Posts Tagged credibility
Business Case Example Rent a car vs. Taxi in New York City
It was suggested I provide a concrete example from yesterday’s idea of writing a one page business case. Here it is below.
This is a very simple version, but you can see that I lay out the summary in a concise format, and then leave the details to follow. Most people will only read the summary but those that need it can follow in the details. In the details, I first lay out any assumptions and then analyze each option in a concise manner. I finish with some qualitative analysis. There could be many variations to this scenario; and, with the assumptions, someone could work those out. Instead, I pick the actual scenario (which is what I did two weeks ago) and work out the numbers.
This took me less about 20 minutes to prepare and will settle most arguments. Try this simple form of analysis and credibility will build.
Example: Should I rent a car or use taxis?
Summary:
Two weeks ago I rented a car while in New York City for four days. It was suggested I could use a taxi and save a lot of money. However, while I stayed in Manhattan I traveled to New Jersey, Connecticut, east end of Long Island and few points around the NYC. Based on a pure cost analysis it is cheaper to rent a car by but only by 12%, saving $79. If I ask the taxi to wait eliminating any waiting time (and making it equivalent to having a car on call) then the savings renting a car are $367 or 37%.
The assumption that I would have saved money is wrong and on a pure cost basis, I recommend we continue to take taxis.
The pros vs. cons of renting vs. taxi are considered. However, since the clients are remote from NYC and not clustered in the center, the convenience of having the car outweighs the other considerations. I still recommend we rent a car.
Details:
Assumptions:
I visited 7 clients and drove 500 miles in four days. I stayed in the center of Manhattan. One of the clients is in the Hamptons.
Renting a car:
Car rental: $92/day.
Parking overnight: $40/day
Parking at clients: Free
Gasoline was $88.00
Taxi rates are: $2.50 for each pickup and drop-off plus $2.00/mile
There is a luxury bus from Manhattan to the Hamptons for $65 round trip. That trip is 200 miles.
Tolls are the same whether I rented or take a Taxi.
Option A: Rent a Car
Car rental: $92/day times 4 days = $368
Parking: $40/day times 4 days = $160
Gasoline: $88
Total cost: $616
Option B: Taxi
# Taxi trips: 12
# Taxi miles: 500-200 = 300
Base taxi rate = $2.50/pickup-dropff * 12 = $30
Taxi miles = 300 miles * $2/mile = $600 miles
1 Hampton round trip: $65
Total cost: $695
Option C: Asking the Taxi to Idle
Cost of Taxi: $695
Average time with client: 2 hours
Note that we are only using a taxi with 6 clients.
Cost of waiting time: 2 hours/client * 6 clients * $0.40/min * 60 min/hour = $288
Total Cost of Taxi if they idle: $983
The pros of renting a car means you have the car when you need it, but the cons are that the car can be more trouble due to tows and you cannot easily work while you are driving. On the other hand, a taxi allows you to not worry about the car and you can work. The taxi cons are that in several of the locations there was no way to find a cab and I would have had to either wait for a cab extra time, or ask them to idle. Asking the cab to idle would add an extra $288 to the cost bringing the total to $988.
Leaving out critical items from a Business Plan
Taking another quick break from discussing executive summaries, since something just cropped up that is worth mentioning:
Recently, while reading through a business plan, I discovered that the writer left out the exit plan. Upon asking, he told me they sometimes include it and sometimes take it out, depending on who they were giving it to. In my case, they felt that I would more likely introduce them to an investor rather than invest myself, so they left it out.
My position is that you should never leave that out, or anything else out. The purpose of showing me the plan was to get my evaluation and consideration to show it to an investor. However, I am going to protect my relationship to investors. My credibility is on the line when I ask them to look at a plan that I approve. Without seeing the exit, on how the investor will make money, I cannot believably support the plan.
It wastes the investors time for them to have to ask for it and it could indicate a problem. Furthermore, it may be the first section that investor turns to when they read a plan. Most people when they read a plan first turn to the section they care about most. For some that is the financials.
