Written by Dave Lavinsky on Thursday, August 9, 2012
Here's a recent development that is a great sign of things to come for entrepreneurs like you and me, who want to raise capital for growth and would consider crowdfunding as a source.
The Jumpstart Our Business Startups Act (called the JOBS Act) was passed with support from Republicans and Democrats alike and signed by President Obama in April, 2012.
The JOBS Act makes equity-based crowdfunding much easier
What the JOBS Act does is make it possible to raise funds from investors and donors through certain crowdfunding sites in exchange for equity in your company, starting January 1st, 2013. This opens up more possibilities in equity funding without the tedious requirements to register your funding as a public offering with the SEC.
If you have tried to raise funds in the past by going the public offering route, you'll know that it's expensive. Being able to bypass all that is huge, especially if you are raising smaller amounts of funding that don't justify such expenses.
The passing of the JOBS Act also means you won't have to seek out accredited investors specifically (people with incomes of $200,000 or more, or a net worth of $1,000,000 or more-not including their residence). You can receive funds from people of all income ranges, which makes the pool of potential investors MUCH bigger.
Imagine how many regular folks are out there, who might want to reallocate some of the funds they already have invested in savings, stocks, mutual funds, or other investments that aren't paying so well at present. In the future, funding other businesses might be a much more common way to diversify your capital-that anyone can do and not just accredited investors. Even you!
But there are going to be conditions set by the SEC which they will also make clear by January 1st. As of now, we know that there will be some kind of yearly maximum dollar amount that one person can invest in this kind of opportunity. It will depend on their income and net worth. Stay tuned to see the other conditions as they are announced.
How can you prepare for this?
If you want to raise equity capital in 2013 and would consider announcing it through crowdfunding sites, here's a quick list of things you can do in the meantime to be ready when the time comes:
Broaden your network
One advantage crowdfunding sites offer you is having access to more investors and donors than there already are in your personal network. The sites generate their own traffic, and a percentage will come across your project online by searching or stumbling across it.
As it turns out, enough projects have been successfully funded (using the donation-based Crowdfunding model, not the equity-based Crowdfunding model that will go live on January 1st 2013) for experts to be able to look back and say that your project is much more likely to be successful if the first quarter to third of the funding comes from your existing network first. Reason being, they are the ones most likely to believe in and trust you already, and strangers want to see some social proof and credibility in advance before they jump on board.
Deepen your relationships
Do this for the same reason I mentioned above-to get the ball rolling on your funding from your existing contacts. So in the months between now and 2013, you should be out seeking new relationships and strengthening the ones you have-specifically with those who are more likely candidates for funding you, or those who are in a position to spread the word for you.
You don't even have to mention funding during this time. Just spend the time necessary to confirm that they have the means and would be interested in your project, while at the same time showing your willingness to serve them and build trust and experience together.
If you're already in business, keep growing it
As with any kind of funding, you will be in a much stronger position to ask for funds if you can demonstrate success in the past. You will have more data available to work into your plan and forecast. And, people want prefer to invest in something that looks like a sure thing-with the least uncertainty. So keep doing what you're doing and you'll be able to show prospective investors 2012's financial statement and smile.
Work on your business plan
Also, as always, have a solid plan for how much funding you need, how you will spend it, and what effects it will have on your operations and revenues. People want to lend to someone who has thought things through and looks less likely to run into unforeseen problems-especially strangers online! Remember that.
It will also take some time to craft your presentation and pitch. If you plan on using a slideshow or video of some kind (or even just writing it out on your project's page), it will take some time to put that together in advance. But, it's something you can be doing now.
So there it is...equity-based crowdfunding is one more way to get the funds you need to launch or grow your business. Stay tuned to the developments (you'll hear them from me) and prepare for funding like you normally would. This might just be the key to your company's growth!
Suggested Resource: Do you want Crowdfunding? If so, don't try to raise it from scratch -- the 14-step blueprint already exists. Get the Crowdfunding blueprint here.
Written by Dave Lavinsky on Tuesday, August 7, 2012
Smart marketers know that as much as 80% of their revenues come from repeat customers. Once you transform someone from prospect to customer and then give them a great experience, your next sale to that customer will be much easier. In fact, oftentimes the next sale will be initiated by the customer without any effort on your part.
