Fast growth strategy for Startup Company
Where do you start? Finding a strategy that catapults your venture from 0 to 100 miles per hour has always been the first place most entrepreneurs get stuck. When you start to look at possible tactics to launch your fast growth, begin by honestly and comprehensively assessing your resources.
- How much capital do you have?
- What kind of manpower can you employ? (or wrangle from family and friends?)
- What are your strengths and weaknesses? Who do you need to hire or what do you need to learn to help your infrastructure handle the growth?
- Who else has done what you want to, and what can you learn from them?
- What is my competition doing? What are they failing to see that I can?
Next, ask yourself what your goals are…and what objectives do you need to reach in order to achieve them. The more clearly defined you are the easier it will be to get what you want.
The answer to these questions will give you your action plan. Look for areas where you can capitalize on your strengths or leverage your assets. If you have it, throw money at your weaknesses or resolve them through your own initiative. Most of all, design your strategy around a pre-existing business model that is scalable for growth. Most initiatives fail because of the mistaken assumption that the business has to be new to be innovative. The older I get the more I realize it’s all been done before, but it’s just not being done by me right now.
What to do when you get stuck? The term “paralysis analysis” often applies, because you get caught in the details, instead of being able to evaluate the whole picture. Don’t lose sight of the 30,000 foot view. Worry about whether you have evaluated your target market correctly and if you can really push your sales. Clients often concentrate too much on the operations in the beginning. At least 80% of your time should be spent selling even before you are ready to open your doors. You will learn more than you wanted to know about your assumptions being right or wrong from your sales efforts. If no one’s buying (or even interested), change your strategy immediately.
How can you look at the problem to find a solution? Talking to people about one more book about to be published will make a lot of eyes glaze over, even if the subject matter is of interest. I think it’s because reading a book is such a personal experience. So, we had to take a look at what else could be done with the company’s largest asset (not the book…the Author!)
We realized the author’s knowledge and credentialed experience are a perfect platform for teaching his material and certifying people as trainers of it. Therefore, we positioned the startup company for a joint venture to catapult growth. We sought companies that had great experience in creating, managing, and selling training programs. We are currently negotiating with a letter of intent from our first choice of Partner Company for the client.
This will enable the client to reach maximum revenue levels in the first few years, reaching their goals of a million books sold and 5 million in revenue.
Gas prices keep gouging profits?
So, what’s a small business owner to do when gas prices keep gouging our profits? First, recognize that relief will probably not be swift. While voters scream for the government to do something about prices at the pump, there is very little to be done. Realize that while the price of oil is up tenfold since 1998 , the price of gas is only up $1 to $4 a gallon. (By the way, our prices are nothing compared to other countries - see chart ).
Since the cost of oil is 75% of our price at the pump, there is really no way to change the current trajectory. We don’t control the price of oil itself in our freemarket economy. But, you as a business owner can control how efficiently you run your operations and how you can offset the cost by your choices.
First, examine your supply chain and delivery methods. These are the most tightly linked to rising fuel prices. Can you examine your logistics and find ways to reduce shipping and freight costs? (Are you over leveraging FEDEX?) One client reduced costs by installing a priority system for shipping documents, offsetting the FEDEX shipments with Priority Post.
What steps can you take to reduce waste? Can you centralize your distribution? Another client switched fulfillment houses so that drop shipped products could be sent to both coasts using UPS 3-day ground and restricted customer shipments use of overnight delivery.
Can you switch to bio-diesel? Perhaps it’s time to examine alternate fuels.
These are just a few thoughts. You will, as the small business owner, need to be proactive instead of reactive. Take the time to evaluate your operation and see where your Profit and Loss Statement points to places you could tighten up.
Of course, you probably feel pressured to pass on the increasing costs to your customers. How and when you do this will be critical to whether or not you retain your customers in this price sensitive economy. Make certain to build your pricing model to reflect changes that customers can handle. Even though it will be tough to create more profits right now, continuing with a customer-centric policy will pay off, creating real profits long-term.
If you are wondering how to make these changes and determine your pricing model, you can use a combination of CRM, Market Research, and a matrix to reveal various pricing strategies. (Product Line, Optional Product, Captive Product, Promotional, ect.) Here is a great pricing article .
Outsourcing Tip: How to handle a freelancer when the job isn’t delivered.
What do you do when your freelancer doesn’t deliver the project as promised? Well, I got asked this question just this morning. A client called with a dilemma. She hired an acquaintance as a graphic designer to create a logo and brochure for her computer repair company. She didn’t like what she got and the designer couldn’t understand her feedback. Now she’s stuck with unusable materials and a bill she doesn’t want to pay.
