Written by Dave Lavinsky on Tuesday, April 23, 2013
Crowdfunding is getting a group of regular individuals to collectively fund your venture. And when I say "regular individuals" I am contrasting them to professional investors and lenders like banks, venture capitalists and angel investors.
Clearly, Crowdfunding gives the key benefit of providing funding to your business. But, I have found other key benefits. Below I list those benefits as well as 5 keys to successfully raising Crowdfunding.
5 Benefits of Crowdfunding
1. Market Research
Pre-selling your product is incredible market research. If people buy it, then your marketing message is on target and there is a real need for your product or service.
If people don't buy it, then maybe a market doesn't exist, or you need to adjust your marketing message or target market.
In either case, getting this market research BEFORE raising or trying to raise a ton of money is invaluable. It allows you to test whether you have a winner before going through this process.
2. Built-in Customer Base
When you get others to fund you via Crowdfunding, you build a customer base. If you provide a good product or service, these customers will be prone to buy more products and services from you (the same products, upgrades and/or new products you develop) in the future.
3. Case Studies/Testimonials
Showing case studies and testimonials from customers is a great way to convince new customers to buy from you. And you can get these case studies and testimonials from those customers you gain from Crowdfunding (assuming you delivered them the product/service and they liked it).
4. Word of Mouth Marketing
People who fund your company will tell their friends about it. Particularly if you make them feel like founders/initial investors (which you can easily do via email and on your website).
Done correctly, Crowdfunding can result in thousands of customers, most of whom can tell numerous friends and colleagues about your products and services. This word of mouth marketing can be worth millions of dollars.
Local media sources are enamored with Crowdfunding as it's new and unique. As a result, countless entrepreneurs who have raised Crowdfunding have been profiled in local newspapers, radio shows and TV broadcasts.
So, with some legwork, raising Crowdfunding can get you lots of PR.
So, now that you understand the benefits of Crowdfunding, how do you raise it? Below are five keys.
5 Keys to Raising Crowdfunding
1. Inspire People
When you tell your "story" to potential crowdfunders, inspire them. Yes, they are investing in your product or service, but they are also investing in you. Give them an inspiring story about yourself and why you are building your company. Inspire them to want to help you.
2. Provide Value
When people crowdfund you, they need to get something in return, such as equity in your business or your promise to give them a certain quantity of the product or service you create. Make sure potential crowdfunders feel they are getting value for their investment. If not, they won't fund you.
3. Create Social Proof
Social proof is the psychological concept that if someone sees someone else doing something, they are more prone to do, or want to do, that same thing. For example, a line outside a bar shows social proof that the bar is hip/cool/the place to be, and inspires others to want to go inside.
Social proof can be created in Crowdfunding. Here's how. As soon as you launch your Crowdfunding project, get as many of your friends and family as possible to fund it. Then, when others that don't know you go to your Crowdfunding page, they will see that lots of other people have already funded you. This will make them much more likely to fund you too.
4. Market and Build Buzz
Even if you have the coolest company, product or service in the world, chances are that crowdfunders won't automatically beat a path to your door. Rather, you need to market your Crowdfunding raise. Email all your friends about it and tell them to do the same. Tell everyone on Facebook and Twitter about it. And so on. Even if your company is buzzworthy, you need to first create the critical mass of people who know about it and can spread the word. So make sure you do just that.
5. Don't Slow Down
Once you start getting more and more backers to your Crowdfunding campaign, don't just sit back and let the money roll in. Crowdfunding is a fixed-term capital raise. For example, on Kickstarter, your Crowdfunding campaign can only last 90 days. So, once those 90 days is up, you can't raise more money (you'd have to start and market a separate campaign later). So, during the campaign, try to raise as much money as possible. Communicate with those who have backed you. Thank them and tell them to tell their friends to back you too. And make sure they don't have "buyer's remorse" - assure them that you remain steadfast in achieving the vision you laid out when you convinced them to back you.
Crowdfunding is an exciting new source of funding with many benefits. To get it, prepare yourself and follow these steps.
Want Crowdfunding for your business? Check out Crowdfunding Formula. The program is a series of videos I recorded that walk you through each of the 14 steps to raising rewards-based Crowdfunding. Many of you have already joined the program and raised money. If you haven't, click here to get Crowdfunding for your business now!
Written by Dave Lavinsky on Sunday, April 21, 2013
On April 4th of last year, the JOBS Act was signed into law. As part of the JOBS Act, equity-based crowdfunding was made legal in the US.
However, before entrepreneurs could start using equity-based crowdfunding, the SEC had to write the specific rules governing it. The SEC was given 9 months to write those rules; they were due on December 31, 2012. However, the SEC failed to meet that deadline.
And, even a year later, on the anniversary of the JOBS act earlier this month, the SEC still hadn't finalized the rules. The good news is that any day, they will. The bad news is that "any day" could mean tomorrow, or possibly 3 to 5 months from now.
Below I'll give you the run-down on Crowdfunding, and also the types of Crowdfunding you CAN raise today.
What is Crowdfunding?
Crowdfunding is getting a group of regular individuals (versus banks, venture capitalists or angel investors) to collectively fund your venture.
What are the 3 Core Types of Crowdfunding?
There are three core types of Crowdfunding.
The first is debt-based Crowdfunding also known as peer-to-peer lending. This is offered by sites like LendingClub.com and Prosper.com. On these sites, entrepreneurs (and individuals) can solicit loans from other individuals. Because they are loans, they must be paid back. Generally these loans are capped at $50,000 per year.
The second type is equity-based Crowdfunding. In this type of Crowdfunding individuals who give you money become investors and own equity in your company. Equity-based Crowdfunding IS legal today, but only when the funders are accredited investors (which entail them meeting certain criteria such as having annual incomes exceeding $250,000).
The final type of Crowdfunding is donation-based Crowdfunding. This type of Crowdfunding is the most popular and is offered by sites including Kickstarter.com, RocketHub.com, IndieGoGo.com and several others.
Donation-based Crowdfunding is my favorite since you neither give up equity nor have to repay the debt you receive. And it's MUCH easier to raise since there are tons more potential funders than funders of debt-based or equity-based Crowdfunding. For example, there are over 3 million registered users on Kickstarter.com.
However, there is an important caveat with donation-based Crowdfunding. Which is this: generally people don't donate money to your cause simply out of altruism. Rather, the companies who have successfully raised donation-based Crowdfunding offer rewards in return for donations.
Specifically, these rewards typically include the product or service the company intends to produce and/or offer. For example, San Francisco's Peter Dering wanted to raise money for a new product he conceived called the Capture Camera Clip System (an accessory for photographers that secures their cameras to their other gear).
So, as a reward to those who donated $50 or more, he promised to ship them the Capture Camera Clip System product when it was developed.
So, as you can see, this type of Crowdfunding is essentially pre-selling your products or services to your customers. Which is really the same as customer financing, which has been around for a while. But, with the internet, it's so much easier to reach tons of prospective customers.
What I also love about donation or rewards-based Crowdfunding is that it is amazing market research. I mean, if customers are willing to buy your product or service before it's even available, you clearly have a winner on your hands.
Which form should you choose?
In choosing the right type of Crowdfunding, here are my guidelines:
Debt-based Crowdfunding: You can raise up to $50,000 on both LendingClub.com and Prosper.com via this type of Crowdfunding. To do so, you will need a good credit score. So, if you have a good credit score, need less than $100K, and you will be able to generate profits pretty quickly that allow you to make the interest payments, then consider this funding source.
Equity-based Crowdfunding: If you require over $250,000 to launch or grow your venture, and the market for your venture is B2B customers (not consumers) and/or you can't immediately provide rewards for funders (e.g., you need $500K to further develop your new technology that might take another 2 years to fully develop), then I like equity-based Crowdfunding. You can either wait for the SEC to finalize its rules, or consider a site like Crowdfunder.com which allows you to raise it from accredited investors.