So the best way to get more sales from repeat customers is...make more sales to first-time customers!
For instance, if your initial sale to a customer is $40, but the average customer will purchase four more times within the first year, then a new customer is actually worth $200 in the first year. Much more than the initial $40! So, clearly, you want to attract as many new customers as possible (and take care of them so they keep purchasing from you).
To help you do this, below are three tips for attracting first-time customers. Since it's the most important sale you'll make, it pays to make your offer truly attention-getting and irresistible.
First-Time Customer Strategy #1: Give Them a Deal
Some companies go as far as to lose money on their first sale (known as a loss-leader), knowing they'll make it back with an immediate upsell, monthly service, or future sales. Your goal is NOT to make as much money as you can on the first sale. It's to make a first sale!
But of course, it's better if the first sale naturally leads to selling your next item or service. For example, I know a pressure washing company who will clean your house's exterior at cost the first time. But then it upsells 80% of these customers to their "twice yearly" plan -- this is where it derives tons of profits.
Restaurants offer specials, phone companies offer you deals if you switch providers, etc. -- you know the drill. Give customers a powerful offer to which it's hard to say no, either in the form of a low price or incredible value for their money.
You see coupon offers and deal-of-the-day sites like Groupon offering $20 massages and other great deals all the time. This works in getting tons of new customers, but be careful. A lot of businesses have reported "The Groupon Effect," in which they will post a special, get a herd of penny-pinchers in the door that take advantage of the offer and then disappear to find the next deal at whoever's cheapest tomorrow. In other words, it can attract the wrong crowd and may not produce repeat business-which is the whole point of making a first sale.
So use these special offers carefully. One idea is to use direct mail. Doing so allows you to target the specific customers you want with your special offer.
First-Time Customer Strategy #2: Give Them an Experience
Think about how much money people spend on vacations, sports, dining, and entertainment. What do these all have in common? They're experiences that people want and are willing to pay for.
You can try positioning your service as a personal experience. It's one thing to offer a massage, it's another to offer a "spa experience" with music, lights, nails, and a free facial.
You can also plan and conduct group experiences like luncheons, parties, open houses, or tours. Or find a way to piggyback on existing events going on in your community, like parades, festivals, expos, etc.
These will take a little creativity, but remember that people are naturally drawn to fun times. Make it memorable and do it a few times per year.
Look to Zappos.com as inspiration. Even though it sells a commodity (shoes), it provides a great experience through exceptional customer service. For many other businesses, providing a great experience is much easier than this.
First-Time Customer Strategy #3: Give Them Information
Every business needs to educate its customers, whether you charge for that education or not. I love it when my mechanic, Vinny, explains to me my car's problem, what caused it, how to fix it, and what it will cost. Sometimes we even go through options together, and I couldn't make a decision on the right one without getting the facts first.
Providing education demonstrates that you're an expert, increases your trust, and gives you higher credibility in the customers' mind. It also gives you an easy segue into showing the benefits of what you're offering and how it will help.
Some lead generation methods tie in very well with education. For example, if you're trying to get blog posts ranked in the search engines, you'll need to write articles on topics of interest to your readers-like how to do something, the pros and cons of different products, etc. These posts will show your expertise and educate the reader.
You can do the same with videos. Simple, informative videos can get the attention of prospects and warm them up before contacting you. End each video with a special offer or a "call to action" that encourages the prospect to contact you.
To reiterate, consider how you can give first-time customers a deal, an experience, or the information they want/need. Use this to gain your first sales. Once you do, make sure you deliver quality, and then you'll be on track towards generating more repeat business than you can handle!
Suggested Resource: Growthink's Ultimate Marketing Plan Template allows you to expertly create your marketing plan. This marketing plan will give you multiple proven strategies for attracting new customers, show you how to overcome customer objections, and dramatically boost your sales and profits. Click here to learn more.
Written by Jay Turo on Monday, August 6, 2012
The “Great Recession” has cost America over 8 million jobs.
The entire fabric of the our "way of life" - from tax receipts to pay for government social programs, schools, and national defense - to the sense that the lives of our children will be better than ours is dependent on a society that creates LOTS of good jobs for those that want to work and are willing to work hard.