First, I asked her what recourse she had in her contract with the designer. Her response was typical. It was a verbal agreement. Well, that was her first mistake. I informed her that had she used a contract that outlined what to do in this case, with specific clauses that address the ramifications of an unfulfilled contract ( she didn’t provide a usable deliverable), the resolution would be clear because the path of action would already be outlined in the contract.
As it is now, she has to try to negotiate with the designer who is demanding payment in full. My choice? Give the designer half for her time and re-outsource the project.
TIP: Never use a verbal contract. Always protect yourself from contingencies. Use the right clauses in your contract so that you don’t have to guess what to do next.
Sources:
Work for Hire Contracts - Gives you a boilerplate contract you can modify.
Outsourcing Secrets Guidebook - Has a whole section on what clauses/sections you should include in your contracts.
Penetrating Target Markets:Would You Use a Shotgun to Catch a Butterfly?
If you have a small business, gaining entry into your target markets can be like capturing a butterfly. What starts out as a methodical step-by-step attempt looks like a crazy dance - with you chasing a target that seems to have no predictable traits at all. In fact, it seems quite random.
And because marketing may not be your specialty, you wind up taking a more random approach than you might want to. In fact, your company’s marketing plan begins to be reactive rather than proactive.
This is quite like using a shotgun to catch a butterfly. It’s the wrong tool for the job, not to mention the wrong approach overall. But, I see this time and again as symptomatic of what plagues small business marketing. There is a lack of strategic planning. The results are missed opportunities and wasted money.
Don’t use a “shotgun approach”. There is an easier way. Use a marketing plan. One developed with your mission, goals, operational capacity, and budget in mind. It doesn’t have to be long. It can be 1 or 2 pages. But DO IT! Set down your ideas, get them organized, draw up a simple budget and go from there.
Why waste money, time, and valuable energy chasing a butterfly with a shotgun? Your marketing plan is your safety net. In the world of small business marketing, you need to “net” as many sales as you can. A solid marketing plan is the foundation you need.
Sales Negotiation: How to Turn an Unhappy Customer into an Evangelist
Are you getting in the way of your own success?
Have you ever had a difficult customer? Someone who is deeply dissatisfied with your product or service?
At some point, every company runs into this problem. As Abraham Lincoln said, “you cannot please all of the people all of the time.”
How you choose to respond to this problem as an entrepreneur is a key determination in your success. Every company must recognize the value of the customer already sold. If you are always seeking new customers and just leave your old customers to languish, you will lose real and potential profits.
As an example, I know of a new boat manufacturer. This company is only two years old. One of their first-ever customers buys a boat. He is excited and decides to customize the boat with a few other pieces of equipment to make it an even better fishing boat. BUT, the additional equipment didn’t work.
Strangely or not, he blamed the boat manufacturer - even though he had added the equipment himself. The customer was so frustrated! Even though the boat manufacturer had no control over what was added after the sale, the customer decided that the equipment should have been able to fit and function properly if the boat had been designed correctly.
He decided to sell the boat and told everyone he knew how much he hated the boat. Of course, this created a huge problem for the boat manufacturer. Can you imagine trying to sell someone in town a new boat when the guy down the street says it sucks and wants to dump it for ½ of what a new one costs?
This is typical. Customers will blame the product or service, even if they used it improperly.
To my surprise, the manufacturer let the problem fester like an open wound. Instead of just doing WHATEVER he could to fix the problem, whether he had created it or not, he just ignored what seemed to be a situation he felt he hadn’t created.
Well, it’s VERY HARD to sell against negative testimonials. The manufacturer should have recognized this - especially since he is selling to a niche market. No matter how hard his Sales Director worked, his sales slowed, of course, as the situation hurt his reputation.
But the worst part – the company owner didn’t trust any one of his employees to deal with the problem. If you disempower your workforce, you create an unproductive and inefficient team. No one can actually problem solve; the owner becomes tired of putting out fires all day and wonders why he or she can’t get anything done.
Perhaps, in reality, an employee would be best to handle this type of situation because they are a step away from taking it too personally. Empowering everyone in the company to resolve customer issues creates a customer centric culture, a leading practice among successful companies.
In this case, the sales director finally took initiative and negotiated a win/win with the customer. His approach was an interesting one, so take note! He acknowledged the customer’s unhappiness and made it clear that his company would fix the problem even though they had not created it.
