We all know the names, we see them every day in our newspapers, magazines, TV commercials and even on billboards. We buy their products at the grocery store, mall, music shop, garage, and even pay them tribute in tithings. There is at least one product in our homes either marketed or in some way related to one of these ubiquitous names, and yet it happens so transparently we hardly notice. In America especially, fast food has been a part of normal every-day life, so much so that each and every establishment melts into the background so uniformly that we only notice the absence of them. It seems this is simply how a capitalistic society works, it’s ingrained in our culture and we know nothing else.

These circumstances make it all the more potent when one of these iconic figures of our ironically institution-friendly lives suddenly plummets from respect and trust into calamity. From the horrors of environmental disaster to the paranoia of poisoned food, all the way to the darkest reaches of child molestation, it’s the very foundations of our society in which we’ve placed so much complacent trust that can hurt us the most. These pillars of the business world show just how far the Mighty can fall.

The Collapse of Enron

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Enron was an American energy company based in Houston, TX as one of the world’s leading electricity, natural gas, pulp and paper, and communications giants. Named “America’s Most Innovative Company” by Fortune for six consecutive years, with 22,000 employed, Enron claimed nearly $101 billion in revenue in 2000 alone. About 15,000 employees held 62% of their savings in Enron stock, purchased at $83.13, not foreseeing the plummet to a miserable $0.10 in October 2001. Their downfall began during a recorded conference call on April 17, 2001, when Wall Street analyst Richard Grubman questioned Enron’s unorthodox accounting applications. Enron, as it turned out, was the only company that could not produce a balance sheet along with its earnings statements. Not only were their top dogs immensely compensated using stock options, racking up a plethora of financial crimes including bank fraud, securities fraud, wire fraud, money laundering, conspiracy and insider trading, but cost stock holders at least $11 billion after filing bankruptcy in 2001. Kenneth Lay and Jeffery Skillings, former CEOs, went on trial in January 2006; Skilling sentenced to 24 years, and Lay dying before he could be sentenced. Not only was the company itself destroyed in the process, but every one of its peers and business contacts came under harsh scrutiny from numerous government agencies, and public trust in the entire industry was irreparably damaged.

The Exxon Valdez

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Joseph Jeffery Hazelwood was piloting the Exxon Valdez March 24, 1989 when it struck the Bligh Reef in the Prince William Sound, just off the Alaskan Coast. What followed would forever be known as one of the most devastating maritime environmental disasters in the history of humanity. 10.8 million gallons of Prudhoe Bay crude oil poured into the sea, eventually covering 11,000 square miles of ocean, destroying all at once the seabird, salmon, sea otter, and seal habitats in a Disney movie style of Armageddon. Although it didn’t rank as top on the list of world’s largest oil spills in volume released, the Prince William Sound’s remote location made response efforts difficult as it was only accessible by helicopter and boat, severely hampering efforts of damage-control. The spill caused the complete collapse of local marine life, which in turn crippled the local economy. The town of Cordova, AK, was effectively brought to its knees, as their assets were based on the health of the fisheries. The salmon population eventually returned in 1996, though the Pacific Herring population has never recovered, and several locals suffered a similar fate – the former mayor of Cordova took his own life in the wake of the spill.

AIG

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The American International Group, Inc. is an American insurance corporation which first suffered from crisis back in September 2008 when its credit ratings were downgraded to “Below AA” levels. Without attempting to dive into the economics that lurk the background in the chain of events that caused this, in the end their stocks fell 95%. In order to remain solvent, they needed some way to meet augmented collateral obligations due to the hiccup, so the US Federal Reserve Bank stepped in on September 16, 2008 to inject $85 billion. The move drew fire from millions of tax-payers and even though it averted a crisis that would have completely de-stabilized our economy(further than some say it is now). Of course, Uncle Sam had to get something out of it: a nice chunk of stock for 79.9% of AIG’s equity, leading to cries that the move heralds flat-out Nationalization in America, the equivalent to hoisting the Hammer and Sickle over Wall Street. Now the general public won’t touch the company with a 12-foot pole, investing in its stock feels not only like a waste of time, but leaves a bad taste the mouths of potential investors.

