Can investing in your career provide more financial benefits than investing in the financial markets? Maybe...
For most people -- especially for those in the 1st half of their working lives/careers -- investing time, energy, and even money into their careers might prove to be very valuable investments. For many, investments in their careers might prove more rewarding than typical financial investments.
The reasons why this is the case for many people are two-fold. First, most people don't have a lot of initial capital to start off with - saving and investing is key for them, but with so little capital there's not much that can be achieved in the short run for the typical retail investor. Second, investments in your career (e.g., investments in your skills and knowledge) have compounding effects over time as one progresses in his/her career.
It's hard to give a useful guide on what to pour your money, your time, and your energy into because each job is different and careers are diverse. However, it's a safe bet that building the following skills/attributes within yourself will prove very beneficial over time:
Newton said there's inertia in the universe, so we now know more about our world and physics is better for it. That's not the inertia we're talking about here. Forget the universe for a second - focus on inertia in your mind.
Mental or spiritual inertia is a real thing. We won't try to define it here, but everyone who has experienced it knows what it is. It's when
Here are some examples of using interim in your own favor and taking quick, small, but intense bursts forward in whatever you'd like to achieve:
The problem with modern Western self-improvement and self-development thinking is that it treats the human mind as a machine when it should instead be treated more like a tree - we'll get into what this actually means in below. But, the vital thing to note is that this type of thinking has permeated self-improvement and self-development thinking quite profoundly. It has penetrated so deeply that when most people think of becoming better human beings are strictly in the machine paradigm; most people don't even understand that a different way of thinking about the mind and self-improvement exists.
Machine vs. Tree: Be a tree, not a machine
Machine: The machine paradigm is easy for most Western readers (e.g., readers who grew up in an environment where Western post-Platonic thought formed the foundation of academic/scientific thought) to understand. Treating your mind like machine means having a paradigm where you believe improvements to the machine (your mind) are to be made based on external analysis/planning/thinking (exogenous improvements) and where those improvements can be immediately implemented (e.g., upgrading the machine).
Tree: The tree paradigm is more difficult for Western-oriented thinkers to understand and is somewhat more in line with Eastern, though, but not completely. The tree paradigm is where you believe that mental "upgrades" are impossible or exceedingly rare, and you acknowledge how little control you actually have over your own mind. Instead, with the tree paradigm, you more clearly see the only real way to make lasting changes to your mind: through feeding it with useful information over a long period of time and allowing that information to be absorbed, integrate, and recalled later. Someone who understands the tree paradigm has a far clearer perspective on their own mind, their ability to improve or develop it, and the timeframes it takes for such improvements. This is just a brief into the tree paradigm - there's as much and more here as there is in the well-known machine paradigm
The descriptions above are accurate, but they might seem confusing to readers without proper examples. Often, the best way to illustrate a point quickly is to give examples. So, here are a few.
Problem: A man realizes he's terrible at relationships - his wife is unhappy and he finally realizes that there are things he just doesn't know about women, relationships, and how to have a happy marriage.
Problem: A man's friends sit him down and tell him that they feel he has a deep problem with aggression - at bars he picks fights, friends are always afraid of him getting upset when he's drunk, and they remind him of how he became aggressive with his wife a few months ago.
Problem: A high school kid who is good in school but self-conscious, timid, and possibly under-developed physically compared to his peers gets harassed at school by older, more aggressive kids looking for easy prey.
News is by definition most relevant in the short term – as time moves forward each piece of news information degrades quickly in terms of how relevant and/or useful it is. In effect, information can be thought of as having a half-life. If we map things out in this respect, we can see that not all information is equal:
So, if you’ve got a limited amount of time and energy -- and your goal is to maximize the amount of useful information you obtain -- you’ll want to focus on things with a far lower half-life. In practice, that means making choices like this:
Here are two great articles that in-part inspired this piece:
You can't save your way to riches if you don't have a big enough income to save just like you can't dig a big hole if your shovel is tiny. Too many people, too many financial websites, too many financial advisors, too many financial shows have for too long advocated saving with a deep lack of attention to the more important sid of the equation: INCOME.
Of course, even if you have an enormous income but still manage to spend it all, you won't build wealth. But that is not at all relevant to what we're discussing here. What we're saying is that there are simple mathematical and physical principles govern the world we live in and based on these principles there's something we know that's true:
the maximum amount you can save is your full income - this would be not possible in most cases it would require not spending anything
So, if you're earning $30,000 a year but are the most magnificent saver in the world, the most you can possibly save is $30,000 but realistically you'll be considered an ultra-saver if you manage to save $20,000 a year.
Contrast that $30,000 per year example with someone who earns $300,000 a year - clearly that individual has a much bigger shovel and has a lot more room to take advantage of saving. In effect, this person who makes $300,000 can benefit more from saving because the more he/she saves the more they can put away for building wealth up to their income. In effect, if they can spend $10,000 a year like the person in the $30,000 example, they can save a huge pile of money every year and build a lot of wealth.
People should be focused on saving, but they should equally (if not more intensely) be focused on generating more income for themselves os that they can put more money aside. This is easier said than done and that's the reason most financial resources tend to focus on saving rather than increasing income - everyone simply wants to pick the low-hanging fruit.
Most people in history created their livelihood -- either by creating income or by actually producing the necessities of life with their own hand and toil -- within family or communal units. The idea of working at a job for a larger entity such as a corporation is extremely new in the grand swath of human history. In effect, almost all of the people who ever lived could in effect be classified as small business owners - this is even true today as most US employment comes still from sole proprietorships or small businesses.
Why is it useful to understand the history of work/labor?
This idea is very important to people living in modern societies because we have a view within our minds that is quite different from reality. Many people believe that:
Going beyond the present day and having at least a basic conception of the things our ancestors did to create substance and value in their ancient worlds will assist in opening up your mind to new opportunities, new ways of combining life with work, and new ways of creating value for others.
Hunting and Gathering - The First Sole Proprietorships
For most of our history, we hunted meat and gathered fruits and vegetables to feed our families and our very tight-knit communities. The lifestyle involved simply waking up with the sun, looking for food during the day, and resting in the evening. Bedtime was when it became dark and no hunter-gatherer had to plan very far ahead.
