Growthink Blog

The Age of Comparison


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Debt crises in Europe.

Medicare, education, and deficit crises at home.

Middle East crises for as far as the eye can see...

Things seem pretty bleak out there, don’t they?

And isn’t the tone of our civil discourse so polarized that not only do we have tough problems, but doesn’t it feel as if our ability to proactively address them is less than it has ever been?

But maybe we have met the enemy and it really is us.

Maybe we have let our “it bleeds, it leads” media - the drumbeat of negativity that we are subjected to on a daily basis - play havoc with our psyches.

Maybe we are putting so much emotional weight and heft into the things that are bad, the things that can go wrong, that it is crowding out the things that are positive, the things that can and are going so very right.

Maybe the statistical odds are actually overwhelmingly in favor of everything just getting better.

For all of us, our children, our grandchildren. 

As in more prosperity, better education, more safety from premature death and disease, and yes even more happiness. 

Maybe when we pull our heads up and look around, what we will see is that what we are really living in is a golden age of technology, of prosperity.

And of possibility.

Maybe optimism - as author Matt Ridley describes it – is really the intelligent, intellectual choice. 

Peter Diamandis in his outstanding book “Abundance” talks about the “rising 3 billion” - how between now and 2020 the number of people connected to the global Internet and productivity grid will rise from its current 2 billion to 5 billion.

And that as it does as opposed to this creating crisis, how it will lead to the greatest economic boom in the history of the world. 

A boom driven by innovation, by technologies with us now in dynamic new fields like cloud computing, robotics, 3D printing, synthetic biology, digital medicine, nanomaterials, and artificial intelligence.

So now this is exciting stuff, and I feel personally blessed that my professional life revolves around a company like Growthink with its so inspirational mission of helping entrepreneurs succeed. 

As, of course, it will be the entrepreneurs – working at companies large and small and ones yet to be even dreamed and conceived - that will drive and create this new boom and these new innovations.

But even more excitingly, is the age that we are moving into is one driven by a power greater than that of technology and entrepreneurship.

And that will be one driven by the power of comparison

As has been happening for the past 30 years, those individuals and locales and states and countries that “get it” - and let technology in, let entrepreneurship in, let freedom in, well they will continue to be the ones that get ahead and get richer and richer and dare I say happier and happier. 

And those that don’t get, well they will fall further behind.

And for the first time in human history, there are now billions of people the world around with this power of comparison - of trial and error, of split testing, of modeling and mimicking best practices.

The power of information and intelligence and an entrepreneurial spirit and an empowerment to do something about it.

And because of this power, yes the statistical odds are overwhelmingly in favor of things just getting far better than any of us even dare to dream.


Why the SBA Funds Businesses Like Yours


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In the United States, many entrepreneurs get SBA loans to start or grow their businesses. While these loans are issued by private banks, the U.S. Small Business Administration (SBA) guarantees a percentage of each loan. What this means is that if you, the entrepreneur, default on the loan, the bank only loses a small percentage of the money it lent you (the U.S. government pays the rest).

Because of this guarantee program, it's much easier for entrepreneurs like you to get SBA loans -- as the bank doesn't need to bear all the risk themselves. Without the program, banks wouldn't make as many loans, and fewer businesses would get funding.

When small businesses grow, everybody wins! According to Karen Mills, current head of the SBA, its job is to make sure that small businesses have all the tools they need to grow, stimulate the economy, and create new jobs.

Small business funding challenges during the recession

But as you may have noticed, business owners are still having trouble getting access to capital, namely 1) Small dollar loans, and 2) Loans in the niche industries affected by recession, such as real estate, finance, etc.

If you think about it, most small businesses don't need $1 million or even $500,000, and wouldn't even know what to do with it all. In many cases, even $50,000 can go a long, long way towards boosting revenues (or even doubling them) if invested in more lead generation campaigns, building a sales team, etc.