When the customer was satisfied, he confronted him about his negative and slanderous comments around town. The customer, who had thought he needed to be a bully to get his way, immediately backed down and the Sales Director elicited a promise from him to stop trying to sabotage the company.
That is excellent negotiating. Best of all, the customer is now an evangelist and sings the company’s praises. This is common with customers who are vocal in the first place. They are going to sing one way or another so make sure it’s positive.
Recognize and use your company’s best assets, your employees! If you are not confident about their abilities, then why did you hire them? Have you used a performance review to help both you and your employees see where they can grow and take on more responsibility?
Sometimes in business an entrepreneur needs to recognize when to get out of their own way. Remember, run your business, don’t let your business run you.
Ad Copy - Write a Money Maker
Let’s discuss how to define and develop your target markets. Once you have identified their characteristics, take the next step and tell them why they should be your customer.
So this month, look at the do’s and don’ts of marketing communications. These communications range from newsletters, web copy, and brochures, to TV, radio or printed advertisements, even your business card!
Why is this important? Because, the largest expense in your budget should be advertising. (Coca-Cola spends four times as much money on advertising than any other expense). Even if you outsource your advertising development to an ad agency, you should still know the difference between great and poor marketing communications. In the end, you must approve all marketing communications of your company! A great ad will make you money while a poor ad will not only cost you, but can drive customers away as well.
How to Write a Moneymaking Ad
Successful print advertisements have certain characteristics. They are readable, informative, clear, honest, simple, on strategy, motivating, competitive, believable and specific. Always keep these 10 qualities in mind when you are reviewing your marketing communications, especially printed advertisements.
Here are three golden rules:
- Body copy is set in serif type.
- Copy is set in three columns, 35 to 45 characters wide.
- Copy is set in black type on a white background.
You can get creative and break rules, but it is best only to do so in a campaign when it serves a particular purpose - like highlighting a visual feature of your product through poignant illustration.
When it comes to combining art with copy, here are 10 mistakes to avoid.
Don’t let the art….
- overpower the copy
- overpower the idea
- overpower the headline
- fail to advance the sale
- fail to grab the casual reader or viewer
- fail to get the patch or spot noticed
- fail to be different
- be created in a hurry
- fight the products identity
- most of all, don’t let the art dominate the ad
Create sales by communicating strong ideas. These ideas often reach your potential target market via visual marketing communications. Good print advertising emphasizes the words, making them easy to read, so your message hits its mark.
If you feel under-whelmed by your advertising, your potential customers probably do too.
Recession Proof Your Small Business: Steps to Strengthen Your Strategic Position
A recession doesn’t have to cost your business. As a matter of fact, smart business owners use recessions as a time to strategically position themselves for economic rebound.
Unfortunately, most small business owners see recessions as a time to make across-the-board cuts. They shrink payroll, hoard cash, delay product development and simply try to wait through the tough times.
Great business leaders, by contrast, address the recession but they also prepare for the rebound. They use the recession to position their company with a competitive advantage. Looking at the 1990-91 economic downturn illustrates how Dell computers used the recession to perfect its telephone ordering and “on demand” supply chain system. The company was able to accelerate its profits and dominate the market when the recession ended.
Don’t make the mistake of trimming costs, and cutting resources in every aspect of your business. For every one thing that you trim, invest twice. A recession is the best time to buy or build new assets.
It’s easier to reconfigure your company in a slow down. You’re not growing at a breakneck speed. Your employees are giving you their undivided attention, and they understand that the company must adjust to a new environment.
Here are some steps to take that will help you ‘recession proof’ your company:
Remember that cash is king. Managing your cash flow is critical to positioning your company to have the assets it needs in order to survive and thrive in a recession. Use your financial management skills to project your cash needs and create budgets to monitor your spending. Using projections and budgets are critical to successful financial management during a recession.
Speed up your receivables. The faster you get paid, the better control you have of your cash. Give your customers incentives to pay faster. If they normally get 30 day terms offer them 2% off of the invoice if they will pay in 10 days. (This is called 2% Net 10). Also, use the time to create a receivables system to keep on top of aging invoices if you don’t have one already. The squeaky wheel gets paid faster.
Review your overhead expenses and try to cut waste. Examine internal systems and see what could be more efficient. Empower your employees to set budgets and remain within by giving them incentives to do so.
Examine inventory levels. Are you overstocked or carrying obsolete inventory? Reduce the stock levels of your best items and dump your obsolete inventory for the most cash you can.