The first really interesting thing to think about when thinking about how hunter-gatherers provided for themselves is how there were almost never any intermediaries. Besides the possibility of occasional trade within tight-knit communities, hunter-gatherers had what can be considered a two-step method to getting what they wanted. In terms of purity of execution, this was the most basic/fundamental way of obtaining food and water - a hunter gather would literally expend energy in order to obtain the final product he/she sought.
The second interesting thing arises from the first - hunter-gatherers didn't create value for other human beings in order to achieve their goals. Of course, a hunter-gather might want to provide for his family and create value in that pursuit, but that's not what we mean here. What we mean is that hunter-gatherers either went to pick edible growings or killed animals in order to obtain sustenance. In that pursuit they did not serve any other human being in any way - they simply went out into the world and obtained what they needed from it. Contrast that with today's world where we almost exclusively have to earn our livings by creating value for other people, be they your employees or your customers (which are also your employers in a sense). We're not making a normative statement here - we're simply making a descriptive statement.
The third very interesting thing about thinking of the working hunter-gatherers performed is that they had a direct understanding of how their efforts and skills translated into the final product they obtained. Of course, hunter-gatherers likely had some sort of quasi-religious beliefs where they imbued objects, the weather, etc. with spiritualistic aspects and they might have relied on them to provide. However, that doesn't detract from the simple physics of hunting and gathering - every hunter-gatherer must have understood how it was their own physical efforts out in the world that were the proximate cause of their gain. They could have thought the ultimate cause came from the skies or from the tree spirits or elsewhere, but they surely understood that the proximate cause was their own effort - they surely understood that without themselves leaving their cave, picking growing, or killing an animal and dragging it home, their families would not have food to eat. Contrast that with today's modern corporate worker who works in a corporate office or campus and who has
These complex factors can include things such as
Yes, a person's well-being still depends on themselves and everyone must take responsibility for their lives - you must work hard and well so that you're able to do well in your job and in life. However, it is abundantly clear that the level of mental control that a person feels over his or her method of meeting wants/needs should have been far greater in the past than in today's complex and interconnected environment where so much of the economy is not visible or understandable by a single individual.
This understandability of relationship between soil and result could be psychologically beneficial to human beings on many levels. This isn't a psychology website and we're not purporting to have any theoretical or empirical underpinning for these statements, but it does seem to make sense that an individual who has a clear "a leads to b" understanding of the relationship between toil and result -- as opposed of "a to b to c to d to a BLACK BOX to e to f to g" understanding -- would have greater psychological comfort and less psychological stress.
In no way is above supposed to make you envy a hunter-gatherer - we live in a far richer world (both physically and mentally) than our ancestors and anyone who would want to give up today's peace, today's luxury, and today's comfort for a hungry dangerous life of basic subsistence and survival is a quite unusual person.
Agricultural Revolution and Farming
After many centuries of foraging, humans ended up farming. This happened gradually over the course of centuries as well, but the end result was the literal transformation of human life from a nomadic existence to a settled life that would be far more familiar to the modern person.
Although life transformed as well as the approach fro providing for it, humans still operated at a family or communal level - humans still remained in effect small business owners. The business changed, of course humans went from hunting and gathering to
Humans mainly operated as family units after the agricultural revolution according to current historical data with larger family-based communities existing for things that went beyond the family. In effect, each household ran a small farming business that employed the entire household from a relatively young age by today's standards.
Here people had a bit more complexity - their toil no longer immediately translated into value creation (eg. food to eat) but had to go through the intermediate step of waiting for the seeds to grow into plants. The same is true for livestock - farmers and heard had to wait for livestock to grow and spend time and energy on breeding instead of just going out into the wild to kill game.
We can see that from hunting and gathering to farming -- things which make up by far the vast majority of human existence -- we operated in very small-scale communities and were in effect creating our livelihoods within our family units. In effect, all hunter-gatherers and farmers until the Industrial Revolution turned farming into big business can be classified as small business owners in the very broad sense of the world. These individuals worked primarily for themselves and their families. Farmers in certain eras might have had to pay taxes to lords or barons or other elites, but these can be thought of as quasi-taxes. Almost all of humanity did not know the meaning of providing your labor (either in the form of physical or mental exertion) to another individual in return for some sort of payment - this was the case for many reasons, one of which was an economy that was so poor that it could not sustain such interactions in a meaningful way.
Artisans and Craftsmen - Sole Proprietors Throughout History
Beyond farming, there have been at times in history a class or artisans or craftsman. This class developed after the Agricultural Revolution as settled communities were needed in order for this class of people to arise. They mainly operated in larger cities and they ran what can be considered small businesses. The words "artisan" and "craftsman" is too narrow, however, as these individuals operated a large variety of business. These businesses including:
All of the above can also be classified as small businesses. They are more like the small businesses we think of today - instead of directly producing their own livelihoods, these artisans and craftsmen would set up shop and serve their communities. They would very likely have most of their family involved in the business and live either close by or directly above their shops.
The Modern Working World
Although the majority of US jobs still come from small businesses, most people think of work as something you do in a large-scale setting such as a corporation. Most people even aspire to such work.
This work is quite different than operating a small business because it involves providing your labor to a larger entity that you do not control and likely can never fully understand (not even the CEO of a large firm fully understand what's really going on). This creates a sort of "black box" effect where you provide your labor into a "black box" and then some income is given to you. You aren't totally sure about the actual value you're creating for the firm and you don't fully understand how your labor fits into the bigger puzzle.
There are of course many benefits working in jobs - most of these benefits come from a certain stability that is not always present in running a small business. However, there might be some psychological costs that affect a person in the following ways:
Working in a job might make a person blind to other small but very profitable opportunities where their skills might be used. They might not ever consider opening their own business, running their own website, consulting on their own, or providing value on a small scale. This is unfortunate because it is in such small setting where you are able to capture the full value of your efforts (instead of the employer capturing most of the value). This is really how people get rich today - most people will never get rich working for a job and saving a large portion of their income; the vast majority of people in our world get rich in entrepreneurial activities.