Jack in the Box, Taco Bell, Peanuts and Hell

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As consumers, we put our trust in the people and companies that handle our food; we have to, because we’re not about to make it for ourselves all the time. Despite this, we got our wake-up call back in 1993, when four children died and 600 others became ill in Seattle and the Pacific Northwest, as well as areas in California, Idaho and Nevada after eating undercooked meat infected with E. coli from fast food chain Jack in the Box. At the time, it had been the deadliest E. coli outbreak to date. The consumer trust in the chain was completely broken, with mass closings both temporary and some even permanent. Millions of dollars in sales were lost as a result of this debacle, and not surprisingly, paid out in wrongful death lawsuits.

Early December 2006 brought E. coli to the forefront of the news when a total of 71 food poisoning cases in five states were subsequently linked to Taco Bell. The origin of the E. coli was never pinpointed, and was debated to be sourced from either batches of their lettuce or green onions. An announcement was not immediately made, to the dismay of many critics, only due to concerns over “public reaction.” I guess an intestine-ravaging bacterium wasn’t that important to them, but the uncertainty caused a public scare that affected more than just Taco Bell. Many a grocery store’s produce section was left to rot as the populace shied away from potentially deadly sandwich and salad items.

When a salmonella outbreak centered at the Peanut Corporation of America racked up a death toll of 9, with 637 cases of illness across 44 states and Canada back in January 2009, it caused a total recall of all peanut products. They provided U.S food makers with peanut butter and paste that were further distributed to long-term care facilities, universities, food service industries, and private label food companies in the United States, Canada, Haiti, Korea, and Trinidad. When the FDA investigated the PCA plants, they discovered a leaky roof, mold, roaches, rust that could flake into food, dead rodents and bird feathers. A virtual cesspool of disease. They were the subject of a federal criminal investigation for knowingly shipping these contaminated batches of product. As of February 13, 2009 the company has filed for bankruptcy, stating that the complete recall left them with no choice but to close shop. As for the rest of us, some people are still sketchy on whether to trust their PB and J or to just stick with Nutter Butter for now.

McDonalds: Physical Burns and Mental Scars

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Want some chicken head with that? First reported on November 30, 2000, a woman found a chicken’s head in her order of chicken wings at Mcdonald’s. Rumors circulated initially that it was fabricated, despite video evidence of the head, and whether or not it ended up holding true or not, a publicly broadcast video of someone finding a chicken head in their order is never good publicity for the people that served it.

You can thank Stella Liebeck of Albuquerque, NM, for the three dozen warnings on hot coffee cups. Back in February 1992 she went with her son to order a few things from the drive-thru, including a nice cup of joe. She placed the cup between her legs and attempted to remove the plastic lid, and in doing so spilled the entire scalding contents onto her absorbent sweatpants. She suffered 3rd degree burns on her inner thighs, buttocks, genital and groin areas. She sought to settle her claim for $20,000, but McDonald’s arrogantly refused. Bear in mind; a burn hazard exists with any food substance that is served at 140 F or above, but McDonald’s held its coffee at a whopping 190 F… to “maintain optimum taste.” This wasn’t new information to McDonald’s though; there were more than 700 claims by burn victims of similar degree as Liebeck between 1982 and 1992. I guess that extra 50 degrees was worth Liebeck’s $160,000 in compensatory damages, and $480,000 in punitive damages. Now She’s lovin’ it.

Martha Stewart: Crime Boss

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Martha Stewart was named the third most powerful woman in America by Ladies Home Journal in 2001. Martha Stewart Living Omnimedia was her brainchild, a spanning corporate entity encompassing publishing, merchandising, and broadcasting under her house-marmy watchful eye. She was a stockholder in ImClone, a company that was developing a cancer drug that was rejected by the FDA. Stewart gained this intelligence before the public, and committed an illegal act of insider trading by selling her 4,000 shares due to the knowledge of the impending blow that ImClone was about to take at the markets immediately following the press release. In 2004 she was convicted of lying to investigators about the sale of stocks and served 5 months in prison. Her pure, Suzy-Homemaker image was seemingly damaged beyond all recognition, but she’s been working in ernest, managing a fairly strong comeback-campaign in 2005, with her company returning to profitability in 2006. People may still see her as viable, but she’s not the same icon she was before the fall. Now she and her company are compared to the likes of Paris Hilton, not Grandma’s Cookies.

