Thursday, 15 October 2015

Tony Fernandes' top 10 tips for entrepreneurs

1) You don’t need to know everything
I came from the music business. I knew nothing about planes. To all the entrepreneurs out there, you don’t need to know everything about what you want to do. It’s all about the idea, it’s about passion, it’s about implementing it.
2) Just do it!
Don’t let anyone tell you that you can’t do it. You’ve got one life, so you can’t press the rewind button and say ‘I wished I had done that.’
So I recommend to all of you out there, just do it. Live your life to the utmost, be positive. If you fail, at least you have tried.
I have failed miserably at Formula One, but I have no regrets because I got to stand with the greats from Ferrari, McLaren, and others.
3) Passion is a key problem-solver
Dreams do come true. Don’t worry about failure. You have one life, make the most out of it. Nine times out of 10, if you have the passion, you will find a way to work through it.
4) Invest in marketing
If you have the greatest idea in the world, please, please, please put some money on marketing. This is because if you don’t put money on marketing, nobody is going to hear about your great idea.
There are so many great ideas that never took off because of a lack of marketing.
Marketing is not about the dollars, it is also about public relations (PR). In AirAsia, we had no money. So I ran around with a red cap on and said controversial things so that the press would always take a picture of me. That was our marketing in AirAsia’s early days.
We have been through so many issues, and marketing played a key role in overcoming them.
Remember SARS (severe acute respiratory syndrome)? At that time, nobody wanted to fly; we all thought we are going to die.
Everyone cut their advertising, but I told my guys not to cut because this was the best time to build our brand. In fact, we tripled our advertising and everyone looked at me and said, “Are you on drugs?” I said, no, it is the best time because no one else is advertising.
When the first Bali bomb attack happened, everyone cancelled their flights. I said to the guys, we cannot let the Bali route die. We must continue to fly.
So we came up with ‘Love Bali’ campaign, giving away 10,000 free seats, and it worked. All 10,000 seats were snapped up in like under one minute. And all those who got those seats told all their friends about it on social media. Your best advertisement is your customers.
5) Leverage social media
When Malaysians get a good deal, they will tell the whole world about it. So the 10,000 people who went and had a good time in Bali, told 10,000 people that they had a good time. That was the early gestation of AirAsia’s social media.
We realised the power of social media very early on, so when Facebook and Twitter came up, we latched onto them. We were early adopters. We now have 32 million people on our various social media platforms, and 7 per cent of our business comes directly from social media.
The Bali campaign taught us that our best advertisements are our customers.
6) Don’t be scared of complaints
Complaints are actually free market research. Someone took the effort to write to you to tell you where things went wrong and how they should be improved. These are things that companies pay a lot of money for consultants to tell them that same thing.
So we treat every email preciously.
7) Focus on one image when it comes to branding
During the early days, there was the word ‘AirAsia’ and a logo of a bird in our branding.
If you look at the top brands in the world, there’s only one image that comes to your mind. When I say “Shell,” you think of the Shell logo. When I say “Coca-Cola,” you think of the word ‘Coke’ in italics, and when I say “Nike,” you think of the swoosh.
So, back to our earlier AirAsia brand, we said drop the bird – we felt it was facing the wrong way anyway – and we used ‘AirAsia’ as our logo. Just one image. Why spend double the money to promote two images?
We also dropped the blue and the green colours. I tried very hard not to go with red, because everyone thinks that I want to be Richard Branson [the Virgin Group founder and Fernandes’ former boss] ... but it was the best colour, so we picked red.
So yes, the colour does make a big difference!
8) Go on the ground
What I used to do – although I don’t do this anymore – was that once a month, I would carry bags, I would be a cabin crew [member], and also at the check-in counter.
I did this for two reasons. The first is that you can’t be an effective CEO (chief executive officer) unless you go on the ground to experience the real situation.
Here’s a true story. The baggage handling team told me that they needed belt loaders. I told them, “No, we can’t buy that as it’s too expensive.”
So one day when I was tasked to carry bags, they put me on one of the Indonesia flights. People who fly with us generally bring their house with them, but people who fly to Indonesia bring their neighbour’s house as well!
So there was a lot of bags. I broke my back in the process, and I told my team that they were right and I was wrong, and let’s buy the belt loaders.
If I didn’t do that [go on the ground] and just sat comfortably in the office, I would have made a wrong decision, damaged a lot of bags, and probably started a union.
The second reason [for going on the ground] is that I wanted to look for talent. I wasn’t looking for the talents from Oxford or Cambridge, I was looking for the Grade 3 SPM [O Levels equivalent] kind of guys who needed a second chance.
9) Never underestimate the potential of your staff
I broke all the rules in terms of hiring people. To me, as long as you have a dream, you can do anything.
There was an ex-cabin crew member – she came up to me one day and told me that her dream was to become a pilot. I told her to go for it.
Then she called me up one day and asked if she could take part in the Miss Thailand [beauty pageant], and I told her okay, as long as I get to use her photographs in our marketing materials.
She won the [Miss Universe Thailand] pageant and recently became a captain – so we are the only airline in the world with a Miss Thailand flying with us.
The moral of the story is that we have such a flat structure that she was able to tell me what her dreams were, and we were able to make a raw diamond into a diamond.
Another one of my boys, a baggage handler in Kuching, told me he wanted to become a pilot. I told him to go for it. He passed all the exams ... he had the top marks in the flying academy. Today, he is a captain.
We have many of such stories at AirAsia.
Your biggest assets, besides your ideas, are your people – because at the end of the day, it is the people who will deliver your ideas.
10) Data is king
We have a huge amount of data that we don’t know what to do with it, but everyone else wants our data ... so we figured it must be something very valuable and there must be an opportunity there.
We are investing in a few ventures. We plan to launch our own version of TripAdvisor, a travel dongle, a new YouTube-type of channel and more – data will be playing an essential role in these ventures. Data will be king. —

