If you want to raise capital,
then you need a professional
business plan. This video
shows you how to finish your
business plan in 1 day.
to watch the video.
"The TRUTH About
Most entrepreneurs fail to raise
venture capital because they
make a really BIG mistake when
approaching investors. And on
the other hand, the entrepreneurs
who get funding all have one thing
in common. What makes the difference?
to watch the video.
The Internet has created great
opportunities for entrepreneurs.
Most recently, a new online funding
phenomenon allows you to quickly
raise money to start your business.
to watch the video.
"Barking orders" and other forms of
intimidating followers to get things
done just doesn't work any more.
So how do you lead your company
to success in the 21st century?
to watch the video.
Written by Dave Lavinsky on Thursday, May 17, 2012
Below is an easy exercise that will boost your profits.
First, list your products and/or services
Create a spreadsheet. In Column A type the names of each product or service you offer.
Second, list your market segments (customer groups)
In the first row of columns B, C, D, etc., write the names of the different types of customers you serve.
For example, if you have a walk-in store as well as a website set up for e-commerce, you will have at least two groups of customers - those who come in to purchase and those who buy online.
Or you may sell to consumers and businesses.
Or you may sell to affluent consumers and less-affluent consumers. Or you might sell different products and/or services to men vs. women.
List all of these customer segments in the first row of columns B, C, D, etc.
Place an "X" in each cell in which you have a combination
To recap, in Column A you have a list of your products and services. And in the top row of the other columns, you have a list of all your customer segments.
Now, place an "X" in each cell in which you offer that product or service to that customer segment.
For example, if you sell insurance to affluent consumers, then type an "X" in the cell that intersects these two variables.
The result will be a chart with "X"s showing all your product/service and customer segment combinations.
Next, write down a list of all the combinations you found. For example, your list might include:
- insurance to affluent consumers
- insurance to businesses
- home security to non-affluent customers
Determine your revenues and profits for each combination
For each combination, type in how much revenue and profit you generate from it.
In many cases, you will find that one combination dominates your profits. Or that one customer segment (among several products and/or services) buys the overwhelming majority of your products and services.
Importantly, in completing this exercise, you may also identify combinations you didn't know even existed.
Sharpen your marketing focus
Most entrepreneurs and business owners place equal marketing focus on ALL their combinations of product/service and customer segments.
But, smart entrepreneurs and business owners place more emphasis on the combinations that are proven winners. Now that you know your winners (i.e., the combinations that are generating the most revenues and profits for you), focus on them.
Using the example of "insurance to affluent consumers" being a winning combination for you, here's what you should do:
1. Do more marketing to them. Figure out how can you reach more affluent consumers. Perhaps stop doing general advertising that reaches both affluent and non-affluent consumers and do more targeted advertising like direct mail or cable television. Or perhaps there's another company serving this clientele with whom you can partner. Etc.
2. Better tailor your marketing to them. Rather than having advertisements that mention several of your products/services, create ads that solely focus on your insurance offering, since this is what generates the most revenues and profits. Likewise, since you know the specific customer segment you want (i.e., affluent individuals) use terminology and images that will specifically appeal to that segment.
Most entrepreneurs and business owners make the mistake of trying to be all things to all people. As a result, they water down their value proposition to the customers that give them the most revenue and profits.
Rather, by identifying your most profitable customer/product combinations and focusing your marketing efforts to them, you can quickly grow your revenues and profits, and distinguish yourself from your competition.
Suggested Resource: Growthink's Ultimate Marketing Plan Template allows you to expertly create your marketing plan. It will help you fully leverage your most profitable marketing combinations and dramatically increase both your revenues and profits. Click here to learn more.
Written by Jay Turo on Monday, May 14, 2012
One of the key objectives of the recently passed JOBS act is that it will “open” the now 11 years and counting "shut” window for initial public offerings.
Hopefully, it will help. Because golly, when it comes to the IPO market and public market returns in general, help is needed in a big way.
How bad is it? Since the Internet bubble burst in 2001, the number of IPOs hasn’t recovered to even 1980s levels.
That's 30 years ago, folks.
For perspective, before 2001 over 40% of all venture capital exits were via initial public offerings.
By 2010, that percentage had declined to a mere 3%.
Or, in hard numbers from 1990 to 1996, 1,272 U.S. companies went public.
For the period from 2004 to 2010 a mere 324 did.
Not unrelatedly, since the bottom has fallen out of the IPO market, the performance of the public market as a whole has been dreary to say the least.
Let’s call this the Boston Celtics phenomenon. Twice in the last 20 years the Celtics have had great teams decline as they “got old” as they didn’t sufficiently “re-invigorate” with younger, fresher players.
And aren’t our public equity markets - after more than 10 years now of only a handful of dynamic, innovative companies being added to them in any meaningful quantity - like that too these days?