The odds are you can suffice with a smaller loan amount. In the past this has been more difficult because banks are geared towards extending larger loans since they can earn more interest for the same amount of due diligence per loan.

What the SBA is doing for small businesses

The SBA recently launched two loan-guarantee revisions that simplify and streamline paperwork even more for banks and borrowers.

One of them, the Small Loan Advantage program, is off to a strong start. It allows banks to make loans at more affordable rates, and brings more opportunities to borrow smaller loan amounts, like $50,000 to $100,000 or even less....which is great if that's all you need!

Applying for a small SBA loan from banks

To take advantage of this for yourself, find out which local bank makes the most SBA loans. You can often find this information on the bank's website. Or you can visit the branch or call them. Ask them how many SBA loans they make and how often they fund loans in the dollar range of what you need.

Find the local bank that is most active in the SBA loan program and apply for a loan. If the bank says you're not ready for the loan, ask them why. Then figure out how to address the issue so you can go back later after resolving the concern.

The United States Small Business Administration wants you to succeed as an entrepreneur and business owner. Because when you do, you will create jobs and stimulate the economy. So consider SBA loans as a funding source; they might be just right for your business.

 

Suggested Resource: Want funding for your business? Then check out our Truth About Funding program to learn how you can access the 41 sources of funding available to entrepreneurs like you. Click here to learn more.


The Top Crowdfunding Sites for Business Owners


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Crowdfunding, or raising money from the Internet "crowd" has really taken off. Just a couple years ago there were only hundreds of companies who had raised Crowdfunding. Today we are in the tens of thousands.

Below is a brief overview of the many Crowdfunding platforms to consider.

The Largest Crowdfunding Sites:

Kickstarter.com is the largest site for funding projects, mostly creative projects. Having the largest network is nice, because the more people visiting the site, the more they have the chance to find you (as opposed to driving all of the traffic through your own efforts). The downside of Kickstarter is that not every project is accepted and they charge a success fee of 8% in the event you get funding. Also, if you raise fewer funds than you need, you don't receive any of it (but if you raise more than projected, you get the surplus).

Rockethub.com is primarily for funding creative projects. Their network is not as large as Kickstarter's, but still substantial. They accept more projects, and also have a success fee of 8%. I suggest scanning this site for similar projects to yours. Were they funded? How many days long was the funding period? Finding "comps" like yours can help you determine if you want to post your project here, on Kickstarter, or somewhere else.

GoFundMe.com has heavy traffic and is unique in that it doesn't charge a success fee if you get funded. They do charge a $9 fixed monthly fee, which is really minimal but still screens out less serious competitors and donors will take you more seriously. You can also raise money for anything here without an end date to the fundraising time frame you're given. While I have not used it myself, GoFundMe has gotten positive reviews on many blogs.

IndieGoGo caters to business owners-particularly artists and creative projects. You can make donations tax deductible here, which is fantastic because that's a deal breaker for some donors (and you don't want to have to form a non-profit yourself just to receive donations...or pay taxes on them!). Scroll through the different projects on this site to get an idea of how easy to use it is for visitors and entrepreneurs.

Rock The Post is similar to Kickstarter in a lot of ways. If you don't reach or surpass your funding goal you won't receive any of the funding. This is good for donors but can be frustrating for you. More uniquely, there are many other entrepreneurial members of their online community who can help you to brainstorm or even implement ideas. So think of it as a way to get connected to potential partners and support as well as funding.

Niche Crowdfunding Sites:

Localstake is a new site that is focused on helping local businesses get funding. This is a great idea, because most investors would rather help out someone local. One reason is that they benefit from helping their community become stronger, but also because they are more familiar with local concerns and feel like they can keep an eye on things (eating at your restaurant, etc.). My experience is the more tangible you can make your pitch and plans for those you approach, the more "for real" they perceive it to be.

