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 Dave Lavinsky on Sunday, April 22, 2012
As a business owner, I encourage you to think about your business a little differently. That is, I want you to think about your business as a product. And specifically a product that one day you might sell to an acquirer (for a lot of money of course).
By thinking about your business this way, you will be more likely to build a company that an acquirer would want to buy. As opposed to the vast number of un-sellable businesses most entrepreneurs unfortunately create.
Importantly, even if your intention is never to sell your business, I want you to adapt this way of thinking. Because the same attributes that will make your business attractive to buyers will also make it perform better for you. Remember, your business should work for you, not the opposite.
Looking at your business as a product, the first question to ask (and the first question an acquirer will ask) is:
Does the company you built stand out from the others?
In assessing a product, we typically consider its unique attributes or unique selling proposition. For your business, what about it will get the buyers' attention? Will it be your cash flow, recurring revenues, or potential for significant future growth?
A second question a product buyer might ask is '"how easy is it to use the product?" Similarly, an acquirer will ask:
How easy will it be to run this business after acquisition?
Clearly, the acquirer will want the smoothest transition possible when taking over. The acquirer does NOT want to deal with:
- Employees not knowing what to do or how to do it without you being there
- Clients and customers leaving along with you/the old owner
- Hit-or-miss revenues and unpredictable cash flow
- Being outdated by competition, trends, government regulations and/or new technologies
Likewise an acquirer would NOT want to purchase a company in which a small handful of clients represented the majority of revenues. In such a case, even just one or two clients leaving could materially hurt revenues and possibly bankrupt the company. Yes, even thriving businesses have been bankrupted by one or two trophy customers leaving because they failed to diversify their customer base.
Another question a product buyer typically asks is "what are the key features of the product that allow it to perform?" In relation to your business, these features include the Financial Metrics you've achieved and Business Assets you've built.
How has your business performed financially?
Obviously a buyer will want a business that makes money (or could make it money), and the more predictable and turn-key it is, the more you can make from the sale.
Doing your homework on what similar businesses sell for will help you plan your exit in this regard. Find out what yearly revenues and earnings is the "sweet spot" for businesses or individuals on your target acquirer list, and make this your revenue goal to shoot for before selling.
This is harder to do in the "survival" stage of your business, obviously. But over time as you discover what works and what doesn't and double up on what's effective, a higher percentage of your efforts will succeed and that adds to its predictability and stability.
What business assets has your company built?
A big part of your business' value is the time and effort you put into building the business assets that allow your company to profitably and efficiently run.
These business assets, which will strengthen your business and increase its value, include:
- Subscribers & Customers - Your customer base is one of your biggest assets, and represents the chance to market repeatedly to the same people. Your databases of those who subscribe to be contacted by you via email, Facebook, text messages, etc, are also assets to spend time and energy increasing.
- Systems - Who does what in your business? What are the recurring tasks that someone will need to perform over and over and over again? What is the correct process for each of these, and the steps involved? Your business' acquirer does not want to come on board with all of this information in your head. Ideally, these processes and checklists will have been mapped out in advance and followed as "the way we do things here" all along.
- Solid team - It takes time, trial, and error to find the right team, and much more time after that to coach and develop them to be able to run the business without you. This is also part of the work involved with preparing a company for sale. Between documenting systems and this, having exceptional people is much more important, because the right people will be willing and able figure out how to get results without having it all spelled out.
- Hard assets and technology - These business assets include real estate, machinery, inventory, web properties, software, etc. which help you run the business more effectively.
A final question you might consider when purchasing a product, and particularly an investment product, is its future growth potential. When considering purchasing a company, a similar question the acquirer will ask is:
What are the odds of sustainable future growth?
Few buyers are going to pay you a significant multiple of your annual revenues or profits unless they believe they can increase those revenues/profits even more. Otherwise, how are they going to get a return on their investment?