The major stock market indices certainly seem to indicate so, with the Dow and the S&P and the NASDAQ trading today basically in the same range as they were 11 years ago.
So the hope of the JOBS bill is to encourage more “emerging” companies to take the IPO plunge via relaxing regulation and reporting requirements for smaller, younger companies as they go public.
Will it help?
…the bill will not in any way alter the technological and global macro-economic forces that:
A) Just make it far more interesting and possible for private companies to do and have everything that public companies do - from big multiple exits (see Instagram), to growth capital (see the robust world of hedge and private equity funds), to liquidity (see Sharespost, Second Market) - without the headache of a public listing; and,
B) Seem to indicate that even when companies do go public that it is almost a sign that their best innovation and growth days are behind, and NOT ahead of them.
Sure, there are exceptions, but in a world driven by SaaS, by open source, and by the “app store” phenomenon, the cost of innovation - and the cost to disseminate that innovation globally - has dropped so far and so fast that the days of needing a public market “balance sheet” to innovate seem long behind us.
What does it all mean?
Well, for investors seeking capital appreciation, it is critical to digest that the “big picture” vectors all point toward private companies that remain private being the main drivers of innovation - and thus growth - for as far as the eye can see.
Now translating this overriding point into a specific, private equity investment strategy is hard for sure…
…but the alternative of looking to public stock market investing as a true growth strategy long ago passed into the realm of that famous definition of insanity as doing the same thing over and over again and expecting a different result.
Written by Dave Lavinsky on Sunday, May 13, 2012
In your business experiences, you may have noticed that "selling" is not particularly hard when you have the right product positioned correctly, in front of the right person who wants it NOW.
But, when one of these factors are "out of whack," it can be a much tougher sale to make.
Getting funding from angel investors is the same way. It's not so much about how good of a presenter or salesperson you are (though those qualities help). Because the most important time you spend influencing potential investors is done long before you present to them, even long before you even contact them; it's done when you prepare your company for funding.
You've probably heard the quote from Abe Lincoln, "If I had 8 hours to spend cutting down a tree, I would spend 6 hours sharpening my saw." The point -- you can get a job done with a lot less effort when you are fully prepared.
So how do you prepare?
You prepare by making sure angel investors will want to invest in your company. And they'll want to invest if they believe your company has great potential to achieve a liquidity event, and one that enables them to earn a significant return on their investment.
Trust me, you're not going to show them that potential with your passion and enthusiasm alone, or a killer presentation. There are certain criteria that, if your business meets them, will show the angel that you DO have the potential. Here they are below...
Criteria #1: Scalability
This is the potential for your company to achieve significant annual revenues. An angel investor, when no future funding is required, might be willing to invest in a restaurant or website that has the potential to generate hundreds of thousands or a few million dollars-as long as a clear path has been laid out regarding how they could get a sizable return on their investment.
The problem is that some businesses are not as conducive to scaling as others. If you offer a professional services business, you can probably only handle so many customers yourself. Even with an office full of lawyers, for example, you would have to hire and manage more and more people in order to grow.
In a truly scalable business, you can multiply your sales without having to greatly increase your resources. You would simply turn the knob up and an existing infrastructure can handle it.
Criteria #2: High Barriers to Entry
Barriers to entry are those things that make it difficult for another firm to compete against you, such as patents or proprietary technology, a unique location, strategic partnerships with larger firms, and long-term customer contracts.
Having first-mover advantage (being the first to offer something) will give you an initial head start. But rest assured, competitors will copy your idea, once proven. You've got to find ways to keep that advantage by excelling so well at what you do that it will take others a long time to catch up.
Your company will need what Warren Buffet describes as a "sustainable, long-term competitive advantage" and looks for in the companies in which he invests.
Criteria #3: Strong Management Team
Who is running things (besides you)? The angels must believe in and be comfortable with both the founders and the key operating personnel of the company.
Does your management team have relevant experience and successes under their belts? Are they capable of taking things to the next level? Do they advise you, or are you currently more of a babysitter to your managers?
Experiencing massive growth is hard. You need capable leaders who can deal with the unknown and adapt to rapid change. You need people who can figure things out on their own and pioneer new ways of getting results.
The "Who" often comes before the "What" in priority. Get the right people together and they will likely choose the right course among all the options. Keep this in mind when hiring managers-will they be able to grow with your company, or does it seem like they will only be capable of their current role?
Criteria #4: Your Exit Strategy
The fourth criteria in which angel investors need confidence is your exit strategy. This means that the chances are good of eventually having another firm purchase you or your firm going public.
You have to remember that it's typically through your exit strategy that these investors profit from their investment in you. It's hard to get a company to generate enough cash off the top to pay them back over time-the original investment and some interest, maybe, and generating the cash to pay them several times their investment isn't likely (or desirable).
So angel investors count on some event happening that will generate a very large sum of money that pays them back, plus their profit. Unless they want to be an owner of your company forever, you have got to choose and prepare for your preferred exit in advance.
