Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Jul 8

    I recently read about a show on CNBC that was described as a cross between Shark Tank and Top Chef. (Seriously… Can’t you see that producer walking into a meeting with CNBC and pitching it exactly that way.) The show was called Restaurant Startup and I just had to check it out.

    The setup is that there are two teams of restaurant owners who approach the “sharks” with their concepts. In one episode there was a married couple who ran a Lebanese-themed deli in Oklahoma City that wanted to expand into a sit down restaurant, and the pair of good ol’ boys with a southern comfort food joint in Kingsport, Tennessee who wanted to open a second location in Knoxville. The sharks sample some dishes and quiz the competitors on their operations. They pick one and give them 36 hours and $7,500 to show off their food and their skills. After that “opening night,” they decide whether to invest their own money in the concept.

    Early in the show, the good ol’ boys serve the sharks some dishes prepared from the owner’s grandma’s recipe book. And the shrimp and grits did look mighty tasty. One shark asked the chef how much the owner currently charges for it in Kingsport, and learned it was $12. Then he asked how much the average check was, and learned it was just $13. “This is a $20 dish in Knoxville,” he said, pointing down at the grits. “You need a $35 average check to make it work there.”

    The chef did not want to hear that he had to raise prices, and much wailing and gnashing of teeth ensued. He objected that diners in his town wouldn’t pay that much for the food. His grandmother who came up with the recipe wouldn’t want him charging that much for the food. And he wanted everybody to be able to afford to eat at his restaurant and enjoy his grandmother’s great dishes.

    (Does any of this sound familiar? I can just hear some of you saying “my customers won’t pay any more!”)

    The sharks agreed that it would be a big jump to raise prices to those levels, but they insisted that the point of running a restaurant isn’t just to share grandma’s southern comfort. It is to make money—and making money, in this case, would require higher prices.

    The sharks chose the good ol’ boys for the test kitchen, and set them up with a local consultant to help walk them through the process. Once again, pricing came up. The owner said flat out “I don’t want to serve a $19 piece of fish.” The consultant explained the restaurant isn’t just serving a piece of fish, it’s serving an experience— then proceeded to show the owner how he could garnish and plate the fish to look like it’s worth the price he had to ask diners to pay.

    At that point you could almost see the light bulb go on over his head. He readily agreed to raise his prices, and the pop-up restaurant opened for business. Diners who filed in that night loved the food. Unfortunately for our good ol’ boys, service and management weren’t as good as they should have been and the sharks declined to fund the concept. It was a hard lesson for them to take home to Tennessee.

    And here’s our lesson for the day. If you’re like most small business owners I know, you at least profess to want to run your business to make money. You may think your customers won’t pay more— but you’re probably wrong. You may think that your mentor, or the person you bought your business from (who didn’t charge enough himself) would disapprove— but it’s your business, not theirs. And you may really want everyone in town to be able to enjoy your great product or service—but can you really make the kind of money you deserve if you price yourself into bankruptcy?

  • Mar 4

    Many years ago, Folgers® coffee scored big with a series of ads taking the viewer inside various gourmet restaurants while an announcer whispered “we’re here at such-and-such snooty restaurant, where we’ve secretly replaced the fine coffee they usually serve with Folgers® crystals. Let’s see if anyone can tell the difference.” And they interviewed diners, who expressed shock, and I’m sure no small amount of embarrassment, when they discovered how much they liked the cheap Folgers® Instant instead of the “gourmet” brand they expected. (This was way before Starbucks® elevated our palates and made us all coffee connoisseurs.)

    A few years ago, Walmart® shamelessly ripped off paid homage to Folgers® with their own ad promoting-believe it or not-Walmart® steaks. “We’re here at the famous Golden Ox Steakhouse in Kansas City, where we switched their steak, with Walmart’s choice premium steak…”

    Now, I can’t vouch for the quality of Walmart’s meats, but let me make two points about Walmart® steaks, with lessons for your own business.

