Forget 1 Million, Focus on 1,000 for Success

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During my time at college, I had a friend who was obsessed with the idea of making $1 million. How hard could it be, he wondered, to take $1 from each of 1 million people? “Look at the guy who invented the pet rock. He became a millionaire selling. . . rocks!” my friend observed.

Creating the next big fad was his plan, but he quickly found it’s not easy to duplicate the success of the pet rock. Creating a product that could command the attention of 1 million people is a challenging dream to chase.

I recalled my friend’s ambitious plan to gain 1 million customers while recently reading author Kevin Kelly’s essay entitled “1,000 True Fans.” The main point of the essay is that most of us do not need 1 million customers; 1,000 will do nicely.

Defining a “True Fan“

Kelly’s “1,000 true fans” are people who would do almost anything to help their favorite businesses prosper. He gives the examples of a singer whose devotees will drive 200 miles to hear her perform and a writer whose fans buy hardback, paperback and audio versions of his latest book.

We would all like to have diehard fans like those, but they are difficult to attract. That’s especially true if your business provides a product or service that is not unique – like state-mandated auto emissions tests, for instance. Nobody is going to travel 200 miles to get their emissions test from you, except possibly your mother.

On the other hand, I have clients like dentists and property managers who are very highly regarded as regional experts. Their top clients, or fans if you will, are loyal to the point of sending them gifts and personalized Christmas cards. I have to imagine their fans would follow them through a change of office locations or the occasional fee increase.

Why 1,000?

Two premises of Kelly’s “1,000 True Fans” are that the entrepreneur can earn, on average, $100 profit from each true fan per year and that an entrepreneur can make a living by earning, on average, $100 per year from each of 1,000 customers. That’s $100,000 per year, but the $100,000 must be free and clear of all operating costs. In other words, it is net profit.

Why is 1,000 the magic number? That is the question I asked myself while reading “1,000 True Fans.” I know dry cleaning businesses whose owners make their livings from customer bases smaller than 1,000. I can imagine Kelly’s premises being valid for a writer or a singer without a band. But for most of my clients’ businesses, some adjustments would have to be made.

As Kelly explains: “The number 1,000 is not absolute. Its significance is in its rough order of magnitude — three orders less than a million.” So, 1,000 is not posited as the be all and end all. It’s an approximation far closer to the mark than 1 million customers.

For an entrepreneurial professional with employees, the business probably needs to clear $100,000 per professional (maybe more depending on the region). And, the 1,000 customers likely needs to be expanded to accommodate a practice of several professionals.

The key point is that attaining 1,000 customers is an achievable goal. You can grow your business to that size by adding just a few accounts each week. And, if 1,000 is achievable, so is 2,000. It just takes more time. . . and an unwavering commitment to keeping customers happy.

Here’s to your 1,000!

Mike, The Numbers Coach

Lessons Learned From a Restaurant

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Pals is a fast food restaurant located in Kingsport, Tennessee and was the first restaurant company to win the prestigious Malcolm Baldridge Quality Award.  Putting it in the company of companies like Ritz Carlton, and FedEx.  This small 26 location company has a crazy low turnover rate given the fast food industry.  For front line employees, it’s just 1/3 of the industry average and for its assistant managers it’s a meager 1.4%.  How do they do it?

 3 key ingredients

  • Hire for attitude and train for skill.

What Pals found out was if you got the attitude right with an employee, you could train them for the skills you need.  Attitude over skill any day.

  • Lots of opportunity for training and improvement.

Employees spend a lot of time on training and retraining.  They get certifications and opportunities to continue to learn.

  • Get serious about teaching.

The company has assembled a reading list of key books that an employee is expected to read.  And not all the books are on business but rather include some timeless classics such as The Prince by Machiavelli.

What is your secret sauce to hire and retain a great work force?

Mike

Are Successful People Just Lucky?

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Have you ever heard of the “Marshmallow Experiment?”  This famous research experiment from the early 1970s involved children who were offered a deal:  The child was given a marshmallow and told that if they didn’t eat the marshmallow while the researcher was away, the child would be rewarded with a second marshmallow.  Some children ate the marshmallow right away while others waited for the second one.  What’s the significance of this experiment, you may ask?

The researchers tracked down the participants as adults and noticed something interesting.  The children who delayed gratification of eating the first marshmallow did better with SAT scores, stress responses, avoided substance abuse, and had better social skills, as reported by their parents.  The researchers then followed the participants for 40 years and continually noticed that the ability to delay gratification was one key aspect for their success in life.

This behavior plays out in business as well.  The decisions we make today impact what we can do in the future.  Delaying gratification with purchases and initiatives could be the difference between success and failure. 

Researchers at the University of Rochester duplicated the experiment years later with a twist:  They split the children into two groups. One group was exposed to unreliable experiences; hence these children were offered a small box of crayons with the incentive of getting a bigger box later that would never come.  The second group was given reliable experiences, and when offered a bigger box of crayons they got one.

Well, you could expect what would happen with the children with unreliable experiences when they ran the Marshmallow Experiment on them:  They ate the marshmallow right away because they didn’t trust the researcher.  Does that sound like a situation you may have had at your company?  Promise something, but you didn’t deliver?

If you can delay gratification and build a discipline for this into running your business, then one of the keys to success is already in your toolbox.  No luck is required.

Cheers to your ability to succeed with delayed gratification!

Mike

7 Little Strategies that Equal Big Success

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It is often practicing the simple habits that result in running a successful business. There are proven leadership methods that can make the difference between a growing and profitable business that stays afloat, and one that sinks. You’ve heard it before: Work smarter, not harder.

Here are 7 tips to do just that in this new year:

  1. Watch cash flow. Poor finances can ruin any business, so it is imperative that a small business owner understands how to keep the cash flow steady, spend intelligently, and grow the business intentionally. Regular cash flow projections are an important ingredient to ensure you don’t run out of cash.
  2. Follow the leader. It’s key to learn from people who have achieved goals like yours. It’s lonely at the top, but having a mentor, or being in a business leader program, are smart and simple options.
  3. Track spending! It’s easy to go overboard on certain areas of your business, such as marketing. Pay close attention and track spending to determine what spend activities work and why.
  4. Know your strengths and hire for your weaknesses. Hire people who can complement your skills and help fill in your blind spots. Think efficient use of energy and resources.
  5. Take a minute to plan. Strategizing and planning can oftentimes be easier said than done. However, spending time on this activity up front will lead to greater successes and less risk in the long run. Successful companies have vision and execution.
  6. Get in the right mindset. Having confidence in your ability and knowing you can achieve success matters. Don’t underestimate your subconscious’ s ability to impact goals. Visualization techniques and the use of mantras you can live by can drive that impact. “Slow is smooth, and smooth is fast” is a mantra used by the Navy SEALS when they are under pressure situations.
  7. Delegate, delegate, delegate. There are people who can do it as well, if not better, than you can. Hiring the right people and clearly outlining their responsibilities will make your job easier and your company more effective. Micromanaging can be detrimental to your success.

Some successes in life are owed to good luck and good timing, but the majority are the result of good leadership, efficient use of resources, and seeing opportunities to take. The strategic habits we implement in our business are an important part of its success.