Watch your profit and loss statements closely every week, every day if necessary. Double check your customer’s credit ratings. Make sure that you are not selling to people who will have trouble paying you. It’s better to have an angry customer than an unpaid invoice. Also, watch your vendor’s credit ratings. If they are having trouble, you may want to research new vendors before they put your business in jeopardy.
Effectively manage your assets in your financials. Are assets listed on registers, but no longer in existence? You can improve your short-term cash flow if you track your production oriented assets and fixed assets tightly. Increased insurance premiums, property taxes and neglected depreciation are several ways that assets can cost them much needed cash.
To relieve pressure on cash flow, ask your vendors to extend your credit.
Double your effort in sales and marketing. Research effective guerrilla marketing tactics. You don’t have to spend a lot of money to be effective. You just have to be innovative.
Become indispensable to your best customers - don’t compromise on quality or service. You need repeat sales to survive. Remember the 80/20 rule because it’s never truer than during a recession.
Finally, get everyone in the business involved in your business strategy. Be open to new ideas and accept constructive criticism. Your employees can be your best ally, because they can see things you can’t. Entertain customer focus groups, network among your peers or start a mastermind group targeted at your industry. Involve people because they will see things from a different perspective and have new ideas.
If you need capital during a recession and you are finding it difficult to get funding from a bank, see my report “15 Ways to Get Alternate Funding If You Can’t Get a Bank Loan” on my website.
New Year’s Checklist
As we head into a new year, the growth of our businesses will be the focus of strategy and planning sessions for at least the first quarter. Some of you early birds will have already begun this process in December, but for others the planning starts this month.
In my experience, strategic growth springs from the deliberate interplay of 3 business segments: the ability to increase income, the management of operational efficiencies, and great leadership to drive both the aforementioned.
Increasing income is more than just looking to broaden your current market. Other factors such as making each sale more profitable, cultivating more profitable vendor partnerships, as well as targeting unusual market opportunities (blue ocean strategies) are key components of planning for more profits.
Of course if you pour more water (income) into a bucket (your company) that already has a hole in the bottom, it’s never going to fill (full of more profits). You need to look for the holes in your operation that are draining your profits. Cut inefficiencies and waste.
Two areas to examine right away are how well you are using your existing financial and human resources. Watching how the money flows through your company will give you great insight so you can stop wasting it. Use those weekly financial meetings and reports to dig through your company’s financial well being and make your money work for you! That’s working smarter, not harder.
Of course if your employees are not performing to the best of their abilities, they are wasting company profits too. So make sure you have those performance reviews ready and know how you are going to motivate them this year through training and incentives to help them achieve their goals.
Finally, without great leadership, your company growth will not happen. Inspiring others to carry out your company vision takes skill and planning. Knowing how, when and what you are going to communicate to your employees is critical to gaining consensus, and thus company wide alignment. The alignment of ALL efforts makes the difference between a good year and a great year. One person pushing a boulder uphill cannot compete with the team effort of twenty.
Solid strategy comes from making a sound assessment of your current business practices. With that in mind let’s review a New Year’s Checklist.
New Year’s Checklist
Grow Income
- By Individual Sale. Are you making the most profit you can with each sale?
- New Internal Markets. Have you explored the entire potential of your current market?
- New External Markets. How many can you list?
- Alliances. How can you make profitable vendor or customer alliances this year?
Cut Waste
- Budgets. Are you using them?! Effectively???
- Assets. Have you reviewed your current and long term assets for potential reassignment? Are there ways you could get your money to work for you?
- Cash Flow Management. Growth takes money. Do your financial projections reveal weak spots? Don’t let yourself get caught in a cash crunch. Last minute loans can be expensive.
- Employees. Do your employees have clear goals and have you empowered them to achieve them?
- Operational Waste. How will you seek out and mitigate wasteful activities, systems, and behaviors?
Leadership
- Review mission and vision company statements. Do they state your vision clearly?
- Company wide training. What subjects and what kinds of training will you offer this year?
- Company events. How are you going to connect to your employees, customers and vendors this year as a leader?
These are the general areas you want to examine now. Remember, every business has its blind spots, so try to be as objective as possible. You don’t have to get lost in the details but at least try to flesh out a strategy and a simple plan for growth. It’s the first step to working smarter, not harder.
Remember, you have unlimited growth potential. Have a successful 2008!