It’s Not Just You, Nobody’s Good Enough for Abercrombie & Fitch

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In 2002, a slew of new A&F shirts hit the shelves featuring caricatured faces with slanted eyes and rice-paddy hats and had people demanding public apology within days. One shirt carried the slogan, “Wong Brothers Laundry Service – Two Wongs Can Make it White.” Apparently they, “thought Asians would love the T-shirt.” At least, that’s what Hampton Carney, with Paul Wilmot Communications (the PR firm to where A&F referred queries) thought about it. The company was jolted into rethinking its approach when marketing to (and attempting to represent) racial and ethnic groups. Soon after, in 2003 and 2004, A&F paid a total of 42.2 million dollars to employees for reasons ranging from forcing them to buy Abercrombie clothes to settlements for discriminatory employment practices.

On that note, in what is by far the single most disgusting display of discriminatory employment practices seen in recent memory, in June of 2009 Riam Dean stepped forward with her story. The young, attractive Briton enlightened the world on her banishment to the storeroom at the A&F store in London where she worked. People get rotated back to the storeroom at some point, surely, but she was administratively placed there for not fitting the “Look Policy.” Dean has a prosthetic forearm. She is currently suing the company.

Ryder: Preferred by Terrorists

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It’s a crass remark to make, surely, as the company Ryder itself has absolutely nothing to do with Terrorists, but when Timothy McVeigh and Terry Nichols rented a Ryder truck on April 19th, 1995 none of that would matter to the public. The truck was used to bomb the Alfred P. Murrah Federal Building in downtown Oklahoma City, OK. The attack left 168 persons dead, hundreds more injured, and millions of dollars in property damage. The attack was a massive blow to the national ethos and a bruised Ryder image was nothing compared to the losses the company took when nobody would rent from them.

Sony: Just Plain Clueless

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“It’s probably too cheap,” spewed Sony Computer Entertainment chief Ken Kutaragi said in a May 2006 interview, referring to the PS3’s $600 price tag. “As with the PS and PS2, we believe people who like games will, without question, purchase it,” Kutaragi said. It’s with this kind of arrogance that Sony slowly deteriorates the benevolence of its customer base. Apparently, Sony expected gamers to blindly flock to their newest product like good little consumerist zombies, ready to hungrily devour whatever the company deigned to give them. Nobody likes being taken for granted. SCEA President Jack Tretton even went as far to famously offer a $1,200 bounty on any systems found “on shelves for more than five minutes.” In reality, the consoles were gathering dust.

In December 2006, Sony decided jump on the experimental (and dangerous) viral-marketing faux-blog bandwagon to promote their PSP handheld gaming system. Alliwantforchristmasisapsp.com (now defunct) was a website sponsored by them, created by Zipatron, containing ridiculous spoofed content and videos. The attempt was rife with corporate half-measures and fans quickly caught on to the site due to its often incorrect use of internet slang and over-eager meme use. It was quickly taken down after a backlash of outrage.

When God of War II was released in Europe, Sony decided to have a grand fête in celebration. They decided to have a Grecian inspired party, complete with togas, wenches, and… a mostly-decapitated goat carcass centerpiece. Pin the tail on the donkey anyone? No, that’s not outrageous or grievous enough for Sony. Reach into this goat’s warm carcass to remove offal, and let’s see who can eat the most! While you’re at it, allow the topless grape and wine wenches to cater to your every need. Sony was so pleased with this event that they even published the pictures in the 80,000 print run of the official Playstation magazine, a move quickly regretted as it was immediately recalled after the public fury and outright disgust at the multinational’s behavior.