If you plan to sell, that's the most straightforward way to go. Set a time frame for when you'd like to accomplish a sale and work consistently towards that end. If you don't intend to sell, you'll either need to take the company public someday, or negotiate other ways of paying back the angel.
Criteria #5: Being a Local Company Helps
Another important criterion, while not necessarily tied to liquidity potential, is that angel investors tend to invest in local companies. In fact, according to the Center for Venture Research, 70% of angel investments are made within 50 miles of the investor's home or office.
Angels often like to invest in companies that are close by so they can visit them and participate in Board meetings and other events. And for retail businesses like a restaurant, they like being able to drive by and think or say "I'm an owner here."
Criteria #6: The Right Price
Finally, angel investors will only invest when the price is right. If you price your equity too high, angels may not have the potential to reap significant enough returns and will not invest.
If you know a few angel investors or angel groups in your area, find out in advance what kinds of prices and returns they would find acceptable. With this information, you may have to reset your revenue goals to achieve before getting the next stage of funding from angels, ask for less funding to increase their return, or commit to a higher payout if that's what it takes.
Understanding and preparing yourself and company to exhibit these six criteria will help you achieve your main goal-to convince angel investors to write you a check.
And not surprisingly, working towards the same objectives that attract angels will also help your business to be more profitable, stable, and positioned for growth even if you decide not to raise additional funding down the road.
So, start sharpening your saw today. Think about and strengthen your exit plan. Think about how you can build a better management team. And so on. And then, you'll be able to raise all the angel funding you need.
Suggested Resource: In Growthink's Angel Funding Formula, you'll learn exactly how to find and contact angel investors, exactly what information to convey to them and how, and how to secure your financing check. This angel funding video explains more.
Written by Dave Lavinsky on Friday, May 11, 2012
When seeking equity investments, the source of capital is, for the most part, tied to the stage of capital being raised.
You see, equity capital is raised in stages or rounds. The five main stages include the following:
1. Pre-Seed Funding
2. Seed Funding
3. Early Stage Investment (Series A & B)
4. Later Stage Investment (Series C, D, and so on)
5. Mezzanine Financing
Most companies that raise equity capital and are eventually acquired or go public receive multiple rounds of financing first. Do you intend to go big before selling or becoming publicly-traded?
No right or wrong answer here, but if this is your vision then it's important to consider when negotiating deal terms on earlier stage financing rounds. As Steven Covey said, you'll want to "begin with the end in mind" and not make arrangements with your angel and/or early investors that will complicate later stages of funding.
If it's not your plan to get venture capital down the road, then you'll probably stop in Stage 2-receiving enough funding to boost your marketing, sales, and infrastructure to grow organically from there to the point where you are satisfied or ready to sell.
Here are the five main stages of equity capital:
Stage #1: Pre-Seed Funding
Pre-seed funding refers to the initial capital a company brings in that comes from friends, family members, credit cards-whatever you can get. This could be as small as $5,000 and as high as $100,000.
Though the dollar amounts are lower, this round is more difficult to get institutional funding for ("institutional funding" is when a financial institution, rather than an individual person, funds you). Banks are not ready to make a Small Business loan on a company that has yet to launch, break even, or establish a track record.
Nevertheless, this is when you get the startup money to kickstart your business with the bare essentials needed to begin making and fulfilling your first sales. Necessary machinery, an initial website, your first batch of inventory-things you can't function without. Put everything else on your "wish list" to buy with revenues from sales or additional financing.
With this funding, the company often perfects its business plan and starts building its management team in order to position itself for its next round of funding. Your first year or two in business is where your dreams merge with reality and take a new form to guide your future efforts.
Many entrepreneurs end up taking their company in a different direction after some time spent testing your initial business model. Take the founder of Wrigley's chewing gum, who began selling baking powder and soap door-to-door and giving away gum as a bonus before discovering people wanted it a lot more than soap.
So during this round, you'll be testing what works and what doesn't. Here, you prepare to scale up the things that do with future funding. It might even be a good thing to not have too much funding at this point of your business so you don't invest too much going in a direction you'll abandon later.
Stage #2: Seed Funding
Seed funding (also called seed capital) typically ranges from $100,000 to $500,000 and is often provided by angel investors, and is usually structured as convertible notes or common stock.
With seed funding, you hope to grow your business and, at the very least, gain proof of concept. That is, you'll use the funding to build a product or service and prove that customers want to buy it. At this point, you will be ready for institutional investors who can provide funding to scale or rapidly grow your business.
Stage #3: Early Stage Investment (Series A & B)
"Series A" is the term used to describe the first round of institutional funding for a venture. The name is derived from the class of preferred stock investors receive in return for their capital.
The average Series A round is between $2 million and $5 million, with the expressed goals of funding early stage business operations. Providing enough capital for 1 to 2 years of operations, funds obtained from the Series A round can be used for the full gamut of needs-from product development and marketing to employee salaries.