Ten Reasons Why Your Company Needs a Customer Relationship Management Strategy
1. Profit more from every sale . Why do you keep wasting unrealized opportunities with your customers? You could be making more profits from each sale by managing the relationship right. Cut your costs by managing each account’s productivity.
2. Sell more to existing customers! It’s back to the 80/20 rule. Use it to your advantage and gain more from your current customers. Are you cross-selling, upselling and reselling enough?
3. Grow your gross sales faster. Once you begin to truly dialogue with the RIGHT customer for you, your gross sales will skyrocket. Narrow and deep is better than wide and shallow.
4. Shorten the repeat sales cycle. Get more sales faster because you know how, when and where your customer wants it. When was the last time you truly ANTICIPATED what a customer would need?
5. Cut the cost of acquiring a new customer in half. Spend less on wasted marketing. Use those marketing dollars to strengthen your customer relationships.
6. Get more referrals from current customers! The best advertising is the testimonial of a current customer. It’s cheap and most effective. Are you asking for them?
7. Find new sales growth strategies. Your customers can show you where your growth potential is AND be ready to buy when you launch.
8. Stop wasting money on ineffective sales and customer service efforts. If you are out of touch, then your customers probably won’t care what you have to say when you say it because it’s not what they want to hear and doesn’t address their needs.
9. Retain your customers. Why are you losing your goldmine? Put together some customer retention ideas. After all what have you done to appreciate them lately?
10. Stop wasting resources on less profitable/no profit customers. Not all customers are good customers. At some point you have to make a decision who you can serve the best. Analyze your sales data. Talk to your customers. Those relationships that are most profitable need your time and commitment to keep growing. The best part is as they grow, so do your profits.
Gain true competitive advantage. Start structuring your company to make more profitable sales while spending less money. True growth comes from understanding your customer. Find the time to set up a CRM strategy. It’s worth it.
Please take a minute and forward this to another small business owner you know who could use advice, tips and tactics to grow their business too. They will appreciate it.
Looking at How the Credit Crunch will Affect Small Businesses
Already we are seeing the results of the demise of the mortgage market due to the sub prime debacle. Lending banks have severely tightened lending criteria as their asset bases erode and the financial sector comes under huge pressure. Wall Street does not like to see 2.5 billion dollar write offs from Morgan Stanley and the like.
John Maudlin said in his November 9th Newsletter “Data released in the past few months, and again this week, have shown that banks and other lenders are tightening their standards for all sorts of loans. And it is not just that they are becoming more like an old-fashioned banker who actually wanted to know that he could get his money back”. (You can read more John Maudlin www.frontlinethoughts.com/gateway.asp )
Start up companies and smaller operations with limited assets are the ones who have benefited over the last five years of easy money. Some companies were even funded through second mortgages because they were cheaper and easier to get than an SBA LOC. For all but a lucky few, that option is now gone.
I recently completed a very solid business plan for a client that was denied funding. At first I was surprised (that they were denied). But given the external factors that now affect the lending market, the response from the bank will be a common one. No more easy money.
So now everyone will have to get creative to get financed. Here are my top two creative ways of finding the money when you are a small business in need:
Friends and Family –
Sometimes people look at me and say “but my friends and family don’t have any money.” Well, neither did mine when I wanted any for my business. But a funny thing about friends and family - when I approached them with a solid plan and a sample product they could see, feel, and admire, suddenly they were open to the idea. But here’s the trick: I didn’t ask any ONE person for the whole amount. I took seven different loans to get $25,000 and paid them back according to need.
So my friend who lent me her last $5000 got hers paid back first, and my grandfather, who was retired and didn’t need his $5000 right away, was willing to wait. Everyone knew the payment schedule and signed their acceptance of it. When I needed the last $5000 and no ONE person had it, I had two friends who even lent me $2500 each. That’s how you can put money together creatively.
Merchant Account Advance –
Almost every business now accepts credit cards. Not only have they proven in studies to raise individual ticket sales (people will charge more than they will pay with cash), merchant accounts allow for greater flexibility for the small merchant. You don’t have to be open at 2 am to make a sale - your website can do it for you.
So now you can get money in advance of future sales. Merchant account advances are a relatively new way for merchants to access cash. Business owners get the cash they need quickly. Instead of having to worry about large monthly payments, the loan is repaid from a small percentage of each credit card sale the business makes.
There are qualifications. But if you are open for business and have consistent credit card sales this is a great avenue to explore.
My special report “15 Ways to Get Money for Your Small Business” can be found at my website www.soaring-phoenix.com . In it, I list several creative financing options that you can explore for your small business.
