Most of the small business and microbusiness clients I work with want to talk to me about Marketing. It may not be in the very first meeting (it usually is, in fact), but eventually they want to get around to it, and usually sooner rather than later.
Everybody seems to believe that Marketing is the key to small business success...at the very least, Marketing is the key factor in driving revenues. Entrepreneurs frequently ask about the best ways to market...as though there are normative answers to those questions. I think it comforts people to believe that there is some direct relationship between marketing dollars spent and total revenues. People want to think that if they spend big money on the right combination of media (print, internet, radio, etc...), they are guaranteed to have a great revenue stream.
Unfortunately, it doesn't work that way.
In Marketing, I can promise you that there are no magic bullets. I can not help you discover that one, super easy, inexpensive key to success...that one small thing that you haven't been doing, but as soon as you start, all your revenue goals will be met.
In fact, it depends on the business, but more often than not, I end up talking to the entrepreneur about the difference between Selling and Marketing. In my opinion, for many if not most small businesses and microbusinesses, Selling is a FAR MORE important success factor than Marketing.
And yes, there is a difference between the two. Selling involves one-to-one communication, whereas Marketing communications are one-to-many. There are some other differences, as well, but many will follow from this basic distinction.
The thing is...Marketing is actually very easy compared to Selling. Lots of entrepreneurs have some instinctive ability to understand Marketing...maybe even design it...certainly to evaluate it. I mean, we ALL see roughly 3000 Marketing messages per day, every day. So it's only natural for us to have certain thoughts about which messages resonate with us and even with others.
So it's tempting to rely on Marketing to drive your revenues. It's tempting to think that we can be creative and we can place a few ads in the yellow pages and the newspaper...and then all we have to do is sit by the phone, wait for it to ring, manage our business, and grow filthy rich.
That's easy.
Selling is hard.
Most of us don't LIKE to sell. We really don't like salespeople, either. Marketing is...well, disengaged. We draw a picture, pay somebody to print it, and we wait. Selling, on the other hand, is a full contact sport. We're not used to it. We're uncomfortable with it.
And I hate to be the one to tell you, but it might...just might...be a critical skill for the success of your small business.
Now, don't get me wrong. There are situations in which Marketing is great. Marketing works if you are trying to build a brand. Marketing works when the purchasing decision is simple. If you're standing in the cereal aisle at the local grocery store and you know you want some cereal that tastes GGGGRRRREEEEEAAAAAAAATTTT!, well, Tony the Tiger has been telling you for years that you want Frosted Flakes.
But again, that's an easy purchasing decision. Do you want this box of cereal or that one? Pick. Many purchasing decisions, however, are more difficult. Mazda can put commercials on teevee every day that say "zoom zoom zoom" but I'm not going to walk around the car lot, put my hand on the hood of a car, and say, "I'll take this one!" A car has to be SOLD. You have to be able to ask: What are the safety features? What are maintenance requirements? Does this thing get good gas mileage? Can I special order it in silver?
In fact, I'd ask you to think long and hard about the purchasing decisions that your clients make. Are they simple purchasing decisions? Or are they pretty complex? It's my experience that MANY small businesses have customers that are facing more difficult purchasing decisions...decisions in which their Selling skills are actually IMPORTANT.
Let's say you are a contractor...let's say you build decks on peoples' houses. Classic microbusiness, right? Well, you can spend a LOT of money on marketing, and you may have clever, catchy ads. The most those ads get you is an opportunity. So let's say Mrs. Jones calls you because you've got a big yellow pages ad...or maybe she finds your web page. So you go to Mrs. Jones's house and you get out of a beat up, crappy looking van...and you've got a couple of tats crawling up out of your collar and creeping up your neck...maybe even "love" and "hate" across your knuckles (not that there is anything wrong with that...I have tats). Maybe you're smoking a cigarette...maybe you show up 5 minutes late or even 15 minutes late.
I don't care how pretty your advertising was. Marketing does NOT win you that job.
But let's say your neighbor or your friend tells Mrs. Jones about me. I don't run ads, but I get referrals. How? Well, Mrs. Jones calls me. I show up ON TIME. I look and sound like a guy that Mrs. Jones feels comfortable with. She feels like I can work on her house...whether or not she is home. Furthermore, I show up on time. I take measurements. Instead of some crappy bid sheet scrawled in crayon or wax pencil, I put my measurements in a nice, readable excel spreadsheet and I produce an easy-to-read bid on paper.
