Our monthly newsletter, Link Newsletter, is full of tips, reminders, and timely advice to help you stay well informed when it comes to your business and personal finances. If you have questions about any of the articles, feel free to email Damon Yudichak at Damon@yudichakcpa.com.
Focused Information for the Small Business Owner
Volume 2, Issue 10
Portrait by Charles Gupton
You have to wonder at times what you’re doing out there. Over the years, I’ve given myself a thousand reasons to keep running, but it always comes back to where it started. It comes down to self-satisfaction and a sense of achievement.
Steve “Pre” Prefontaine
American middle and
long distance runner
(1951 – 1975)
In This Issue
A Rekindled Romance
This month I ran my first 5K road race ever. I ran the Road to Rolesville 5K in Rolesville, NC. I showed up thanks to Mike Honkomp who dared me to run the race. I ran a good race and ended up winning the bronze medal for my age group. I hollered and threw both fists in the air as I triumphantly stepped up to get my medal.
I started running again seriously this October and I was excited to get my feet pounding the pavement again. I especially want to thank Andrew Bateman for inspiring me to run again. On November 7 Andrew finished his goal of running two marathons in a month in support of Team Dykeman.
In high school I was a very good runner. I ran both track and cross country. Thinking back on my times in high school my best memories stem back to the times I was either training on the track or running on the trails. I made some great friends and learned a lot about myself. As a junior in high school I set my personal record of 5:03 for the mile and 10:38 for the two mile.
I ran because I loved to run. It was always an effort to improve myself. Running for me was a way to process my life and solve problems I was facing. I stopped running after I got out of the Army because running was no longer any fun. Instead of being an experience where I could be free, it became a confining experience. It became a chore. So I stopped running and it’s been about 10 years since I seriously ran.
That’s all changed now and I think I’m more excited about running than I’ve ever been in my life. It’s been a missing piece in my life and I’m thrilled to have it back. I start training for the Myrtle Beach Half Marathon this week which is a stepping stone to completing my first marathon next October.
Damon’s Big Lesson
The month of November was a month of reflection for me. I reviewed the successes and failures I experienced over the last year. It was a wonderfully fulfilling year both professionally and personally. I had some wonderful accomplishments that still humble me. I proved a lot of things to myself and created new friendships.
I also experienced some failures and the subsequent self doubt that ensues most times I don’t accomplish what I set out to finish. I’d like to think that I’ve been pretty open to learning the lessons of my failures. Even though I try to be objective when I don’t meet my goals and standards, there are times when I will be my own worst critic. In the end, I am grateful after I skin my knees because that tends to be the time when I learn the most.
I compared where I am this year to where I planned to be and started to think of where I want to be five years from now. I’ve got a pretty good idea of what I want my life to be like in five years. I know what kind of relationships I want to have with my wife and children. I know what kind of business I want to have. I know what kind of impact I want to have in my community.
As I contemplated this for the entire month, the realization came to me that in order to create the life that I want to have in five years I have to make a few changes. I have to continue to learn, grow and develop the management skills, business skills and personal skills to grow into the life that is mine. I have to nurture the most important relationships in my life and devote the time and attention to them so they will continue to reward me.
Thanks to Matt Archer for recommending this month’s book. The E Myth Revisited by Michael Gerber came highly recommended to me by Matt. The entrepreneurial myth is one that most people who start small businesses are entrepreneurs. The fatal assumption is often made that an individual who understands the technical work of a business can successfully run a business that does that technical work.
I really appreciated the perspective I gained from Gerber’s book. My whole career I’ve been involved in professional services businesses where highly technical expertise was required to complete the services that were sold by the business. It’s easy for a very intelligent technical person to be confident enough in their abilities to provide their services to think that they can also run a business that sells their services. Until the technician learns the skills of running a business they are running a business that will only be marginally successful at best.