Let’s be more stark and look at two places in the world that simply don’t create very many jobs of any type - sub-Saharan Africa and the Middle East.
Even a cursory look at the deep and tragic social problems of these regions lead to two conclusions - 1) the incredibly wasted potential of literally hundreds of millions of people because there is so little to do and 2) the source of the attractiveness of violent ideologies to young people when there is no hope for them to “earn their own bread.”
Now, thank God America’s problems are nowhere even near the magnitude of those in these fortune-starved places, but the connection between how we live and our society’s ability to create jobs is such a fundamental and moral issue that it should never be made into any kind of political football.
And more to the point, as Americans we don't just want “a” job.
We want a GOOD job, or one that:
1. Allows for a reasonably “worry-free” meeting of the base, human needs - food, water, shelter, and clothing.
2. Provides security from threats to health and violence (i.e. making enough money to live in a safe neighborhood).
3. Is part and parcel of one’s overall life mission, whereby the successful performance of it is "self-actualizing," and generates self-respect, a sense of belonging and community, the inherent satisfaction of the work itself, and the satisfaction of contribution to a cause larger than ourselves.
So Where Do These Good Jobs Come From?
Well, they obviously don’t come from government.
Perhaps less obviously, they also don’t come from Fortune 500 America – as big companies on average shed more jobs than they create in time of both prosperity and recession.
No, according to multiple studies of U.S. Economic Census Data and from the Kauffman Foundation nearly all net new job creation in the U.S. economy comes from new (startups) and young (one to five years old) companies.
By way of perspective, in the last “good jobs year” of 2007, the U.S economy created 12 million new jobs.
Of these, startups and young companies created 8 million of them, or almost the exact number of jobs that have been lost in the current recession.
• Since 1977, without startup companies, net job creation for the American economy would be negative (i.e. more job would have been LOST than created) in all but a handful of years.
• Young firms - companies between 1 and 5 years old - over the past 30 years have accounted for the lion's share (more than 2/3) of all net job creation.
This is because while startups create a lot of jobs, the high failure rate of new businesses - less than 50% of them make it to age five - causes them to shed a lot of jobs too.
In fact, companies between one and five years old create on average 4 jobs per year each.
And it goes deeper than that.
My experience of over 20 years in business has taught me that there is far greater likelihood of a good job - as defined above - being at a startup or a dynamic young company versus being at a larger and normally more bureaucratic organization.
And it should be self-evident that companies that are creating jobs are one that are growing.
And yes folks, it is growth companies and growth companies alone that drive equity values and lift stock markets.
So, let's back them governmentally - not with handouts but how about for starters with just simple and predictable tax and regulatory policy.
And let's back them culturally - by holding up the entrepreneur and business owner for what he or she really is - a modern day, real-life action hero.
And from these bases of understanding and agreement, yes we can all build something great together.
Written by Dave Lavinsky on Monday, August 6, 2012
In the process of business consulting and coaching, I've learned quite a few things that growing companies seem to have in common no matter what industry they're in or what they sell.
We all have cash flow to deal with, projects and teams to manage, and marketing campaigns to plan and carry out. Every business.
But here's another common characteristic...pretty much all business owners face the four universal objections that their prospective customers have. What should you do about them? I suggest that you assume they have all four objections. Then, have a way to prevent each of them in advance through solid marketing and positioning and as they arise at the time of the sale.
Do this for every product or service, but start with the one that needs the most help (or would create the most revenues if improved). Come up with answers to these four objections-don't worry, I'll help-then have your whole sales process incorporate it.
Check each of the ads you're running to make sure they don't agitate one of these concerns. Or show people in advance that it's not a concern. Check the language on your website and sales pages. And make sure your salespeople have been trained in answering the objections.
Okay, enough explanations! Here are the four 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.
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.
Objection #3: I don't have the money
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!
Another solution (which is not mutually exclusive) is to offer payment plans if possible to alleviate legitimate cost concerns.
Objection #4: I'm not sure I believe you
People are skeptical, and don't believe everything you advertise-and rightfully so. 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.
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.
Suggested Resource: Growthink's Ultimate Marketing Plan Template allows you to expertly create your marketing plan. This marketing plan will allow you to overcome customer objections, attract tons of new customers, and dramatically boost your sales and profits. Click here to learn more.