Then I sell. I send Mrs. Jones the bid. I call her two days later and I say, "Mrs. Jones, I just wanted to follow up and make sure you got the bid I sent to you. You did? Great! Do you have any questions I can answer for you?"
If it's your personality, you might even engage in some selling techniques, such as assuming the close ("Would you like to schedule the deck build for the second week in January?") or even simply asking for the job.
Yes, Selling is more difficult. It's full-contact. But the beauty of it is that YOU control the means of follow-up. You control who sees your message, exactly what they see, and when they see it again. With Marketing, there are two main variables, scope and frequency. Personally, I believe frequency is the more important of those two, but that's admittedly subjective and situational. But with Marketing, you can't really control who sees the newspaper or who listens to the radio...not even who opens your direct mail piece. With Selling, though, you deliver the message and you can even devise a series of messages using different media. When you follow up, you can remind people of the messages they have already received.
Plus, you can see by the above example how excellent Selling leads to FAR more referrals...ESPECIALLY if you build it into your process to ASK for referrals.
Marketing frequently begins with a scattershot approach. You may, if you're lucky, have SOME idea of your potential customers...but how do you reach them? Which advertising medium will work? But Selling begins with prospecting. Make a list of the top 30-50 people that would be your best customers or best linking relationships to your customers. What would you say to them in 30 seconds?
Now say it!
For most small businesses, the best way to improve their top line is to focus on Selling.
How do you get better? It's not easy...again, no magic bullets. One website that I refer people to is www.justsell.com
You can learn how to prospect...how to qualify prospects (so you pitch to decision-makers, only)...how to ask open-ended questions...how to overcome objections...how to CLOSE deals. These are the things that drive your top line. Make no mistake about it.
Tuesday, December 8, 2009
Friday, December 19, 2008
Destroy Wall Street
This post is about the logical extension of BUYING locally. It's all about INVESTING locally.
There are a lot of topics related to small business and microbusiness that bring out great passion in me. This post is going to be about one of those things that excites me and scares me....makes me crazy and happy...makes me DREAM of a better future.
I'm ready to destroy the Wall Street model.
Why does Wall Street exist? Anybody in Finance will tell you that Wall Street exists for one simple reason: to allocate capital. The Wall Street model of capital allocation may work just fine for pension funds and institutional investors. But I don't think it works well at all for most investors. Furthermore, it's easy to imagine a system of capital allocation that would work better for small business and microbusiness people.
For years, Americans have been working hard. At the end of the week, we shovel our extra nickels and quarters into our IRA or our 401(k). That fund is administered by some lackey on Wall Street. They rate the investments (based on who they are underwriting, not based on any legitimate merit), they run the funds, they take your extra nickels and quarters and they PAY THEMSELVES FIRST.
Don't kid yourself. They pay themselves first. They ALWAYS pay themselves first.
If there is any money left over, you might squeak out some kind of return from Wall Street...at least, you have a chance if we're in a long period of prosperity. There are also a couple of long periods in the last 40 years without much prosperity. But if things are going well and if your fund managers are making enough to pay themselves, you might have enough money for a comfortable retirement.
To me, this model is for shit. And I'm hopeful that RIGHT NOW the stars are aligning for the first time in 150 years in a way that might completely revolutionize finance as we know it.
Look...we've got computers. We've got internet access. Do we REALLY need fat cats on Wall Street to allocate capital for us? Are they really actually good at it? Or is now the right time to take back some control?
Is now the time that we ALL use self-directed IRA tools and learn how to INVEST LOCALLY?
Couldn't that be the next, most logical extension of the movement to BUY LOCALLY?
Everybody THINKS they have a self-directed IRA. If you can buy any stock or mutual fund you want to buy, you would probably tell me that your IRA is "self-directed." Will your IRA allow you to buy, hold, and manage real estate as an investment? Will your IRA allow you to make a private placement in an LLC? There are some TRULY self-directed IRAs out there. Here are a couple:
Equity Trust
Guidant
Bottom line...why would you want to work your whole life and shovel your money off to Morgan Stanley or Goldman Sachs? You're playing their game. They pick the winners and losers, really, and you just hope they are right...or crooked enough to run a Ponzi scheme long enough for you to cash out.
With a truly SELF directed IRA, YOU can make a private placement in a local business...could be a hot dog cart vendor or a person wanting to start a hair salon or a dog grooming business or a shoe store or any one of a million other potential locally owned and operated businesses. Why invest on Wall Street when YOUR investment could be creating businesses and jobs LOCALLY?
The communities that REALLY understand this concept and get out ahead of it are going to be the communities that succeed over the next decade. Economic development doesn't need the inefficiencies imposed by the Wall Street model of capital allocation.
