“Competitive advantage is now based on what you know rather than what you own.” Mary Adams

Have you noticed that your customers, your boss, your co-workers, your friends and your family all share something in common? They all value what you know, not what you own.

If you’re a plumber, the customer values your ability to identify the root cause of their water leak. They don’t value your new truck or tools.

If you’re a family business advisor, the customer values your questions and how they lead to answers that improve their situation. They don’t value your laptop or new website.

If you’re an employee, your boss and co-workers value you saying “I’ve seen this situation before, so here’s what I recommend we do.”

If you’re a manufacturer, your customers value your knowledge of the requirements of their business and industry, not your new ERP system or robots.

Or if you’re a church music minister, the pastor values your knowledge of the Bible and how you chose the perfect songs to support their sermon topic, not your new keyboard.

What is the “Trigger” for someone to call you? It’s what you know, not what you own.

What’s your daily nut to crack? 

That’s a question I often ask business owners.

What I’m searching for is, “How much do you need to sell today to break-even?” Fixed costs are the shell. Inside the shell are tasty profits.

Break-even is sales revenue number your business must surpass to make a profit.

Most business owners don’t know the answer to my question off the top of their head. But I help them identify the number using their business’ Profit & Loss report. After we identify the nut, business owners rarely forget it.

It may sound complicated, but it’s not. Break-even analysis lets you know how many hamburgers, stampings, books, or hours of consulting you must sell each day in order to cover your costs.

The formula for Break-even = Fixed Cost/Gross Profit.

For example, if the daily fixed cost to operate a business is $500 and the average Gross Profit percent is 25%, the daily nut to break-even is $500/.25 = $2,000 . You’ve got to sell $2,000 every day to cover fixed costs before you make a profit.

Why do I ask, “What’s your daily nut?”

• It’s a good conversation starter.
• The answer is useful.
• Helping a business owner answer the question is a simple way I can help.
• The bigger the nut, the more stress to crack it.
• Knowing your break-even is a key part of any good business plan.

Knowing your daily nut is practical wisdom. The wisdom to answer “What’s your daily nut?” with a sales number and to act rightly is distinctly practical.

If you have questions on how to define your daily nut, email TomPryor@icms.net .

“People are far more interested in what works than what’s true.”

This quote by Andy Stanley reminds me of my college macro-economics professor.

Professor Hayashi repeatedly said, “In theory, this is how the market is supposed to work.”

My professor taught what was true but failed to tell me what works. He taught sound theory. He drew investment curves and mathematical equations to demonstrate when interest rates drop, borrowing and investment increase.

In theory, that is true. But it did not work following the Great Recession of 2008. Business investments, jobs and GDP did not grow, even with the Federal Reserve offering zero interest to banks.

What works to bring an economy out of recession? Entrepreneurship, a word Prof. Hayashi never mentioned in class or in my textbook.

What’s true can be what works, but it’s frequently not. I’ve learned over the past 60+ years that what works and what’s true are often diametrically different. Here are some examples:

• It’s true that having a high FICO score can make borrowing money easier. What works is spending less than you make to stay out of debt.

• It’s true annual performance reviews can identify an employee’s strengths and weaknesses. What works are daily coaching sessions where your manager simply asks “What are you working on? Do you need any help?”

• It’s true that memorizing answers will get you an “A” on school exams. What works to achieve success in life is learning how to ask great questions.

• It’s true most business text books recommend every business have a detailed strategic plan. What works is a 1-page plan because it’s easier to create, communicate and change.

• It’s true that it’s good to follow your passion. What works is following opportunity. There are 5.8 million opportunities (jobs openings) in America in 2016. Don’t follow your passion, but bring it with you to the opportunities that present themselves.

Andy Stanley’s primary point in making the statement that opened this blog is this: Virtually no one that attends his church is on a truth quest. Instead, they are on a quest for what will work for them to make them happy, at peace and successful.

What truth have you experienced that does not work in your personal or professional life? 

“Put it in writing” is some of the simplest, wisest advice I’ve been given. Here are several examples: