Key Topics to Know – Marketing, Income Statement, Balance Sheet

I spent 30 minutes recently on the phone with a good friend of mine in the industry. I listed several issues that are just somewhere between causing me concern and driving me crazy. I have preached about education for the industry it seems like every day for the last 20 years. I do believe, as an industry, that we are making progress. When the call was over he told me he hoped I was feeling better now that I had a chance to get this off my chest. He was right, I do feel better. So today I’d like to talk about three subjects that I feel are important to our industry from a managerial standpoint and that every salesperson, marketing person, and management person in the industry should be aware of and pretty much have committed to memory.

When Bill Gates and others designed DOS, they were smart enough to put a delete option into the functionality and I won’t be offended if you decide to utilize that at this point. Mr. Gates often said that every decision he and his followers did was not the best that could have been made. When asked what his biggest regret in creating all this coding and functionality that we now know and enjoy, and sometimes struggle with, he replied that he never understood why they made ctrl-alt-delete a three-button function instead of just one. But, it did seem cool at the time.

There are three pieces of documentation that we all need to be familiar with.

1. The definition of marketing
2. The income statement
3. The balance sheet.

I am not going to go into a detailed explanation of each so if it looks like I have abbreviated this down to the base level, that was my intent.

The Definition of Marketing

The definition of marketing is quantifiable. Each element is individually quantifiable and there is nothing in marketing that cannot be measured. The definition I am outlining is what I was taught years ago and what I have read in various publications from major educational institutions. It’s not meant to diminish other definitions and I have no problem with them as long as they are all quantifiable in every detail.

Marketing

• Product – tangible or intangible
• Place – in the supply chain
• Pricing – as a strategy
• Promotion
  • Sales (yes, sales is a part of the marketing process and does not stand alone as a separate function from marketing)
    • approach the customer
    • set the agenda
    • deliver the message
    • close the order
  • Advertising
  • Publicity
  • Public relations

Reading an Income Statement

Income Statement (sometimes referred to as the profit and loss statement)

1. Topline revenues (sometimes referred to as sales or income)
2. COGS (cost of goods sold)
3. Gross profit
4. Operational costs
5. Net profit
   • EBIT -earnings before interest and taxes (Sometimes referred to as PBIT)
   • EBITDA – earnings before interest, taxes, depreciation, and amortization

The Balance Sheet

The Balance Sheet contains information on:

1. Assets
2. Liabilities
3. Equity

One final piece of information that I often find misstated or misunderstood, especially with marketing people.

When I asked the question “can you tell me the difference between a credit and debit” and they start to go into this rendition of credit is increasing something and debit is decreasing something, I know immediately that they don’t know the answer. I am sure everyone reading this will know the answer but just in case one or two of you older folks (like me) may have forgotten.

A debit is an entry to the left-hand side of the ledger and a credit is an entry to the right-hand side of the ledger.

And finally some closing points

1. Why am I offering this? To be honest with you I feel like, in several articles, I’ve reached out to encourage people to comment on what I’ve written. The subjects are usually around math but not always. I get almost 0 feedback from these posts. I think ElectricalTrends is fantastic and well written and that Channel Marketing Group is an excellent resource that not enough people in our industry take advantage of. The problem is always the same. People are embarrassed to say they don’t know the answer to any specific issue or question or to disagree with the writer.  (We won’t publish what you write or mention the source without permission ) I’d love to do a course on math for marketing which would probably take a couple of hours and can be done virtually. If you’re interested in that please reach out to me or David Gordon. We’re also thinking of developing a course to put on BlueVolt for NEMRA University and other online universities. Would this be of interest to you / your company?
2. The other pushback on what I just said is along the lines of “not having time”. We are all so busy. Another mentor of mine, John, who passed away 20 years ago, sat me down to drill into my sometimes stubborn head “We never have time to plan, but we always have time to fix it” .
3. Sometimes you don’t realize what a good friend or mentor was to you until years after their passing. Such a man was Sam Phillips who worked with me on the counter and inside sales for a steel service center in the late 70s. Sam said one thing to me which did not resonate with me until years later. Sam said “success is never final.”

My fear right now is business is so good, but much of it is not by our own doing but by circumstance. Those circumstances will not last forever and we, as an industry, need to be developing plans now for when that inevitable date appears on the horizon. That brings us back to that training issue.

For those of you that took the time to read this, I am grateful. I welcome your feedback both positive and negative so please feel free to reach out. Kcain5622@gmail.com 240-682-3660.

Please, expand on this dialog with your own points of view! Tell me why I am wrong! Hello, anyone out there?