Series B is the round that follows series A in early stage financing. In this round you can generally raise $5 million to $10 million, but can sometimes you can raise up to $20 million in capital or more.
Stage #4: Later Stage Investment (Series C, D, etc.)
Series C, D, etc. (some venture backed companies have raised over 10 rounds of financing) are further rounds of venture capital funding.
Each round may raise between $5 million and $20 million or more. Series C, D, etc. rounds are also typically obtained from venture capital firms and/or strategic/corporate investors.
Stage #5: Mezzanine Financing
Mezzanine capital, often provided by private equity firms, is capital provided either as equity, debt, or a convertible note that is provided to a company just prior to its Initial Public Offering.
Mezzanine investors generally take less risk, since the company is generally solid and poised to "cash out" relatively quickly.
Hopefully this lays out the different types of funding you can get and when. There's no sense going after venture capital if the time isn't right, or if it's not needed to reach your vision. For most of my readers, the main concern will be preparing your business for angel financing until the time is right for venture capital.
Suggested Resource: In our Angel Funding Formula program, you'll learn exactly how to find and contact angel investors, exactly what information to convey to them and how, and how to secure your financing check. This video explains more.
Written by Jay Turo on Monday, May 7, 2012
One of the hardest challenges of those leading a business is keeping its “star players” happy, productive, and aligned with the mission and key objectives of the company.
This challenge is compounded exponentially in the Internet age - with fast shifting competitive and marketplace realities naturally necessitating that tomorrow’s key priorities and objectives will most certainly NOT be those of today.
As a result, it is almost impossible for everyone every day to be on the “same page.”
Even and especially when doing so seems to many in the company as being contrary to their personal self-interest.
And when these organizational “breakdowns” occur, the wise manager knows to proceed very carefully as these are the kind of “crowded hours” in which business success - and failure - are often defined.
So when this kind of trouble arises, the first suggestion here is to simply take a breath.
Things will fall apart, and even the highest performing employees, teams, and organizations will have their bad days.
Then, try to see these breakdowns as “positive crises.”
Crises that inspire the kind of reflective thinking that can drive organizational design and perspective breakthroughs.
Finally, never underestimate the power of engagement.
Everyone - especially star players - want their voices to be heard, their opinions valued.
Making this happen in an organization in a real, productive, and elevated way is hard and vexing work.
It can easily turn into unproductive airings of grievances.
Or perhaps most insidiously just into an unproductive distraction from the customer - focused work that is so central to the fulfillment of the mission of the company.
But when these “difficult” conversations are properly moderated and bounded, and related and connected NOT to shorter term “selfish” agendas, but rather back to the mission and ideals of the company…
…well, that is when the magic happens.
That is when a team, an organization, and even its most “selfish” star players, truly get on the same page and do great things together.
It may not last for long, and without the continued exertion of spirited and principled and DAILY leadership, it will soon fade away.
But for those that are serious about building companies to last, it is a necessary and ennobling discipline.
And as a lovely bonus, all this hard, principled effort often creates the kind of togetherness, the kind of collaborative elation that we all seek from our professional work.
And dare I say, from our lives too.
Written by Dave Lavinsky on Sunday, May 6, 2012
Every business needs a vision - a clear definition of what you'd like your business to become in the future. And, every business needs a set strategy - a definition and plan of how your business is going to reach this vision.
All the key elements -- what you sell, to whom, for how much, what you promise, etc. -- they are all part of your company's strategy or direction towards creating the business you want. My last article covered how to set this strategy so that the rules of the game are tilted in your favor.
When you've chosen a direction and vision, the next step is strategic planning - mapping out how you will achieve this over a long-term time frame (usually one year). This, like all planning, involves determining what projects you will complete and when, and how you will allocate resources such as man hours, money, and assets.
Lastly, your strategic plan will break down into specific, detailed short-term plans that help you know what to do on a month-to-month and even day-to-day basis.
But can you imagine what happens when you have a short-term plan to handle all the business and projects you have going on, but no longer-term, strategic plan to tie it all together? Maybe you've experienced it...the answer is chaos, drudgery, and endless wheel-spinning with no little progress.
So, let me explain some of the key errors and obstacles facing entrepreneurs and what to do about them:
Unclear, Unshared Vision
With all the time team members spend together in meetings and talking to each other, it's surprising how often they come away with different mental pictures of what the company is supposed to be and in what direction it's supposed to be going.
Everyone sees the company's future from their own perspective and function. It's your job to repeatedly communicate your company's vision and strategy to them-50 or 100 times if you have to-so they're all on the same page and can give you better advice and support.
Operational Thinking Dominates Your Time
This happens when most of the time spent in meetings is discussing how to run the business and putting out the fires that come up so often. Rather than also spending time strategizing and planning.