Donation-based Crowdfunding: If you have a consumer based product or service (or store), then I love donation-based Crowdfunding, because your investors are also your customers. Since this form is legal, you can go out there today and attract hundreds or thousands of investors. And when you do, you also have a built in customer base to buy from you long-term.
In summary, even though equity-based Crowdfunding to non-accredited investors is still not legal, there are other Crowdfunding options you can use today. So, if you need funding now, there's no need to wait.
Written by Dave Lavinsky on Sunday, April 14, 2013
Whether you are trying to sell a prospective customer on buying your product, a prospective investor in funding you, or a prospective partner in doing business together, you will encounter and will have to overcome objections.
Importantly, you should plan for these objections beforehand. How? By expecting them, and trying to preempt them.
Here are the five universal objections for which you should be prepared.
Objection #1: I'm too busy
This makes it hard to even get your foot in the door in the first place. At the advertisement level, people will skim over your ad and never commit to focusing on and reading it. You've got to show prospects fast that what you're offering is worth their time.
The solution is to get their attention. Tease them with something, promise something, use memorable messages, and/or give prospects value up front.
Importantly, the better you understand who your customer is and can speak to their specific needs, the better you will do in getting their attention and getting them to spend time considering your offer.
Objection #2: Why do I need you?
Particularly if prospects are not actively seeking the product or service you offer, you must show them why they need it. Show them what life can be like with your solution - how it solves a key need or pain.
Sometimes you even need to put them in pain, if they don't know or think they are in pain. For example, while your prospects may be happy with their CPA firm, a message that stated "learn the 3 ways your CPA firm is probably costing you thousands of dollars each year" will make them think they do have a pain/problem and get their attention.
Objection #3: I don't have the money/the price is too high
This objection comes up earlier than you'd think. It's partly because people and companies are both more cost-conscious these days, and partly from people's aversion to spending more money on something at all. So "I don't have the money" is their excuse to bail before getting too invested in the decision-making process.
The solution here is to show prospects the value of what they are getting. Will your product or service enhance their lives, save them money in the future, position them to be more successful, etc.? Let them know the answer to this question!
Likewise, if the prospect is considering an alternative solution to your company which is less expensive, you need to show why the best decision is to go with you.
Objection #4: I'm not sure I believe you
People are skeptical, and don't believe everything you advertise or say. They want to know you're for real and they want to see proof that your product or service does what you say.
Show them you're legitimate by letting them know your credentials, seeing your work, knowing your clientele or how long you've been in business, and also that you're honest, have integrity, and really care.
One of the best ways to prove you can get results is showing testimonials from other customers. This is why "before and after" pictures are used in most weight loss commercials. This can be done with many products.
Other things you can do to overcome skepticism include offering money back guarantees and simple return policies.
Objection #5: Let me think about it/I need to speak with my partner/manager/etc.
Sometimes prospects legitimately need to think about a decision. Or they need to discuss it with someone else. With regards to the latter, ask questions from the beginning to determine if there's another decision-maker. And if so, bring that other decision-maker into the conversation earlier so you can "sell" both decision-makers at once (rather than having to do it twice).
With regards to the prospect requiring time to consider the decision, make sure to follow-up with them while their making that decision. That doesn't mean calling or emailing every hour. But rather periodically checking in on them. Importantly, find reasons to check in. For example, maybe you read about something in the news that you think they'd find interesting. If so, call or email them with the piece of news. When you do, there's no need to even bring up the sale you want to close. Rather, focus on helping them and staying in touch, and each time you do, you'll move closer to securing the sale.
Getting new customers is one of the hardest things a business must do. By considering the objections prospective customer have, and preparing for them (via adjusting your marketing materials and training your sales team), you will more successfully attract new customers. This can and will give you a competitive advantage, and allow you to grow a successful company.
Written by Dave Lavinsky on Tuesday, April 9, 2013
Most businesses fail. I hate to be so blunt, but this is the truth. The only thing that varies is just how many businesses fail.