Get out in YOUR community. You already know the benefits of BUYING locally. Now get to know INVESTING locally and see the resulting benefits grow exponentially. Create an investment club. Run a monthly "pitch" meeting. Get some local placements made. We're working on it here in Lawrence, Kansas.
Can you Destroy Wall Street from where you live?
There are a lot of topics related to small business and microbusiness that bring out great passion in me. This post is going to be about one of those things that excites me and scares me....makes me crazy and happy...makes me DREAM of a better future.
I'm ready to destroy the Wall Street model.
Why does Wall Street exist? Anybody in Finance will tell you that Wall Street exists for one simple reason: to allocate capital. The Wall Street model of capital allocation may work just fine for pension funds and institutional investors. But I don't think it works well at all for most investors. Furthermore, it's easy to imagine a system of capital allocation that would work better for small business and microbusiness people.
For years, Americans have been working hard. At the end of the week, we shovel our extra nickels and quarters into our IRA or our 401(k). That fund is administered by some lackey on Wall Street. They rate the investments (based on who they are underwriting, not based on any legitimate merit), they run the funds, they take your extra nickels and quarters and they PAY THEMSELVES FIRST.
Don't kid yourself. They pay themselves first. They ALWAYS pay themselves first.
If there is any money left over, you might squeak out some kind of return from Wall Street...at least, you have a chance if we're in a long period of prosperity. There are also a couple of long periods in the last 40 years without much prosperity. But if things are going well and if your fund managers are making enough to pay themselves, you might have enough money for a comfortable retirement.
To me, this model is for shit. And I'm hopeful that RIGHT NOW the stars are aligning for the first time in 150 years in a way that might completely revolutionize finance as we know it.
Look...we've got computers. We've got internet access. Do we REALLY need fat cats on Wall Street to allocate capital for us? Are they really actually good at it? Or is now the right time to take back some control?
Is now the time that we ALL use self-directed IRA tools and learn how to INVEST LOCALLY?
Couldn't that be the next, most logical extension of the movement to BUY LOCALLY?
Everybody THINKS they have a self-directed IRA. If you can buy any stock or mutual fund you want to buy, you would probably tell me that your IRA is "self-directed." Will your IRA allow you to buy, hold, and manage real estate as an investment? Will your IRA allow you to make a private placement in an LLC? There are some TRULY self-directed IRAs out there. Here are a couple:
Equity Trust
Guidant
Bottom line...why would you want to work your whole life and shovel your money off to Morgan Stanley or Goldman Sachs? You're playing their game. They pick the winners and losers, really, and you just hope they are right...or crooked enough to run a Ponzi scheme long enough for you to cash out.
With a truly SELF directed IRA, YOU can make a private placement in a local business...could be a hot dog cart vendor or a person wanting to start a hair salon or a dog grooming business or a shoe store or any one of a million other potential locally owned and operated businesses. Why invest on Wall Street when YOUR investment could be creating businesses and jobs LOCALLY?
The communities that REALLY understand this concept and get out ahead of it are going to be the communities that succeed over the next decade. Economic development doesn't need the inefficiencies imposed by the Wall Street model of capital allocation.
Get out in YOUR community. You already know the benefits of BUYING locally. Now get to know INVESTING locally and see the resulting benefits grow exponentially. Create an investment club. Run a monthly "pitch" meeting. Get some local placements made. We're working on it here in Lawrence, Kansas.
Can you Destroy Wall Street from where you live?
Money
That's a catchy title, isn't it? Money.
Before we get back to revenues, let's talk about Money. Remember, Money is the initial investment capital you need to get a venture off the ground. Americans, it seems, have what I call a "Las Vegas mentality" when it comes to start-up capital.
Why do I invoke Las Vegas? Because it's the great, culturally acceptable American lie! What do I mean by that? Well, have you ever had friends or relatives that went to Las Vegas for a trip? Of course you have. And when they come back, they tell you one of three things:
--I broke even
--I won a little bit of money
--Oh, I won about enough to pay for my trip.
Folks, these people are full of shit! Don Trump and Steve Wynn didn't irrigate the desert and build all those buildings to contribute to your kids' college funds! People LOSE money far, far more often than not when they go to Vegas. If they were honest, they'd say, "Well, I should have brought the title to my house with me so I could have refinanced and kept on gambling while I was out there!"
And frequently, people are full of shit when they are discussing start up capital for businesses. People, it's HARD to find Money. Don't let anybody tell you anything different.