FundaGeek is a site geared towards funding technology, invention, and education projects. Many college students and professors use it to advance their research and submit ideas for funding as an alternative to grants and give people more freedom and control over the project's purpose and implementation. I would definitely check this site out if you have a relevant project, as more donors here will be inclined to support your cause.

Appsfunder is the "kickstarter for mobile app design." On Appsfunder, you'll start by telling the story behind your idea, get funded by milestones as it's developed, and then launching it in the iTunes and Google Android markets.

Appsplit focuses on mobile, web, and desktop apps, and lets you hold "open" or "all-or-nothing" funding campaigns. The latter type are the same as with Kickstarter, but making your project "open" means that you receive the funds as they are donated, regardless of whether you reach your full projected funding goal or not. This is helpful because even some funds are better than none in some cases. If I were making an application, I'd definitely check out Appsplit and Appdfunder first.

Equity Based Crowdfunding Sites:

Once the SEC provides its rulings on how equity-based crowdfunding will work, we will see a crop of new equity-based crowdfunding sites. To date, several of these sites have already launched, but aren't fully functional. My favorite (because I know and like the people behind it among other reasons) is Crowdfunder.

Hopefully with this selection of sites available, you'll catch the vision of crowdfunding as well. It's no longer a question of "Should I?" -- now it's a matter of which site, for what, and when. Happy fundraising!


Crowdfunding vs. Peer-to-Peer Lending


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With the internet making several new forms of funding available to entrepreneurs who want to sidestep the hassles and qualification of getting bank financing, there's a little confusion about peer-to-peer lending sites and how they're different from crowdfunding.

I'm going to explain the difference, and some of the advantages and disadvantages of each.

Peer-to-Peer Lending

Peer-to-Peer (or P2P) Lending transactions occur between individuals without going through a bank or traditional intermediary. Without the middleman, borrowers can get better terms and access to more capital than before, and lenders can earn higher returns.
 
And as can be expected, there are several popular websites that connect borrowers and lenders directly, such as:

  • Prosper.com
  • LendingClub.com
  • Zopa.com
  • IOUCentral.com

 

The downside of P2P lending is that supposedly less than 10% of loans applied for on these sites get funded. And you have to pay back the loans.
 
Crowdfunding

With crowdfunding, you' can tap a lot more investors and raise unlimited amounts of money. And, you provide rewards for those who give you money rather than needing to repay a loan. And, your chances of raising crowdfunding are much higher than with P2P lending; statistics show that 50% of entrepreneurs who try to raise crowdfunding successfully do so.

With regards to rewards, with Crowdfunding you want to offer something to the people who help fund your project, such as future redemption of the product or service you are creating, discounts, prizes, gifts and bonuses.

A percentage of the money raised will in all likelihood come from friends, family, and people in your existing contacts. However, crowdfunding sites give you an organized and safe way to advertise the opportunity, and people can see the social proof of others getting on board and funding your project.

Examples of crowdfunding sites are:

  • Kickstarter.com
  • Rockethub.com
  • IndieGogo.com

 

{Note: There is also a type of funding called "Micro-funding," which is a means of offering funds to impoverished people who don't have access to traditional forms of loans. These funding amounts are generally very small and are used by the recipients to launch personal businesses, such as sewing, trading, making crafts, and other manageable ventures where a little funding can go a long way for the person and their family.}

I prefer crowdfunding over Peer to Peer Lending because of the potential to raise more money through a larger group of people, and not having to pay the money back (nor interest). However, I like diversifying my funding, so you should also check out the peer-to-peer lending sites to decide if they're worth pursuing for your business.

 

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.


JOBS Act Opens Up Crowd Funding From Equity Investors


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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.


3 Simple Tricks for Getting New Customers


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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.


Who Built That?


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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.

Additionally:

•  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. 


Overcoming Customer Objections: The 4 Biggest Objections and How to Handle Them


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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.


Six Steps for Turning Failure Into Success


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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.


Needles and Haystacks


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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.


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