It's Tuesday at 2:00pm! (PST Time: I live and work from Southern California)
KNOW YOUR NUMBERS.
I realize that the title "know your numbers" can talk about FINANCES or IMPACT. We're going to focus on FINANCES for this post, and we'll come around to look at IMPACT when we finish this SHARK TANK FOCUS. Remember last week, I shared that we're going to talk about 4 things over the next few weeks:
#2) Know Your Numbers
#3) Know Your Competition
#4) Know Your Customer
The goal is to give you some ideas for your PITCH or your presentation.
These are from lessons learned, and today is a really simple one.
We were doing a large capital campaign for a retreat center property in Ecuador in the late 90's. We had identified a piece of property, and we had negotiated some time to raise the finances to complete the project. This was the first time I had led a capital campaign of this size focused on one project, so it was a series of lessons. I'll share one of those today:
I had been invited to present this project to a foundation that was interested in learning more. As I prepared to travel to make the presentation, I didn't spend anytime figuring out the NUMBERS. The request was simple:
The property was negotiated, and a price was agreed upon. The price was $180,000. That was the cost of the purchase price.
I created a proposal, and in the financial section is simply wrote, "The funds needed are $180,000". This is the amount that was going to be given to the man selling us the property.
I presented to the foundation, found favor, and they agreed to write a check to cover half of the cost, $90,000. I was excited! We had momentum and we were halfway. I came home celebrating in the success and in the generosity of this foundation. The check came, and we began working on the other half. We also began to incur costs on the property: transfer fees, wiring fees, some maintenance and utility upgrades, our organization also assessed a 12% administration fee on every dollar that came in, we had a couple of employees that we needed to keep working the property, and we needed to create a budget to actually operate the property.
Oops, I also spent over $1,000 traveling to the U.S. from Ecuador, renting a car, staying in a hotel, in order to raise that $90,000. Where was this money coming from?
Here's the lesson: We didn't need to raise $180,000 for this property. We needed to raise $240,000 for the purchase of this property. These were all real costs associated with this project, and I didn't realize at the time how this worked.
I often wonder, had I walked into that foundation and shared that the total cost was $240,000, would they have still covered 50% of the cost or $120,000?
Because of my failure to understand the numbers, this project took longer, created more pressure on me and our team, and it took a while to recover from it.
Understand the NUMBERS.
If you can't figure it out, get some help.
Later, I was sharing this story with a member of that foundation board, and he challenged me to calculate the real costs associated with a project or a proposal, and to do it BEFORE you present. There will always be things that come up at the last minute out of your control, but do your work to be as prepared as possible.
You can't go back and say, "Sorry, I miscalculated, and we can't do the project because we planned poorly." (Although we often do this!)
When you define a project to pursue:
TAKE YOUR TIME TO EVALUATE THE REAL COST
TAKE YOUR TIME TO CALCULATE THE EXTRA COST TO YOUR ORGANIZATION
TAKE YOUR TIME TO ESTIMATE SHORT-TERM OPERATION COSTS AND INTEGRATE THAT INTO THE PRESENTATION
TAKE YOUR TIME BY GETTING SOME HELP, ADVISE AND INPUT FROM OTHERS THAT MIGHT HAVE MORE EXPERIENCE THAN YOU.
When you're watching Shark Tank on TV, one of the reasons the Sharks don't invest is because the numbers don't make sense.
You need to KNOW YOUR NUMBERS, backwards and forwards, inside and out.
Be prepared to share real costs and the reasons behind them. Don't inflate numbers, and don't stretch the truth, but include everything that is affected by this potential project and have a number associated to it. This will give you a full picture.
"If you don't know your numbers, you don't know business." Marcus Lemonis
"Know your numbers' is a fundamental precept of business." Bill Gates
Things I'm Reading, Listening To and Watching This Week:
I just read a great John Grisham Novel called "SOOLEY". It's a basketball story and an inspirational story of a South Sudanese Player. It's fiction, but it was a really powerful read.
The Goo Goo Dolls Essentials on Apple has some really good songs from this band. Fun to go back and listen again!
OK, I already mentioned this show, but Gina and I watched a couple of the episodes again with friends and are now thinking about Italian Food all over again. If you haven't seen this series on CNN with Stanley Tucci, "Searching for Italy" it's a MUST SEE.
I enjoyed reading this book over the weekend, Remote Inc. It's a simple book that challenges the idea of working from home, or working away from the office. What I liked about it was the paradigm shift that is our need to focus on PRIORITIZING OUR GOALS AND OUTCOMES instead of measuring HOW MUCH TIME WE'RE SPENDING WORKING. Robert C. Pozen and Alexandra Samuel have written a timely book addressing our changing work structure.
This fresh news: My daughter Raylin left one of these on the counter today for me to dip in my coffee. She said I'd like it, and she was right! Nature Valley Biscuits with Almond Butter. Give it a try. Good tip Ray and Sam!