    There is a placebo effect. Diners who gear up for a big night out at a fine steakhouse are primed for a great meal. They expect choice ingredients everywhere, and select service from a well-trained staff. And they’ll probably be pretty happy, even if the experience isn’t “objectively” all that great.

    This effect has been proven time and time again. Researchers at Stanford University used MRIs to study Caltech grad students’ brains as they swallowed five red wines priced at $5, $10, $35, $45, and $90 per bottle. They found that as the price of the wine rose, so did the activity in the subjects’ medial orbitofrontal cortices. (Apparently this is the part of the brain that experiences pleasure.) The “catch,” of course, is that the subjects didn’t drink five different wines-they drank three. The wine presented as costing $45 per bottle was really the one costing $5-and the wine presented as costing $90 per bottle really cost just $10.

    The placebo effect won’t work just anywhere. Diners have to really expect a great meal for it to work. Nobody who shows up at the squat-and-gobble all you can eat buffet expects a world-class steak. They are just happy they don’t see marks from where the jockey was hitting it.

    There is also a Walmart® effect. I understand Walmart® steaks are actually perfectly fine beef. They’re USDA “choice,” which is the same cut you find it mid-priced steakhouses like Outback® or Longhorn®. (The top 3% of beef, with the most marbling is graded “prime.” That’s the stuff you’ll find “dry-aged” at elite steakhouses, often drenched with butter, and sometimes served with a side of Lipitor®. The next 55%, with “slightly abundant marbling,” is graded “choice.” That’s the stuff you grill at home, and it’s really pretty good. Finally, there’s USDA “select,” which usually winds up ground into hamburgers.)

    The problem, of course, is that Walmart® has positioned itself as being the home of discount prices (cheap). And nobody associates “cheap” with “good.” Nobody expects good steaks at Walmart®. So how does Walmart® get around our prejudice?

    Well, here they resort to a classic “dramatic demonstration.” Showing happy diners enjoying Walmart® steaks is a lot like H&R Block® ads showing a stage full of happy clients stepping up to claim surprise refunds. It’s just like “Vince from ShamWow®” telling the camera guy to follow him as his miracle chamois soaks up a spill.

    The downside of this approach is that while Walmart® tells us their steaks are “surprisingly good,” at least some of us still focus on the “surprise” more than the “good.”

    To sum up: 1) the “placebo effect” actually lets us sell downscale stuff at an upscale price; however, 2) the “Walmart® effect” actually keeps us from selling upscale stuff in the downscale environment.

    Still skeptical? Ask yourself this-would you have nearly as hard a time believing steaks from Target® are good?

    The bottom line for your business is this: if you position yourself as a premium provider, clients may not even realize if you occasionally drop the ball. But, if you position yourself as a discounter-if you give yourself a reputation for being cheap-clients will have a hard time believing you’re good!

    You probably didn’t go into business to be the Walmart® of your profession. Let Walmart’s challenge in selling steaks remind you why you should position yourself as high up the food chain as you can!

  • Jan 8

    There are seven critical areas of marketing every business must have in place to be balanced. These seven spokes must be in place for the “wheel” of your business to run smoother, be less stressful, and less time consuming.

    Successful and wealthy business owners consistently have each of these seven critical marketing areas working at their maximum potential. These seven spokes on the marketing wheel are:

    1. A market that is hungry to consume your message… and able to pay for your product or service.
    2. A marketing message that grabs your prospects and draws them into your ad, sales letter, emails, or other marketing pieces.
    3. A system for increasing the lifetime customer value of each customer, client, or patient.
    4. A system for reaching more affluent customers who don’t make purchasing decisions based on price.
    5. A lead generation machine that works so smoothly you never have to wonder where your next customer is coming from.
    6. Strategies for getting your marketing message in front of your customers offline.
    7. Strategies for siphoning more leads to your business online.