As Americans, we want to believe that, gosh darn it, I'm good enough, I'm smart enough, people like me, and I've got a GREAT, bulletproof business idea. The money will somehow BE there, right? I mean, it's America! We never let lack of money get it the way of buying houses and cars we can't afford! We'll come up with the money somehow!!!
Be forewarned. Start-up capital for entrepreneurs, for small businesses and microbusinesses, is hard to find. In all likelihood, you are going to self-finance your venture. DON'T get me started on Matthew Lesko and his bullshit about grants. I'll save that for another post, somewhere down the road.
Money is the number one reason why people fail in their attempt to get started. If you don't have money, be prepared for a very difficult, illiquid market for start-up capital. People toss around terms like "venture capital" and "angel investor" like they were nothin'...like there are people walking the streets with assloads of money that are JUST SEARCHING for business ideas...just like yours!
It's not true. Now, there are creative financing strategies out there and people to help you figure out creative ways to raise money. But it's probably not going to look anything like what you think it might look like.
Before we get back to revenues, let's talk about Money. Remember, Money is the initial investment capital you need to get a venture off the ground. Americans, it seems, have what I call a "Las Vegas mentality" when it comes to start-up capital.
Why do I invoke Las Vegas? Because it's the great, culturally acceptable American lie! What do I mean by that? Well, have you ever had friends or relatives that went to Las Vegas for a trip? Of course you have. And when they come back, they tell you one of three things:
--I broke even
--I won a little bit of money
--Oh, I won about enough to pay for my trip.
Folks, these people are full of shit! Don Trump and Steve Wynn didn't irrigate the desert and build all those buildings to contribute to your kids' college funds! People LOSE money far, far more often than not when they go to Vegas. If they were honest, they'd say, "Well, I should have brought the title to my house with me so I could have refinanced and kept on gambling while I was out there!"
And frequently, people are full of shit when they are discussing start up capital for businesses. People, it's HARD to find Money. Don't let anybody tell you anything different.
As Americans, we want to believe that, gosh darn it, I'm good enough, I'm smart enough, people like me, and I've got a GREAT, bulletproof business idea. The money will somehow BE there, right? I mean, it's America! We never let lack of money get it the way of buying houses and cars we can't afford! We'll come up with the money somehow!!!
Be forewarned. Start-up capital for entrepreneurs, for small businesses and microbusinesses, is hard to find. In all likelihood, you are going to self-finance your venture. DON'T get me started on Matthew Lesko and his bullshit about grants. I'll save that for another post, somewhere down the road.
Money is the number one reason why people fail in their attempt to get started. If you don't have money, be prepared for a very difficult, illiquid market for start-up capital. People toss around terms like "venture capital" and "angel investor" like they were nothin'...like there are people walking the streets with assloads of money that are JUST SEARCHING for business ideas...just like yours!
It's not true. Now, there are creative financing strategies out there and people to help you figure out creative ways to raise money. But it's probably not going to look anything like what you think it might look like.
More on The Three M's...
Let's dig into The Three M's just a little bit more.
I am not going to spend much time on Management for right now. Some small business people are great at management...some are not very good. I work with a lot of technician entrepreneurs. If they can manage their own time, anyway, they can successfully run a microbusiness. At least they might be able to provide self-employment, if not a thriving, employee-hiring, growing business. As their skills improve, they can grow. 'Nuff said.
Market is a tricky little bastard. Most prospective entrepreneurs tend to assume they will have a market. They are passionate about their idea. Their supportive friends and family usually pat them on the back and tell them how great the idea is and how they'll be their first and biggest customer.
I know a lot of bitter small business people...bitter because their friends and family didn't support the actual business the same way the supported the idea.
But maybe they wouldn't be so bitter if they had done actual market research instead of just relying on feedback that is basically biased to be good. If I had a dime for every person who showed up in my office assuming that their product/service was so good it would more or less sell itself, I'd be retired and on the beach right now.
Market is the M most likely to cause an entrepreneur great anxiety in the early days of business. Far, far more often than not, REVENUES for a start-up or early-stage ventures come in significantly BELOW the projections.
We'll talk more about revenues soon. Oh, yes...yes we sure will!
I am not going to spend much time on Management for right now. Some small business people are great at management...some are not very good. I work with a lot of technician entrepreneurs. If they can manage their own time, anyway, they can successfully run a microbusiness. At least they might be able to provide self-employment, if not a thriving, employee-hiring, growing business. As their skills improve, they can grow. 'Nuff said.
