Why do you want to start a business?

I have the privilege to share my experience with many entrepreneurs, small business people and some just thinking of starting a business. My first question, put to them in various ways, is always...why?  The answer is not easily derived and is often buried deeply in one's psyche.

New businesses are always failures when the sole or main reason for their existence is "to make money".  All successful businesses I have been associated with are successful because they meet a need in their marketplace sufficient to return a profit and thus continue in business.  Every business I have been associated with that has failed has done so because they lost track of their importance to their market.

The answer to why you are in business should always be centered on your targeted customers. You must understand their need for your product/service and be passionate about your company's ability to provide such. In support of that basic mission must be realistic plans to provide those needed products and services; thus your marketing strategy and financial plan are your highest priorities and must be kept current.  Too many times, I have seen good business concepts fail because the entrepreneur became embroiled in daily details and lost sight of the company's performance to plan or the plan's relevance to its target market.

Don't Neglect In-store Signage to Promote Social Media

We have been fielding many important questions from our clients and workshop participants from the small local business community which lead me to reiterate; social media marketing is not a strategy, it is a tactic within the context of your marketing strategy.  The only thing new about social media is the technology.  It is the classic relationship building, targeted marketing strategy that has worked since the first merchant hung an OPEN sign in the window.

Social media enables today's merchant to inform and engage on a more directed, efficient and broader platform, but it does not mean you can get lazy with other effective marketing tactics.  I am thinking, specifically, of in-store merchandising and signage.  Imagine reading a sale ad, going to the store in question and not seeing any indication that a promotion is on, most would-have-been buyers will turnaround and walk out.  The same applies to social media promotion.  You should have signs in your establishment that announce your social media presence and why a customer should follow you.  Perhaps it's follower specials, product information or limited quantities of popular products just in, etc.

If you want people to follow you, you must give them a reason.   And if you are going to be successful, you must learn from your followers, more on that later.

MediaPost Publications Generational Mix Reveals Shopping Similarities and Differences 03/18/2010

MediaPost Publications Generational Mix Reveals Shopping Similarities and Differences 03/18/2010

It is easy to find information on marketing to generational segments. This article points out shopping similarities in generational segments. Practically, this means we should be looking at buyer characteristics other than age. Perhaps location, lifestyle, etc are more efficient targets?

Richmond competing for Google’s ultra high speed broadband : Richmond BizSense

Richmond competing for Google’s ultra high speed broadband : Richmond BizSensee

Charlottesville is in this race, as well. Cvillians, get behind your city and vote!

http://www.google.com/appserve/fiberrfi/public/options

Success is built on relationships

I conduct seminars throughout the year on various aspects of sales and marketing.  This year is proving to be very rewarding because many of the participants are reporting increased sales and traffic after having implemented our suggestions.  We try to make our seminars relevant to the participants  by dealing with actual situations; however, all the successes are the result of following a simple formula.  First, define your ideal customer.  Second, market and promote where they are and directly to them and third, build relationships with them.


Alan Weiss (contratianconsulting.com) gave a personal example in an email I received last week:

"Years ago, my wife and I moved to a new town with a check for $100,000 in our hands, which represented the difference between the old, smaller house we sold in high-priced New Jersey and the new, larger house we purchased in low-priced Rhode Island. We walked into four banks on Main Street (yes, it is "Main Street") and three of the four branch managers pointed to the rates for various investments, cited the bank's hours, and explained about various bank features. All three of them could have been working for the same place.


The fourth branch manager, at Fleet Bank, had the same rates, hours, and services, too, but she asked us about our objectives for moving to the area, how old our children were, what we would like to accomplish, what kind of work we did, and so on, and all over a cup of coffee. We left our check there, and over a decade later I'm a private banking client of Fleet, having made significant investments and loans with the institution."


Do not be challenged by "sales" it is simply getting to know your customer and building a business relationship.  If you do it right you will have your competition on the run.  By using direct marketing tactics your customer will come to you when he/she is ready to buy.

Secret to success: know your customer

All the advertising, marketing and sales calls in the world are worthless if in the end you have no intelligence about your buyers. In our connected world consumers make buying decisions based on their needs, not yours. They do not care a whit about your product/service unless it helps them accomplish their goals.

I grew up in a small farm-to-market community (circa 1950-1960) in which my family owned and operated a small business. We sold coal, hardware, feed, lumber and whatever else it took to support our sustainable farming community. On Sunday's, Dad would take us on a drive through the country-side and point out who lived on every farm and what their principle cash crop was (cattle, hogs, poultry, grain, etc.). When I was young, I though it was cool that my dad new so many people. When older, I realized how instrumental my dad's "customer intelligence" was in his business success.