    Take a minute to rate yourself on each spoke of your marketing wheel – with 1 being non-existent and 5 being outstanding. This will help you determine where you are the weakest and need the most improvement. It will also show you if you are balanced. As an example, if you rate yourself a 5 on offline strategies but a 1 on online strategies, it’s tough to have a thriving business.

    Make all of your spokes strong in each of these seven areas, and you will have a thriving business that provides you with the income that allows you the freedom from worry.

  • May 29

    Any road will take you there,” according to the Cheshire Cat in Lewis Carroll’s Alice’s Adventures in Wonderland.

    Imagine going up to the airline ticket counter and telling the ticket agent you would like to purchase a ticket to go on a wonderful vacation, but you aren’t sure where or when you want to go. What do you think her response would be? Maybe something like “Well, when you figure out where and when you want to go, come back and I’ll help you. Now, please step aside so I can help the other 14 people in line.”

    Perhaps the biggest unanswered question of business owners is, “Where do you want your business to be and when do you want it to be there?”

    Often the answers sound like: “I want to make more money” or “I want to grow my business.”

    But those answers are vague, hazy, nonspecific and non-measurable. Consequently, there is no way to ever achieve them. Before you are able to figure out how, you must be able to understand the where and the why. Otherwise you’re like a dog chasing its tail.

    This is a process. To begin, you must spend some time developing a blueprint for your future.

    Start by thinking of how you would like to be spending your time. Of all the kinds of work you could be doing, what do you want to do the most? How many hours do you want to work each week, and how would you like to divide up your working time? Then, think about what kind of people you would like to interact with. Who are your ideal clients, customers, colleagues and employees? Next, imagine the physical environment in which you would like your business to operate. What would it look like? What would it feel like? How large a space would you want? What level of business would you have? How much revenue and profits? How many clients, billable hours, etc. would you have? What would be the mix of clients or services that you would provide?

    Write your answers in the present tense. Don’t worry if your picture is a little fuzzy or you can’t answer all of the questions. You are striving for process not perfection. This process will help you develop the focus necessary to achieve your heart’s desire. It takes a lot of time and effort, and some deep soul-searching. It is not easy. That is why only 3% of people will do it. You have a choice. You can consciously choose to be one of the 3% that pursues personal excellence, or by default you will become part of the 97% mass of humanity to spend their lives in mediocrity. I hope you choose to become one of the 3%.

  • Apr 15

    There seem to be certain misconceptions about the networking process. Some would-be networkers use a spray and pray approach. They show up at a networking event, like a chamber function or a BNI meeting, talk to as many people they can, shove their business card in the prospect’s hand, and move on to the next one, never pausing long enough to actually learn anything about the person they’ve just met.

    That unlucky prospect has likely dismissed that “networker” as someone only interested in themselves and are therefore unlikely to do business together.

    Others feel networking is just a waste of time and don’t get out there at all. Perhaps they feel: “If I do a good job for people, they will naturally tell others about me.” If this was true you can only imagine the amount of business referrals you would have. What is true is that the only way you’re going to really kick in word-of-mouth referral marketing is to far exceed your customers’ expectations. In the book, Masters of Networking, Ron Sukenick calls it going into legendary status, with the people you do business with. Remember the story where a lady returns a set of automobile tires to the famed Nordstrom department store and requests a full refund? Within minutes, the cashier returns her money, thanks her for the visit, and the customer walks out satisfied. If you’re asking what’s so legendary about that, the answer is Nordstrom doesn’t sell tires and never has. You see the point is, if you want people to talk about you, you have to far exceed their expectations. I’m sure you’ll agree that Nordstrom did just that.