If you do not discuss it, then we cannot tell if you are hiding something bad, you did not think about it, or you were just leaving it out feeling it was not necessary. Most likely, it is either something bad or you did not think about it. In both cases, an investor would turn it down.
Do not leave things out.
Avoid Boilerplate Phrases
Posted by Steve in For Job Seekers, Pitch, Plan on July 9, 2009
Quick aside from writing the executive summary, but still related.
Are you familiar with boilerplate phrases? Check out Liz Ryan’s article on Yahoo Hotjobs titled, “10 Boilerplate Phrases That Kill Resumes“ The point of her article is that these phrases have been so commonly used that they no longer indicate a strong resume. Instead she says they indicate the writer is vocabulary challenged and non-compelling. Worse, I think they hurt your credibility.
This ties into John Lucht (who I have a link in the sidebar to his website) writes in his book, “Rites of Passage at $100, 000 Plus: the Insider’s Guide to Absolutely Everything About Executive Job-Changing” about resumes: avoid catch phrases but use examples showing how you demonstrate the intention of that catch phrase.
The same thing applies in the executive summary and the business plan. People put in catch phrases and instead of making themselves stand out, they lose impact.
Ryan suggests 10 catch phrases to avoid (I am using these without permission, but linking to her article). I am reprinting them below, but please check out her article!
Check your executive summary and business plan for these phrases. Without specific examples they stand out as meaningless today. Especially check the resumes that are typically put in an Appendix in the business plan.
FYI, I did check my resume, and can safely say I have none of these phrases.
Key Players need to be stated in the Executive Summary
Posted by Steve in Leadership, Pitch on July 8, 2009
In this series of installments I am discussing the executive summary and how to make it stand out. The executive summary should present the compelling reason for the investor to buy into the company.
Alternative title: Credibility is more important than secrecy.
For good reasons, entrepreneurs should keep their key players whether in a contractual relationship or in negotiations secret. However, when presenting to investors, or other key players, they need to weigh secrecy versus credibility.
Have you ever heard someone say, “Very important people are in the know”? Do they ever really state those “very important” people? Not really. The sad reality is that they probably do not have the connections. Investors have to be wary of this. Credibility should be more important than secrecy.
If you plan involves key players, state those key players. If it is in negotiations, state it is in negotiations. Include in the body of the plan, the backup if things fail; but state specifics.
Remember, investors invest in people. They need to see that these people are credible.
Keeping your branding package within budget
This should also be titled, when DIY (Do-it-yourself) comes in handy.
When it comes to creating the intial collateral package are seven things a typical business needs:
- Branding
- Color scheme for collateral
- Logo
- Presentation template (for PowerPoint, reports, and proposals)
- Web site (everyone needs one today)
- Business cards (everyone needs one today)
- Bio photo
From the investor point of view, if you look professional and very, very simple then you are probably spending your money wisely. There is one caveat: this only works if you are in the initial stages. If you say you have been around for a while, selling a lot of product, but your marketing looks like it was done on a low budget, the investor will still wonder about the credibility.
There is nothing wrong with telling the investor that part of the budget will go to improving the brand image.
In the meantime, how does one approach this?
Web site: look for a prepackaged site that you can fill in elements. These are called templates, and you can get one for under $100.00. You may be able to hire a small firm that can use one of these sites and fill in the elements for you. The prepackaged site should even suggest the typography. The colors used on this package will lead to…
Color scheme for collateral: Use the web site colors.
Business cards: You can use the web site colors, but the problem is to lay it out on a small piece of paper. Instead, use simple black and white and put it together on decent card stock. Definitely use a company like overnightprints.com or Vistaprint.com. They will also have templates for the business cards. Word of advice: two fonts. Use one for text and one fancy font for the company name or logo. Once again, if you are not a professional designer, keep it simple to keep it good.
Presentation template: use the website colors, and a very simple layout. For presentations you can use the templates in PowerPoint. They look good and get the point across without become the point.
