Archive for category Business & Management

Regardless of the industry, regardless of what you do, there’s one underlying tenant of business:  To make money.  But how do you go about doing this?  To put it simply, you need to get people to pay you more money then you spend.

When it comes down to it, that’s all business is.  For those who are unaware, me and two of my pledge brothers/friends/housemates have been in the process of starting a small business of our own:  IV Greek.  IV Greek will sell the finest wooden letters and paddles this side of the Santa Ynez Mountains.  If you’re unfamiliar with the area, we’re going to be the only Greek store serving Isla Vista and UCSB.

We got started just over a month ago.  March 24th, according to the domain records.  A future post will contain the information on HOW it got started, but for now, I’ll just talk a little bit of the business model.  Simply put, we’re a retailer.  We don’t manufacture the products, merely sell them.  We buy a large amount of stock from our wholesaler/manufacturer at a reduced price, and sell it at a retail price.  Simple as that.

Some people have asked why a customer can’t just buy from the manufacturer directly.  The answer to that is simple:  They won’t sell to them at these reduced prices.  We’re buying thousands of dollars of product in one fell swoop.  An individual customer would buy only a small fraction of that at any one time.  IV Greek also acts as a local distributor in regards to the supply chain.

Our launch day is set for this Thursday, May 6th.  It’s going to be the start of something amazing.

Of continuing member development

Knowledge; Lifelong Learning.  We need a group of people with one singular goal in mind: the distribution and spread of knowledge.  To do this, I propose two things: 1) The formation of a ‘Member Development’ committee. 2) The dissolution of the Corp. Sponsor ship committee, and 3) The merging of the responsibilities of the aforementioned into the Professional Committee.

The purpose of the new committee is to increase general knowledge NOT found in classrooms, and not taught during the pledging process/ceremonies.  Things that would be generally useful or possibly encountered throughout life and your career.  To those in the prior two pledge classes, ya’ll were used as guinea pigs to figure out what worked, and what didn’t with something of this nature.   But the potential topics remain similar; 401K’s/IRAs, credit information, etc.  And it can be extended to more practical things, like How to form an LLC.  Or How to give an effective presentation.

In the past, we’d every now and then have one-off events similar to these, but since these responsibilities have not been codified, there have been a number of issues with them.  For one-off events like a recent workshop 2 quarters, we had a singular member put on an event.  However, the information and data had many factual and verifiable errors.  By having a committee handle these events, we reduce the incidence of errors in two manners:  We have the committee review the slides and information, and, for errors that do pass through, they can be corrected and noted for future uses of the presentation as the membership of the fraternity turns over.

Regarding the future uses of any particular topic of presentation, this is a mixed bag.  We want to share the information with as wide of a range of people, however, we don’t want to put on events where it duplicates what the member body already knows.  As an example, I think I’ve gone through three or four professional dress/etiquette workshops  since I’ve crossed, as well as it being hammered into us during pledging.  With a formal committee, we can codify it so that no presentation is put on more than say… Once every four quarters.

With a committee, there can also be a budget that can be drawn from.  Prior attempts have shown that getting funding to put on these events independently is near impossible to secure, as well as the uncertainty of reimbursement.  Although a committee like this wouldn’t need much, basic drink/snacks, preparation of materiel  and the like all have a cost.

Another benefit to the creation of the committee is the integration of the committee into the requirements for our members and for our future pledges.  These learning, instructional type of events are fundamentally different than the guest-speaker or outside-workshop type events.  With this committee, we can add that attendance of at least one/quarter is a requirement by all members/pledges in which to continue our Lifelong Learning.

Although prior events of this nature have been handled in the past by Prof. committee, these events are of a different nature than the aforementioned categories.  The other types focus on bringing in outside people, while this committee is by members, for members.  This committee is focused on the purely educational, while the others are a conglomeration of shared experiences, sharing of opportunities and networking type events.

Due to the inherent networking done by the Prof. committee, Prof. Committee should be the ones hitting these people up for sponsorships when applicable.  For every single person part of a corporation that comes to speak, we should be trying to get them to sponsor us as well, or provide further contacts within their organization to get this done.  In addition, Prof should have all the contacts from prior speakers and as such, that information should be used for attaining corp. sponsorships.

There’s also one more benefit on a longer term scale.  Once these are refined, we can then sell/provide these instructional resources to other organizations.  When these other people came to our GM a couple weeks back trying to sell us instruction on how to use Excel… Well, that was horribly disheartening.  We can’t walk two steps without tripping over an accountant in this fraternity, and these are topics we should be well versed on.  Not only should we be well versed on them, We should be the ones selling (or providing as methods to get our name out there) these types of instruction to other groups.

So, solution:  New committee focused on educational development.  As an addendum to this, small list of things that have been done and could be done in the future:  Excel, Effective Presentations, Stocks/Options, Retirement Plans, Mutual Funds/REITs, Quick How to on starting a <industry> business, etc… Just stuff off the top of my head.

The fallacy of the current Points system

The current points system was established with good intentions; It was designed to increase event attendance and participation within the Fraternity, by giving monetary credits to those who attend events, and monetary debits to those who miss events.  However, it has failed for reasons given in our general meetings

The current structure of the system is that it provides monetary incentives and disincentives based on attendance.  Each event is worth x points which directly translates into an equivalent amount of dollars.  The idea is that people will be more or less likely to attend because they’d be reward or penalized.  However, this has a number of flaws.

