Paul Carney

Working hard to make things simple

Tag Archives: resource allocation

My First Web Business – The Goods (Part 2 of 5)

As you read in my first installment, I now had a business idea and it was time to build it. First order of business: What would the Baby Necessities gift baskets have in them?

My wife and I came up with a list of items we thought were necessary to have around when you have a newborn. Most of the items were available through your local pharmacy or grocery store. If I was to make a profit, I needed to buy the goods at closer to wholesale price, but I was a small company with no history and low order volume. How would I get someone to give me a wholesale price?

I canvassed my wife’s network of pharmacists. There was one who had worked with her at a major retail chain, but had left to work for a small, local pharmacy called Leesburg Pharmacy in Leesburg, Virginia. I contacted the owner to see if he would be willing to sell me items at a discount. As the old saying goes, “You don’t know unless you ask.” So I should not have been that surprised when he agreed to allow me to place bulk orders of the items from him at his cost plus 10%.

In keeping with the “necessities” part of the product’s name, we searched for a company that had a wide range of health, safety, feeding, care and sleep-oriented products. The clear choices were The First Years and Johnson’s Baby Care. I attempted to contact both and only The First Years got back to me.

I indicated that I wanted to order about 15 of their products by the case. I even agreed to pre-pay for the order if necessary. They asked a few questions, wanted a bank reference and a few days later, gave me the way to place my order. Sweet! I got to order, get it shipped to me and they billed me. My first order was for over $750 worth of goods and the truck showed up 6 days later with the products. From that point on, my typical order exceeded $1,500, they continued to bill me and I paid the bill on-time. I was fortunate that The First Years gave me such a great opportunity.

Even back in 1998, I was amazed at how many of the other things I could get online: the unique carriage-shaped wicker baskets, the stuffing to put in it, even the ability to buy various cardboard box sizes by the pallet! I now had all of the pieces and parts to build the baskets – all I needed was customers…

In my next post, I will describe how I set up the business from business cards to credit card merchant accounts – and everything in between. As you will see, a lot of work will have gone into the business by that point and there is still not one paying customer.

Time, Talent and Cash: Triad of Success

So much has been written about time management, but how do you effectively manage time, talent AND cash? As scarce resources, you have to determine the proper balance to achieve real value.

When you tackle a problem, you first determine if you have access to the talent. If you don’t have a way to use your own talent or gather the right resources to solve the problem, then no amount of time or cash will help.

Given that you now have access to the talent, how much time do you have? It is the one resource that you cannot increase – it is a steady resource that moves at the same pace, even though it sometimes seems to stand still. It is often difficult to be realistic in estimating how much time a task will take. Men, in particular, tend to underestimate how long a project will take, including the 5 extra trips to the hardware store!

And finally, we arrive at the cash portion of the equation. How much cash do you have and how much will you need? If this is related to a work project where you are trying to make money, it is important to make sure you will make more money than you are going to spend. If it is something like a home improvement project, then you need to make sure you have the money in your budget, including a 20% allocation in case you exceed the budget.

Good business owners and managers know how to take inventory of the time, talent and cash they have at their disposal. The great people have figured out how to effectively allocate those resources to gain maximum achievement. It is not easy to do, but if you can set up a process so that you understand how you have used these scarce resources in the past, it will help you develop patterns that will help you move forward more effectively.

That is why you have to review your inventory of time, talent and cash if you want to succeed. Of course, this is very closely related to the “Good, Fast or Cheap – Pick 2” concept. When you understand both of these formulas, you have a tremendous advantage over everyone around you. Go out and use them to achieve success!

Manage the Exceptions – Anything Else is a Waste of Your Time

Each of us has a limited amount of time available to be effective, whether you are trying to learn a new skill, start a new company or get the attention of that hot person across the restaurant. To be successful, you have to evaluate the options and choose the ones that will help you reach your goal.

So how do you use your time? If you are smart, you will figure out how to manage only the exceptions. Here’s why:

Most things in your life operate from a system: a set of tasks or functions in a specific environment to achieve a goal. That system can involve people, money, or work and is designed to get you from point A to point B in a defined way. There is usually no room for deviations.

From my experience, it is the exceptions to that system that will cause the most issues. They force you to deviate from your path, become less effective and even more likely, miss meeting your goals. You can be doing all of the right things for your system, moving along quite nicely with your destination in site when, BAM! – an issue sends you reeling.

That is why you have to develop a plan to manage the exceptions. If you have done the proper job of setting up the system, it doesn’t require you to manage it. You need to spend your scarce management resources (time, talent, cash) on the exceptions by being able to:

  1. identify them as soon as possible
  2. develop a response plan to counteract them
  3. implement the response plan

This method of “rapid situation detection” and response will be crucial to your success. Just like having a good plan for hurricane evacuation can save your life, having a focus on managing exceptions in all aspects of your life will keep you on the road to your success.

What specific tools do you use to manage the exceptions in your life?

Good, Fast or Cheap: Why You Have to Pick 2

It is the classic dilemma: you want to have great service, done quickly and for a cheap price. But the laws of physics only allow you to have 2 at a time and here is why.

Here are the combinations of 2 choices at a time:

  1. Good and Fast
  2. Fast and Cheap
  3. Good and Cheap

Whether it is the study of law, how to price freelance work, or project management, the laws are the same – you can only pick 2 at a time. One exception seems to be cooking, but only when I am not in the kitchen!

Let’s review these choices from the perspective of a craftsman who builds custom homes.

Take the first combination: “Good and Fast”. This is a great selection because you get great work done quickly. The craftsman who constructs a well-built custom home quickly will have decades of experience, having learned where he can take shortcuts that will not  affect the quality of the finished product. This level of provider knows that the market will pay him a higher price, hence he is “Not Cheap”

We now move on to “Fast and Cheap”. In this case, your custom home is put together quickly and for a lower cost. Quality workmanship for something as complex as a custom home cannot be rushed, and experienced craftsman know this. When he cuts the wrong corners or does the bare minimum to complete the job, you don’t end up with “Good” results.

Finally, we have “Good and Cheap”. In this case, you get a nice custom-built home but at a lower cost than the market drives. This means the craftsman will work on the home as time allows, allocating his scarce (and high-priced) time to other projects that will pay him more. You get your great home at a cheaper cost, but it will take a lot longer to get it done.

The bottom line: Good, Fast or Cheap: Pick 2. Do not try to fight it. The laws of physics will not allow you to win. The earlier you realize this in life, the easier it becomes to make decisions because you understand what you are giving up in your final choice.