What’s Your Baseline?

 

Have you ever had someone tell you something is a “good investment?”  It could have been a salesperson trying to sell you a new piece of machinery; a broker presenting a new stock;  a business partner serving up a new opportunity, or that new condo your spouse found.

 

But, how do you “really” know it is a good investment?

 

While the complexity of the answer is dependent on the level of investment, your risk tolerance, and other external factors. The solution boils down to two fundamentals. Your forecast of that return and the baseline from which you are making your analysis.

 

Today, I want to focus on the baseline as I plan to tackle the concept of forecasting in detail in subsequent posts.

 

Time and money are not infinite. This is economics 101. If you choose to spend either on one item. You take the same amount away from something else. E.g. if you have $1 in your pocket and purchase a soda for $1. You cannot purchase that $1 bag of chips as well. In this simple form, it seems ridiculous that someone couldn’t comprehend that concept, but you would be surprised how things change when it comes to long-term investments such as stocks, machinery, or large-capital projects.

 

Part of the problem is that potential investors do not have a go-to baseline to gauge the true value for the use of their money. Something that isn’t arbitrary. For instance, you can’t assess the success of one project against something else for which the returns must also be estimated, such as a stock or even another plan you are considering. Simply, you need something with a consistent history of positive returns from which to analyze your investment.

 

Personally, I gauge all potential investments against the 20-year T-bond. While nothing is risk-free, this financial vehicle is issued and backed by the faith of the US Government making it an ideal baseline for your analysis.  This is why many investment advisors follow a diversified portfolio that includes a chunk of these assets.

 

Using my suggestion, you would forecast the return on your investment. For instance, if you plan to buy a piece of machinery that will last twenty years and increase your business by 3%. You would weigh that against what you would get if you placed your funds in a 20-year T-bond. If that bond’s coupon rate is 4%, you may want to investigate that investment, your forecasts, and your decision a bit further.

 

A few notes of caution here. If you crunch the numbers and the bond turns out to be a better investment. Try to avoid engaging in confirmation bias – “the tendency to interpret new evidence as confirmation of one’s existing beliefs or theories.” Don’t re-do your numbers until your potential investment looks better on paper than your baseline. Second, depending on the current state of the bond market. You may want to use the yield instead of the coupon in your analysis as this metric takes into account the future value of the bond you are considering. Finally, keep in mind the gut instinct. If you trust your math and truly feel that the investment will be a wise choice. Go for it. However, give it a night’s rest before you sign the check.

 

Your baseline does not have to be a bond. It just has to be quantifiable, historic, and relatively risk-free. For example, if you are considering hiring musical entertainment for your venue. You could analyze your bar and food sales for six to twelve months before you bring in the talent and then weigh your current numbers against those historic metrics.

 

In a future post, I plan to discuss how you forecast possible returns. However, for today. Remember that to measure anything. You need a device from which to gauge the opportunity. You need a baseline.

 

 

Welcome to My New Site!

 

 

I was spending some time with my nephew over the holidays and we got to discussing the various jobs (or what I call them – gigs) I have held over my career.

 

We discussed my time as a Photojournalist under a Pulitzer Prize-winning writer and editor. How I leveraged that knowledge in content creation to launch my own printing company before turning to the road and studio as a professional musician. We closed those tales with a discussion on my business education and how I leverage it in the entertainment industry. It was interesting to watch his face as I shared my various stories and experiences.

 

Sometimes I forget just how blessed I have been in my life. Sure, it has taken a LOT of hard work and perseverance. I have been down and out, bankrupt, and technically homeless at times, but I kept moving forward. I kept chasing my passions and my dreams no matter where they took me. Colebrook, NH… Nashville, TN… Orlando, FL… Las Vegas… Scottsdale, AZ… Hawaii… Aculpulco… Glacier Bay… and the Panama Canal to name a few spots.

 

I really wanted my young nephew to understand that the one thing we can’t get more of is time, so you really need to spend your life doing what you love.

 

That pushed me to finally organize my experiences on my personal website, which I present to you today. It has been a tedious task tracking down pieces from my graphic design portfolio, images from my time as a photojournalist, tunes from my various bands, and videos captured throughout my career. I have organized these assets into three categories.

