Monday, November 9th, 2009

Put Your Eggs In One Basket

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You can put all your eggs in one basket (just watch the basket!)

We’ve all heard the saying that you shouldn’t put all your eggs in one basket. While sometimes wise, I think there are many exceptions.

Mark Twain wrote that you should “put all your eggs in one basket and watch that basket.” I agree in many circumstances, including for business.

If you are super-selective and focus on one business (whether as investor or founder or employee) at a time, you can reap huge rewards. Look at Bill Gates of Microsoft (who loves using the word “super” by the way) — he invested purely in Microsoft for 30 years.

I had the good fortune of meeting Bill Gates a few times and I recall how reporters and other people were highly critical of the fact that he was reinvesting his Microsoft profits in Microsoft and not, for instance, in Philanthropic endeavors.

He told me that he believed his most valuable contribution at that time was focusing on Microsoft and that he would later focus on investing his money elsewhere.

Well, in 2000 Bill and his wife Melinda French (who I also had the pleasure of meeting once) created what is now the largest charitable foundation in the world and Bill turned his focus to investing in creating value elsewhere (specifically, helping solve many of life’s diseases).

So, Bill had his Microsoft basket for 30 years and now has his Foundation basket.

Similarly, Warren Buffett, who has created more wealth investing than anyone to date, has focused primarily on one business — Berkshire Hathaway — most of his life.

If the stock in Berkshire were to tank, Warren’s net worth too. But it probably won’t, because Warren is watching his one basket!

It’s no coincidence that when Warren finally decided to put his eggs (his money!) in a second basket, he chose to put them in the Bill and Melinda Gates Foundation basket – one that he trusted would be watched closely for years to come by his younger friends Bill and Melinda.!

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Sunday, November 8th, 2009

5 Simple Steps On How To Do A Gap Analysis

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Gap Analysis is a strategic planning tool to help you understand where you are, where you want to be and how you’re going to get there.

Here’s a simple Gap analysis chart:

Here’s the Gap Analysis process:

Step 1: Decide the topic you’re going to do the Gap Analysis on? This is the challenge you’re trying to tackle.

Gap Analysis sample topics include:

• Revenue
• Profit
• Market Share
• Product Functionality/Features

Step 2: Identify where you are right now based on metrics or attributes.

Examples:

• Revenue — We’re at $10 million in annual sales right now
• Profit — We’re at $1.5 million in annual profit right now
• Market Share — We have 7% of the market share right now
• Product Functionality/Features — Our product has was just launched so it has limited features

Step 3: Identify where you’d like to be over a specific time frame?

Examples:

• Revenue — We’d like revenue to grow to $35 million in annual sales by 2012
• Profit — We’d like profits to grow to $12 million per year by 2012
• Market Share — We’d like to own 15% of a particular market by 2012
• Product Functionality/Features — We’d like our product to have industry leading features by 2012

Step 4: Identify the gap between where you are and where you want to be.

• Revenue — They gap is $15 million per year in annual sales by 2012
• Profit — The gap is $5.5 million in annual profit by 2012
• Market share — The gap is 8% market share by 2012
• Product Functionality/Features (let’s use Web site as an example) — The gap is that you’d like to have the following features by 2012: a blog, a sign-up form to let visitors follow your business on Facebook and Twitter and a way for customers to buy products directly.

Step 5: Determine how the Gap should be filled.

• I recommend using the “6 M’s” from my Fishbone Analysis Article:
  • Manpower — The people resources you need.
  • Methods — The processes you need.
  • Metrics — The measurements you need.
  • Machines — The automation or technology you need.
  • Materials — The material items (such as physical goods or marketing collateral) you need.
  • Minutes— The time you need.
• Or you could use a SWOT Analysis and simply list out your:
  • Strengths, Weakness, Opportunities and Threats related to filling your Gap.

Some other related Gap Analysis definitions:

• Usage Gap = Market Potential minus Existing Usage
• Product Gap = The part of the market that your missing because of your product features.

Fore more on the Gap Analysis model, check out Gap Analysis Wiki.

Note: There’s a separate “GAP” used in business related to how to run meetings. Read The 3 Simple Steps To An Effective Meeting: The GAP Approach for more.

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Monday, November 2nd, 2009

Black Friday

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I woke up today and noticed that Google Trends lists “Black Friday Deals 2009” as the fifth hottest trend in terms of search traffic.

As I reviewed my other keyword tools, it looks to me like more than two million people will search the keyword “Black Friday” this month.

Here are some examples of the number of searches involving “Black Friday” in the most recent month available (September):

• Black Friday Ads: 246,000
• Black Friday Deals: 110,000l
• Black Friday Sales: 90,500
• Walmart Black Friday: 22,200
• Black Friday Specials: 9,900
• Black Friday Coupons: 5,400
• Black Friday Flyers: 1,300

What is “Black Friday”?

Black Friday is primarily an American event referring to the popular shopping day of the Friday following Thanksgiving each year.

Many retailers provide deals on Black Friday to attract the numerous people who take that Friday as a vacation day.

The news media hypes up Black Friday as the busiest shopping day of the year in the U.S. — this has been true twice this decade (according to Black Friday Wikipedia).

The Black Friday history dates back to January 1966 when the Philadelphia Police department described the day after Thanksgiving as “Black” because the excessive shopping that day brought traffic jams.

Technically, the Saturday before Christmas is typically the largest sales day (but I’m not going to blog about that because there’s no nickname for that day (and only 36 people searched for “Saturday before Christmas” on Google last month (I checked!)

When is Black Friday?

Since Thanksgiving falls on the fourth Thursday in November, Black Friday occurs between November 23rd and 29th each year).

This year (2009), Black Friday falls on November 27th.

How Businesses Can Leverage Black Friday on the Internet

One way for you to leverage the Black Friday trend is through search engine marketing — buying keywords (such as through Google AdWords) or search engine optimization (making sure that you have good content on your Web sites that represent what people are searching on).

I recommend you use the Google AdWords Keyword Tool to review what people are searching on.

For example, if you are in the consumer electronics vertical, here are some of the top Black Friday-related keywords searched last month:

• Black Friday Laptop: 2,400
• Black Friday Electronics: 1,900
• Black Friday TV Deals: 1,600
• xBox 360 Black Friday: 1,000
• Fry’s Electronics Black Friday: 590
• Microcenter Black Friday: 590
• K mart Black Friday: 210

The day after Thanksgiving “Black Friday” should not be confused with the Black Friday 1929 which refers to one of the days following the Wall Street Crash of 1929.

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