accordingly 
– you are subsequently able to routinely churn out 1500 units per month at the same $5.00 cost per unit, the implications for your year end profitability are obvious.
Entrenching a continuous improvement culture in your operations will facilitate innovation – to your ultimate benefit.
To reduce your VCs, you need to measure, record, analyse and trend your data. Many of the income and expense items you need to capture in your monitoring are likely to be the same ones your accountant/auditor would focus on in helping you prepare your end of year accounts for tax returns computation.
Therefore, at this stage you might find it useful to involve your accountant in generating the spreadsheet you want to use – or even have him give you one s/he uses, so you can adapt it for your purposes.
No matter how large your turnover or revenue is, control of your expenses is the only sure way to reasonably ensure your profits are maintained in the face of fierce/increasing competition, and/or market fluctuations. This is especially so, because you cannot raise your selling prices at will – else you price yourself out of the reach of your target customers.
Three(3) Practical Benefits Of Applying VC Monitoring/Control And Reduction Initiatives In Your Business
You will be able to price more competitively and still retain good profit margins even when market situations do not favour most other operators. You would have greater customer appeal. More customers are likely to be able to afford you i.e. your VC reduction efforts enable you price your products/service in such a way that they never become too expensive for your clients/customers.
Also, your ability to cut down your expenses without negatively affecting your product/service quality or delivery, will make it possible for you to offer lower prices/rates and depend on sales volume to sustain the same profit margins. The resultant increased customer base, will naturally afford you increased marketing opportunities, Enhanced ability to withstand/survive market place or industry fluctuations and so on.
They offer some of the lowest rates available in the airline industry, often delivering about the same quality of service as their competitors – who may not all necessarily be too pleased about it :-). If Virgin did not have the means of sustaining this practice, while remaining profitable, they would have crashed out of business long ago.
I never get the accountants in before I start up a business. It’s done on gut feeling, especially if I can see that they are taking the mickey out of the consumer. – Richard Branson
Which would you prefer: More Revenue? Or more Profits? At the risk of stating the obvious, if you do not control your expenses, your revenue can increase without a corresponding increase in your PROFITS. One does not have to be in a business where billions need to be spent before knowing that this is true.
When two units – instead of one – of a raw material are used to produce 1 unit of your bottled juice, you are spending more to produce that bottle, hence your profit margin for that bottle will drop by the value of that extra unit of raw material used, be it with or without your knowledge.
Whether you know about it or not; whether you measure it or not is immaterial, and will not change the fact that you will earn a lower margin on that product.
If that then happens to many products(or a larger number of the same product), you may find at the month or year end, you get a shocking low profit declaration when you(or your accountant/auditor) reconcile expenses, revenues etc for the period.
Things could even fall apart before then. That’s when you see a company that gets plenty of business from old and new clients struggling to find money to run daily operations and make salaries payment(cash flow)!
This is why setting up a Variable Costs Monitoring/Control and Reduction System is important. It will help you keep a close watch on all the important measures of your business’ operational performance, so that you can easily, discover undesirable trends and nip them in the bud.
At the same time, you would be able to intelligently experiment with changes aimed at reducing your operations costs, and monitor their impact in order to decide whether or not make them permanent.
Uncover the invisible costs by using spreadsheet tracking. Some costs are more visible than others. It is those “invisible” cost channels that I refer to here. They are the “potential” profit drain pipes.
Do you know how to identify, monitor and control them in your business? Are you sure you’re not missing a few critical ones? Often times they are avoidable – should not be there – but because the business owner has no monitoring/control system in place, they build up over time, till they cause BIG problems.
Examples include theft/pilfering by outsiders or staff, materials over usages, idle/downtimes in different aspects of your operations, overstaffing, etc.
All these things can – and do – happen. The challenge is for the business owner or decision maker to setup monitoring systems to quickly throw up inconsistencies in the inflow/outflow etc of the concerned items.
As more and more people go into business for themselves, every owner will have to contend with increased availability of the same products/services in the same market.
As has happened in the past, some will have done their operations management so efficiently that they will be able to drop their prices significantly below the market price(or refuse to increase them), and still make as much profit as (or even more than!) their rivals.
The latter on the other hand would struggle to match such price drops if their operating costs are higher – possibly resulting in their being forced out of the market.
This applies to one-man businesses as well as corporate multinationals, be they product manufacturers, distributors, resellers or service providers. The only people who don’t worry about cutting costs in order to give customers/clients stable or even lower prices, are monopolies(due to lack of competitors) and those who “buy their way” to new business.
The wise owner will make a habit of continually exploring Variable Cost Monitoring/Control and Reduction initiatives, that will enable successful delivery of larger numbers of products/services at lesser cost, in lesser time, and using lesser resources.