Gerber begins the book by talking about the three main players in a business – The Entrepreneur, the Manager, and the Technician. When all three players are played by one actor, the business owner, strife will ensue. Strife ensues mainly because each player has preferences on task accomplishment. The Entrepreneur must have vision and set the course of the business. The Manager must make sure that projects are completed on time and under budget. The Technician must have the technical competence to grind down in the details to make sure everything meets appropriate standards.
The Technician will have a hard time being an Entrepreneur because most times they are so good at being detail oriented that it is hard to lift their eyes up to envision a bigger picture. The Technician works best when he is a Technician. When he tries to be an Entrepreneur he is somewhat limited. And so it goes for each facet of the business. Ultimately, a business cannot have one person fulfilling each of the three roles. As the business grows it becomes more complex and the roles of the three players must be segregated to at least three different people.
I would recommend that anyone who runs a business read The E Myth Revisited. There are a lot of good learning points for those who read it.
The Marketer’s Mind
One of the most important things a business owner can do is define and identify their market. For most business owners this can make the difference between a mediocre business and a highly successful business. This also tends to be one of the most difficult tasks a brand new business owner undertakes. It’s a difficult task because it takes a lot of mental energy to both define and identify the market.
For example, I’ve met some people who sell personal care products such as shampoo and makeup. When I ask them who their target customer is, I have heard the reply, “Anyone with skin.” Great answer, but it makes that person’s job much more difficult. The reason I say this is because my four year old daughter has skin but she lacks one thing that the salesperson needs. She lacks money and can therefore not provide the salesperson cold hard cash for the wonderful shampoo. Thus it becomes very hard for me to help this person reach somebody who will by their product.
I think part of the reason people have a difficult time defining and identifying their market is because it requires them to say no to some people. For instance if I decide to only provide tax services to women, then that means I will not sell those services to men.
Once one defines their market, one is able to obtain the laser like focus that is necessary for one to reach the right market. After all, most people will only work between 2,100 to 2,600 hours a year. If one is looking to sell their product or service they don’t have the capacity to sell to just anyone. It is much better to focus the market so that time, money and efforts will get the best return on their investment.
Once one defines a market it is a lot easier to identify how the target customer will behave. Then the products and services can be designed to meet the needs of that target customer. Another benefit of identifying the target market and customer is then one will know the best way to reach them.
A good resource for identifying your market is Reference USA. If you have a Wake County Library card, you have free access to this database. This lists all of the businesses in the US by NAICS code. For instance, if I wanted to get a list of all fo the orthodontist in the 27587 zip code, I would be able to get a list of three companies, Gladwell Orthodontics, Hixson & Bumgarner Orthodontic and Vinson Orthodontics. Reference USA is a powerful tool because once you determine who your market is, it become easy to identify that market.
For instance the Lamborghini company makes exotic cars. They will probably construct less than 3,000 cars in any given year. The cost of a new Lamborghini will be in excess of $250,000. For a lot of people in America that is more than they will spend on their house!
One could argue that it would be ridiculous to spend that much money on a car. But to the target customer they are happy to spend the money because to them purchasing the car is worth every penny spent on it. And so it is with our businesses. Once we are able to target the market and customer, we can identify who they are and what their likes and dislikes are. We can start to talk in their language and develop and sell the services that they are happy to buy. Everybody wins in this situation.
What’s With the Moon?
I’ve had a couple people ask, What’s with you and the moon? About two years ago, I became fascinated with the Apollo Program. I began to study the program and interview people who helped make the monumental task of landing on the moon a reality.
The moon is a symbol of possibility for me. It is a source of inspiration. I like to be inspired.
My name is Damon Yudichak and I am a Certified Public Accountant. My father was an Army officer and we moved around a lot. We finally ended up in Fayetteville, NC. I’ve been a resident of Raleigh since 1999 when I moved here to go to North Carolina State University. I am fascinated with the moon and am still amazed that man has walked on the moon. I also am a big standup comedy fan.
The Orange Star Newsletter is prepared by Damon Yudichak. The Orange Star Newsletter carries no official authority, and its contents should not be acted upon without professional advice.
In accordance with IRS Circular 230, this newsletter is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.