Tylenol: Finish What that “Killer Headache” Started

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On October 5, 1982 Johnson & Johnson issued a massive nationwide emergency recall on all of its Tylenol products following 7 deaths related to the medicine. As it turned out, the bottles had been tampered with and poisoned. An estimated 31 million bottles were in circulation at the time, with a retail value of over $100 million. The market share of Tylenol plummeted from 35% to 8%. While it was quite the PR nightmare, J&J was commended by the media for swift action in the incident and it rebounded in less than a year because of this (at a substantial marketing cost). In November of that year, J&J reintroduced capsules, but in a new, triple sealed package, which has become the industry standard today. The “Tylenol Killer” has never been caught, and the $100,000 reward has yet to be claimed.

The Firestone Death Tolls

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August 9, 2000 saw the recall of ATX, ATXII and Winderness tires used in Sport Utility Vehicles from manufacturers such as Ford, GM, Toyota, Nissan, and Subaru. A total of about 6.3 million tired were actually replaced, out of 6.5 million. Apparently, “no specific problem was found with the design or production method” of the tires, but 119 claimed lives in relation to tire defects would probably disagree with that notion. This incident was just another stain of many on the Firestone name. About twenty years earlier, in 1978, Firestone recalled 10 million of its steel-belted radial 500 tires, which were found to be defective and the cause of 34 deaths. Yet another recall followed in the later 1980s, and crippled the company so badly that it nearly went bankrupt, which led to its purchase by Bridgestone in 1988. That didn’t seem to fix the problem, either.

If You Can’t Trust FEMA… You’re Just Plain Screwed.

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Our own government is basically one large corporation, with departments and department heads. Public Relations in this case applies to not only the citizenry, but also the watchful eyes of the global community. The United States suffered a massively damaging blow to its public face when Hurricane Katrina made landfall on August 29, 2005 and forever changed the Gulf Coast. In the days immediately following, heated debate consumed the nation in regards to the local, state, and federal government’s role in the response of the disaster. Rightly so, because help hadn’t come for three days. Deaths of several citizens by thirst, exhaustion, and violence after the storm itself had passed began to transition from shocking to a somber reality, because of the lack of organization. Even after FEMA arrived, locals had said that they were nowhere in sight, that “it [wasn’t] a FEMA operation with no command and control around.” FEMA can send substantial amounts of aid to tsunami victims in Indonesia with breakneck speed, but can’t rescue its own city of New Orleans? The agency not only showed up late, but soon became utterly useless by turning away diesel fuel, ice, relief supplies, water evacuation assistance and even cutting off the Jefferson Parish emergency communications lines. The latter prompted the local Sheriff to restore it and post armed guards to protect it from FEMA. Their efforts were poorly executed, to say the least, and left a bitter taste in all our mouths. No citizen of the country felt as though they could rely on the Federal Security Blanket called FEMA from that moment forward, and if that weren’t bad enough, the entire world watched as Americans were abandoned by their own government.

The Oldest Running Global Business, Rome Gets a Black Eye

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It may be pointed out that the Catholic Church is not a corporation, but it has their own country and GDP, so I deem it worthy of this shit-list. The matter of sexual abuse by Catholic priests rose to international attention in 1985 when Gilbert Gauthe plead guilty to 11 counts of molestation of young boys. Attention was again brought to the issue in the late 1990s when books on the topic began popping up, much to the chagrin of Mother Church. But in 2002, the Boston Globe covered a series of criminal prosecutions of five Roman Catholic priests. According to a study spanning 52 years titled The John Jay Report (.PDF), some 11,000 claims had been made against 4,392 priests in the United States alone. The problem was deemed “widespread and affected more than 95% of the dioceses and approximately 60% of religious communities.” Because of the Church’s largely silent stance on the issue, often preferring to ignore the cases and shun those involved, the general population began to regard one of the most ancient and venerable institutions in the world with open or even violent disdain.

In 2002, the U.S. Church embraced a “zero tolerance” policy for sexual abuse.

More recently, in 2008, the Church trained 5.8 million children to recognize and report abuse, and now runs criminal checks on its volunteers, employees, educators, clerics and candidates for ordination. The Church declared that the scandal was a “very serious problem” but also predicted that it was “probably caused by no more than 1% (or 5,000) of the over 500,000 Roman Catholic priests worldwide.” Because that makes it so much better.