It's easier said than done to carve out time in your schedule for strategic thinking and planning, but that's the nature of entrepreneurship-taking care of today's business with an eye on the future. Hard to do, but keep in mind that delegating more of the day-to-day operational tasks to your team can free you up to do the strategic work, which may be something that only you can do.
I have to admit, when you show up for work it's easy to turn your attention first to all of the urgent tasks and demands for your time. Strategic thinking, on the other hand, is one of those activities that time management gurus classify as "Important, but not Urgent" (an example of "urgent" being something you must deal with immediately like an irate customer on the phone).
This means you have to fight for your strategic time, as it's the process that takes an unfocused business and sets it firmly on the track to success. Block it out on your calendar -- each week, schedule time to assess and/or discuss strategy.
Getting Complacent When Things are Good
My friend Paul Lemberg refers to the Comfort Zone phenomenon as leading business managers to become "fat, dumb, and happy." In other words, becoming complacent when things are going fine. This can lead to becoming reactive with your strategy, rather than proactive. Do you want to be reconfiguring your company and innovating under duress at breakneck speed at the last minute, or well ahead of time when the pressure is off?
Quite a few companies wait until a crisis comes around to kick-start their strategic thinking out of necessity. You don't want to be planning during a crisis...
Wasting Time With 5-Year Plans
Let's be honest here...isn't a five-year pretty much a one-year plan, plus 4 years of guessing?
You MUST have a clear vision of what your company will be like in 5 years, but to try and guess the details of what will be going on in 43 months, for example, in a fast-changing world is wishful thinking.
But once again, you must create your long-term (5 year) vision, which will guide all of your annual and other planning. Take a sheet of paper and describe the key elements of what you'd like your business to do, be, and look like in 5 years. Document this and use it to judge new opportunities and directions to see how well they fit.
Planning Once Per Year, Out Of Routine
We all know how around New Year's Day, many individuals start thinking about their personal goals for the year ahead. And many businesses work hard on a yearly plan during the same month of every year.
But can you wait to do your strategic thinking until your annual cycle calls for it? The business environment just isn't that predictable.
I suggest writing up your strategic plan right now and then making periodic changes throughout the year. You must set your annual plan, and then judge your progress and adjust your strategy and plan as needed.
No Process or Methodology For Strategic Planning
I suggest you discuss and choose your strategy in one session, then do your full strategic planning in another.
In setting strategy, you'll be in creative mode, exploring all possible options. Choose the strategy that makes the most sense, and then figure out the precise action plan to achieve it in a separate, more analytical meeting.
With appropriate time set aside for strategic thinking and planning, and by avoiding the obstacles discussed herein, you'll experience the joy that comes from knowing exactly what you're striving for and how to get there.
You'll feel more grounded, balanced, and centered. You'll come to work with greater purpose and passion. And you'll have more to show for your efforts at the end of each year.
Suggested Resource: You just learned how to remove the obstacles that cloud your strategic thinking...a key part of the strategic plan to guide you in growing your business. What else should you include in your current growth plan? To have a great strategic plan, there are 13 crucial sections. For your reference, they're listed in this video I put together. Watch it now.
Written by Dave Lavinsky on Thursday, May 3, 2012
The entrepreneurs and companies that will prosper and outpace their competitors during the next two decades will be those that outthink their competitors strategically, not outmuscle them operationally.
Specifically, the winning companies will craft a focused strategy that gives them a distinctive advantage. Conversely, too many companies try to compete by imitating their competitors. A successful strategy is one that makes competition almost irrelevant.
Isn't that the best position of all to be in...to have no direct competition? To achieve this, you have got to stop playing the game by the same rules as everyone else, and to embark on a strategy that changes the rules in your favor.
Chances are you're in imitation mode when you:
- Copy what your competitors are doing
- Attempt to outpromote and outsell them
- Attempt to outmanufacture them
- Attempt to outservice them
All of this results in a race with no winner...it will just be brief leads and falling behind again. It leads to incremental advancement only, often fleeting, and certainly isn't going to help you dominate your market.
Let me give you an example of market dominance by discussing the market for cigarette lighters. Most cigarette lighters are disposable and cost 99 cents or so. However, rather than playing the price game (a race with no finish line), Zippo has turned the game on its head by specializing in more expensive, higher quality lighters that sell for $15-35 each-or more, for certain collector's editions.
Another example is IKEA, whose distinctive strategy sets it apart from other furniture dealers. Ever walked through an IKEA store? I doubt you'll find a larger selection anywhere else selling furniture so inexpensively.
Why? Because their strategy targets customers who are willing to assemble furniture themselves (relatively easily) in order to save a bundle. The furniture's materials can be compactly packaged for shipping still in the box, at a much lower cost than shipping, say, an assembled dining room table that takes up a lot more space.
So here's the golden rule...never play the game according to the rules the leader has set. Don't try to outdo the top dog at their own unique strengths they've spent years or decades developing. They know the rules better-after all, they designed them!
