Why is this current crop of #TrumpRussia organised crime figures so ... disorganised?
As a business consultant and executive coach, I have seen my share of bad decisions by entrepreneurs. I have done my best to warn them of the pitfalls ahead, and give them planning models to help them prepare to avoid, reduce, or manage risks. I've helped them through investigations by tax offices, government regulators, and police.
While making rookie mistakes has always been a problem in small business, you would think that for organised crime figures, international money-launderers, and jet-setting superspies might be just a bit more careful.
After all, the risks include asset forfeiture, life in prison, or even a death sentence! Not to mention a polonium tea, or a "heart attack" while falling from a fourth floor window.
Nope. Same rookie business planning mistakes showing up in the #TrumpRussia scoops, over, and over, and over.
So, for anyone in any business (regular or irregular), here are the basic principles those Trump associates whining about legal costs have failed to consider:
1. Revenue isn't profit.
You don't get to spend all the money that comes in. Well, you can, but things get messy real quick if you do.
2. There is always a cost to marketing.
Even if you never print a poster, or place an ad, marketing is costing you. If you don't pay someone else to market your services, you will end up paying yourself to do it. And you are probably not that good at it.
Even for international criminals, the person who brings you the business will expect a cut. Sometimes, someone will expect a cut even when they didn't bring you the business, just because you are doing the business on their "patch". (Case in point, Vladimir Putin and his oligarchs, Facebook and everyone who has a Facebook page.)
Allow for 10% of your revenue of disappear in marketing expenses, be they ads, plane flights, bribes, giving away something for free or below cost, or "licensing fees".
If someone brings a deal to you, roll that 10% right on in to #2.
3. There is always a cost to make a sale.
If you have affiliates or commission-based sales reps, the cost of making a sale is very clear. (And sometimes very high!)
Usually, allowing around 20% for commissions will get you through, but if you are selling an electronic product online, your affiliates will expect more like 50%. Reportedly, Vladimir Putin also expects 50%. (See Bill Browder's testimony to the US Govt's enquiry.[1])
4. Get the product delivered for 30-35% of the revenue.
This means that if the product is you, calculate the hourly rate you want to earn, and triple it. That's what you charge. You will spend an hour marketing and an hour doing admin for every hour of paid work you bill, and the only way to get paid for that time is to bill it to the someone.
If you engage an external company to deliver for you, say someone like Giles-Parscale, a small website-making firm, and you pay them, say 91 million dollars to produce something for your client [2], you had better have charged your client 273 million dollars for that result. Assuming, of course, that the work done to make the something was actually worth 93 million dollars, and Giles-Parscale wasn't outsourcing it to a third-world country like Russia or Macedonia for pennies on the dollar.
5. Allocate 20% for overheads (fixed costs like rent and leases on equipment) and admin.
This is where you get the money to pay for your lawyer. If you get a client who looks like they might involve you in legal costs greater than 20% of the revenue they pay you, they are NOT A CLIENT YOU WANT. Risk management 101. The likelihood of an event multiplied by the seriousness of the consequence determines how important a risk is to manage. If the consequence is death, prison, or bankruptcy, you darn well want to manage that risk to its minimum!
Even the most casual background check on Donald Trump shows he is a potential legal liability risk, due to his long history of ties to the mob in New York [3], and his complete inability to either keep a secret or utter a believable lie. Everyone who worked for him should have been squirreling away some of their income for paying lawyers. Where Trump is involved, lawyers are not a small, remotely likely risk. They are a probability. Attention from law enforcement is a clear and present danger for anyone in bed with Trump.
6. If all goes well, you'll have 10-15% in profit.
You should really squirrel some of that away for contingencies, whether unexpected costs, or unforeseen opportunities. If you'd been doing that, you'd have another nest egg to grab when the Mueller inquiry reached your door.
So, you are free to spend somewhere between 5-8% of you hard-earned revenue on flying to Fort Know to watch the eclipse. Unless, of course, you can find a way to bill it to the taxpayers instead[4]. Then you can keep all the profits.
Except you'll be needing another dip into your lawyer contingency account to fund the corruption enquiry.
- http://www.esquire.com/news-politics/politics/news/a56666/russia-putin-oligarchs/ accessed 18 Sept. 2017
- http://www.newsweek.com/trump-brad-parscale-russia-digital-guru-637322 accessed 18 Sept.2017
- http://fortune.com/2017/05/17/donald-trump-russia-2/ accessed 18 Sept. 2017
- http://www.businessinsider.com/why-steve-mnuchin-used-military-plane-solar-eclipse-kentucky-2017-9 accessed 18 Sept. 2017