According to research from the University of Tennessee, 44% of businesses fail within the first three years. And within certain sectors, like information (which includes most technology companies), 63% fail within 3 years, or in Retail, 53% fail within 36 months.
On the other hand, according to research from Bradley University, 70% to 80% of new businesses fail within their first year. Bradley University also found that half of those who survive the first year will fail within the next four years.
And the number one cause of this failure? According to Dun & Bradstreet, the primary cause is lack of business planning.
Yes, entrepreneurs and business owners don't plan to fail. Rather, they fail to plan (which causes them to fail).
In my view, there are two types of business plans; (1) the one you develop when you start your business, and (2) the one you develop to grow your business.
When you start your company, the purpose of your business plan is to ensure you have fully thought through your venture.
Among other things, this plan includes significant market research. It assesses your market size to ensure the opportunity is big enough. It analyzes customer segments to confirm that customer needs match your company's proposed product and/or service offerings. And it analyzes the competition to determine how your company will position itself and how you will most effectively compete.
From a strategic standpoint, the business plan must document your marketing plan (how you will secure customers), your human resources plan (who you will hire) and your operations plan (what key milestones you will accomplish and when).
When you're done, your business plan will confirm your market opportunity and give you a roadmap to follow. It will also be required should you wish to gain funding from investors and lenders.
Now, once your business is up-and-running, you still need a business plan in order to succeed. This is the second type of business plan, and I refer to this type of plan as a "strategic plan." I term it as such because this type of plan requires much less research (since you already know who your customers are, the market fundamentals, and lots of information about your competitors). Rather, the focus of this plan is strategy.
Specifically, this plan needs to identify precisely:
1. Where you want your company to be in five years
2. What you need to accomplish within the next year to progress you to that point, and
3. What your strategy is to complete your key milestones in the next 12 months
In determining the optimal strategies, you need to consider your company's strengths, and opportunities that can best leverage them. If you don't take time to do this, you become too tactical. That is, you continue to use the same tactics that have gotten you to the point you are at. And oftentimes, the strategy and tactics that got you where you are today are NOT the strategy and tactics that will get you to the next level.
So, spend time figuring out the best strategies to follow. The good news is that you've already proven you can execute on strategies (which is what got you to where you are now).
After you figure out the big picture opportunities to go after (which often fall into the categories of further penetrating your existing market, going after a new market, or creating new products/services for existing and/or new markets), you need to revisit the three core strategies you developed in your initial business plan.
To start, you need to modify your marketing plan. Importantly, your marketing plan should always be adding new marketing venues or channels (e.g., direct mail, print, radio, search engine optimization, etc.) as the more channels you have, the more customers you will get and the less risk you have of one channel losing effectiveness. For example, think about businesses who used to get all or the majority of their customers from the yellow pages; many of these companies have perished.
Next, consider your human resources strategy. What new people will you need to hire to accomplish your key goals in the coming years? In what areas will you need people, and what skill sets must they have?
And finally, you need to develop your operations strategy. Figure out what key tasks and milestones you need to accomplish over the next year and break them down into smaller projects that you and your team must accomplish. And then create a master schedule showing who, how and when these projects will be completed (I like using a Gantt chart to do this).
Creating a business plan when you start your company, and annually creating strategic plans to grow your company is absolutely essential to your success. Research proves it. So, if you want to avoid failure, and achieve maximum success, make sure you are continuously creating, updating and following your business and strategic plans.
Suggested Resource: You just learned the importance of choosing the right strategies to build your company. Including this information in your strategic plan is critical to growing an ultra-successful business. What else should you include in your current growth or strategic plan? Click here to find out.
Written by Jay Turo on Monday, April 8, 2013
You’re invited to attend a webinar on Tuesday, April 16th at 1pm Eastern / 10am Pacific about opportunities in the Healthcare Information Technology sector.
To register, click here.
Over $200 billion MORE was spent on healthcare in 2012 than in 2011.
Let's put that number in perspective - the increase in healthcare spending last year was greater than the revenues of Microsoft, Cisco, Google, and Apple.