One of, if not the most major of these, is the monetization of our events.   By linking each event to points, which is linked on a one to one basis with money, it creates an association within our member’s minds that each event is only worth x dollars.  With this association, it turns something that should be motivated by social pressures and internal ambition, into a simplified Utility Maximization Problem with regards to time and money. (I’m typing this to accountants and economists, I might as well speak their language).

An example of this is the following thought process, which, while anecdotal and may not apply to everyone, has been observed in a significant portion of our group.  I doubt that anyone would refute that the following attitude is a factor in some people’s minds.   It’s the thought process that “Oh, this event is only worth 4 dollars, I’d rather sleep in than have 4 dollars”.  Or, to the ever more logical economist, “Minimum wage is 8 dollars/hr, it’s a more effective use of my time to work the proverbial coal mines than this specific event.”  It’s even been said by committee chairs in our meetings that an event is “Four dollars in your pocket!”

Or take the case of the food-sales fundraiser, where we get points if we help out or we buy food.  If we buy food, we get 4 dollars towards next quarter’s dues.  If we were going to buy food at a restaurant anyway, there isn’t any substantial loss to choosing to eat at that location. So, we’d get some percentage, around 20%, give or take.    Because attending this event would, cause us to lose out on dues, and gain only a small amount (Very few of us actually spend over 20$ at each of these fundraisers), many of these events cause us to LOSE money overall.

We replace our social and personal ambition pressures with a monetary one.  If these thoughts echo with any books you’ve read, it’s a similar example to the daycares cited by Levitt & Dubner.

Another problem is the lack of parity of incentive for event types.  An event can be a recreational one with free food and activities, or an event listening to a speaker talk about topics which may not directly apply to us.  All incentives equal, which would you rather go to?  Which do you think the majority of people would rather go to?

As also touched on earlier, the points system is detrimental to the budget.  Each quarter, there is an average of over $200 that the fraternity doesn’t get.  In some quarters, this amount is more than doubled.  Due to the variable nature of the system, the monetary loss cannot be accurately forecasted at the beginning of the quarter, and thus cannot be accurately budgeted for.

Flat out abolishing an incentives system is not the solution though.  It’s currently better than having nothing in place.  However, I propose that the current dollar-points system be replaced with a pure credit-points incentive system.

To elaborate:  We make each type of event worth some amount based on the level of involvement/difficulty of the event.  Example, a Service event, on a Saturday morning, be worth 400 points, while a party would be worth 100.  (all values are for discussion only)  Exemplary actions, going above and beyond, etc, can get points based on the nature of what was done.  Because these don’t have a direct monetary link, they can be handed out without as much concern for the budget.

Various levels can be set for each type of thing, but those are specifics and it’d more important to go over generalities at this stage.  Besides, As long as the point values are relative within each quarter, how they may fluctuate at the whims of change in leadership isn’t as much of a factor.

This brings us to the issue of what to DO with these points.  Here’s where the incentives come in.  At the end of the quarter, these points can then be redeemed for various things.  One thing that can be done with the points is have them be used to buy raffle tickets for an internal raffle.  Take a fixed amount of money, (say the $200 from above) and spend it on various goodies for people to try and win.  Could be things ranging from an iPod to an embroidered sweater, to small things like everyone’s favorite blabla, or even non-physical items such as… “Get called ‘King SoAndSo’ for a Day” or “Eboard writes a poem dedicated to you”.  It’s something that we could have fun with, and limited only by the creativity of our members.

By having this type of system, there’s an additional degree of separation between the points and the end reward.  By having a raffle system, it gives benefits of increased odds of winning to those who are more active over those who are less active.

If there’s doubt to the efficacy of this system, there’s a similar type of dissociative incentive system that we’re all familiar with: Chuck E. Cheese and their ticket system.  The link between the money spent and the trinkets gotten as rewards is a lot more tenuous.

The points can even be used as levels to incentivize minimum participation within a period of time.  For example, the potluck; we can always make it so people with less than a preferred minimum # of points would go last.

These also have uses as disincentives, but these should be used sparingly.  Disincentives such as not paying dues on time, or missing a GM, Or not attending what we say are the minimum required # of events could result in the loss of some large percentage of these incentive points, or perhaps enforcing our suggested minimum requirements with loss of membership as opposed to the point burdens.

Because these aren’t monetary, that means that these points can then be carried over quarters, so people can, if they want, accumulate them over their total time in the organization, thus giving seniority a benefit based on total contribution rather than an absolute one based only on the calendar. Though, to prevent complete monopolization, perhaps some percentage decay of the rollover points.

This brings up another idea…  Why not have the ability to spend these accumulated points towards a quarter of Sr. Standing?  Amounts would depend upon average accumulation per quarter.  Again, instead of calendar time, it would be a more accurate representation of overall contribution.  Or require a minimum ‘total collected points’ to go on Sr. Standing for one quarter.    (Of course there’d be language to deal with the transition for those who are currently in it and working towards their 4 qtrs for Sr. Standing)

This also lessens the administrative workload for excuses for non-mandatory events; No one would need to get excused to prevent a penalization; They just wouldn’t get points, wouldn’t get the bonuses at the end of the quarter, and they’d have social pressures working against them w/regards to not attending.