Michael Jackson: He Built an Empire to Fall From Grace

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Continuing with the boy-touching theme, Michael Jackson simply cannot be avoided here (RIP Thriller Man). It may have only been a month since his passing, but it’s still a very relevant topic for any Hall of Shame’s PR shit-list. On November 19, 2003, an arrest warrant was broadcast for the King of Pop, in Santa Barbara, California for several counts of child molestation. His then-accuser was a 13 year old cancer patient whose last wish had been to meet the celebrity. He claimed that Jackson gave him alcohol, let him sleep in his bed with him, schemed to hold him against his will and molested him. The child’s mother had accused JC Penney guards and her husband of molesting her son, and had been trying to collect money from other celebrities. Whether this is true or not, and whether Jackson was truly innocent (despite being acquitted of all charges on June 14, 2005) or not, the Moonwalker was left with a heavy mark of suspicion and was routinely the blunt jokes ever since. The incident wasn’t the only one, either, as Jackson would have to deal with the same routine of implication and damage-control for the remainder of his crumbling career and life. Upon his death, there were mixed cries of both lament and glee. People hold grudges whether they can prove them or not, and some of those grudges transcend mortality. The truth of the matter will never really be known.

When you fade into your surroundings, how can you expect to be taken seriously?

Diminishing is #6 on the list of 8 Mistakes Men Don’t Make and it goes beyond simply making a weak introduction or otherwise blending in to your physical space. Read on to find out if you’re diminishing in one of the following ways.

Sending Weak Signals

Averting your eyes and failing to offer a handshake (or giving a wimpy one), and using the wrong tone of voice are all physical cues that will sabotage your credibility.  Make an effort to look directly at people when interacting. What may be shyness on your part can translate to dishonesty or hostility.

The handshake is extremely important. Think about all that non-verbal information communicated when you actually touch someone. Lead with a firm and friendly handshake every time. Not sure if it’s appropriate? To withhold a handshake can be considered extremely rude – and weak.

Watch your tone. Women sometimes inadvertently raise the pitch of their voice at the end of a sentence making it sound like they’re asking a question. This communicates that you’re unsure. Poof! Bye-bye credibility.

Saying Sorry

Try this: for a day or a week count the number of times you say you’re sorry – for anything. As you’re tracking, think about why you’re apologizing. Is it really necessary or has it become your default setting? If you assume everything is your fault, others will start to agree.

Staying at the Party Too Long

I had a friend in high school who was hyper-aware of precisely when we should arrive and leave any social gathering. She had this idea that you had to be late enough that people anticipated your arrival, and leave early enough that they wished you’d stayed. It was all too complicated for me to master at the time, but she had a point.

When the business of a meeting is over, get out. Some people linger, chatting or just milling about, not wanting to be rude or maybe just honestly wanting to catch up on a more personal basis with the people involved. The problem is that when you do this you’re perceived as having nothing better to do, no other important business to conduct. This decreases your value.

So throw your shoulders back and make eye contact. Do like momma taught you and watch your tone. And remember that once the business is done, so are you.

Image Credit: pacomexico, Flickr

Johnson & Johnson has issued a recall on 21 lots of children’s Tylenol that could be contaminated with pneumonia-causing B. cepacia bacteria. AboutLawsuits has the scoop:

The Tylenol recall affects certain batches Children’s Tylenol Suspension, Infant Tylenol Suspension, Children’s Tylenol Plus Cough & Runny Nose, Children’s Tylenol Plus Cold/ Allergy and Infant Tylenol Drops and other infant and children’s products of various flavors and sizes.

There have been no injuries or illnesses reported in connection to the contaminated medicine. McNeil has said the recall is precautionary, and they have not found actual bacteria in finished Tylenol products. Parents and caregivers who believe they have a recalled product can contact the McNeil Customer Care Center at 1-800-962-5357 for a coupon for a new bottle.

Here’s the full list of recalled products.

Are you wearing rose-colored glasses today? You may want to take those off long enough to get clear look at the plans you’re making for your own success.