    So, let’s also address the myth that networking just takes too much time and energy. If you include it as a part of your marketing strategy, it isn’t. Networking is not a place you’re going to, but a place you’re coming from. Sukenick describes it like this: Instead of walking up to the fireplace and getting warm, think of yourself as coming from being in the fire. By doing this, you’ll bring your whole self to the meeting and people will be impressed with your presence. Don’t confuse it with something you have to do as drudgery or something you must spend a lot of time preparing for. Just have it be a part of everything you already do. Remember, it’s a process for developing and maintaining relationships and it’s a passion that one develops from the work they do.

    So, don’t just think of networking as something you do sometimes and some places, but instead as something that you can do with ease all the time and everywhere.

    If you’re interested in developing relationships with referral sources as opposed to just handing out business cards, come, be my guest at a BNI meeting. We meet every Wednesday morning at the Church of the Redeemer, located at 1100 Cody Road S. in Mobile, at 7:30 AM. Give me a heads up you plan to come and I guarantee a warm welcome.

  • Aug 22

    When you meet someone for the first time, here’s the scoop, good, bad or indifferent: The experts say that in as little as one-quarter of a second, a person makes up his or her mind about you. In the first five seconds, a person’s first impression of you flips back and forth 11 times. Your first impression is more important than your next five combined. The message is, according to Rainmaker U. founder, Timothy O’Brien, “Your fate could be sealed even before you utter a single word. The reality is you are the product, like it or not.”

    No one has ever stated it better than Napoleon Hill: “People buy your personality and ideas long before they buy your products and services.” Yet, in his best-selling book, What Clients Love, Harry Beckwith reports that the facts reveal that most of us try to sell exactly the opposite; we sell price first, products or service second, company third, and ourselves last.

    What all this means for your success is, that your personal brand and how you market yourself are far more important than price, product, and yes, even smarts.

    A personal brand is not something you can choose to have or not have. Everybody has a personal brand. What you can choose is whether yours is positive, negative, or neutral. If you’re going to have a personal brand anyway, why not make it a great one?

    According to O’Brien, a personal brand is “a personal identity that stimulates a meaningful emotional response in another person or audience about the qualities or values for which that person stands.” For example, when you think of former Enron CFO, Andrew Fastow, who was initially charged with 78 counts of fraud, what are the values or qualities that come to mind? Trust? Honesty? Credibility? Probably not.

    The single most important step in building a great personal brand is accepting the fact that what you think of yourself is nearly irrelevant. Branding is all about what others think of you. Al Ries and his daughter, Laura, authors of 22 Immutable Laws of Branding, define the process of branding as “reserving a word or phrase in the mind of another.” To build a personal brand, you begin by identifying the emotion you want to evoke in your audience. Then you identify the word or phrase that reflects that emotion, and which you want others to associate with you. Lastly, you must, must, must consistently engage in intentional behavior that promotes and reinforces the word or phrase you have chosen.

    Anyone whose success depends upon or requires the cooperation of another individual or group needs a great personal brand. Financial planners need to sell their clients on their capabilities. A CFO of a publicly traded company needs to sell Wall Street on the integrity of its company’s numbers. A minister needs to sell his flock on the message of the gospels. Now more than ever, he who has the best personal brand wins!

    The best part of personal branding is that it focuses on the most important asset you have — you. Personal branding is about standing for something. Your personal brand is the embodiment of the values and qualities you cherish. Build a great personal brand and you won’t have to follow the crowd. The crowd will follow you.

  • May 16

    Radio Shack announced last month that it would be closing 1100 of their stores nationwide. That amounts to 20% of all their stores in the nation. Believe it or not, it’s because they made a common mistake. They abandoned the niche that made them a success in the first place. Instead of embracing who they were, they tried to become “Best Buy, Jr.” and what a costly error it was.

    All too often business owners are blinded by the segments of their business that aren’t performing as well as they’d like. Tunnel vision ensues and before you know it, while chasing a marginal increase in a marginal segment, they’ve totally neglected the customer base that was succeeding. This is such a silly mistake.

    I’m not speaking out against expanding your business, in fact quite the opposite. I think you should constantly expand your business, but in a way that makes sense. Instead of focusing on making your weak areas strengths, you should spend more time and resources on growing the area of your business that is already kicking tail.