Some Examples of Employment Throughout History
Although most people worked for themselves throughout history, there were some interesting examples of employment throughout history. Here are a few:
Hobby vs. Business - A business is a value-creating entity that receives some of the value it creates in the form of revenue
What is a business? This is a deep question that is rarely asked - possibly never asked. Everyone goes about their lives today talking about businesses, thinking about businesses, and dealing with businesses, but almost know one ever thinks about the definition of a business.
This likely stems from the fact that we seem to have an inherent understanding of what a business is - we guilty learn it growing up and see no need to ever define the term. Even MBAs in the world's greatest business schools - schools like Wharton, HEC Paris, Booth, or the London School of Economics - never seem to really discuss what business means. They (and everyone involved in any sort of human enterprise that attempts to create value) would be well-served by taking some time to dig deep and understand what business really it - having a workable conception beyond the mere imagery we currently use to understand the concept.
A business is an individual or an organization that is engaged in value-creating activities in order to earn remuneration for the value-creation at least equivalent to the costs of creating the value but attempting to charge enough to earn both a nominal and a real profit.
Let's dive deeper into our definition in order to flush out the meaning each of the definition's subcomponents:
Average Transaction (AT) - A fundamental metric that is key to a better understanding of your business and organization
The Average Transaction (AT) is the fundamental building block to having an understanding of your business - if you don't currently know the Average Transaction (AT) for the business you own or manage, your level of business intelligence is severely lacking.
In today's works of easy record keeping, storage, and plenty of computerized analytic powers, there is no excuse to not be keenly aware of such basic and fundamental metrics such as your business's AT.
Average Transaction (AT) simply represents the mean transaction over a given period of time. Stayed more appropriately to business, AT is the expected transaction - it is the revenue you can "expect" (in the statistical sense of the term) to receive from the next individual or organization that you do business with.
Calculating the Average Transaction (AT) for your business or company
Calculating your AT is quite simple - you simply take the arithmetic average of all your transactions:
AT = (sum of transactions)/(# of transactions)
If the formula sounds very simple, it's because it is - you hopefully already know your business's AT. Of course, there are a few important things to keep in mind in order to make sure your AT is accurate and useful.
Timeframe matters when calculating Average Transaction (AT)
There are two points to be made regarding timeframe. The first is easy and hopefully obvious - you must use the same timeframe for both parts of the formula. So, if you sum the transaction over 2016, you need to divide by the number of transactions in 2016. Imagine you didn't follow this rule and instead only used 6 months worth of transaction for the top part of the formula (for the sum of the transactions). What would happen? It should be clear that you would significantly understate your AT (it works like be one-half) because you're not taking the full year's worth of transaction into account. If you only had 6 months worth of transaction, you would need to divide by the number of transactions you had in that year in order to calculate your AT properly.
The second point on the timeframe is that it's better to use a full year of data instead of just a few months. A full year of data (if your business is in a stable state) will allow the kinks and gyrations caused by changing seasons, holidays, etc. to be evened out - a full year of data will allow the full spectrum of things that occur in a year to be captured within your data.
When calculating AT, focus on transaction, NOT customers
A key part of calculation your Average Transaction (AT) is to make sure you're using transaction and not customers - it's called Average TRANSACTION after all. The distinction is key because focusing on a transaction will allow granularizing your metrics down the line - you'll be able to not just calculate AT, but you'll be able to calculate multiple ATs for different types of transactions (eg. those arising from Google, those arising from referrals, etc.). More on this is covered below, but let's look at an example to really understand the difference between using transactions instead of customers.
Imagine you have a customer that comes in once every month for a year. You'll want to count each of the 12 transactions separately instead of counting the customer as a whole. So, you'll sum each transaction and divide by 12. If you have 10 such customers, you'll sum each transaction and divide by 120 (10 x 12) because there are 120 total transactions for the year.
The benefit of doing this for transactions instead of customers can be explained by doing a thought experiment. Which would you rather have when a customer comes into your business to execute a transaction:
Clearly, the first one allows you to predict what will happen in the immediate future and put things to a close. The second one, however, only allows you to make a prediction about the overall general future - you really won't know what's going to happen today. What this example illustrates is that it's quite useful to be able to predict what's going to happen today instead of-of having today only fit into a larger long-term prediction.
Average Transaction (AT) can be broken down even further into more granular sub-metrics that will provide even greater insight into your business or firm
You can break down your AT even further to determine you AT for various types of transactions - transactions arising from Google, from Facebook, from referrals, etc.
This gradual AT is useful because it will allow you to understand where your most valuable transactions come from so that you can channel more money into those pipelines and away from less-profitable transactions.
Referrals Per Customer (RPC) - A key business metric that will allow you to learn more about your business's virality and ability to generate organic growth
Referrals Per Customer (RPC) is the correlated rate of referrals per customers over a given period of time. Stated more simply, Referrals Per Customer tells you "how much of an additional customer" each customer brings in.
Understanding that both the above definitions still might be a bit opaque and obscure to business owners and managers, let's go a bit deeper with an example. A Referrals Per Customer (RPC) rate of 0.25 means that for each unique customer over a given period of time, 0.25 (or one-quarter) of an additional customer is going to come into your business - which means that for every 4 customers, you can expect one additional customer to come in via a referral.
We measure the Referrals Per Customer (RPC) rate in terms of a single customer because it will be easier to use downstream - although it might be easier to say "you get 1 referral for every 4 customers" saying instead that "each customer brings in an additional 1/4 of a customer" is the best ay to approach and to understand RPC because it will allow you to apply an understanding of RPC to each customer and because it will be easier to use the RPC concept downstream in the calculation of things such as the Lifetime Customer Value (LCV).
To calculate your business's Referrals Per Customer (RPC) metric you simply need two numbers:
Using these two numbers, you can simply divide the number of referrals by the number of non-referrals to get your RPC metric. For example, if in 2016 you had 800 non-referral customers and 200 referrals, you would simply divide 200 by 800 to get 1/4 OR 0.25 - your RPC would be 0.25, meaning it's as if each customer brings in an additional one-quarter of a customer with him/her every time they come in.
