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Old April 16, 2003, 07:26 AM
Michael Ross (Qld, Aust)
 
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Default One point of contention (meaning, perhaps)

Good post, Michael.

I have one point of contention about what was said...

> Along the way Doris stuck her thumb in the
> eye of two principles often held with great
> reverence in the entrepreneurial community.
> 1. Multiple Streams of Income-She remarked
> that they had opportunities to take the
> business in different directions at many
> points in time. Such as when they were
> offered the chance to distribute other
> product lines. But she always felt by doing
> this it would take their focus away from
> their core business. Or in the late 90’s
> when they put up a web site, everyone
> thought they would start selling direct to
> the consumer and bypass the Kitchen
> Consultants, which did not and would not
> happen according to Doris. She knows what
> the “Pampered Chef” does well and doesn’t
> deviate from that path. Repeatedly
> throughout the lecture she talked about how
> important focus was in the growing of their
> business. I know from my perspective that
> focus is more of a problem with most
> entrepreneurs and not a lack of finances. I
> use to think multiple streams of income was
> where it was at but over the past few years
> I’ve changed my mind completely on the
> subject. Most people do not have the
> capacity, and not necessarily financial but
> mental and managerial, in order to create
> several successful business units at the
> same time. How often does Multiple Streams
> of Income end up being Multiple Streams of
> Mediocrity?

With regards to MSI, a person can have MSI while owning one single business.

In her case, I would say she has 75,000 income streams. (That's the number of distributers she has, right?)

I think it would be clearer to say she wanted to stick with one business and not many businesses. Otherwise, to say she does not want multiple streams of income, makes her a hypocrit as she has multiple streams of income coming in from all over the world.

Okay, so it's a matter of interpretation of what one takes MSI to mean.

> 2. Doris never had an “Exit Strategy”. Even
> though she sold the business to Warren
> Buffet in 2002, she insisted (which I’m sure
> he supported fully) that she stay on as the
> head of the company. She said, “I’ll never
> retire” and added, “Why exit something that
> you love doing?” Warren Buffet said he
> shared the same point of view. This one hit
> me hard… “Exit Strategy” is such a
> fundamental belief in the entrepreneurial
> community but if you are doing something you
> love how could you just jettison it and go
> on to something else? And if you can do it,
> how connected to the business could you have
> been in the first place and how much did
> that hamper your ultimate success?

Great point. Although, I don't know how embedded this "exit strategy" thing is, I do agree it exists to some extent. And there are some "gurus" who constantly preach about having an exit strategy BEFORE you even begin the business.

Also, from what I know of Buffett, he WANTS the owners of companies he buys to continue working in the company. They were what got the company where it was and know more about it, and making it profitable, than anyone. So her "insistance" of "staying on" could be a little white one :o) But her advice is good so perhaps we can forgive her that one.

> Doris had mentors along the way. She allowed
> and welcomed the help of others. Quite often
> today I see small businesses stay “small”
> because the owner thinks they know all the
> answers.

Maybe Dien can answer this one more correctly... but didn't Einstein say something along the lines of "as soon as I say/think I know something, it shuts off my brain from learning anything more."?

Impossible. The fastest way to grow
> a business is using the skills and insights
> possessed by others. What doing everything
> yourself limits is your paycheck.

Part of her "not knowing" appeared to be evident from the start. So it was part and parcel of her beginnings and she continued to stick with what worked - getting help from others. Another lesson not to change what works.

> “Hard work is necessary,” according to
> Doris. You can’t fake it. I guess I can’t
> imagine someone sitting around in the
> underwear growing their business to ¾ of a
> billion dollars per year.

HAHAHA. Love the analogy.

> Doris did not manufacturer any of the
> products she sold. All she did is show
> people how to use existing high quality
> products more efficiently. This is where she
> created value. Yes the products she sells
> are very good products. Are they the best
> out there? Probably not. But the value is in
> the showing how to use them. This is what
> people pay money for. The high quality of
> the product is just an adjunct. The Kitchen
> Consultants put on a show, they entertain.
> Remember people will spend their last dollar
> to be entertained.

For us "foreigners" who don't have a clue what Pampered Chef is, my understanding of your explanation is: she sells kitchen gadgets via party plan AND educates the buyers on how to use those gadgets during the party. In essence, she educates First, which then entices the party-goers to buy the gadget.

Is that right?

> I’m sure I’ve missed some other key points
> from the talk, no matter how fast you write
> you can never get everything. But I think I
> got the main points and those main points I
> gladly give you the reader and hopefully
> they make your entrepreneurial life a little
> easier.

Thanks for sharing, Michael. I can see this article being picked up by a business journal, if you would submit it.

Michael Ross
 


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