And with the Affordable Care Act slowly but surely becoming the law of the land and the Baby Boomer generation retiring and hitting their “peak” healthcare spending years, there is no end in sight to the growth.
You Can Cry About It or You Can Seek Opportunities In It
While out-of-control healthcare costs and bureaucratic systems remain one of our most vexing societal challenges, private sector entrepreneurs are moving fast and smart to address various aspects of the problem.
And are building dynamic growth companies while so doing.
Healthcare Information Technology – A $30 Billion Business
Healthcare Information Technology (HIT) is one of the great and growing bright spots in the U.S. economy – it’s a $30 billion+ a year industry growing at over 14%/year.
It is comprised of big sectors:
• Practice Management Systems (PMS) - a $4 billion/year business growing at 11%/year
• Electronic Health Records (EHR) - a $1.5 billion/year business growing at 22%/year
• Revenue Cycle Management (RCM) - a $1 billion /year business growing at 15%/year
• And last but certainly not least - Transcription, Billing, and IT services, clocking in at $24 billion/year and growing at 12%/year
Within each of these sectors are dozens of under-the-radar companies experiencing strong revenue and profitability growth, developing dynamic and cost-saving technological innovations, and are being courted by financial and strategic acquirers.
Companies like Castlight Health, Practice Fusion, Kissner Software, and Strategic Solutions Management.
Meet An Industry Leader
I would like to invite you to an exclusive opportunity to meet, via web conference, the principals of one of the most innovative medical billing companies in the country.
Combined, they have over 40 years of experience in successfully overcoming and profiting from some of the most vexing challenges in medical billing and information technology, and are well-versed on the regulatory and technological changes sweeping the industry.
On the web conference, they will share:
• Who the winners and losers will be when the brave new world of the Affordable Care Act meets the cloud computing and Big Data revolutions
• Why practice areas like obstetrics, surgery, and podiatry are in a unique period of change and consolidation
• How the “dream” of combining billing, practice management, and electronic health records systems into turnkey platform is in fact becoming a reality
• How the emerging world of mHealth – the use of iPads and tablets and mobile devices to deliver care - is and is not transforming modern medicine
• And much, much more
To preserve the intimacy of the presentation, we are limiting the web conference to the first 35 registrants.
So sign up right away to attend via the link below:
Best regards, and look forward to connecting.
Written by Dave Lavinsky on Tuesday, April 2, 2013
If you're not familiar with Zig Ziglar, he was a well-known author, master salesman, and motivational speaker. Unfortunately Zig passed away last November. I apologize for taking so long to honor him with this essay, in which I tell my favorite Zig Ziglar story.
In Zig's early years as a salesman, he visited peoples' homes, making presentations to sell them high-quality cookware.
He had a competent assistant at the time who helped him keep track of appointments and handled administrative duties. One week, however, Zig realized he had two appointments scheduled for the same time. Not waiting to cancel any appointments he asked his assistant to cover one of the appointments for him.
She was terrified. She did not want to do it and he wasn't going to make her!
Being the consummate salesman that he was, Zig eventually got her to calm down. Then he assured her that she knew the presentation as well as he did, and that she would do great. After he solemnly promised to never ask her to do a presentation again, she agreed to cover the appointment just that one time.
Zig recounts that at the end of the evening, she was convinced she had fumbled half the presentation. But, to her surprise and delight, the clients ordered quite a bit of cookware. Most surprising, is that when she got over her nerves, she found she rather enjoyed the experience.
His timid and sales-panicked assistant evolved into a top notch salesperson, was his right hand partner for many years, and years later (with his delighted consent) became a highly-sought out and respected sales trainer for a leading cosmetic company.
Zig shared this story to show human potential. He puts all the praise on her and generously applauds her for her accomplishments. While I am inspired by her transformation, I want to focus on his role in her transformation because I believe that was Zig's greatest gift to the business world. Yes, his sales training is worth bars of gold, but ultimately what really made him a success was his ability to develop others.
He could have made millions as a star salesperson. He could have kept his philosophy, his techniques, and his secrets to success all to himself. Instead, he made hundreds of millions by sincerely applying himself to improving everyone around him who was willing to listen.