The joy of entrepreneurship is finding a game worth playing!
Find things competitors are lacking in, or-even better-reach markets they're not reaching. No matter how big they are, no one company can be everything to everyone.
For every mammoth Anheuser-Busch selling the most beer to the most people, there's a quaint microbrewery selling a double chocolate stout that would fail on store shelves but is the ONLY one that a certain rabid group of buyers want.
As an example, I pretty much love all the beers created by Lagunitas Brewing Company in Petaluma, California. Since my supermarket doesn't carry it, I'll drive 20 minutes to a beer distributor that does.
When you change the rules, you neutralize and paralyze the leader. The odds are they are so entrenched in doing business the way they have, and have grown so large, that they're slow to change. You can make a lot of progress while they're catching up.
In fact, sometimes changing the rules of the game can put the entire industry in jeopardy. Examples are Charles Schwab allowing people to trade stocks online by themselves in 1997, and Craigslist making life difficult for print classifieds salespeople.
You might be wondering, "Sure, all this sounds great...but HOW do you actually do this in real life?"
Here are some questions to get you started on your game-changing strategy:
What can you excel at?
The odds are your leading competitor has achieved success because they dominate in some area.
So what? You don't have to compete against them, remember? Ask yourself what YOUR company can excel at, and you'll attract customers no matter how big a competitor is who's not serving their needs as well.
Where do you see opportunities for leverage?
Successful companies leverage their unique set of capabilities (things that make you excellent) across as many products, markets, and people as possible.
Often this is done through alliances with strategic partners and other opportunities for synergy.
What new products or services could you innovate?
No matter how much advertising and distribution a monster competitor has in place, they still can't profit from a product or service they don't offer.
Creating a new product or service, or specializing in an overlooked product/service category can make you the best in the eyes of certain customers.
How's your implementation?
The best strategy in the world still won't bring results if it isn't executed. This is where your project planning and management skills will come in handy, to see your dreams through to completion.
In summary, if you want to make substantial gains at your competitor's expense, tilt the playing field to your advantage. Choose a strategy that helps you sidestep the copycat game, and build your strategic plan around it.
As General Sun Tzu, famous Chinese war strategist, would say, "To subdue the enemy without fighting is the acme of skill."
Suggested Resource: You just learned the importance of choosing a distinctive strategy to change the rules of the game. This is the key to a great strategic plan that will guide you in growing an ultra-successful business. What else should you include in your current growth or strategic plan? Click here to find out.
Written by Dave Lavinsky on Sunday, April 29, 2012
In an interview on his blog, billionaire and founders of the Virgin companies Sir Richard Branson said the following about Steve Jobs:
"I admired Steve Jobs, although he was completely different from me. He used to shout at employees that made mistakes. He did not delegate much, and broke all the rules I believe in. Somehow it worked for him. Apple is one the best brands in the world."
Branson, on the other hand, delegates a ton; how else could he manage nearly 50 companies at once?
Now, I'm not saying that Jobs' management style was any better than Branson's or vice versa. But clearly, even Jobs delegated a ton of business activities. For instance, Jobs clearly didn't' do Apple's bookkeeping.
Both Branson and Jobs are/were masters at delegating activities. Which allowed them to focus on the highest value uses of their time to building their companies.
But a natural question arises for entrepreneurs with regards to delegating. And that is: what should I delegate or outsource? [From a definition standpoint, I consider "delegating" to be giving a task to someone else within your organization and "outsourcing" to be giving a task to someone outside your organization.]
This question is particularly acute if/when you are an earlier stage entrepreneur with limited resources (versus Apple and Virgin who are billion dollar companies).
If you look at your business, there is probably a very long list of activities you could delegate, or rather (particularly if your company is relatively small) outsource.
For example, you might outsource activities related to:
- generating new leads
- computer and IT infrastructure
- new product or service development
In addition to outsourcing tasks like these, you may simply choose to outsource tasks that are just plain annoying or take up a lot of your time.
But, once again, if you're working with a limited budget, you will have to make some difficult decisions about what to outsource, and what to outsource now versus later.
Preparing to Outsource
Even if you had unlimited funds, you would still want to prioritize what you outsource and when. This is because each task, role, or responsibility you give to someone else requires work. There is time required to plan the task, find and train the individual, and support or coach them among others.
For example, if you want to hire someone to call local businesses and set appointments for you, you would need to:
- Develop a general game plan of who to call, how many people, what times of day, and for what purpose.
- Create a list of people to call, or develop parameters for the individual to use to develop their own list.
- Write a script the individual should follow when making calls.
- Create a list of the most frequently asked questions or concerns, to orient the individual on your product or service and what you can do for customers.
As you can see, simply preparing to outsource a task takes times, so you can't outsource everything.
What to Outsource First
Every business is different and only you can determine what to outsource. However, read the following to see examples, rules and guidelines that I and other successful entrepreneurs have found to be effective.