  • Mar 21

    I recently read an article where Robert Skrob, president of the Information Marketing Association, was describing his experiences with Disney — there are some ideas I think you can use in your business. Here’s Robert:

    When you enter the Magic Kingdom® park at Walt Disney World in Orlando, you’re really on the second level. Unseen to guest, there is an underground level where employees (or “cast members” as Disney calls them) enter the park. As part of a seminar I held in Orlando, I treated all of the attendees to a tour of this underground area as well as other “behind-the-scenes” areas at Walt Disney World.

    During this event, we had the “opportunity” to tour Disney’s laundry. When the Disney people told me they thought my attendees, which were all CEOs of $25 million plus companies, would benefit from a tour of their laundry facility, I was apprehensive. I’ve seen the inside of too many Laundromats already; I didn’t think my members needed any of that. But, reluctantly, I agreed.

    The laundry operation is enormous — with 160 employees, it is the largest laundry facility in the world. Walt Disney World includes 12 different resorts, each with 500 to 2,500 hotel rooms and their requisite supply of towels and sheets, plus restaurant linens and everything else that needs to be laundered. The individuals who operate the towel folding machines fold an average of one towel every four seconds over an eight hour shift. The monotony must be excruciating; however, they have a staff turnover rate of only 3%. Some employees are second and third generation, their families having worked in the facility for years.

    There is a lot of neat automation to see, but most importantly, I discovered that the laundry can be an important customer service area of the resort in two important ways.

    Laundry as a customer service #1: Each day, guests leave hundreds of items that get mixed in with the hotels’ towels and sheets. When those items get to the laundry facility, each item is indexed by the date, resort name and room number, and then is entered into a database. The laundry facility has a call center to handle the guests’ calls looking for lost items.

    As you can imagine, every day, there are dozens of stuffed animals purchased in the park one day, and left in the bed that night that end up in the laundry the next day. If the guest has already returned home before calling to recover a stuffed animal, the laundry staff takes photos of the toy at several places throughout the Magic Kingdom® and creates a small scrapbook of photos. Then the stuffed animal, the scrapbook and a note, talking about how the animal wasn’t done having fun and that’s why it ”snuck out” to stay back for a couple of extra days, find their way home. The Disney staff goes to great pains to take this “guest mistake” and turn it into an opportunity for them to provide a terrific experience.

    Laundry as customer service #2: Even at the Magic Kingdom®, doing the laundry is not a fun job. It’s wet, it’s hot, it has to be pressed and folded and just when you get it done, another truck full of dirty sheets arrives. It’s grueling, but it has to be done. Plus, these employees don’t get to see guests enjoying their work. It’s one thing to operate a ride; at least you get to see the excited children. In the laundry there is nothing but more laundry. Disney does a great job of ensuring its employees understand why their jobs are a critical part of the guest experience. For the laundry services employee, there are mounds of wet sheets. For guests, a freshly laundered pillowcase is the last thing they see before they close their eyes at the end of a magical day.

    Are there common ways that customers experience frustration that you can plan for and turn them into opportunities to provide a unique experience? Can you turn an embarrassing and tense situation into a “wow” experience for your customer?

    You can find out more about Robert Skrob and the Information Marketing Association at www.info-marketing.org.

  • Nov 1

    Most of us believe we have a great product or service. (For those of you who don’t, I’d suggest that it is time to fix it or move on.) But the humbling realization is that it’s not enough. Without a marketing strategy, the quality of your product or service may go unrecognized. Building a better mousetrap doesn’t ensure they will come. But this isn’t about catchy slogans or tag lines. This is about where your focus is before you even start marketing.

     

    What keeps your customers up at night?