Zig Ziglar was a true leader.
Yes, he sold books, and videos, made speeches, and made money, but he invested in people. He believed that the success of a company was largely dependent on the quality of their sales force, and the quality of their sales force was solely dependent on how much that force really cared about helping people.
And, a sales force isn't going to care about helping anyone if they don't feel that their company cares about them.
Zig could have benched his assistant, sent her right back to her phone and typewriter after she covered that one appointment. Instead, he nurtured her potential and encouraged her to continue developing her sales skills. Now think about this, how much more money did Zig make by having her on his team at her full potential instead of at her lowest potential?
How much more money will your company generate if you make the time to develop your team to their full potential? Beyond just money, how much loyalty will you cultivate? Will you feel more confident about your future success when you have a top-notch team you can trust? How many talented people will want to work for you when the word gets out about your leadership?
Yes, it takes time and energy, yet Zig demonstrated over and over that when you invest in helping someone be the best version of themselves possible, the rewards, material and otherwise, greatly outweigh the sacrifice.
Zig Ziglar died in November of 2012. He left behind dozens of books, thousands of hours of video and audio, and most of all, he left behind millions of grateful professionals whose lives were touched and even changed by the empowering lessons he left behind. His message that you could accomplish more in life and in business through caring and investing in the success of others is a timeless gem that lives on.
As he once said, "You can have everything in life you want, if you will just help other people get what they want."
Rest in peace Zig. We'll miss you. And for all of you listening, develop your employees and customers, and everyone around you, to their full potential, and you will achieve incredible success!
Written by Jay Turo on Monday, April 1, 2013
Why - once we have met our basic needs for food, warmth, and safety - do we work?
And work hard.
There are the usual, default answers.
For Status. Power.
In response to a "fight or flight" instinct, hardwired deep in us.
Because when we were young, we saw our parents do it and when we grew up, we wanted to be like them.
What a bunch of hamster on a wheel mumbo-jumbo that makes folks at the end of their life look back and say why did I waste so much of my precious life on that?
Instead, how about this?
Let’s be heroes.
Wikipedia defines a hero as one “who, in the face of danger and adversity or from a position of weakness, displays courage and the will for self-sacrifice…for some greater good of all humanity.”
Now, that’s good.
It touches the various dimensions of our being.
Heroism in action is a strong, hard effort - a pushing to the limits of one’s physical endurance.
Heroes are intellectually wise. They are fair, sober, and big, and rarely let anger and fear get the best of them.
And when we are in the presence of a hero, we are spiritually risen up, are we not?
And you know what goes hand-in-hand with heroism?
Hard, honest work - taking great, exquisite care to do things right – is what heroism is all about.
As is teamwork.
And creative work, toward an idealistic end.
Work on the behalf of the powerless, for and with the young and the old, heroic.
Winning the right way - with grace and authentically recognizing those that aided in your journey - so very heroic.
And trying your absolute hardest and most honest best, and coming up just a bit short, even more so.
Heroic work, in all its forms, is work worth doing.
You know it when you see it. And unfortunately, also when you don’t.
Let’s look for the heroes in our lives - those right around us and those in their so blessed multitude in this wide, wide, and inter-connected world of ours.
Let’s celebrate and strive to be like them.
Everything else is just noise.
Written by Dave Lavinsky on Friday, March 29, 2013
On many levels, competition is good.
For example, when you start a business, you want there to be competition. Since if there was no competition, there may not be a market or customers who want to buy what you are selling.
And once in business, competition is generally good since it forces your company to get better. It forces you to better satisfy customers (or they will choose your competitors) and it forces you to become more efficient (so you reap more profits even if you have offer more competitive pricing).
Now, while competition does provide these advantages, you clearly want to have less competition, and you'd like for fewer new competitors to enter the market. In doing so, you'll enjoy more of a monopoly in your market, which means more customers and more profits.