Written by Dave Lavinsky on Tuesday, July 31, 2012
When you're starting or growing your company, you'll face lots of challenges and unfortunately realize failures more often than you'd like. One of the hallmarks of successful entrepreneurs is that they routinely overcome these obstacles.
To do the same, follow these six steps to respond to failures:
1) Admit the mistake. Knowing the true cause of a failure is the first step to overcoming it, after acknowledging that there's a problem or failure in the first place. Leaders who practice denial might feel better about themselves temporarily, but nothing gets done to make things better. Face it-no one wants to admit they messed up and it's hard to accept when something's just not working anymore.
2) Be kind to yourself - Even if you directly caused the failure, remember that it's a matter of your actions and their results-not from some personal defect. It's not always about you! Try to separate yourself from the problem and look at it objectively.
3) Talk it through with someone who can offer insight or support. Don't be afraid to ask for help! Again, asking for help does not mean you're not good enough. It means you're committed to achieving outcomes without letting ego get in your way.
4) Find out what you can learn from the failure. The odds are you did things that worked and things that didn't. Examine them and the reasons why they worked or didn't. What you learn here will form the assumptions you'll rely on when making a plan of action in the following steps.
5) Attack, not shrink - When people run into financial problems or serious crises, they usually go in one of two directions. They can shrink back, become more risk-averse, and try to cut expenses and do less to avoid the problem. It's basically cowering and hiding. Or they can attack the problem like a foreign army invading enemy territory. Which strategy do you think has won more wars?
6) Make a new plan and move forward. Thinking about the past is helpful-for the purpose of learning from it. But ruminating and dwelling in the past, reliving your mistakes and thinking about how things could and should have turned out differently just isn't productive.
It's time to think about the future! Take what you learned from the failure and apply it to a new or revised plan towards the same goal. Look at the bright side-you now have more information and knowledge than you did making your last plan! This should give you a little more confidence, knowing your odds are better this time. This is the same mindset that Thomas Edison had when he said, after years of trying to create a light bulb, "I have not failed. I've just found 10,000 ways that won't work."
So rather than reacting negatively to failures and problems when they occur, or getting stressed out about what happened (as if you're somehow exempt, unlike all the other entrepreneurs throughout history), learn how to react productively instead.
Guard your thoughts and mind with the same diligence as you would protect your assets and follow your plan. Allowing negative thinking and fear to creep in will cloud your vision, lead to less effective plans, and will short-circuit your ability to remain consistent and motivated.
On the other hand, if you form the habit of failing forward (productively), then nothing will be able to permanently stand in your way of success. The choice is yours.
Written by Jay Turo on Monday, July 30, 2012
What most frustrates angel investors is the “needle in the haystack” nature of picking winners.
The frustration is trebled because the “traditional” investing options these days are so profoundly unattractive.
The U.S. public stock market long-term woes would be comical if they weren’t so tragic.
We are now well-beyond 13 long years of ZERO public market returns, with major indices (Dow, S & P, and NASDAQ) trading, on an inflation adjusted basis, much lower than they were in July 1999.
As for that other traditional pillar for the individual investor – residential real estate – its woes are similarly deep.
While prices have seen a moderate recovery this year, since 2007 residential real estate investments have largely reverted back to being long-term depreciating - and not appreciating - assets.
Most Americans, in fact, have gotten so discouraged by both markets’ performances and the media’s incessant “end is near” blaring that they have simply taken the “un-approach” to investing.
They just leave their money in cash – mostly in zero or close to zero interest checking and savings accounts.
Now, what is most perplexing and intriguing about this investment depression it that it has coincided with what has unquestionably been the greatest period in history for technology innovation and human progress.
So how do we square these – a period of historically unprecedented innovation tied to one of historically abysmal investing return?
And more importantly for the pragmatists, how do we profit from it?
To the first question, I would point to three main factors – continued payback for the 80’s and 90’s, globalization, and governmental intervention.
For the U.S. public markets at least, the last 13 years have represented a “reset” of values that had gotten way ahead of themselves in the 80’s and 90’s.
Remember, from August 1982 to July 1999, the Dow Jones Industrial Average went from 777 to 11,031, and the NASDAQ from 159 to 2,685.
