Vanity beware

Lesson #3: Let the revenue dictate the costs (not the costs dictate the revenue). Here I look at the danger of letting vanity drive your decisions rather than business sense.

After short period with Lionel as my mentor I started to become more confident (many in the office probably felt over confident), so I had an idea for a new publication. It would be my first launch; and show everyone that I knew how to launch a magazine. The ‘business plan’ was ready (well my first attempt at a business plan, Post-It note might have been nearer the mark).

After Lionel had read it he asked me where the revenue figure had come from.

“You said we needed a 20% return, so I worked out the costs then added a revenue figure that would make us the 20% margin,” I replied.

My launch was based on a producing a very high-end magazine; being my first launch of course I wanted to impress. So the revenue figure was pretty high.

“Is that revenue figure bankable or is it a stretch,” came the next question from Lionel.

“What do you mean?” I asked.

“Can you guarantee the revenue figure, or has it been based on what revenue you need to cover the costs, plus our 20%?”

I told him the revenue figure was entirely based on the costs so he rejected my business plan.

He told me to come back with a cost model that still showed the 20% margin but off a revenue figure I knew I could deliver. I realised the sense of what he was telling me: Yes I wanted great-looking, expensively produced product but the revenue I was forecasting was simply too optimistic .

So I did exactly as he asked. I determined the realistic revenue I could expect and then looked at every line of the costings and tightened up almost every cost. The only thing I did not compromise on was the content, but every other cost was taken back until I had cut them by about 30%.

It was no longer the Rolls Royce magazine I had dreamed up but the revenue figure was a much more achievable level and would cover all costs plus deliver a 20% return.

After six months the magazine was successfully launched; revenue still fell short but only by 5%, so we still made an acceptable margin. If we’d gone ahead with my original revenue figure, it would have been a bloody disaster.

What had I done wrong? I had allowed vanity to get the better of me. (There is even a term in publishing – “vanity publishing” – that refers to magazines that have more looks than business sense.) From that day on I have always let the bankable revenue dictate the costs – and not the costs dictate the revenue.

This is an article series based on lessons learned from my great mentor Lionel Morely Joel. Read the first article to understand the background and then dip in and out of the lessons as you please.

business people

Give respect to earn respect

Lesson #2: Always treat people the way you want to be treated. Or why you must treat people with respect to earn their respect.

I arrived at Lionel’s office for my daily round of mentoring. Just a normal day at the office, so I thought. As I walked into his office I could tell he was not happy. Before I could even say “good morning”, he let me have it, tearing into me about a mistake I had made the day before. He made sure his voice was carried beyond the office, so everyone knew Eddie was getting an ****kicking.

I returned to my desk and waited for the call to go back to his office so I could explain the mistake (grovel). The call never came.

I went home distraught. I couldn’t sleep; I kept thinking about what had happened and how hurt I was. How I hadn’t been given a chance to explain.

The next day, the call came. As I entered Lionel’s office, I found a very different (normal) Lionel.

“How did you feel about how I treated you yesterday?” he asked. He said to be honest, and so I told him how upset it had made me.

“Last week, one of the girls in the office made a small mistake,” he said. (He knew everything.) “So you went over and in front of everyone pulled her apart. What makes you think that she felt any different than you did last night?”

His message was clear, and I have never forgotten it. Treat others as you want to be treated: with compassion, consideration and fairness. I would never have got that message so clearly if Lionel had not done what he did to me.

We all deserve courtesy and respect in the workplace, and I had just become too big for my boots and let my position (and arrogance) get the better of me. I would like to think it has never happened since, but only others could tell you that.

It’s a basic lesson that seems almost too obvious, but how easy it is to forget, especially in the heat of a stressful moment. But remember this, staff will walk alongside you for a while, if told to. Treat them badly and they’ll walk away. Manage them well, with compassion and respect, and they will walk alongside you for a long time. Not because they are told to, but because they want to. And those are the staff you want at your side. Less obvious is that this can’t be turned on and off. I’ve often been asked over the years how it can be that staff will go out of their way to meet tasks or challenges I’ve set, where other managers face an uphill battle over every request no matter how nicely they ask. The currency gained from treating staff with respect can only be built up over time, and it can be destroyed within a minute.

If you’d like help getting the full weight of support of your team behind you why not explore this on our mentoring retreat in Tuscany this October? Contact me for a chat to see if the retreat could be just what your business needs.

This is an article series based on lessons learned from my great mentor Lionel Morely Joel. Read the first article to understand the background and then dip in and out of the lessons as you please.