The best way to knock competitors out of your market and discourage new entrants is to build "business assets" that your competitors don't have. (I define "business assets" as resources you build now that will give you and your company future economic value.)
Here are five examples of business assets you can build:
1. Customers: Most mobile phone companies offer 2 year service contracts that all new customers must sign (and face penalties if they leave before the two years are up). This essentially "locks up" customers making it harder for new entrants (or existing entrants) to come in the market and take their customers. Customer agreements and contracts are one of the most powerful business assets you can build.
2. Systems: Most franchise organizations (e.g., Subway, McDonalds, etc.) have made significant investments in systems in areas such as taking orders, producing products, handling customer complaints, etc. These systems make it easier and less expensive to hire and train employees and better service customers. This makes it harder for others to compete against them. Likewise, I know many companies who have built customized software systems that allow them to perform faster, cheaper, and more consistently than their competitors.
3. PPE (Plant, Property and Equipment): When I was a teenager, I made a lot of money shoveling snow. I used that money to buy a snow blowing machine. Equipped with the snow blowing machine, I was able to remove snow ten times faster than my competitors. This allowed me to dominate my local market.
4. Product or Service Variations: A local pizza shop promotes itself as having 36 varieties of pizza. Offering this large variety makes it harder for new pizza companies to enter the market. Because a new company would have a very hard time creating 36 varieties from the start, it would be harder for them to satisfy customers.
5. Exclusive Partnerships: Creating exclusive partnerships could be a key business asset that gives you competitive advantage. For example, if you create exclusive partnerships with top organizations in your industry, they would only work with you and not your competitors. For example, let's say you and a competitor both serve the senior market. But you have an exclusive relationship with the AARP whereby they only promote you, and not your competitors. With 37 million senior members, your AARP relationship would give you considerable advantage.
What I want you to consider now is how you can build business assets that "unlevel the playing field." How can you make it so that nobody wants to compete against you?
- Can you lock-up customers with agreements and contracts?
- Can you build new systems to make your company more effective and efficient?
- Can you make investments in plant, property and equipment that allow you to cut costs or increase output?
- Can you develop new product and/or service options that better serve customer needs?
- Can you form exclusive partnerships to help you gain new customers that your competitors can't?
Importantly, whatever answers you come up with, realize that building these business assets will take time. Often times they may take as much as a year (or even longer). And also realize that short-term profits may go down when you are building them. For example, in the AARP example above, forging such a relationship could take 6-months, during which you invest lots of time and generate no incremental revenue.
But, once the asset is built, you may profit (and profit big) for years.
So make sure to properly plan and prioritize the development of your business assets, even though they often have less short-term benefits than other activities (such as setting up a new advertising campaign).
Set a long-term goal for when you want the assets built. And make sure that you build time into your daily, weekly and monthly schedules to move the development forward. Doing so will dramatically improve your revenues and profits, and at the dismay of your competitors who will be forced to go elsewhere.
Written by Jay Turo on Monday, March 25, 2013
Depending on how you slice it, this is either a golden or a leaden business age.
It is a golden age, as never before in human history has there been so much access to great opportunities as there are right now.
Crowdfunding, private equity and debt secondary markets like Second Market and SharesPost, peer-to-peer lending sites like Prosper.com and Lending Club, and the Big Three social networking giants - Facebook, LinkedIn, and Twitter - have made information and intelligence on, and access to opportunities better and greater than ever before.
Yet, the overall spirit and mindset of business is anything but golden.
Huge and historically unprecedented public sector debt and social safety net obligations in the United States and Europe - layered on an overlapping and inter-connected global banking system cast a pale “macro” of systemic risk over the markets.
Compounding matters, never before has the drumbeat of news and information been louder, mostly shrilling that the financial sky could fall at a moment’s notice.
The overall effect of this both real and perceived angst is a “crowding out” of all of the good stuff that is happening out there.
So what should the growth-seeking, yet sober executive and / or investor do?
Well, first and foremost, get one’s mind and spirit right.
And the best way to accomplish that is to focus on what author Matt Ridley so eloquently describes as what has been since the dawn of Man the guidepost to our better future.