Just too much too fast, and after this 16-year great bull market we have now had a 13 year pause.
As for globalization, in this context it is the idea that wealth growth in this period has not so much been paused as it has simply moved from the U.S. and the “West” to the “BIC” – Brazil, India, and China and their brethren.
To the degree that this is true, my view is that it is a short-term “ripple” that is clouding the longer-term reality that all of this great, new global wealth will soon find its way back to the U.S. in the form of increasing exports of American goods and services (especially services).
Thirdly, and perhaps most distressingly, has been the “double whammy” of U.S. governmental intervention in the markets.
First, by “crowding out” private capital with massive, structural budget deficits.
And more subtly but far more insidiously, by “uncertainty signaling” regarding tax and regulatory policy which has slowed entrepreneurs from taking the kind of assertive, forward action and risks that they could and would if they felt more comfortable regarding the rules of the game.
So what to do?
Well, if history has taught us anything, it has taught us that in the long run innovation always wins.
And, in spite of its challenges, the U.S. economy and society still produce by far the most and the best innovators in the world.
Find and back these innovators and you will be just fine – BIC, government, and the ups and downs of the markets notwithstanding.
As for who these innovators are? Just keep it simple.
As opposed to thinking of them as technologists, just think of them as good business people.
Peter Drucker defined them best many years ago simply as “Effective Executives.”
They are those that:
1. Ask, “What needs to be done?”
2. Ask, “What is right for the enterprise?” (as opposed to an individual or a specific stakeholder)
3. That develop action plans.
4. That take responsibility for decisions.
5. That take responsibility for communication.
6. That focus on opportunities rather than problems.
7. That run productive meetings.
8. And that think and say “we” rather than “I”
Find these effective executives in whatever line of business they may be in and BACK THEM.
Everything else is just noise.
Written by Dave Lavinsky on Sunday, July 29, 2012
How do you define success?
I have seen it defined as consistently achieving your pre-determined goals. Others have said it's your level of "grit" or ability to fail consistently without losing your motivation or giving up from self-doubt.
Your business goals and dreams are unique to you. While the object of success is different for every person, we have been able to determine the characteristics that are shared by those who have found success and fulfillment, as they define it.
The industries and pursuits of successful people are very diverse, so mimicking their actual day-to-day behavior is not always a true model of how to get what you want (unless you're trying to succeed at the same thing they are).
Watching the actions of successful business people reveals their mindset that motivates them and, more importantly, gives them the perseverance and consistency to take the actions needed every day to achieve what they dream.
This is a humbling reminder that growing your business is more than just knowing what to do, or finding out the secret technique or method that will make you more money.
While that helps in choosing your strategy and making the execution easier, the reality is that anyone with a strong enough success mindset will have the attributes needed to find out what to do, commit to it, and then get to work through thick and thin, changing their course as needed until they've realize their goal.
What are the elements of this "success mindset?"
Confidence in your dream and your abilities
How strongly do you believe in your company's potential? How strongly do you believe that you have the knowledge and skills necessary to pull it off? This is self-confidence. Entrepreneurs who don't fully believe in themselves are more likely to quit, or make excuses that keep them from trying in the first place.
Part of confidence comes from experience. After all, if you've made money in business in the past, it's not too hard to see yourself doing it again, or more of it. When you see your hunches pay off, you'll learn to trust your gut even more.
Part of confidence is knowing that you are probably going to run into challenges and fail at a few things along the way. It means you can handle setbacks without questioning your own ability. There will always, I repeat, always be setbacks. The difference is that a confident entrepreneur knows he can figure out what to do when the time comes and overcome them.
My point here is that when things don't work out the way you planned, it does not mean that you are personally lacking in some way. The point is to achieve your goal, not to have a flawless plan.
Flexible and willing to learn
The sharpest entrepreneurs are continually learning from whatever source presents itself. This means getting expert knowledge in their field and learning how to run a business in general. But it also means listening along the way for ideas that you can implement directly in new or current projects.
It doesn't matter who the ideas come from. Constantly look outside yourself for new ideas and be flexible. After all, there is no one right way to run your business, and copying your competitors exactly is more of an exercise in flattery than a strategy for success.