Now that we've given you a brief overview, we'll discuss why this is an important thing to know, then we'll dive into some important conceptual pieces of Referrals Per Customer (RPC) and then follow up with an example of how to implement this new and valuable understanding.
Why should you care about Revenue Per Customer (RPC)?
Any small or medium size business owner or manager worth anything will understand the importance of referrals. From antiquity to the most modern businesses around the world today, referrals are a critical part of growing any businesses sales base - this understanding is so fundamental that it almost needs no explanation.
Humans, being social creatures, value the opinions of other humans they trust and respect. Humans intuitively understand that a referral from a respected individual is a valuable thing because it both
If referrals are so important to businesses, and if most businesses understand this, why is so little effort put into properly understanding referrals by small and medium-sized business owners and managers? In conversations with small and medium sized business owner sand managers, this usually occurs because a misconception that it is either costly or difficult to go beyond the basic "please refer us" statement to understand the nature of particular business's referrals.
If the nature of referrals can be properly understood, however, various benefits will immediately flow to the business owner or manager. These benefits include:
Correlation vs. Causation - A key distinction to know in business and in life
Now that we've covered the basics, we'll dive deeper into RPC in order to flush out some of the important details and get a good understand fo the concepts and it's potential weaknesses. First, we'll note that the way we calculate RPC is a bit flawed - RPC looks at how referrals are correlated with overall customer volume and NOT at the actual amount of referrals that a certain number of customers bring.
What this flaw means is better illustrated via a generic expamle using the same numbers we used in the brief example above. Let's say you have an ice cream shop and 800 new customer visit in 2016 with 200 referrals. Per our RPC calculation, you would look at be looking only at numbers in 2016. That means a referral could have come in on the very morning of January 1, 2016, but you would still count it as part of your RPC. This doesn't make sense because clearly, no customer in 2016 referred that customer - it was almost surely someone in 2015. So, you're not really looking at the causes of the referrals, but only at how your referrals are correlated with (eg. compare with) your non-referrals.
This is a flaw, but it should remain a minor flaw for the vast majority of businesses. You should be aware of it, but that is all - you can safely assume the flaw away because the error that will be introduced will be very small and due to the fact that the greatest error occurs in the first year. In subsequent years, although the very small error will persist within each year, the error will be normalized away via a comparison of years with each other - 2016 and 2017 could be compared with each other and both will have that error in it.
For calculating RPC, count customers, NOT Transactions
It is important when calculating your RPC metric, as stated above, to use customers and not transactions - customers might engage in multiple transactions but you only want to track the individual customers in order to accurately calculate RPC.
It's easy to see why we want to focus on customers and not transactions. Imagine a customer who refers one friend but comes to your coffee shop every single day for a year. Intuitively, how do we understand the relationship between the customer and the referrals that come from him/her? We clearly would say that the one customer refers one person - we wouldn't say 365 customers refer one person. If we count transactions, we would in effect be saying that it takes 365 of this customer to get a preferred customer - a meaningless and inaccurate statement. Clearly, we can see that it only took us one customer to get that referral - the more accurate approach is to count only customers.
Does the same apply to referrals? Do we count transactions or customers when counting the number of referrals? Clearly, we also count the number of customers - counting transactions would possibly overstate a number of referrals and thereby overstate the RPC metric incorrectly. Again, image one customer refers another and that referred customer comes into your coffees spot every day for a year. Would it be more appropriate to say that one customer was referred or would we say that 365 customers were referred? Clearly, it is more meaningful and correct to note that one customer refers another, not that one customer referred 365 customers.
Digging deeper into the calculation of Revenue Per Customer (RPC)
We touched on the actual calculation above, but let's dig a bit deeper into it in order to really flush out the details. As we said above, there are only two things you'll need in order to calculate Referrals Per Customer (RPC):
Then you simply divided:
(# referrals)/(# non-referrals) = RPC
Make sure to keep in mind that you're dividng referrals by non-referrals (not the other way around). Additionally, it is key that the two numbers your dividing are for the same time period - if you use different time periods for counting the number of referrals and non-referrals, your RPC will inaccurate and incorrect.
Hopefully, you already have the data to be able to get the above numbers. However, if you don't, you'll have to set up a system for collecting customer data and wait a bit (at least 3 months) before you do the calculation. You'll want to wait so that the data is sufficiently representative of what's going on and so the short-term kinks and gyrations are evened out. One year is an even better timeframe - if you start at a shorter timeframe, move to a longer one as more data becomes available. One year is particularly excellent because for most businesses it will allow for a full yearly business cycle (eg. holidays, special sales, varying weather, etc.) to be represented within the dataset you are using.
It's not difficult to start collecting the necessary data to calculate RPC if you currently don't have it - you really only need to tag each customer with whether or not they are a referral and be able to separate out customers from transctions. Separating referrals vs. non-referrals is relatively easy - you or an associate can simply ask at the time of purchase verbally or via a registration form if your business uses them. Making sure transction are separate from unique customers will be a bit more complicated, but is still relatively simple - you'll need to someone keep track of your customers (eg. an MS Excel file) and be able to search within your customer list (eg. Ctrl-F within MS Excel) for the customer when a new transaction occurs. This MS Excel - Ctrl-F is the most basic and primitive approach - far more sophisticated and elegant approaches are possible using both MS Excel or a piece of Customer Relationship Management (CRM) software.
Benefits of knowing your business's ability to generate revenue from customer referrals
Once you know your businesses RPC, you'll have a far better picture of how referrals factor into your business. You will literally be able to understand what percentage of customers are referrals and, thereby, understand what each customer (on average) brings into your business in terms of referrals.
You'll effectively be able to both understand and quantify the additional benefit that is derived from each customer above just the transaction - you'll knw that the transaction amount is only one part of the gain your business receives from each customer. By knowing this, you'll be able to better evaluate marketing - both towards new customers and to existing customers. You'll also be able to better evaluate different approaches to growing sales and revenue - a common dilemma many business owners and managers face is whether to market towards new customers or to focus on getting more referrals.