Task Type #1: Lead Generation Tasks
Since the biggest challenge of most businesses is not having enough leads no matter how great your product or service, lead generation is probably one of the first things I would outsource if you want to make more money. This is particularly true if you think that your investment in outsourcing can be returned very quickly in the form of new sales and profits.
You should specifically consider outsourcing lead generation tasks that you don't already do, or that you do poorly or ok (but not great).
For example, search engine optimization (SEO) is a lead generation task that most entrepreneurs don't do, or do very poorly because they don't have the time to devote to it. Conversely, some search engine optimization firms and outsourced individuals stay abreast of the latest SEO techniques and technologies and can generate significantly greater results than you or your team can in a fraction of the time or cost.
Task Type #2: Fulfilling the business you generate
Once you generate leads and convert them into clients, you need to fulfill the orders. Particularly in service businesses, fulfillment often becomes a bottleneck; particularly if you need to perform the work yourself.
This typically results in a "feast or famine" cycle. That is, once you close a new client you are in "feast" mode from the money the new client brings in. But then, you spend all your time fulfilling the client, and when the work ends you are in famine mode. Specifically, because while fulfilling you didn't spend time on additional lead generation, once the client job ends, you are left without enough revenues and searching for new clients.
So considering putting someone in place to handle all the new business to generate. If not, you'll likely find your lead generation to be sporadic and less effective, or your customers not getting the quality of service they deserve.
Task Type #3: Other ongoing, repetitive tasks
There are many tasks your business needs to perform over and over again-like bookkeeping, filing, creating reports, compiling data and contact lists into spreadsheets, researching vendors, etc.
Your job is to grow your business by initiating new projects, not taking care of business as usual. So you need to outsource these administrative tasks.
Task Type #4: Your most painful tasks
Each of us has our favorite tasks and our most dreaded tasks. And each of us has strengths and weaknesses. Ideally, you should perform the tasks which 1) you like, 2) which leverage your strengths, and 3) which have the most value to your organization.
And certainly, if a task doesn't meet any of these three criteria, you must outsource it immediately.
The exception to this (and a warning) is when there is a skill or competency that you really do need to improve in order to be a successful business owner. Decision-making, planning, building a team, and other leadership responsibilities are not always fun, but critical to perform yourself (or with a co-founder or management team if necessary).
Action Plan to get started
With these thoughts in mind, create a list of tasks that you are doing right now that aren't the highest value uses of your time. Also include tasks you aren't doing (e.g., lead generation tactics), but should in order to boost revenues and profits.
I realize there often seems to be a chicken-and-egg issue, which is that you need money to outsource projects, but if you spend your time doing those projects yourself, you won't generate enough revenues or profits to pay for an outsourced person.
The answer is to take the leap. Go ahead and outsource a task or two. You will inevitably find you can generate more revenues and profits with the time you gain from outsourcing. You will eventually start outsourcing (and delegating) more and grow a thriving company.
So make a quick list of the 5-10 activities you should outsource (either because they are a pain, you are not doing but need to do them, or they are low-level repetitive tasks). And then find someone to which you can outsource them.
Suggested Resource: What should I delegate? What are the best marketing strategies? How do I most effectively build and lead my team? If you're looking to grow your business, would you rather (1) try unproven strategies and see what works? or (2) follow the exact footsteps that other ultra-successful entrepreneurs have already taken? If you're like me, you'll choose number two. And if so, you'll want to watch this video to see learn those exact footsteps.
Written by Dave Lavinsky on Thursday, April 26, 2012
If you're business isn't growing, it's probably dying. Inflation and costs increase whether we expand along with it. Customers, markets, and trends are changing whether we are changing along with them. Those who do not grow get left behind.
But what is growth? That's the tough question, isn't it?
Growth is making progress in narrowing the gap between your vision of the company's future and its present status. It doesn't necessarily mean getting larger, having more people, and more revenues, though it often does. Growth is making progress towards your vision and future as only you can define it.
We also know that your business has several "parts," or functions and departments that work together. They don't grow by themselves haphazardly or unintentionally. They have to grow together in an integrated, coordinated way-by choice!
So what ties it all together? The answer is "Growth Drivers." These are the three areas in which you can focus your growth efforts:
- Market Segments
- Lead Generation
Whichever of these on which you choose to focus, you have three "growth strategies" available to choose from:
This gives nine possible ways to grow, which I'll break down for you shortly.
But first, for growth to be successful and sustainable, it has to start with marketing knowledge. The right marketing knowledge and intelligence will tell you which available market segments can give you the best opportunities for growth, what products will attract and please your customers, and which lead generation channels and messages will bring them to you.
To acquire this intelligence, pay attention to your customers and collect feedback; conduct formal market research surveys, assess customer demographics, etc.