Your results are also a source of learning if you'll listen to them. This applies to both successes and failures. If you succeed at something, it's not because you're invincible-it's because you took certain actions that produced a certain result. Same goes for failures.
Focus more on actions and results and what they can teach you through trial and error, rather than making things personal.
Persistence and determination
The most persistent entrepreneur will usually win. There are plenty of talented, highly-intelligent, and educated people out there. Why aren't they all successful?
My guess would be their mindset. Perhaps they don't believe they can achieve what they want, or set their sights low to avoid the risk of failure and pain.
We can learn a lot from entrepreneurs like Henry Ford-a man of average intelligence who surrounded himself with the very best people. His job was to consider their input and make decisions accordingly. People look to the leader to press forward-that's you!
So even if you don't currently have the know-how or the funds (or whatever you think is holding you back) to achieve your dream right now, know that you will eventually if you continue to make proactive efforts towards your goal. It's just a matter of time!
Ask any fighter and he'll tell you that focus and concentration are crucial. Would you want to get distracted by shiny objects in the crowd if you were in the middle of a heavyweight battle? You'd probably get your clock cleaned, or at least fail to be effective at attacking.
Why would your business be any less important? Every day, you will have a ton of information, thoughts, and cries for your attention coming at you. The average person comes in contact with as many as 2,000 advertising messages per day, for example.
How well do you focus on your goals? Do you review them often? Do you make plans for their achievement, and revise them when they don't work as well as you thought?
At any given hour of your workday, ask yourself, "What am I doing right now, and is it helping me achieve my goal or is it busy work, a distraction, or something I could delegate?"
The topics of confidence and self-esteem as well as mindfulness and concentration are not only fascinating studies in self-knowledge. They can help you make money. They can help you grow your business, and find success.
To apply this, take a look at your own mindset lately. Has it been conducive to success, or do you find yourself getting in your own way? The process of developing the right mindset is not as simple as a one-time task list. It's based on setting the habit of consistently paying attention to your thoughts and feelings, which reveal your higher thought patterns and beliefs.
Written by Dave Lavinsky on Friday, July 27, 2012
Every good plan for massive growth will address how you intend to generate leads and turn them into sales. Unless 100% of your sales take place online, you'll need real, live people to take phone calls, process orders, and follow-up after the sale for retention and support.
Who is going to do this? Not you personally, if you plan to grow.
Not an in-house sales team of employees, either, for many business owners who prefer to outsource these positions to freelance sales reps or call centers.
Outsourcing your sales staff is becoming more popular because:
#1: It's less expensive than hiring and paying employees. It's easier to pay independent contractors by commission without a base salary, which you'll probably need to do with employees to comply with your state's laws.
#2: You're not that great at sales yourself. There's nothing wrong with this, but if your company is going to have salespeople, someone who knows how to get the job done effectively is going to need to train and manage the team. If no one else in your company is qualified, it's just easier to go with outside specialists.
#3: No managing a team. Like I said above, someone will need to manage the sales team. This takes time to do and I don't blame entrepreneurs for wanting to pass it on to another company. If not you, who in your company could take charge of that responsibility? Can you bring in a sales manager or new partner to handle it?
For these reasons, it seems like outsourcing your sales is the way to go. And maybe it is. But it depends and has its downsides like anything else.
The biggest downside to outsourcing your sales
But assuming we're talking about filling an ongoing need, my experience is that most of the time, the companies and individuals you outsource selling to just don't get the same results as an in-house team.
They can do well, but the companies who have tested sales from in-house teams versus outsourcing the sales usually show that you can make more doing it yourself. If you had 25% more revenue for each precious dollar you spend on advertising, you might do the math and see how much more you can make.
Some of the possible explanations are that outside salespeople often make sales for multiple clients, so they aren't focused on selling your product. They may push other offers with higher commissions or make more time one week for someone else, neglecting your customers.
And although they usually take some time up front to get acquainted with your product's details and how it's marketed, the salesperson is the last chance to make the sale as your customer goes down the marketing funnel. They have got to know the product inside and out to be able to answer any question a prospect could ask without giving them a reason to say "No."
So which is better? It depends...
How quickly do you need to set up and for how long? If you're in a rush, there are places that can get set up to take incoming calls or start setting appointments for you within a few days-not weeks, as it would to run ads, process applications, interview, and train a team on how to sell your product.