 

Jeremy Larochelle Businessman – For a look at my experience as an entrepreneur. My college and grad school studies. As well as my theories on leadership, management, and marketing.

 

Jeremy Larochelle Musician – Is where I have placed my work as a touring and studio drummer and educator.

 

Jeremy Larochelle Content Creator – Here you will find my photojournalism, graphic design, and video creation portfolios as well as my experience in each area.

 

Finally, I have migrated my online drummer clothing company, Spirit and Groove® to this site.

 

I plan to continue updating all aspects of my web presence and even have some new offerings in the works, so please come back to see what I am up to.

 

~ Jeremy Larochelle, MBA

 

 

 

Si vis pacem, para bellum

Si vis pacem, para bellum, translated  “if you want peace, prepare for war” is an exceptional mantra to adopt in both your personal and business lives.  While it sounds like something that would come from Sun Tzu’s Art of War. It does not.  Rather, the phrase comes from book three of De Re Militari by Latin author Publius Flavius Vegetius Renatus. A first-of-its-kind war manual for Roman troops.

Business management is often looked at as a militaristic endeavor.  We have the war room, wear suits that dictate our prestige in the company, and even give marching orders. As such, we naturally gravitate to the military leadership and wisdom from war-tested individuals such as Tzu and Renatus.

It is important to note that when you read these manuals you will notice that much of the works are devoted to preserving life and, especially in Tzu’s work, avoiding a battle until absolutely necessary. As he points out, actual battle is costly – you lose both life and wealth in the process.  Tzu is consistent in his message of continually analyzing your opponent, the battlefield, and your position relative to both so that when the opportunity or need for war arises. You are better prepared to end the matter quickly and efficiently.

This is exactly the same in business. As a leader, you should always know what is going on in your battlefield.  Is a long-time supplier suddenly providing materials to a competitor?  Are there signs of your market shrinking… expanding… or disappearing altogether? Are your employees showing signs of complacency? Perhaps, your customers are discussing other options under their collective breath? These are all items a general should not only know but constantly analyze and calculate against the firm’s Key Performance Indicators (KPI’s).

These suggestions are not meant to create paranoid leaders. Rather, they are to remind said boardroom generals that peace in business is not achieved because you defeated a competitor. You will always have new competitors, fleeting customers, changing regulations, and world events that will impact your bottom line. Peace comes from accepting those fates and doing everything in your power to prepare for the wars that may come, so your army can win the battle quickly and efficiently.

 

 

 

The Dangers of Over-negotiation and Increasing Perceived Risk

 

When negotiating, be careful not to go too far. This week, I was negotiating a small sale with someone…. let’s say. Not that experienced in deals. We had both made our demands and concessions and it was clear a balance had been struck. When it came time to close, he made another demand that would have brought us back to square one. I researched my market, my position, and kindly told him of other persons selling a similar item. However, if he still wanted my product. He could get it for market price.

My ultimate position was not enacted due to emotion. Rather, this customer’s final action increased my perceived risk of the deal. The concessions he initially earned, were judged on my risk analysis that he could pony up the funds, close, and wouldn’t return a vintage item that could be harmed with further shipments. Remember, risk is part of the deal. We learn it with car insurance, health care, and mortgages. It should be a part of any decision.

Communicate Right or Get Lost in the Shuffle

 

I get a lot of emails every day. I mean – a FREEKIN’ LOT! However, my inbox doesn’t compare with some of the people I work with. Case in point, I was having lunch with a colleague for a major cruise brand and during our hour together, he received 35 emails, a bunch of texts, and a few calls.

 

It may be difficult to understand just how complex email management can become if you have never worked in an environment based on group decisions with partners in multiple time zones that require written communication to audit deals being made. This is exactly the case for booking agents, concert buyers, and entertainment managers. In our business, the cc (and sometimes bcc) are commonplace, which quickly converts one email into double digit chains plaguing our inboxes.

 

Of course, there are programs and protocols one can follow to better manage their inbox. However, each of these emails (or at the very least the subject) needs to be read and, if warranted, investigated and responded to.

