At some point in the life cycle of any organization its ability to succeed in spite of itself fails.
It is often difficult to know when this point occurs even in an owner-operated business. That is one reason to consult an outsider and not to trust our own feelings. I had a client several years ago who was having some problems with sales. He was planning to invest another $2 million of his own money. I showed him why he should let that business die. It was painful for me to tell him and to show him. It was painful for him as the founder to hear. The business had done its job. The business had now become obsolete.
The politician approach, and I don't just mean from elected officials, is to make it difficult to know when something is happening. The politician approach is to pretend that nothing has happened. No matter who is in the White House I really enjoy the press conferences. The Press Secretaries are the ultimate politicians. They can take any question and instantly spin it in the Administration's favor. If the DOW went to zero, unemployment was at 100% and the Chinese wanted their money back right now, a Press Secretary would have a smart positive answer.
Jerry Lewis is "suddenly" out of the 2011 Muscular Dystrophy Telethon after a half century. This year there will be several unknowns hosting it and it will only be for six hours instead of twenty. What exactly happened behind the scenes we do not know. We can say for sure that there will not be any $53 million in donations this year. Do not be surprised if there are no future telethons after 2011. The idea may be worn out.
I live in Cheyenne Wyoming, the hail capital of the United States. Hail is frequent but usually causes little if any damage. In 2002 we had a biggie. Again in 2011 on July 12. In 2002 the repairs to my truck cost $2,244. In 2011, at the same dealership body shop to repair the same damage to the same truck is right at $6,000.
A business that was doing $1,000,000 in 2002 needs to do almost $2,500,000 just to be equal to what it did in 2002.
Often I may find that someone is quite boastful that they have increased sales by 50% in that period of time. They are not pleased to learn that their sales have actually gone down about 50%. What is worse is that with the same number of units of service overhead has gone up and profit is non-existent.
Many people like to take the politician approach and tell themselves that their business has been growing. In fact they may be on their way out. What makes it worse is that they not only have lost money they have lost an amount of life time. We'll cover life time in another session. It is a very important concept that is unfortunately best viewed in hindsight.
For today, please understand that considering the time value of money is an element of understanding when an organization may be on the downside of its life cycle.
David Sneed
It is often difficult to know when this point occurs even in an owner-operated business. That is one reason to consult an outsider and not to trust our own feelings. I had a client several years ago who was having some problems with sales. He was planning to invest another $2 million of his own money. I showed him why he should let that business die. It was painful for me to tell him and to show him. It was painful for him as the founder to hear. The business had done its job. The business had now become obsolete.
The politician approach, and I don't just mean from elected officials, is to make it difficult to know when something is happening. The politician approach is to pretend that nothing has happened. No matter who is in the White House I really enjoy the press conferences. The Press Secretaries are the ultimate politicians. They can take any question and instantly spin it in the Administration's favor. If the DOW went to zero, unemployment was at 100% and the Chinese wanted their money back right now, a Press Secretary would have a smart positive answer.
Jerry Lewis is "suddenly" out of the 2011 Muscular Dystrophy Telethon after a half century. This year there will be several unknowns hosting it and it will only be for six hours instead of twenty. What exactly happened behind the scenes we do not know. We can say for sure that there will not be any $53 million in donations this year. Do not be surprised if there are no future telethons after 2011. The idea may be worn out.
I live in Cheyenne Wyoming, the hail capital of the United States. Hail is frequent but usually causes little if any damage. In 2002 we had a biggie. Again in 2011 on July 12. In 2002 the repairs to my truck cost $2,244. In 2011, at the same dealership body shop to repair the same damage to the same truck is right at $6,000.
A business that was doing $1,000,000 in 2002 needs to do almost $2,500,000 just to be equal to what it did in 2002.
Often I may find that someone is quite boastful that they have increased sales by 50% in that period of time. They are not pleased to learn that their sales have actually gone down about 50%. What is worse is that with the same number of units of service overhead has gone up and profit is non-existent.
Many people like to take the politician approach and tell themselves that their business has been growing. In fact they may be on their way out. What makes it worse is that they not only have lost money they have lost an amount of life time. We'll cover life time in another session. It is a very important concept that is unfortunately best viewed in hindsight.
For today, please understand that considering the time value of money is an element of understanding when an organization may be on the downside of its life cycle.
David Sneed
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