I could go on, but I think the point I’ve made here is clear enough already. So much thinking/re-organisation will have to be done initially to develop the needed systems. But the process once started, can only get easier. And the positive benefits derivable from adopting this approach will be immediately obvious.
1. One good way to maintain and/or significantly increase your profits without raising your prices, is to reduce your Variable Costs(VCs).
2. You can reduce your variable costs by marketing more efficiently (getting more customers at lesser cost, AND maintaining them at lower expense).
I once read an article that proposed a new parameter COCS: Cost Of Customers Sold or Served). This could be adopted as a Key Performance Indicator(KPI).
3. You can also reduce your variable costs by innovating more(i.e. developing greater efficiency in your routine internal operations and/or product/service delivery).
That way, you would be able to produce/deliver more products and/or services with less effort, in less time, and using less resources. All of these would imply LOWER expenses/costs, leading to INCREASED profit retention per unit of product/service sold.
4. There is saying that : “You cannot manage something, if you do not measure it. Nor can you measure it, if you do not record it”.
Spreadsheet tracking will help you conveniently implement and sustain the process of monitoring, controlling and/or reducing your VCs. You will need to do this so as to constantly evaluate progress of your VC monitoring/control and reduction initiatives.
NB: This article is based on excerpts from the original piece which was first published in 2007 via www.spontaneousdevelopment.com – Tayo Solagbade’s former 9 year old domain name.
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Tayo Solagbade’s Excel Heaven™ is the FIRST provider of Preprogrammed and Custom Spreadsheet based solutions in Nigeria.
We offer Workbook Auditing/Optimisation and VBA Automation; Custom Spreadsheet Software Development; Sales; Job-Based Spreadsheet Coaching; and Consulting/Advisory Services on effective application of spreadsheets for business use.
See video demos of Tayo’s custom built MS Excel applications at http://www.youtube.com/user/TKSolagbadeSDAc
Visit our Excel Heaven mini-site at :
I sent huge amounts of my working capital down "newspaper advertising drainpipes", when I first started out, because I did not have a proper understanding of the important considerations for deciding on how and where to place my ads.
My thinking about advertisements, and how to use them to attract business for myself was terribly "confused".
As is very often the case when one has the benefit of hindsight, after making many mistakes and learning how it should NOT be done, I offer you the following ideas to consider in deciding how to go about getting marketing/advertising exposure for your business.
As I always say, THAT would be okay: Simply take what you need, and leave the rest for others to consider. Understand also that I make no promises or guarantees that the ideas you get from here will work for you.
It was not that I did not try to get help or advice from those I believed would know, but it was that – with the exception of a few – most people I met with did not somehow manage to get around to telling me(that is of course if they knew) what they knew about the subject, much as they tried to help.
Let me tell you a few things I have since learnt about cost-effectively getting marketing/advertising exposure for my self, through sometimes quite painful(AND "pocket-draining"!) experiences.
Consider this true story. Back when I was in my teens, I was actively involved in competitive school/state level handball. At one time we had a team mate who was rather smallish(compared to the rest of us).
But he was so skillful that virtually everyone he played against had to make extra effort to keep him for scoring on EACH attack his team made. Over time he earned the nickname "Small but mighty" and all who had faced him in "battle" agreed that he was!
As I said in my article titled "How To Choose The Right Web Design Company", size does not necessarily equate to competence – or as is more appropriate to this article: "An advert’s big size will not necessarily make it more potent or effective".
It’s not so much the size that really matters, but how well crafted the message contained in the advert is. To arrive at what would be a well crafted ad, you will need to have built for yourself, in your mind, a clear "profile" or your target audience – demographics like age, income group etc.
Looking back, I think I missed it because it required doing A LOT of up front THINKING before going out to pay for ANY advert. Unfortunately, THAT(i.e. "thinking") was not something I did not do much of in those early days after leaving a salaried job.
I just thought I needed to get out there, place the ads, and start responding to enquiries that resulted. Well, my empty bank account soon taught me to slow down – and learn!
What I write in this article, can save you needless, avoidable pains like those I had to endure.
The placement/location of a well-crafted advert in the medium chosen can make or mar the advertiser’s efforts of getting the maximum possible exposure through it. Classified ad boxes can deliver quite good returns depending on your intended target audience.
You might want to study the different newspapers and magazines to see what type of adverts people place in them. A little 4.5 x 5cm ad box(like one of many that I came across in an edition of the UK Magazine "Management Today"), if placed on a page(s) readers know they can find advertisement, can get sighted/read as frequently as one that is a big as a quarter of a page.
But that’s not all. That kind of box advert very often has the potential of generating even greater returns for the advertiser, if complementary e-mail/internet marketing is used to support it.