Additionally, by knowing your RPC, you'll now be able to track your RPC over time - this is incredibly valuable and will allow you to monitor the performance of different strategies and tactics. For example, if you implement a referral bonus where customers get a certain discount for each referral, you'll actually know how effective that program was. You might think that you would already know how effective that program was without knowing you RPC - wouldn't tracking sales and revenue be sufficient? The answer is NO - revenue clearly depends on many thigns (eg. season, tastes, unemployment rate, economic growth, randomness, better salespeople, etc.). By knowing your RPC, you'll be easily able to measure one time period's RPC against another and really know how a new strategy affected the level of referrals derived from each customer.
Most importantly, you'll be able to use your RPC metric in important downstream uses that will further create business intelligence for you - critically useful metrics such as Lifetime Customer Value (LCV) rely on the RCP metric as an input.
If you own or run a small or medium sized business and you don't currently track customer, lead, or inquiry data, starting to do so could be magic for your business.
Keeping quality data on customers (and on leads or inquiries - people who contact your business but are yet to take the next step) could prove incredibly powerful in terms of gaining insights about your business and future marketing efforts.
I've spoken to many small business owners both in a professional and social context and I often ask them this question:
"How would you feel if you had the email of every single one of your previous customers available to you right now?"
They usually respond by saying that it would be amazing to have that - the longer they've been in business the more amazing it is. Once small business owner in California that's been around for over a decade remarked that having that sort of data would be like gold - it would allow for excellent marketing opportunities since tens of thousands of happy high-transaction customers have walked through the business's doors over the course of more than 10 years.
Beyond just emails, knowing very simple things like the Zip codes of your customers would add a level of intelligence to your marketing and advertising efforts without which business owners are using primitive methods devoid of any sort of business intelligence that is so easy to acquire in today's environment. Without knowing anything a business owner is shooting in the dark in terms of marketing and advertising. By knowing just the Zip codes of previous customers, marketing strategies could be more finely tuned in order to get better returns on advertising spend. Google, Facebook, and even print ads are all advertising mediums that easily lend to the use of such information.
Any small or medium sized business owner or manager who currently keeps poor data has the ability to transform things today with the use of a computer and a bit of time. The great thing is that it's very easy to start. Although most business owners and managers who haven't started this already have likely procrastinated because they thinks it's too difficult or too complicated for them or their business to implement, that's just false - it's incredibly easy to start for anyone with a computer and a licensed copy of Microsoft Excel.
We recommend using MS Excel (not Google Docs or Apple's Numbers) because Excel is at once easy to use and powerful. Excel is robust enough to handle large sets of data and will allow for various sorts of analysis and manipulation in the future - it's basically the gold standard in terms of entry-level data suites and going for a more simple or easy-to-use suite might be a mistake here.
Here is an example we created to demonstrate how easy it is to start collecting useful data (see image below). We created various simple fields that will be applicable to all businesses:
Date: So you know when the record was taken
Privacy and compliance in collecting customer data
Always make sure to ask for data - don't just input it yourself. Additionally, let the customer know that you're storing it and that you intend to keep it secure and private. Make sure you actually do so by using robust passwords and access protection methods, storing hard drives in safes or secure/locked locations, and refrain from transmitting the data via unsecured connections or to parties who are unaffiliated with your business.
The best rule of thumb is to treat the data as if it was your own or your families' information.
Data vs. Intelligence - How to approach the stunning amount of data in the world to succeed in your business or your career
We live in a world of massive amounts of data. You've likely heard the term "Big Data" many times before, but it's far beyond this and you probably don't have a full grasp of how amazing our modern and connected world (mainly the developed 1st world) is today.
In the year 248 AD, Rome celebrated its 1000th anniversary - it had been 1000 years since the founding of Rome. More data is created in one year today than was created in those 1000 years of the Roman Republic and Empire. This is an astonishing fact that should bring a sense of awe to every intelligent and curious person - humanity is creating absolutely vast amounts of all kinds of data today.
What kind of data?
Here are just a few examples of the kinds of data creation that take place every day - that takes place very second every second:
The list above is meant to be broad in order to demonstrate the broad swath of things from which data is created today. Data can be created by governments or big corporations, but data can just as easily be created by small businesses and individuals during their everyday tasks and processes.
The above list is just a tiny example - almost anything remotely automated or electronic creates some sort of data today.
A Key Question
If we have an exponentially larger amount of data today than in the past, why aren't we exponentially smarter today as a society? Sure, the size of our economy as measured by GDP or GNP is much larger than at any point in history, but we can still see that we haven't moved that far way from past societies and civilizations in terms of the things that are most important to humanity.
Going further, why aren't businesses incredibly smart if we have so many data available? So many small and medium sized businesses today still operate under the same paradigms as businesses of the past. The problem is that even though there are tremendous amounts of data (and easy ways to collect more), the data isn't being productively used. The data is just sitting there. It's easy to collect data - it's hard to use it effectively.
What you really need isn't data - it's intelligence. You don't need a data dump on your hard drive or a stream of data flowing in at many GBs a second - you need to know how to turn whatever data you do have (hopefully it's quality data) into intelligence. This is what the human mind does - it turns raw data from sensory inputs into intelligence via the brain.
To better illustrate the importance of intelligence and the inadequacy fo data alone, let's imagine a fictional scenario. Imagine giving an ancient hunter-gatherer tribe all of the data available today on a giant supercomputer. Of course, they won't be able to access that data, but let's ignore that for a second and imagine that SOMEHOW that ancient tribe could in fact access all of this vast data. Do you think that things would really change for that tribe? It is likely that the tribe would be incapable of utilizing the data in any way and creating any actionable intelligence from it - they wouldn't have either the mathematical/statistical sophistication to extract much meaning from it and they wouldn't have the background landscape required to absorb and process the data in appropriate and meaningful contexts.
The Definition of Data
Merriam-Webster's dictionary defines data as follows:
1. factual information (as measurements or statistics) used as a basis for reasoning, discussion, or calculation <the data is plentiful and easily available — H. A. Gleason, Jr.> <comprehensive data on economic growth have been published — N. H. Jacoby>
2. information output by a sensing device or organ that includes both useful and irrelevant or redundant information and must be processed to be meaningful
3. information in numerical form that can be digitally transmitted or processed
We define data in simpler terms:
Data are discreet units of information that provide some evidence of something in the real world
Data isn't something complicated. Although we might take a technological slant in our mind when thinking about data today, data can come in many forms. Data can be written on a stone tablet, on a piece of papyrus, on a piece of paper, or by tying knots using a string to keep track of things. Data can come in magnetic form as on credit cards. Data can come from CDs and DVDs or data can be stored on a flash drive. Data isn't technological - data is just information but technology has helped us gather and store vast amounts of it.