Branding: One of the first elements of branding is to be consistent. By using the same color schemes, fonts, themes through the collateral you will develop a brand for your business. It is very basic but consistency works.
Bio photo: In the beginning, unless you are entertainment, this is not that important. You could go to one of those photo places and see if they can take a portrait photo and then provide you a color corrected web and print version. If all they do is provide a portrait photo then do that. A good portrait photo goes a long way. Avoid being too sexy like in a Glamour Shots photograph. You want to look professional.
Logo: Entrepreneurs love to play with this all the time and it can often really hurt them. The simplest logo is either a graphic of the letters of your business name, an image of the name of your business (if it is a noun), or an image that represents the activity that your business performs. Start with the letters as that is the simplest.
Cash considerations are important. When you cannot afford to hire a professional, do not try to be that professional. Instead, use common sense and keep things simple. Find simple solutions and they will work. These can be used to sell your products and services. Investors want to see that money and time is spent wisely and produces results. When you do this, you are much more credible to investors (and potential customers).
Professional vs. DIY
Professionals are called professionals for two reasons. First, they do the job better than most people. Second, other people call them professionals and pay them because of the first reason.
Many people will tell you to “save money” and “do it yourself”. In some instances, this is very sound advice; especially when you have no cash. However, it is often taken too far and becomes counter-productive by destroying credibility and turning away the target audience. The end result looks amateurish and buyers (customers and investors) walk away.
Today, I read on Seth Godin’s blog (see the CONNECTIONS section) his article titled: Why aren’t you (really) good at graphic design?
His premise is this: Today, business professionals are expected to have professional looking presentations and collateral. However, because of today’s “easy” software, instead of hiring someone you can do it yourself. You will not be as good as a professional but you will be “really good” and that is good enough.
I have seen “really good” and usually it is not good enough. The problem with “really good” is that it is purely subjective and often based on the other idea, “I just do not want to spend the cash.” Standards and expectations are lowered by the business owners. The problem is that customers do not lower them and expect professional. The customers go elsewhere.
When I was the marketing director of an animation festival and executive producer for a startup animation studio we saw many portfolios, many artists and graphic designers. There is a big difference between DIY and professional. There are many levels of professional and wide range of prices.
Maybe you cannot afford world-class, but maybe you can afford something. You need to make the right decisions on when to DIY and when to find a qualified person within your budget. When you approach a professional, tell them what you want and your budget. Don’t hide the budget but figure out what you would pay for what you want. If it is not enough, they will tell you. In my expereicne, if the designer does not have a budget they will usually overbid. You keep it under budget by giving them a budget.
Godin identifies the four big things people try to DIY and suggest you can too: PowerPoint presentations, web sites, business cards, and bio photos. It is just not that easy to do all four. Here is my response:
Presentations in Power-Point: Absolutely DIY. Why? The best ones today are simple with no animation. They just look good. You could hire someone to develop a color template and then use that template over and over. This would be branding development (see tomorrow’s post).
Web site: If it is very simple and you are satisfied with out of the box, then by all means go DIY. Otherwise, hire someone with talent. Amateur sites look that way. There is a lot more to it than meets the eye. If your business depends on look and presentation, then you have to spend the time and money on a web site.
Business Cards: If you do a simple black and white design or use one of the online pre-designed cards, then DIY. Otherwise, hire a designer. When it comes to printing them, save yourself a lot of time and trouble and just get them printed. At overnightprints.com you can get 100 double sided color cards (standard size) for $14.95. You can get 1000 for $49.95. It is worth it. If you print them and cut them yourself it will look amateurish. $50 is a sushi dinner for two. Skip one of those and get business cards.
Bio photo: Anyone can take a photograph. Having someone take a good photograph and then knowing how to color correct them well for presenting on the web and in print (which are different from each other) is another story. You could probably take a lot of decent pictures of yourself. It is a challenge for me. If you can take the time to figure out to color correct it then do it; otherwise ask a professional.
Godin missed a few more items that many people also DIY which maybe they should not. I will write more on that topic tomorrow.