You need to place your advert in the right news medium. Instead of putting it in a general subject news medium like many of the dailies, consider getting better exposure in a smaller, less widely circulated publication which is mainly consumed by persons likely to be interested in your product or service.
For instance you are likely to get better results by advertising in a paper newsletter titled "Weekly Insights For HR Professionals" sent out to HR Managers of companies in your area, than placing the same ad in a general subject weekly publication.
So, depending on the area of business you’re into, you will have to study extensively the most economic and effective medium of advertisement to use. A good method would be to approach those who have been using them and ask their opinion.
That most people use Tuesday Guardian does not mean you should. Sometimes, that edition can get too crowded that an advert not strategically placed to catch the eye as pages are turned will probably not be seen by any of those who need to see it!
Another factor to consider is the shelf-life of the medium you wish to place your advert in.
You must try to analyse how long you think it will take those you want to reach, to sight the advert. Most publications have a shelf life of 24 hours to one week depending on the type (some are weeklies).
You will have to consider this in placing your advert, because you want to be sure that as many as possible of the kind of people you want, get to see it before another edition is published and the old one becomes obsolete.
Most times you need to do A LOT OF THINKING BEFORE you decide on what advert type to place, and where. My experiences at a point made me decide upon adverts that announced my Excel VB products/services or Speaking/Coaching programs without date/time indication.
My website and auto responder addresses included in those adverts invited interested persons to find out more. This advert was then placed in a monthly publication whose readers generally had interest in the area advertised, and who often read old issues of the magazine.
Since the advert did not reflect a date or time, any reader of the old edition still found it appropriate to follow it up – getting me the prolonged exposure I sought.
Note that these techniques I have described/strongly advocated, help you to cut down drastically on your advertising expenditure. In many cases you might find that using website and e-mail marketing techniques effectively could on their own generate multiplier effects however, that is of course if the kind of people you need to patronise your business use the Internet/e-mail.
Going by the fact the fact that most advancement in societies/businesses across the world today, is technology driven, I would PERSONALLY be wary of spending much of my marketing/advertising budget targeting prospects who have an aversion for using PC/Internet resources!
Today I sent an email message to a new Farm CEO client, who’d purchased my Monthly Poultry Farm Manager app.
The email was however NOT about the app or his farm.
Instead it was about a blog I discovered he created in 2012, then later abandoned, which I wanted him to know could be VERY useful to him, if used right.
Here’s the message
“Ekene”.
I just browsed through your blog experiment, and felt compelled to send you my impressions, and a suggestion…
I know your last post indicated you got the maiden posts contents from your course work.
However, from what I read, I get the impression that you’re likely to make a good go of non fiction writing in particular, and blogging in general.
The thing is that it takes time and plenty of DOING to get the hang of it, and make it 2nd nature.
But once you succeed it can prove a powerful self (and business) promotion tool – when done right.
I say this based on the many dimensions of name recognition, and sales/marketing benefits my regular article and email newsletter marketing brings me.
That’s why I wonder why you’ve not continued with “Beyond Quarantine” and other ideas you hinted at since 2012?
If it’s due to zero comments or reactions, to the ones you did, let me assure you it does not mean anything.
For many months after I started my blog in 2012, I got very few readers and not a single comment.
But I focused on adding new useful content weekly. Then later I began doing it daily.
However, I did not stop there.
I also went outside the blog to add useful creative content in satellite websites (e.g Youtube, G+, Facebook etc), using different media (e.g audio, video, infographics, slideshows etc) to attract more of my target audience to my blog and website.
Eventually, views ramped up, and some people began commenting, but most important and useful were the sales enquiries via my email address and website contact forms for my services and products.
It’s now over a year and a half since you did this blog project.
You could be thinking you don’t need it or the time is not right. Believe me when I say you would be wrong to think either.
Give what I’ve said some thought.
From what I’ve read in your posts, you only need to narrow down to the subject and theme you’re passionate about (mine is “Best Practice Performance Improvement in Key Areas of Personal and Work Related Lives” of my target audience members).
Once you know what to write about, and identify a niche of people who want it, and who would go out of their way to get it(including buying something from you), your writing/blogging success in ANY market or industry will be INEVITABLE.
Just my heart felt opinion…
HOW I FOUND THE BLOG?
If you wonder how I found your blog, it’s thanks to Google who sent me a notification asking if I knew “Ekene N……” and 2 other persons.
I followed the link to your Google+ profile and saw the blog posts and URL to the blog.
Amazing how the web works isn’t it?
Used correctly it can reliably deliver subtle, and timeless, yet potentially powerful content propagation at zero cost.
That’s why I use it so dedicatedly!
I urge you to do the same Ekene. And there’s no better time to do so than NOW.
In your service.
Tayo
