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Posts Tagged ‘Human Capital’

The $500K Question: Word on the Street — July 11th thru July 15th

July 17th, 2011 1 COMMENT
Winning the Lottery

Word on the Street by Kevin Carty

What You Would Do if You Won the Lottery?

I remember a couple of years ago when Powerball was up to some crazy amount like $280 million. Or how someone from a small town in Washington State won Mega Millions for $380 million. If you are like me, you always wonder, “What would I do if I won the lottery?”

There are the obvious answers like pay bills, buy a new house, make sure all your kids, relative’s kids, and friend’s kids get money for college. Or you could be like my step-dad who seriously had a plan. Which caught me off guard because he is a real no nonsense guy, yet he seriously had it all planned out as if he had already won. And he only plays the lottery when its over 100 million dollars because then and only then does it seem logical to buy a ticket. We all know people like that. Heck, I am one for that matter. For some silly reason, a meager 50 million dollar jackpot is not worth $1. 🙂

But let’s shift gears a bit and put this into a more practical scenario.

What would you do if you came into work on Monday and there was a $500,000 check made out to your business waiting for you to deposit? It was not for a job or for anything other than for you to invest into your business. What would you do with it? How would you spend it? Really think about it. It may not be a lottery windfall, but it is a substantial amount of money. How would you get the biggest bang for your buck.

My answer comes from from something I heard on a reality TV show called Shark Tank. In the episode, there was an entrepreneur with an already successful product and business. It was a no-brainer for any of the potential Shark Investors to invest in. Until they started asking some tough, thought-provoking questions. You see, the product was already successful and doing quite well at a 200% markup. Yet the business plan, should entrepreneur get the investment funds, was to make a lower cost/lower margin version of this niche product in order to bring it the larger market. So the investment dollars would go towards developing a mass market version.

The Shark Investors all started saying no to the opportunity because, in their wisdom, they realized that the entrepreneur was missing the big picture. Meaning, he already had a great niche product that reaped a better than average profit margin. So, why not take the investment dollars and grow those sales by broadening the sales footprint, whether by hiring more regional sales reps or creating a better web presence for people to access the product. As one investor said and I paraphrase, “In the end, I would rather have a 1.5 million dollar niche business/product that sells for a 200% profit margin than a 3 million dollar business that produces a 25% margin.”

Which leads me to what I would do if I had the $500,000 to invest. I would invest in Human Capital such as Sales Reps, Designers and PM’s. And of course Marketing personnel.

The thought being, we already have what I would consider some of the best products and production capabilities, including all the CNC technology you could want. Along with that, we have a solid reputation as a good company and a great place to work. We are a company that firmly believes in the power of relationship sales backed by great product lines. So I would invest in the Human Capital to help grow the business:  Designers to keep us on the leading edge of design, Sales Reps to increase visits with distributors, and Project Managers to fulfill the sales process and to continue to improve the customer experience. And Marketing folks to create additional education and web-based tools for distributors.

So . . . take the challenge. If you suddenly had $500,000 to invest in your business, what would you do with it? Would you invest in people, technology, showroom displays, or something else. Share your plan . . . And flying to Las Vegas and putting it all on the roulette table doesn’t count. This isn’t a Chevy Chase movie.

Have a safe and restful weekend.

–Kevin Carty