Next in the series of 8 Mistakes Men Don’t Make is the habit of hoping for the best. (Monday we talked about seeking validation.) This plays out when you fail to plan, rush negotiations, or overextend hoping to please colleagues and superiors so that they’ll just naturally want to look out for your best interests. I can’t find who first said it, but at the risk of quoting someone I don’t like, I’ll do it anyway: hope is not a strategy.

Do You Truly Understand Others’ Motives?

It’s never a good idea to assume that someone else–excuse my crudeness–gives a crap about what happens to you. Human nature being the way it is, unless this other person is your momma, that’s just not going to happen. I know I’ve been sucked into this trap a million times. You do good work and that should speak for itself. But it doesn’t. Everybody is the center of their own life. Plus, there is so much political maneuvering going on every day all around you that you’ll never fully comprehend it all. And you don’t have to.

Pick Your Battle and Create a Plan 

What you do need to do is figure out what exactly it is you would like to have happen and figure out who’s got a stake in it and what their motivations are. It might be a big sale, creating a business relationship, or getting the ridiculous lunch room rules at your kids’ school overturned. Whatever it is, nothing’s going to come out your way–at least not consistently–without a plan.

Meeting Before the Meeting

One of the things that Carol Spieckerman and Lisa Carver discuss in their presentation 8 Mistakes Men Don’t Make is the concept of having a meeting before the meeting. Men do this all the time; it’s called golf. Think about situations where it would be beneficial to iron out some of the more important details with key players before you’re in a more public meeting. This needs to be part of your plan. 

Can We Just Get This Over With Already?

Harking back to the need for validation, some women rush through negotiations, taking away far less than they would if they had a tougher stomach for the process. We all need to learn to ask for more than what we think we can get. Remember too that the negotiation starts long before the negotiation. The other side will size you up from the get go. False modesty and rushing outcomes only send the message that you’re going to be easy to manipulate. The other big no-no we make if we’re hoping for the best: not walking away on our own terms. When you have a concrete plan in mind, you’re less likely to make this mistake.

Overextending, aka I Can Do That!

Over achieving is certainly not the exclusive domain of women. At first I didn’t understand what it had to do with hoping for the best. I thought it was more of a validation issue. But it’s all related. When we say yes too often, we create a baseline of accomplishment that is so high that we have to uber-achieve to get any recognition at all. And then when we don’t get the pats on the back we’re martyrs wondering why no one’s putting our needs first. Then we start taking it personally, but we’ll talk about that next week.

If you enjoyed this post, please read more Mistakes Men Don’t Make and join in the conversation.

Image Credit: Pink Sherbet, Flickr

Walt Disney Studios Home Entertainment announced this week the launch of their new Diamond Collection, which they hail as the ‘definitive collection of the Walt Disney Studios most historic and beloved animated classics’. These gems will debut beginning with Snow White and the Seven Dwarfs on October 6 on Blu-ray Hi-Def.

“Walt Disney’s gift of telling captivating and engaging stories was matched only by his passion for presenting them in the most spectacular way,” commented The Walt Disney Studios Chairman Dick Cook.

While Walt may have had the gifts of crafting and presenting stories, the marketing department at Disney has a magical way of making consumers believe they must buy whatever digital format are currently hot right now – right now – or risk losing the chance forever.

Remember the Disney Vault?

As in – buy these VHS tapes while you can, before Snow White or Cinderella or Princess Whoever is waltzed back into the Disney Vault for who knows how long. They said that on all the commercials.

But then we got DVDS…..

And now it’s Blu-Ray …..

From Disney’s press release:

Two titles will be selected each year, including Beauty and the Beast and Fantasia in 2010, as Blu-ray Diamond editions, each title will be released from the Disney vault for a limited time.

And that, children, is the magic of Disney.