If you're just testing a campaign that involves a salesperson, you may not want to invest in a whole team of people you may not need anymore in a few weeks or months. You could also outsource it at first to get the ball rolling and then take your time building a terrific sales team to replace them.
It's up to you. You're the leader...you make the tough calls. But hopefully now you've seen the pros and cons of both ways and can choose how you do it with confidence.
Written by Jay Turo on Monday, July 23, 2012
What do the most dynamic 21st Century entrepreneurial companies have in common? Well, for starters they a) pursue global Markets b) place company culture above all else and c) They embrace the Black Swan within and without.
They Pursue Global Markets. Peter Diamandis, in his great book “Abundance, The Future is Better than You Think” talks about the emerging world of “9 billion people with clean water, nutritious food, affordable housing, personalized housing, top-tier medical care, and nonpolluting, ubiquitous energy.”
Drowned out by the doom and gloom talk of Euro-crisis, LIBOR and Mitt Romney’s tax returns, it is THIS story that is and will be the dominant one of our 21st Centrury.
Try these statistics on for size, from 1999 to today Asia’s share of the world’s Initial Public Offerings grew from 12% to 66%. In that same time frame, United States IPO volume declined 75% in real terms and now accounts for less than 11% of the global total.
And with their capital and confidence, China and India are stretching their wings. Since 2005, they have been the two leading investors in Africa, investing $31 billion and $16 billion on the continent, respectively.
Why? Well, McKinsey estimates that consumer spending in Africa will double, to $1.8 trillion, by 2020, equivalent to bringing a whole new market the size of Brazil online.
China. India. Brazil. Africa. This is where the growth action is, and while the first reaction of Americans is to feel as if we’re being left out of the game, the RIGHT reaction should be WOW.
These are fantastic new markets for U.S. goods and services, especially services, and they are expanding in aggregate at a rate that even 10% U.S. domestic GNP growth couldn’t touch.
Action Point: Core to every strategic session for any company of ambition should include these simple questions:
• What is your China strategy? Your India strategy?
• How easy / possible is it for global customers to buy your product – to purchase your service?
• How can they find you? How do you market to them?
• How / must your business model evolve to leverage these new opportunities?
They Place Culture Above All Else. Modern business, shaped by technology, is increasingly diverging to two nodes – on the one hand to great size quickly (see Google, Facebook, eBay, Twitter, et al.) and on the other hand, to corporations of one, the so-called Free Agent Nation.
The tools of collaboration and connectivity - mobile always-on Internet, cloud productivity applications like Google Apps, Basecamp, Salesforce and Skype - are so good that the natural devolution is to a BREAKUP of the corporate form and to everyone working for themselves, by themselves.
Now except for the very fortunate few (see Google et al. above), almost everyone else is left with the challenge of how to get to scale and once there how to maintain it.
This is HARD. In a world where ideas and technologies and business models and even intellectual property (sad but true) can be copied and undercut worldwide at the speed of a mouse click, what can any company really hold onto?
The answer is company culture. There is no one size fits all answer as to what the “right” corporate culture is. Successful cultures are as disparate as General Electric’s famously formulaic one, to Zappos’, Virgin’s, and Mind Valley’s irreverent, almost carefree approaches.
But a few constants remain. A strong results and metrics-focused approach. A vigilant commitment to ethics and integrity. And an environment that encourages and demands learning and constant improvement of people and processes.
The great thing is that via the Internet we CAN copy the principles of the best of them - Zappos’ and Mind Valley’s and scores of others are online for all to see. While the principles of course are NOT the culture itself (wouldn’t it be nice if it was that easy?) they ARE signposts as to what is possible.
They Embrace the Black Swan Both Within and Without. At the core of modern entrepreneurship are the sometimes seemingly mystical precepts of The Black Swan.
The concept of The Black Swan was popularized by the great Lebanese thinker and writer Nicholas Taleb in his bestseller of the same name. He describes it best:
"What we call here a Black Swan is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."
Taleb continues, "I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives."
So from a business perspective, how can we make the Black Swan work for, and not against, us?
Well, two ideas:
1) Bet on the Unexpected. Check your ego firmly at the door when evaluating business models. Accept that you (and everyone) for that matter KNOWS NOTHING about what the future will hold other than the fact that we don't know what the future will hold.