After you've conducted this research and it's time to grow, here are the nine ways to grow your company:
1. Market expansion - Increasing your target market to include more people or a larger geographical area. This is doing more of the same but to reach more people in more places.
2. Market Saturation - This means getting a bigger piece of the current pie. Whatever target market you are currently in, you would attract more customers from within it and make them "yours."
3. Market Diversification - This entails going after additional market segments. If you're selling donuts to walk-in customers, then you might start selling them in the grocery stores or directly to businesses as well (new segments of your market of donut buyers).
4. Product Expansion - Adding more variety to your existing product. An example of this would be Coca-Cola adding Diet Coke, Caffeine-Free Diet Coke, Cherry Coke, etc.
5. Product Saturation - This means customizing products-tailoring custom-made goods for individual customers. If you go this route, make sure to raise your prices for the extra value (and work).
6. Product Diversification - This means introducing new product lines. The more you have that might appeal to the same group of people, the more likely it is that they'll buy one of them. You might sell items that complement your flagship product and enhance your customers' experience.
7. Expanded Lead Generation - This means advertising through the same channels you have been (magazines, signs, direct mail, etc.) but using more of them (ads in additional magazines, mail to new lists, etc.).
8. Concentrated Lead Generation - This means advertising more often through the channels you already are. You'll reach a higher percentage of the market more frequently to increase response and sales.
9. Diversified Lead Generation - Adding a greater variety of lead generation channels and messages that you're not currently using, to reach prospective customers in as many ways as you can.
If you are just starting your business or launching a new business model within it, do your best to plan and execute on a small scale.
Once you are farther along and/or are ready to really grow, choose one or more of these 9 growth strategies and focus on implementing them.
Suggested Resource: Would you like to know more ways to improve your business; and turn it into one worth $10 million or more? Then check out Growthink's 8 Figure Formula. This video explains more.
Written by Jay Turo on Wednesday, April 25, 2012
At the end of the day, we all want to close more deals and do more business. To do so, we have to be very convincing.
But often at that crucial moment, when it's most important to be convincing, 9 out of 10 times we're not.
Our most important messages have a surprisingly low chance of getting through.
I recently connected with #1 New York Times bestselling author, Oren Klaff, who knows the answer.
Oren’s book – the amazing Pitch Anything – is hands-down the best book on modern selling and deal-making I have ever read.
And I have read a LOT of them.
And it is driving a quiet “turn the tables” revolution on the relationship between buyer and seller.
But don’t just take my word for it. Here are what some of Oren and his method’s thousands of devoted followers say about his revolutionary approach:
“If you've ever come out of a meeting, conversation, or sales appointment with a "no", or "unfavorable" response from your audience or prospect AND didn't know why, then you may want to check out this book.”
“Oren cuts through old patterns of boring conversation that we all despise and breathes new life into the art of business meetings, presentations and pitches.”
“Oren Klaff has a dazzling ability to clearly describe totally new methods for presenting ideas.”
“Now THIS is the “Art” of the Deal – Trump’s got nothing on Oren Klaff!”
Oren put thousands of hours of dedicated research as what needs to go in every pitch, every presentation.
And he’s put it all in this new video.
When it comes to delivering a pitch, Oren Klaff has unparalleled credentials. Over the past 13 years, he has used his one-of-a-kind method to close deals, raise money and sell companies.
For the first time, he's sharing this method in detailed and eye-opening videos.
Whether you're selling ideas to investors, presenting to JV partners or pitching clients for new business, Oren's methods will work for you.
• How to give the "Perfect Presentation" - for an client, JV partner or investor - based on Oren's battle-tested and path-breaking formula
• 3 reasons why your emails, requests and pitches are being ignored right now
• The right way to get past the "gatekeeper of the mind" and grab attention when you need it most
• How to completely control a room - even if it's filled with strangers you just met (This part of the method is called "Frame Control" and it works).
Imagine you're sitting across from the one person who can help you secure the biggest deal of the year. Instead of listening to you, he's texting on his phone and then tells you he has to take another call in few minutes.
Your next move means the difference between big bucks or going back to the drawing board.
Have you been there? Oren shows you how to fix this problem here.
To your Success,
PS - I should also mention: Two years ago, Oren was pitching a Russian billionaire.
The billionaire asks, "Oren, give me vun last reason vhy I vould do this deal."
Oren looks at him. And says, "You know, this reminds me of the blue whale&hellip"
Find out what happened next here.
As a final thought: What would you do if you could get whatever you want from whoever you want in 20 minutes?
That's the power of Oren's STRONG pitch. His method is broken down into basic steps that are learnable and repeatable. This exclusive STRONG method can be put to use immediately:
1. Set the Frame
2. Tell the Story
3. Reveal the Intrigue
4. Offer the Prize
5. Nail the Hookpoint, and
6. Get a Decision
Each of these tactics can get you where you want to go. Used together, they make a potent cocktail for closing the deal.
Find out how to use Oren’s STRONG method here.