Image Credit: Raymond Brown, Flickr

The U.S. Department of Commerce recently released its quarterly data on per capita income (PCI) change, noting an overall drop in 0.5% from 2008 Q4 to 2009 Q1. This is slightly worse than the preceding range, which was registered in at -0.4%. With all the talk about this recession being the “worst since the Great Depression,” these figures may seem to reduce the severity of the recent economic situation; it should be noted this change was preceded by over a decade of unprecedented growth, and the last notable decrease in PCI occurred in 1991. The following graphic illustrates the implications of such change on the U.S.’ various regions, as well as what the average PCI change has meant to individuals living in them.

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Last week I wrote about the importance (or not) of custom web design, particularly for aesthetic reasons. After thinking about visually awful, but fully functional Craigslist, as well as Twitter’s sparse and Blogger-based informational blog, I’m still clearly in the ‘it depends’ camp when it comes to the importantace of sophisticated web design.

(That said, my sites are looking *awesome* – thanks to Eric Hamm.)

Here’s another example of through-the-roof business growth with funky, homemade media. Morris Rosenthal’s video about his book on laptop repair isn’t fancy, but it’s working.

“The video was made in a single take with my FlipCam, no script, and I never experimented with running different videos. If you sit through the video, you’ll see it really is about the book, there’s no “call to action”, promise of enhanced performance, longer life, improved self esteem, or any of that good stuff.”

But in the post he reports that sales are way up. If you check out his blog (linked above) you’ll see that’s not so pretty either.

So I guess at least when it comes to laptop repair, it really is all about the content.

Image Credit: notionscapital, Flickr

Graphic Design Blog has a list of 25 logos with hidden messages.

The SEC accuses former Countrywide CEO Angelo Mozilo of fraud. Who’s next?

Carrotmob’s reverse boycotting could work wonders for the environment, without government intervention.

Young people don’t use Twitter. Is that a problem? Hardly.

The right business idea will thrive in any economy. But no idea is good enough if the numbers don’t make sense. One of the best first things you can do with your business plan is calculate the break even point. It’s one of the most important numbers you’ll ever crunch. Predicting a precise amount of revenue is impossible, and variables are constantly changing, but a break even is a great benchmark for any business.

How to Calculate Break Even

How many products or services do you need to sell in order to stay in the black? You can get a good idea by using simple model to calculate the break even point. This calculation determines the number of units that must be sold in order to recover all costs:

Break Even = Fixed Cost / (Unit Price – Variable Unit Cost)

Expenses

The key to calculating break even is understanding the way certain expenses behave in relation to revenues. In a break even analysis we analyze how expenses change relative to sales. The two types of expenses are:

• Variable expenses change as sales increase. These costs vary the production of each additional unit sold. The cost per unit is expressed as a Variable Unit Cost. Variable expenses might be materials used in production, or commissions on services sold.
• Fixed expenses do not change as sales increase. Fixed expenses are the total of all costs involved in producing even ONE unit of a product. This number doesn’t increase until the volume sold is high enough to require new capital expenditures to meet the demand. Examples of fixed expenses are rent on office or manufacturing plant space and interest on debt.

Some expenses will be a mix of fixed and variable expenses. Salaries might have a fixed component (wages) and a variable component (commission or bonus). When calculating break even, you’d want to separate out these type of expenses into their separate components of fixed or variable cost.

Plugging in the Numbers

You can calculate break even easily on a piece of paper, but if you’re hand with a spreadsheet it’ll be easier to play with the variables.

To get revenue, simple multiply the number of units sold or clients serviced (expected unit sales) by  the unit price (amount charged to customer).

Total Variable Cost is calculated by multiplying the number of units sold by the variable unit cost.

The break even is a nice way to find out how sensitive your business idea is to various changes. You can make all kinds of decisions based on this information. Should you get the larger space or the smaller space? Hire two employees or three? Raise or lower your prices? (Of course that will adjust your expected sales, but that’s another calculation!)

Has calculating a break even ever helped you out in a new business venture? Or do you think it’s a complete waste of time? Let us know in the comments.

Image Credit: Myki Roventine, Flickr

• Interest rates can be lowered to as low as 2 percent and then if necessary, the term of the loan can be extended to a maximum of 40 years.

• Homeowners are eligible for up to $1,000 of principal reduction payments each year for up to five years.

See more here.