One of the key features of data is that it gives us some sort of information about the real world. This is due to the fact that data arises from the real world. The only way data can be created is by somehow recording some aspect of the outside world in some sort of storage mechanism. That mechanism might be robust or it might be fragile, it might be high advanced or primitive, but it has to (at least for a time) store some sort of information that is somehow derived from the real world.
Data that has no basis in or relationship to the real world is utterly useless for the purposes of using it to create value and making more effective decisions. Imagine a set of data that is just made up randomly - a random list of customer data that includes totally made up random numbers for purchase amounts, transaction IDs, customer contact information, items or services purchased, customer acquisition methods, discounts applied, and satisfaction surveys. How could a business use this made up data in any meaningful and purposeful way? They couldn't. This data would be of use to no one because no amount of technical knowledge or manipulation would yield anything positive - you cannot derive anything from it. In effect, it's "garbage in, garbage out" with data.
Intelligence, in the sense we're discussing here, is the use of data in effective ways to achieve valuable (whatever that means) goals and objectives in the real world.
What sort of goals are we talking about? They can be any goal that is worthwhile:
Most worthwhile goals are achieved through a combination of effort and intelligence - effort alone is not always enough because you need to put your effort int he right direction. Of course, intelligence alone is useless without the effort to use it also - but intelligence s the seed from which our goals can be productively and effectively achieved.
Intelligence is what sets humans apart in some ways from the other beings that inhabit the world we find ourselves in. Although lots of animals are intelligent in some ways, they're not as intelligent as us. We can use complex models of the world to make decisions - this is why we are the dominant species.
Intelligence is the stuff that builds bridges, building, and apps. Intelligence is what wins battles in war and battles in the boardroom. Intelligence is what allows you to outperform in life and in business - it's what can set you apart in the battlefield of business and make that customer come through your doors or visit your website or download your app instead of your opponents'.
Data vs. Intelligence
Data and intelligence are two different but interrelated things. Data is used in order to obtain intelligence. Or, stated another way, you need data if you're going to have some sort of intelligence.
Intelligence doesn't just arise out of nowhere. The kind of intelligence that is useful (the productive kind of intelligence that helps with making effective decisions int the real world) is based on data. Therefore, intelligence and data are not two different but similar things, they are two very different things with one being required fro the other. It's like water and oxygen - you need oxygen atoms to make water, but water and oxygen are far from the same thing. Just as with oxygen and water, you need data to have intelligence, but intelligence is far more than just data - it's using data to create an understanding of the world.
Intelligence can exist in many forms. It can mean knowing your:
Intelligence can also mean knowing things there aren't specific numbers, but are more comparative in nature - things such as:
Intelligence can also be binary - it can include things like:
The cost of customer acquisition (CCA) is the average price of acquiring a new customer, and is a fundamental piece of business information. The cost of customer acquisition is a fundamentally important metric for a business of any size. It is vital to know your or your organization's cost of customer acquisition in order to effectively execute.
Why calculate your business's or company's cost of customer acquisition?
The cost of customer acquisition (CCA) is a fundamentally important metric that will allow you and your firm or organization to:
How to calculate the cost of customer acquisition for your business
To calculate the CCA you only need two ingredients:
We left out one thing above - the time period. Over what time period should you get the above two metrics? The most obvious and safe answer is 1 year - it's not too long and not too short and will generally allow for seasonal cyclicality to not skew the numbers up and down. You don't want to use a timeframe that's too short - doing this for one month (let's say December) could cause miscalculation due to cyclical changes that might have an impact on how easy or difficult it is to attract customers in December. For example, a retail location might find it far cheaper to attract customers during the holiday season because foot traffic increases in malls and shopping boulevards. If this is the case, using numbers from only December would cause the CCA to be lower than it really is over a longer period of time.
However, you know your business and you should be the final judge of the timeframe. You might feel that a 2 or 3 year timeframe is more appropriate do due longer run cyclical aspects to your business that might affect customer acquisition.
It is important to remember that the times must match above - if you are using the total spend for 1 year you must make sure that you are also using the total number of new customers for that year as well.
So, we now have two metrics - PS and NC, representing the total promotional spend and the total number of new customers respectively. In order to calculate the cost of customer acquisition, we simply divide PS by NC in order to get the total money spent per customer:
CCA = PS/NC
It seems quite simple - just divide PS by NC - but the CCA calculation can be quite a bit more complex than simple division if you want to calculate your CCA properly.
Obtaining Accurate and Quality PS and NC Metrics
In order to properly calculate your cost of customer acquisition, you need to make sure your PS (total promotional spend) and NC (total number of new customers) are accurate and quality metrics. This might be easy for some firms and organization but difficult for others. Let's dig into the main points we need to consider:
Your next steps are based on the amount of information you currently have:
8 Things to do Before Starting College - How to set a college freshman up for a successful financial life
An undergraduate degree is a wonderful thing and college or university can be an amazing experience. You’ll learn a great deal, but almost as importantly as your educational experiences in college, you’ll expand your horizons and your mind beyond basic academic pursuits and you’ll grow personally into a more interesting, sophisticated, and happier (hopefully) person. However, to have an amazing college experience, you’ll want to make sure you to do the below 8 things - they’ll help you manage expectations and reduce both financial and personal stress so that you can focus on school. They’ll also set you up for a successful financial and professional life once you’re out of school.
1. Understand What an Undergraduate Education Really Means in the 21st Century
An undergraduate education isn’t what it used to be. Today, a college degree is more like a high school diploma than a ticket to a great job and a great salary. You must understand what an undergraduate education really means in the 21st century for your learning and for your career if you are to make the most of your college or university experience and if you are to avoid being disillusioned and disappointed in the future.