Saturday, 10 October 2015

Sales Leadership: Markup v Margin-is it critical your staff know the difference?

Markup vs Margin Differences
Is there a difference between margin vs mark-up? Absolutely. More and more in today’s environment, these two terms are being used interchangeably to mean gross margin, but that misunderstanding may be the menace of the bottom line. Markup and profit are not the same! Also, the accounting for margin vs mark-up are different! A clear understanding and application of the two within a pricing model can have a drastic impact on the bottom line.
Terminology speaking, mark-up percentage is the percentage difference between the actual cost and the selling price, while gross margin percentage is the percentage difference between the selling price and the profit.
So, who rules when seeking effective ways to optimize profitability?. Many mistakenly believe that if a product or service is marked up, say 25%, the result will be a 25% gross margin on the income statement. However, a 25% markup rate produces a gross margin percentage of only 20%.
Markup vs Gross Margin; Which is Preferable?
Though markup is often used by operations or sales departments to set prices it often overstates the profitability of the transaction. Mathematically markup is always a larger number when compared to the gross margin. Consequently, non-financial individuals think they are obtaining a larger profit than is often the case. By calculating sales prices in gross margin terms they can compare the profitability of that transaction to the economics of the financial statements.
Steps to minimize Markup vs Margin mistakes
Terminology and calculations aside, it is very important to remember that there are more factors that affect the selling price than merely cost. What the market will bear, or what the customer is willing to pay, will ultimately impact the selling price. The key is to find the price that optimizes profits while maintaining a competitive advantage. Below are steps you can take to avoid confusion when working with markup rates vs margin rates:
– use a pricing model or pricing tool to quote sales. Have the tool calculate both the markup percentage and the gross margin percentage
– relate gross margin percentage per sales invoice to income statement
– organize your chart of accounts to compare gross margin rate to sales quotes
- educate your sales force on the differences. By targeting the gross margin percentage vs the markup percentage you can throw an additional 2 – 3 percent profit to the bottom line!
Margin vs Markup Chart
15% Markup = 13.0% Gross Profit
20% Markup = 16.7% Gross Profit
25% Markup = 20.0% Gross Profit
30% Markup = 23.0% Gross Profit
33.3% Markup = 25.0% Gross Profit
40% Markup = 28.6% Gross Profit
43% Markup = 30.0% Gross Profit
50% Markup = 33.0% Gross Profit
75% Markup = 42.9% Gross Profit
100% Markup = 50.0% Gross Profit
 So what do you think of our ways of  speaking the common language of finance? What do you do to effectively ensure your staff are educated in finance? Please share your thoughts in the comments section below as we learn just as much from you as you do from us. 

Tuesday, 6 October 2015

How To Build Trust On Your Team?

Old-fashioned management was easy. Back in the Machine Age, all a foreman or boss had to do was stand at the end of the line and make sure everybody was doing their job.

How did they make sure people were working? Threats, of course! It’s easy to manage through fear. All you have to do is let people know that you have the power to fire them.

Now we’ve left the Machine Age. We’re in the Knowledge Economy now, and we need more from our employees than grudging compliance with our standards and procedures.

We need them to care, and to put their heart and mind into their work. Now we see the truth: you can’t get people to give their best by threatening them!

We have to lead in the opposite way — we have to create trust in our environment, and that’s something that is new to plenty of managers.
They grew up as managers leading through fear rather than through trust. Now they have to learn a whole  new way to manage their teams.
They aren’t used to talking openly and honestly with their employees. They aren’t used to saying things like these:
  • I need your help.
  • I’m not sure how we should proceed. What do you think?
  • I so appreciate what you did yesterday to solve that problem. We couldn’t have done it without you.
  • What can I do to support you in this assignment?
Managers are learning a new vocabulary. If trust-based leadership is new to you and your team, here is a way to step into it and begin to grow your muscles!

If you haven’t been holding one-on-one meetings with your staff members, now is a great time to start.

A one-on-one meeting is a chance for a manager and a team member to catch up and share ideas. “Have you met your goals?” is a topic for the meeting, but it’s not the primary topic.

The primary subject for your one-on-one meetings is “How are you doing?”

If your employee isn’t hitting his or her goals, you need to know the reason. In the old days, a fear-based manager might say “I don’t want to know the reason — if you don’t hit your goals, you’re history!”
That’s foolish. You won’t learn anything unless you ask questions. Foolish managers say “Under-performing employee? Off with his head!” and let a potentially tremendous employee walk out the door.