 

So, why is this entertainment blogger discussing the woes of our email management. Well, the answer is to help artists looking for work to better communicate with us, so you don’t get lost in the shuffle.  Here are a few pieces of advice I want to give.

 

  1. Keep it simple.  Remember grade school and how they taught you to outline your paragraph in the first line by dictating the who, what, where, when, and why? Follow that rule. Don’t bury the story.  Provide us with your website and video links upfront along with what you are looking for and what your act brings to the table.  We don’t need to hear your life story. How you learned to play the guitar at six. How you met John Mayer that one time and he dug your tune. Let us know what you are going to do for us.
  2. Keep it to email if possible. Facebook, Instagram, and other social media channels are great, but they are not the best place to solicit a new client.  For one, if the company is huge like a cruise line. The person reading those messages probably has nothing to do with entertainment, so you are relying on them to forward your message to the right person. If the company is smaller, the person handling those messages is probably wearing 100 different hats and will likely look at your message and forget about it until they are managing the site again in the future. When you send an email, it at least ends up in the correct inbox…barring spam filter interference.
  3. Better than email… the website form. If the agency or venue has a form “specific for entertainment applicants” use that. They did this for a reason. For instance, the company I work for, Mike Moloney Entertainment, put a web application form that forwards all applicants to the email accounts of five agents.  I know for a fact that many larger cruise companies have their online forms set-up in a similar fashion.  In all instances, the forms are designed to capture the data we need to make a decision and (hopefully) a deal. Do yourself a favor and follow our lead.
  4. Don’t spam!
  5. Don’t spam! See what I did there?  This one is so important, I put it in twice.  NOBODY likes spam, so don’t be that person. Now, there are many ways you can spam a prospect through email. Sending the same message to every email address you can find within the intended agency. Including them on your mailing list without asking. Emailing them every day. Emailing, then messaging on all available social channels are all ways you become a spammer and it generally doesn’t work in your favor.
  6. Do some research on who you are emailing. Does the booking agent work in your genre of music? Are you applying to a cruise agency, but you get sea-sick? Is the booker outside of your drawing ability? It doesn’t hurt to do a little research to focus your pitch, and with so much information at your fingertips it is rather easy to be properly prepared.

As an agent, I can attest that most of us are always hungry to find the next great act for our venues. However, that is only a small percentage of our business. The largest chunk of our time is spent putting the deal together and then executing it on show day. A lot of artists feel that the “squeaky wheel will get the grease” and in some instances that is true.  However, if the driver can’t hear that squeak. Nobody will be getting to their destination. Follow these steps to increase the probability that we will hear you.

 

 

24 Hours in the Life of an Entrepreneur

This is just one day…a Monday…of my life. I want people considering starting their own company to remember just how much time and effort it takes to make it happen, because one of their competitors could be a dude like me.

 

8am: Wake-up to an email from USPTO that a legal action has been placed against one of Spirit and Groove’s® trademarks and we have forty days to respond.

8:15am: As I shove oatmeal into my mouth, I investigate the claim and the party bringing it against my company. I find it legit, but winnable. However, it could be extremely costly to challenge. A HUGE decision must be made that will be 90% on faith, impacts my entire business plan, and could hinder my personal finances for the next few years.

9:00am: My regular job begins. Currently booking and contracting nine lounges for the next three months, two holiday weekends of parties for fourteen, managing the company social and website, and fielding inbound applicants.

1:00pm: Lunch-break and P90X workout…still fielding company emails.

2:00pm: Back at the daily grind.

3:30-3:45pm: Afternoon break, contact lawyers to represent Spirit and Groove® in the claim.

6:30pm: Filming Spirit and Groove’s® weekly Drummer Challenge. I record myself drumming, then green-screen intros.

7:00pm: Editing footage and preparing social for Wednesday’s launch of the video I just shot.

9:30pm: Work on Lesson 12 from Rosetta Stone® Spanish.

10:00pm: Open a company checking account and secure a company credit card after updating finances.

11:30pm: Begin investigating Angel Investors.

12:30am: Find a suitable business plan template and get to work.

2:00am: Bed.