Entrepreneurship lives and grows in the “micro” - in sectors and niches within the overall economy either protected from or aided by the larger current.
And entrepreneurship is the antithesis of sclerotic, bureaucratic, and beyond human scale organizations (see Big Media, Big Government, Big Business) of such complexity and inertia that the application of individual motive force them to far more often than not is ineffective, no matter how good the intention.
Rather, entrepreneurship is undertaken via that finest form of collaboration known to history - small, impassioned teams driving toward an idealistic vision and mission.
To sell some thing or some service of a type, or in a way, or at a price that has never been done before.
And to make money doing it.
And the really good news is that there are more entrepreneurs - far, far more - hundreds of millions worldwide striving to have their brilliance and creations expressed and realized, and to make their futures their own.
And in their multitude, in their collective uniqueness, they are the hope and the light of the world.
Even better, be one of them.
In mindset, in spirit, and in appetite for change and risk and daring.
You’ll feel a lot better.
Written by Dave Lavinsky on Friday, March 22, 2013
In this article, I'm going to give you the secret to highly effective marketing.
Let me start with an example.
Let's say your competitor runs an advertisement that reaches 10,000 target customers and gets these results.
- 1 percent response rate (response rate means that prospective customer visited competitor's website, went into their store, called them, etc.)
- 35 percent conversion rate (conversion rate means the responding customer then purchases)
- $500 price per widget (widget being the item sold by your competitor)
- 1.5 widgets per buyer (average buyer purchases 1.5 widgets in initial order)
- 30 percent profit margin
- 10 percent repurchase rate (10% of customers buy from your competitor again)
Assuming the ad reached 10,000 target customers, your competitor's gross profit from the ad would have been $8,662.50 (minus the cost of the ad).
Now let's assume that your company did a 20 percent better job on each of these factors. Your results would be as follows:
- 1.2 percent response rate
- 42 percent conversion rate
- $500 price per widget
- 1.8 widgets per buyer
- 36 percent profit margin
- 12 percent repurchase rate
Now let's look at the results.
If your ad reached the same 10,000 target customers, your gross profit would be $19,596.
That's 2.3 times greater than your competitor's.
Now, what would happen if you generated 2.3 times greater profits than your competitors every time you ran an ad?
The answer is that you would absolutely dominate them.
Now, the key marketing secret that I'm sharing with you here is that you don't have to revolutionize your marketing system. Rather, small, 20% improvements in each part of your system lead to revolutionary results.
So, here are some ways in which you can improve each part of your marketing system:
The more you know about your customers' wants and needs, the more easily you can design advertisements that appeals to them.
And the more you know about them, the better you could craft a unique selling proposition (USP) to attract them.
For example, if you are local hardware company and you know your typical buyer is a busy male with a wife, kids, and dog, you could easily craft ads with a higher response rate.
You could also boost response rates by developing better offers that attract customers, such as an offer for a 90-day money-back guarantee.
Remember, conversion rates are the percentage of prospective customers that you converted into actual customers.
A few ways you could increase conversion rates include having a better process in place for training your staff and sales team, providing better employee incentives (e.g., commissions or bonuses for closing sales), or by developing and testing sales scripts that boost results.
Number of Widgets Per Buyer
To increase the number of units purchased per transition (including purchasing more widgets or related items), you can rely on similar tactics to increasing conversion rates such as better hiring, training, sales scripts and so on.
Remember McDonalds doubled its profits when it started asking "would you like fries with that?" and increased them again when it starting asking "would you like to supersize that?"
Better systematizing your business and implementing the right processes and procedures will allow you to generate higher profits per sale than your competitors.
Finally, to increase repurchase rates, do a better job of communicating with your clients and showing them how special they are. For example, send them emails, call them, or send them letters in the mail to educate them and remind them that you have products and services that can help them.
As you just witnessed, making small improvements to each part of your marketing system is incredible powerful and massively increases your profits. If you want to learn more, check out our "Double Your Profits" program which provides detailed training on how to make these improvements in your business.
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