    Great marketing starts with understanding your customer/client/patient. Get in the minds of your customers. What are they struggling with? How might you be able to help? The best thing you can do is to first find out what bothers your customers. What itch are you trying to scratch – what problem are you trying to solve? It makes much more sense to figure this out first, then, if you have to, go develop the product/service that solves that problem than to create a product and go looking for a problem to solve.

    Not sure what those problems are? Try asking a few simple questions of your customers with a quick survey using free online services like SurveyMonkey or Google Docs. The answers may just provide the essential insight into what your customers are thinking about.

     

    What are your customers’ needs?

    Don’t get too complex here about needs, start with the basics. Psychologist Abraham Maslow’s “Hierarchy of Needs” suggests that the primary (and the most impulsive) needs are physiological – like breathing, food, water, sleep – and above that, comes safety, then love and a sense of belonging, then self-esteem, and finally “self-actualization.” His point was that our greatest concern is for our basic needs first.

    This would suggest, and some “experts’ would argue, that this means, for example, if your product is both food and social, that the benefits of fulfilling hunger will always trump those of love and belonging. But this is only true if your customer is focused on food for survival, not pleasure. No restaurant can survive catering to the starving market, because typically that customer does not have the ability to pay.

     

    Can you solve all your customers’ needs at once?

    NO! This is where a lot of companies get into trouble. A great marketing campaign is focused on ONE specific need, ONE specific problem you are trying to solve for your customers. Now it is true that different customers buy for different reasons and you want to try to cover some of those bases, but stay focused on one need at a time.

    If you try to solve too many needs at once, your customer won’t know what your product or service is really all about.

  • Aug 23

    You’ ve just closed the sale/completed the transaction. Your prospect is now your customer or client. This is a great time — in fact, it’s the best time — to ask for and receive referrals. Sure, you can ask for referrals from anyone, at any time, once they know you, like you, and trust you. Still, there’s no question that the best possible person to ask for referrals is the one who has just made a purchase from you.

    And yet most salespeople squander this opportunity, they never ask for a referral. Why is that? In his book, Endless Referrals, Bob Burg identifies four reasons.

    Reason 1. They Forget

    Why do they forget? It could be for any number of reasons. They’re not used to asking; it’s not an established part of how they operate. When the situation gets tense – filling out paperwork, answering more questions, etc. — it’s easy to forget what you’re not yet used to doing. In other words, it’s not part of their consciousness. Perhaps, they even forget to ask because, deep down, they don’t want to ask. In that case, it’s just easier to forget.

     

    Reason 2. They Lack the Confidence

    Salespeople often retreat from the opportunity to ask for referrals because they don’t have the confidence in themselves to do so. Perhaps the new customer or client will say no, and rejection is never fun. They’ve already gotten over the hurdle

    of facing possible rejection once, when they made the sale, why court it again? Hey, maybe the client will get annoyed and actually change her mind about the decision to buy! Or maybe the salesperson simply doesn’t believe she is worthy or deserving of referrals.

     

    Reason 3. They Don’t Think Their Products Warrant Them

    This is a very disturbing reason salespeople sometimes don’t ask for referrals. If this is the case, you must either learn more about your product or service — enough that you come to fully understand how much it serves your customers and how much it adds to their lives, and thus to the lives of all those to whom they refer you — or find another product or service to represent. If you don’t believe enough in what you do that you feel it’s worthy of helping everyone in the world own it who should own it, then you can’t expect to be very successful.

     

    Reason 4. They Don’t Know How

    Ah, this is the final reason, and, according to Burg, the easiest one to address. Often salespeople don’t ask for referrals simply because they haven’t been taught how to do it properly — in other words, how to do it in a way that they’ll get them. If you don’t know how to do something right, they figure, why bother? There are plenty of books, such as Burg’s, and courses out there to help them learn how.

     

    Now we don’t all have salesperson in our titles, but there’s no doubt it falls upon us to sell ourselves, our products and services, and our companies. So, if you’re not asking for referrals on a consistent basis, what reason is your excuse?