We won’t go into the history of education here, but since the end of World War II, a Bachelors degree was an almost sure fired way to get a good job and earn a good income for your entire life in the Western World. Almost regardless of what you studied, if you graduated from a decent college or university, you would very likely be able to enter the workforce and earn a good income as some sort of white collar worker (or a more technically-oriented blue collar worker). You would have a stable job with a stable financial life.
Since the turn of this new 21st century, however, things have been gradually changing. The 1990s saw a massive proliferation of high-powered, connected, and affordable technology for both consumers and enterprises. Today, that technology is reaching even the most remote and forgotten parts of the world. That technology, which was a novelty for many years, is now permeating deep into everything and is beginning to transform enterprises around the world in ways that are too numerous to describe in this article, but here are just a few:
Who would have thought ten or twenty years ago that so many smart college graduates would be working in places such as Starbucks - this would have been almost unimaginable to someone int he 1980s, for example, where a Bachelors degree from a reputable college or university meant you would almost surely find a decent career. Today, however, too many college graduates can’t get good work or are forced to go to graduate schools to pursue a Masters degree or professional degrees in order to have the same shot at a good job their parents or grandparents had just by obtaining a Bachelors degree.
Whether or not this is “right” or “wrong” or why this is occurring are are very interesting discussions, but they are beyond the scope of this article, which is intended to make sure you’re very successful in your undergraduate education and beyond. What you need to understand is that times have changed and that your college degree might just turn our to be the equivalent of a second high school diploma. Your college degree might be very useful to your personal and intellectual life, but it might not be very useful for your career unless you choose one of the handful of majors whose graduates are very in demand with only a Bachelors degree (majors such as certain types of engineering, accounting, data science, or computer programming).
Don’t take the above as anything more than it isn’t meant to be - a simple statement of what seems to be currently occurring. The above discussion is not at all meant to dissuade you from pursuing a college degree. An undergraduate education is way more than a ticket to a job - it is an opportunity to grow both personally and intellectually, it is an opportunity to become a more interesting and well-rounded person, and it is now an opportunity to see what you might really want to do with the rest of your life. Unlike past generations, graduating with your Bachelors degree will just be a starting point for most students in terms of their careers and their professional development.
Check out the very interesting (and slightly dark) video below for one take on what the future of work means and how the "rise of the machines" will affect employment:
2. Save at Least $1000 for a Small Emergency Fund
Having a $1000 emergency fund before heading off to college is a must and a bear minimum - do your best to save more. There will very likely be unexpected expenses that come up and you’ll want to have the cash available to take care of them without going into debt and without stressing out too much over them. Here are just a few examples of possible finical emergencies in college:
You might already have $1000 or more saved up from gifts you’ve received over the years or from a job or two you’ve had during high school. If you don’t have that $1000 saved up, then start saving it now. You can easily save up $1000 with a part-time job (or two) during the summer before you start your freshman year at college or university. You probably won’t want to work hard the summer before college and that’s understandable, but if you can manage to work hard anyway and do the right thing of putting a starter emergency fund in place, you’ll set yourself up for a much better college experience with a lot less financial stress and worry.
Remember, $1000 is a bare minimum - try your best to save as much as you can. A big cash cushion for when you’re in college will almost never be a bad thing. Don’t worry so much about where to keep the money - keep it in a simple and safe savings account and don’t invest it until you’re really ready.
Now, as a young college or university student, it might be tempting to spend some of your money on frivolous and unnecessary things. That’s not good, but it’s understandable - we’ve all made financial mistakes (and other types of mistakes too). However, you must have the discipline to not touch the money unless it’s an actual financial emergency or unless you’re going to purchase something that is fundamentally important for your education, career, or health. Don’t waste the money you sacrificed to have (you either sacrificed by earning it or you sacrificed by not spending it if the money was a gift) on frivolous and useless pursuits no matter - your future self will thank you.
3. Set up a Ride-sharing Profile (eg. Uber or Lyft)
Ridesharing services such as Uber and Lyft are transforming transportation around the world and have the ability to create a much safer world. If you’re heading off to college, you will be wise to make sure you have a profile properly set up on at least one ridesharing service so that you will never drive under the influence of alcohol or any other sort of mind-altering substance and so that you will have a ride in case your only other option is riding with someone who is under the influence of alcohol or some other mind-altering substance.
If you’re under 21 in the United States, you shouldn’t be drinking at all per the law, but students don’t always follow the law on most college campuses - in fact, it’s statistically very unlikely that someone will reach the age of 21 in the Unites States without having had an alcoholic beverage. So, you have to be smart and prepare beforehand.
A ridesharing profile will allow you to be able to leave your car at home if you know you’ll be drinking. Even if you didn’t plan to drink but decided to drink anyway, you can leave your car at your destination and take an Uber or a Lyft home safely if you have ridesharing profile set up - you can return the following morning to your car in a sober state. Additionally, if you happen to ride as a passenger with someone who ends up drinking, you can safely ride home using Uber or Lyft instead of having someone who is under the influence drive you home.
Read The 7 Habits of Highly Effective People by Stephen Covey. There are many great books you can read (both fiction and non-fiction) that will expand your mind and heart and make you a more effective college student, but the 7 Habits of Highly Effective People is a book that can be counted on in many different situations and for many different people - that’s why I am comfortable recommending it to pretty much every reader.
The book is slightly geared towards an older individual than an 18-year-old freshman. There’s a book written by Covey’s son titled The 7 Habits of Highly Effective Teens as well, but a person entering college is too old for that book. An entering college freshman is sort of in a limbo zone between the two books (People vs. Teens), but I would recommend reading a book that’s a bit out of your league than a book that you’re already too old for. As you grow older and mature in your personal and professional life, you’ll be able to refer to the book and reread parts of it (or all of it).