Market is a tricky little bastard. Most prospective entrepreneurs tend to assume they will have a market. They are passionate about their idea. Their supportive friends and family usually pat them on the back and tell them how great the idea is and how they'll be their first and biggest customer.
I know a lot of bitter small business people...bitter because their friends and family didn't support the actual business the same way the supported the idea.
But maybe they wouldn't be so bitter if they had done actual market research instead of just relying on feedback that is basically biased to be good. If I had a dime for every person who showed up in my office assuming that their product/service was so good it would more or less sell itself, I'd be retired and on the beach right now.
Market is the M most likely to cause an entrepreneur great anxiety in the early days of business. Far, far more often than not, REVENUES for a start-up or early-stage ventures come in significantly BELOW the projections.
We'll talk more about revenues soon. Oh, yes...yes we sure will!
Thursday, December 18, 2008
The Three M's
In this post, my goal is to share with you, the reader, the most critical things I learned in business school. Although my undergraduate work was in Philosophy and Russian, I did go back to school for my MBA.
The first important lesson I got in the MBA program was The Rule of 72. 'Nuff said.
The second important lesson was The Three M's. The Three M's are the critical success factors for all businesses. As important as The Three M's are for big business, they are even more critical for small businesses and microbusinesses.
What are those critical success factors?
Management: can you manage the enterprise or put together a team that can?
Market: can you sell this product/service to enough people (and for more than it costs you to provide it) to make it worth your while?
Money: can you get the required initial capital investment to get the business up and running?
Small businesses and microbusinesses need to understand these critical success factors and how they apply to their business. Frequently, we are working with technician/entrepreneurs who are doing all their own actual WORK. They might even be a little overwhelmed. That's why The Three M's are so important--if the things you are working on are NOT related to one of the critical success factors, you must ask yourself whether or not it is worthy of your time. Frequently, it's not.
Next up: more on The Three M's. We'll talk a little bit more about what each means.
The first important lesson I got in the MBA program was The Rule of 72. 'Nuff said.
The second important lesson was The Three M's. The Three M's are the critical success factors for all businesses. As important as The Three M's are for big business, they are even more critical for small businesses and microbusinesses.
What are those critical success factors?
Management: can you manage the enterprise or put together a team that can?
Market: can you sell this product/service to enough people (and for more than it costs you to provide it) to make it worth your while?
Money: can you get the required initial capital investment to get the business up and running?
Small businesses and microbusinesses need to understand these critical success factors and how they apply to their business. Frequently, we are working with technician/entrepreneurs who are doing all their own actual WORK. They might even be a little overwhelmed. That's why The Three M's are so important--if the things you are working on are NOT related to one of the critical success factors, you must ask yourself whether or not it is worthy of your time. Frequently, it's not.
Next up: more on The Three M's. We'll talk a little bit more about what each means.
Wednesday, December 17, 2008
Where are all the small businesses and microbusinesses?
I'll tell you where they are. They are too busy running their damn business to spend all day redirecting you from their Twitter feed.
Who am I looking for? I'm looking for hairstylists, plumbers, landscapers, owners of housekeeping companies, moving companies, roofing companies, and insurance agencies. I don't see too many of them posting on Twitter. They are busy generating revenues the old-fashioned way: answering the phone, greeting people, and learning how to ASK for business face-to-face.
These are the people I work with every day. Seriously, they do not have time to read the same formulaic bullshit that starts out:
"NINE TIPS for..." (and of course they promise you that your whole business will be revolutionized if you just sprinkle the fairy dust on your keyboard)
Running a small business/microbusiness is HARD WORK. There are no shortcuts. There are no easy tricks or quick fixes. When people act otherwise, it pisses me off.
Next post: Do you know what The Three M's are? I will be giving away half of what I learned in the MBA program in my next post.
Who am I looking for? I'm looking for hairstylists, plumbers, landscapers, owners of housekeeping companies, moving companies, roofing companies, and insurance agencies. I don't see too many of them posting on Twitter. They are busy generating revenues the old-fashioned way: answering the phone, greeting people, and learning how to ASK for business face-to-face.
These are the people I work with every day. Seriously, they do not have time to read the same formulaic bullshit that starts out:
"NINE TIPS for..." (and of course they promise you that your whole business will be revolutionized if you just sprinkle the fairy dust on your keyboard)
Running a small business/microbusiness is HARD WORK. There are no shortcuts. There are no easy tricks or quick fixes. When people act otherwise, it pisses me off.
Next post: Do you know what The Three M's are? I will be giving away half of what I learned in the MBA program in my next post.
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