One of the most exciting things about owning a small business, today, is the ease and reach with which we can gather insights about our buyers and communicate with them one-on-one. If you are not using your website, blog and social net to gain customer insights that encourage customers to buy from you, you are at a competitive disadvantage.

Addressing New Normal for Small Business

At year end 2009 much was made about our “new normal” economic conditions. I read several musings of why some small businesses failed and why some succeeded. I read many statistics on what consumers were buying and what they were willing to pay for the products and services they purchase. It all put me to thinking about the decades of 1950s and 60s which was a boon for small business development. So what were small businesses like back then?

Some well known big businesses got their real start in the 1950 and 60s. McDonald’s Hamburgers, Baskin-Robbins Ice Cream are well known, The Schwan Food Co. perhaps less so but impressive none the less. Also, Hy-Vee Food Stores with “a friendly smile in every aisle was formed from Hyde-Vrendeburg, Inc in 1963. All across the USA scores of local butchers, bakers, candlestick makers, hardware stores, farmer-owned coops, banks, law and medical practices were formed.

I grew up and entered into business in this era and recall some key elements of small businesses then that should lead to success in our “new normal” environment.

Focus on the customer. This is an all-encompassing principle, not limited to being polite when you are in contact with your customer. Whatever business idea you have, you are not in business until you have a paying customer. Therefore, your business idea must come from customers. When inspiration strikes, when you have that Ah ha moment, make sure it is generated by the wants and needs of people who are willing to pay you for it. Modern technology makes customer focus a little easier because of open access to information and ease of communication. Continually engage your customer, look to them for new product and service inspiration. Build a knowledge based relationship. One thing no competitor can take from you is your knowledge of your customers. Provide those services that assist in selling your products and make your customers life easier.

Control Costs, Minimize Risk. Sales come first so, only incur those costs necessary to complete the sales you expect to make and realize your expectations are often too high. Be frugal and track the money that flows through your business like water in the Sahara. Also, remember there is a time value to money. Set time limits on all your finances and budgets. If you are not meeting your expectations, make adjustments immediately. Do not become emotionally attached to any aspect of your business. Utilize a peer advisory group, outside board of directors or a mentor to minimize risk through best practices learned by others.

Become as involved in your community as you are in your business. All business is inherently local. Buy local, employ local, sell local and contribute local whenever you can. Your customers live in the community in which you do business. It is your responsibility to contribute to their vitality so they can buy your products and services. Join local service and economic clubs; be active in your local church, synagogue or mosque. I once had a customer say to me; “Dillon, I came in here because of you but, I will be back because of them” (pointing to my employees), which brings me to the human component.

Your employees are not employees, they are co-workers; they are partners in your business. Co-workers deserve to know and understand how important they are and what their contribution means to your business. Train then well, cross train them as back-ups for other co-workers and share relevant company information so they understand and appreciate their contribution or lack thereof. Also, pay for performance. Adopt a bonus structure relevant to each class of co-worker. Remember, your co-workers are members of your community and are ambassadors for your business.

Sales and Marketing Strategy. Face it, not everyone is a potential customer. Concentrate your sales and marketing on those who are most likely to buy. Know your demographics and psychographics. Track everything you do, if it can’t be tracked, don’t do it. Adopt a consistent brand strategy and reach out to potential customers in direct ways. Utilize technology; website, landing pages, blogs, newsletters, social media, etc. DO NOT DISCOUNT, you will end up discounting your brand reputation. Encourage loyalty and show them the value of loyalty. Think about providing customer financing if you are in a big ticket enterprise, be creative, but not stupid.

Financing Your Business. In the new normal, as in the 50s – 60s, credit may be hard to get and at any rate it is expensive. Borrowers are selling you money and that has a cost that adds to your expenses, avoid it when possible. Write a business plan that makes sense to a disinterested third party hand take it to all your friends and relatives for investment. Look for potential partners who have skills that will enhance the business. Consider forming a workers coop if appropriate. Seek partners in businesses that are key to your success such as suppliers, service providers, etc. Make sure your pricing strategy provides capital for growth. Do not launch until you have 2x the capital available to meet your expectations. Your expectations will be wrong.

I could go on, but I am only trying to provide basics. Details change depending on the particular situation. The basic principle is to build a sustainable business model that is lean, green, and profitable and an asset to your community.