That is philosophy - here is money-making: The Black Swan teaches us that the big outlier events - the 10 to 1 shots and beyond – will always be UNDER – priced in the marketplace. Bet on them.
2) Allow Serendipity To Do Its Work. Startups intuitively get the idea of creating new business models as part of their mission. But this lightness disappears quickly.
The Black Swan teaches us that what we have done to date, what has worked to date, is probably NOT what we will be doing, what will be working in the future.
And where does The Black Swan point us to find the wisdom as to what to do? Well, as much from outside the formal strategic planning process as from within.
As Taleb says - from conferences, from parties. From chance encounters. From being open to ideas, people and things outside of the normal box.
Incorporate these Black Swan elements into a dynamic corporate culture, cultivate and ACT upon the global view, and let the magic happen.
Written by Dave Lavinsky on Saturday, July 21, 2012
According to the Center for Venture Research at the University of New Hampshire, last year 66,230 ventures received angel funding.
Compare that to the only 3,673 ventures that raised venture capital, and you quickly see that nearly TWENTY TIMES more companies raise angel funding than venture capital.
Importantly, the Center for Venture Research found that the number of angel investors providing the funding last year was 318,480 individuals. That's a lot of angel investors.
So, the question that entrepreneurs always ask me is "how do I find these angel investors." The good and bad news is that there's no directory of angel investors. This is bad because if there was, it would be easy to find them. On the other hand it's good, since if these angel investors were easy to find, they would be bombarded with deals; and thus raising capital from them would be harder.
The best way to find these angel investors is through networking. The first part of networking is asking everyone you know (e.g., friends, colleagues, family, advisors like consultants, lawyers and accountants, etc. ) who they might know. And you should definitely do that.
The other part of networking is meeting new people. In many cases you should target individual angel investors directly. For instance, you may realize that a certain executive in your industry would be perfect, in which case you should call them and/or seek an introduction from a mutual acquaintance. (Note that business owners, executives and others with high paying jobs comprise the majority of angel investors).
In other cases, you should "get out there" and meet them at different venues. Here are the 7 best venues I've found for meeting angel investors.
1. Local Business & Networking Events
Every city has local events that attract business owners and entrepreneurs (note that other business owners and entrepreneurs are often angel investors and/or can introduce you to angels).
You can find out about these events on sites like Meetup, Eventful and EventBrite.
For example, if you go to Meetup and type in "entrepreneur," you'll find lots of local events.
2. Industry Conferences & Trade Shows
Industry Conferences & Trade Shows are great places to meet angel investors. These events are crawling with successful people who have the means and often interest in funding a company like yours. And, based on the fact that they are attending such a conference, they know your industry. This makes educating them on your venture easier, and also often gives them the ability to give you valuable strategic advice.
3. Alumni Events
Particularly at college alumni events you'll find lots of successful people. Many of whom would be very interested in funding your company as an angel investor. You already have a connection with these individuals since you share the same alma mater. So go to these events and meet them.
4. Chamber of Commerce Meetings
There's probably no better place to meet a large concentration of business owners (and potential angel investors) than local Chamber of Commerce meetings. So attend these meetings.
5. Continuing Education Classes
In most communities there local colleges that teach continuing education classes. Some of these classes will attract successful business owners and others who might consider investing in your venture. A class teaching "bread baking" may not be the best fit. But a class teaching "online marketing for your business" might be a perfect way to meet angel investors.
6. Volunteer at Local Organizations & Charities and/or Attend Charity Events
As a general rule, you should volunteer to give back to people less fortunate than you. But as a bonus, when volunteering you'll often meet very successful people, including large donors to the cause. These individuals might also be interested in funding your company.
7. Online Forums
While there are lots of offline places to meet angel investors as specified above, don't forget about online venues. There are plenty of online communities that you can join. Ones filled with business owners. And ones filled with people who are experts in or are passionate about your industry. Likewise there are LinkedIn and Facebook groups. Go online and join the right groups, and use them to connect with prospective angels.
Armed with this knowledge, go out there and network. There are hundreds of thousands of angel investors out there. It's up to you to find them and tell them about your venture.
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 presentation explains more.
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