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If the river represents cash flow to your business, what is a dam?

Simply put, the dam – and the reservoir it creates - represents cash in the bank, also known as retained earnings.

Misapplication of Economic Value Added Concept
Many companies have embraced the notion that the economic-value-added concept is superior to the traditional performance assessment measures based on traditional accounting.

Economic value added, known by the acronym EVA, is a financial measurement metric that considers the relationship between the enterprise’s profitability and the cost of the capital employed to achieve that profitability. The idea behind EVA is that managers should be evaluated in terms of how effectively, productively and profitably they employ capital in the business. To evaluate profit alone without considering the cost of the capital employed to achieve that profit can be very misleading. But if the relevant content and timing factors are not appropriately considered, EVA calculations can be as distorting and misleading as traditional profitability measures.

Ignoring the Stock Price
Companies that ignore their stock price do so at their peril.

While it is crucially important to concentrate on the basic business of the company, if a company is not mindful of what happens to its stock price, it may find it is in for a rude shock. If the stock price falls too low, investors may lose confidence in management, and critical investors may sell out. If the stock price falls too low, a takeover may happen. A company needs to pay attention both to its basic business and it its stock price.

Ignoring the company’s stock price is a mistake.

11 Promoting Traffic at the Expense of Profitability 

Seeking to establish themselves in a new market, some companies may emphasize customer traffic—to the exclusion of whether they make any money on those so-called customers.

As Peter Drucker has observed, it is a fundamental business truth that the purpose of business is to create and retain a customer. But if you do not make any money on your customers, you do not have a business. Generating traffic without revenue and profitable customer transactions is a sure way to financial ruin. This lesson was relearned by many dot-com technology companies in the 1990s, who promoted traffic to their websites but failed to establish a viable business model. Numerous dot-com companies that failed did not sufficiently understand that, at the end of the day, maximizing hits is much less important than generating revenues in amounts more than the expenses incurred in
achieving those revenues, so that the business can make a profit and sustain itself.

Promoting customer traffic at the expense of good business is a mistake. 

1 Failing to Employ a Structured Decision Process
Decisions made without a structured, systematic process may be less than optimal.

Business school courses, academic textbooks, and training programs concerning decision making provide structured approaches, decision models, and tips to make better decisions. The classic approach involves defining the problem, identifying alternatives, undertaking quantitative analyses and qualitative assessments, exploring the risks, and then choosing the best course of action. While a structured decision making process is central to management, too often that approach is ignored.

Failing to employ a structured decision process can be a mistake.

Image Credit: Duhaime Law  http://www.duhaime.org

We received calls from four different attorneys from disparate parts of the country this past month. Actually, one attorney was from British Columbia, Canada. It boiled down to the inability to expect retirement as a reality.

Each in their own way, they told me that they were looking forward. You know, forecasting. And, they realized that although they wanted to retire someday, not one of them thought retirement was unlikely. They wouldn’t be able to accumulate the required wealth they need to do so.  Two were in their third decade of practice, one aged 39, and one just starting out.  They were all small practice attorneys.

Why 2019 Is eLaunchers’ Year Of

Independence and Freedom

This July 4th is the celebration of my 20th anniversary of making a life here in this land of the free, home of the brave.  I came to the realization this holiday weekend that I am significantly fortunate to live in the United States, and I am proud to be an American.

The value of marketing metrics is critical to a firm’s interests, especially knowing where the revenues originate, flow through the department and produce the ROI that the C-Suite is always asking of marketers large and small.

Last time we spoke of data mining to identify the perfect, high-yielding target audience you should be focusing most of your attention as far as the customer journey on the path to purchase goes.

This article carries on that thought process through to the next step; the present. But hold on, let’s talk a little bit more about what has been discovered and what can be done with it.

There are significant reasons why marketing metrics are critical.  If you don’t know what works, what doesn’t, what’s weak, what’s healthy, you’re lost.  How can you get to where you are going without markers along the way to ensure you’re going in the proper direction.  You’re missing out on pertinent information when you don’t use them.