5. Make Sure Your Health Insurance Is Set up Properly
Your college or university will likely require that you have health insurance in place. You’ll either still be on your parents’ health insurance plan or you’ll have to purchase it on your own or from your school. This is basic stuff, but it is important. You have to make sure you have good and proper health insurance in place because you don’t want to get sick or injured and have to incur debt to pay for your medical bills while you're pursuing your undergraduate degree. You want your college or university experience to be safe and fun, but if it somehow ends up unsafe or unhealthy, you want to make sure your medical treatment is covered and that you won’t have to stress out too much about it. Speak to your parents about this to make sure you're on their plan but take initiative on your own - you might want to call your health insurance provider and let them know you’re going to school and see what they say if you’re planning on remaining on your parents’ health plan. If you’re going to purchase health insurance at your college or university, take the time to see what’s covered, what doctors you can go to, and what the copayments are - you’ll likely be able to find this information on the college’s or university’s website.
6. Check Your Credit Score (and Monitor It Consistently)
Your credit score is important because it roughly is used by lenders and other institutions to determine your creditworthiness - to determine how reliable you are financially and how likely you are to pay back a loan based on various metrics. A good credit score isn’t a necessity for finical success (especially if you have a lot of money and won’t be borrowing money throughout your life) but it is very useful to have a good credit score and a strong credit history.
You’ll likely have none or maybe one credit card of your own as an entering freshman and you probably shouldn’t be applying for more during college, but you still will want to know your credit score and monitor your credit score and credit history over your time as an undergraduate and beyond.
It’s a good idea to check your credit score and credit report at least once a year, but I recommend that you do it at least every six months. There are a lot of free online tools that can help you do this. Credit Karma is a popular and free tool but there might be other products and service that do a better job. Credit Karma is free, but there is advertising involved - they pitch various credit cards and other financial products to you.
Every time you check your credit score, see if your credit score dropped since the last time you checked. If it dropped, find out why. Additionally, check your credit report to see if there are any new things on it that you didn’t do (eg. new credit cards, new loans, etc.). Finally, check to see if there are any derogatory remarks (eg. late payments) on your credit report.
Your credit score is going to start out low because you don’t have much of a credit history as an entering college or university student, but you’ll want to make sure your credit score doesn’t fall and that your credit history doesn’t have derogatory remarks. If your credit score is low in the future, you might find it difficult to purchase a car, rent an apartment, get loans for graduate school or professional programs, open up new credit cards, or get a good loan for the purchase of your first home. You have your whole life ahead of you and you hopefully won’t go into debt, but you might - you might need some sort of loan. You want to make sure your credit score is top notch so that you actually can get the loan and that when you get it, you get it at a good interest rate.
7. Create a LinkedIn Profile
You probably have a Facebook profile set up already (Like us on Facebook if you do!), but there’s another profile you should create before you begin college - a LinkedIn profile.
If you don’t know what LinkedIn is, think of it as a Facebook profile for your professional life. Your LinkedIn profile is like an extensive online resume where you can list not only your work experience, education, and skills, but where you can also:
LinkedIn will become more useful as you go through college or university and then enter the workforce, but it’s a great idea to get a head start now. Here are a few things you can do on LinkedIn starting in your first semester or quarter at college or university:
If you do the above, you’ll have a solid LinkedIn profile when it’s time to look for part-time jobs, internships, and even full-time positions after graduation.
8. Sign up for Khan Academy
Khan Academy is a very useful free online learning platform that’s great for anything but especially seems useful for mathematics. You can use Khan Academy to review basic things before you start classes, but it also proves useful during actual exam preparation for many students. Khan Academy has short videos on a variety of subjects such as mathematics, life sciences, physical sciences, economics, finance, and other useful subjects. Surprisingly, Khan Academy’s videos are of decent quality and seem to provide quite accurate information in relatively easy to understand video bites.
What if you’ve already started college or university?
If you’re already in college or university (whether you’re a freshman, sophomore, or junior), you can and should still do everything on this list if you haven’t done so already. Just because you didn’t read this article before you started college (it might not have been around then) doesn’t mean that it’s too late do do the important and useful things above - it’s never too late to do the right things and it’s surely not too late for a young college student like yourself to move forward in your life and make some wise moves.
Here are the notes from a lecture during on presentation fundamentals. The lecture was given by a professor who has a PhD in English literature as well as an MBA and who is somewhat of an expert when it comes to technical and non-technical communication in various forms. The notes are not very formal, do not articulate all of the information given in the lecture, and are intended primarily to be a starting point for learning about how to craft high quality presentations.
I'm at the gym waiting for a buddy of mine to show up and workout with me. After a long day at work I didn't want to workout. I wanted to go home and rest or basically do anything but exercise. However, I made plans with my friend already and I didn't want to experience that feeling you get when you break a promise to yourself, so I somehow made it to the gym. Sitting here in the gym's lobby waiting for my friend to arrive I remembered a quote I heard before, although I am not sure who said it originally. I tried to search for the quote on Google but it seems that it is attributed to many individuals.
"The hardest part is showing up."
Now that I'm at the gym I don't feel this desire to leave. I've already broken the main part of my internal resistance to working out by just showing up to the gym. I know that I will have to have an intense workout session, but that's perfectly fine now that I'm already at the gym. It's hard to explain and it seems to not make a lot of sense because the difficult part is still ahead of me. I've only completed the easy preliminary task. However, that easy preliminary task seems to have been the most important part. If I just show up to the gym I'll likely work out. It's not likely that I'll show up and then just get up and leave. Maybe it's because getting up and leaving will mean a change of course and a change of plans. Maybe that's what the difficult part is: actually getting started. Once I'm already at the gym inertia is acting in my favor. To leave the gym now would require me to go against that inertia.
I'll keep this little insight in mind next time I have a difficult task to do that I don't want to do. Obviously the task has to be of a particular variety for the principle to be effective, but it is easier to think about just showing up than thinking about the entirety of the task in front of you.
And now, given the rise of cyrptocurrencies and crypto assets to quasi-mainstream financial assets, we're dedicated to providing quality, relevant, and interesting material on cryptocurrencies and cryptoassets. Articles on Bitcoin, Ethereum, Ripple, Cardano, and many more cryptocurrencies and cryptoassets can be found on Pennies and Pounds - all that in addition to a plethora of information on what cryptoassets are, how the entire crypto industry came to be, blockchain/immutable ledger technology, mining, proof of work, proof of stake, and how to prudently invest in crypto if you are so inclined (based on your risk tolerance and ability to withstand the volatility that will come with a crypto portfolio).