The ideal time to sell is after you have demonstrated profits and growth, and right as you're positioned to grow even more, and that means:
- Growth - Having a solid business model and proven lead generation strategies in place that can be expanded by increasing ad spend, or reaching new segments, or moving into entirely new markets altogether. Get your company in a position to do these things, to pave the way for the new owner. Buyers also want a sales process and team that can handle several times more sales without a lot more training and development.
- Risk - What risks exist now or in the near future that might keep the new buyer from getting what they want? You'll want to consider ways to mitigate legal, financial, competitive, governmental, and technological changes and threats.
- Unique Competitive Advantage - Being a "me-too" company puts you on shaky footing, whether managing or selling such a business. Creating and cementing your unique competitive advantage is a critical factor in creating a quality business.
By looking at your business as a product, you can build a thriving enterprise that satisfies your needs and the needs of a big-pocketed acquirer. Specifically, you want to build your business so that it's unique, can run easily upon acquisition, has strong financial performance, includes valuable business assets, and is positioned for future growth.
Do this and then enjoy the success that comes with it!
Suggested Resource: If you want to build a sellable business, join me on a free webinar where I explain exactly what to do. It's called "Million Dollar Exits: How to Build a Business You Can Sell For Millions of Dollars." Reserve your seat for the webinar by clicking here.
Written by Dave Lavinsky on Thursday, April 19, 2012
If you are ever in a position to sell your company, you'll learn that there are two general types of buyers.
There's an individual buyer, or a person who wants to buy your business so they can run it themselves.
And there's a corporate buyer, or a company who wants to buy your business and integrate it into their own.
For the most part, there's a financial cut-off between the groups. That is, if you are selling a business for less than $2 million, generally you are selling it to an individual buyer. And for businesses above $2 million, you are generally selling to a corporate buyer.
Now, when selling a sub $2 million business, you often use a business broker (versus using an investment banker to sell a larger business). And most business brokers among other things, will list your business for sale on several websites.
One of the largest of these websites, in terms of number of visitors, is BizBuySell.com.
Occasionally, I visit BizBuySell.com myself for educational purposes. I like to see the types of businesses that are for sale, how they are positioning themselves, and what prices they are asking.
And the last time I visited BizBuySell.com, I asked myself an interesting question:
Who primarily visits this site?
And the answer I came up with was 1) business brokers, 2) business owners who are selling their companies, and 3) entrepreneurs looking to buy businesses.
Now, it was this latter group, entrepreneurs looking to buy businesses, which I found most interesting.
Because, what must these entrepreneurs have if they are looking to purchase a business?
Money, or access to money.
Now why this is so important is that there are tons of entrepreneurs with businesses or business ideas seeking funding for their businesses. And these other entrepreneurs (who don't have businesses or business ideas) clearly have their own, or have access to funding.
Which led me to a potentially creative technique for raising funding.
1. List your company (even if it's just a startup or concept) on a site like BizBuySell.com
2. When buyers contact you, explain to them that your preference is not to sell your business or concept to them, but rather to partner with them. That is, have them buy-into your business. Specifically, if they invest $Y, they will get X% ownership in your business.
So, the concept here is simple: find someone who has money and is looking for a business opportunity, and have your company be that opportunity.
Now the question is whether this strategy is ethical or not. Mainly the fact that you are listing a company for sale that isn't really for sale in order to meet potential investors.
I think each of you have to answer that question for yourselves.
On one hand, if you legitimately would consider someone buying your business in its current state, then this strategy is clearly legitimate.
However, if you have no interest in selling, it becomes questionable. But perhaps, in your company listing, you more explicitly state that you are more interested in selling a portion of your business, and not the whole business to a buyer. Then, it seems more legitimate.
Note that I have not discussed this idea with the owners of BizBuySell.com or similar sites. But from their terms of service, it seems that such a strategy is acceptable to them.
A similar and clearly 100% legitimate strategy would be to contact local business brokers and see if they know of any potential buyers who would consider partial ownership (i.e., investing in your company) instead of full ownership.
Finally, one of the key points of this article was not to tell you about this one strategy for your consideration. But rather to let you know that there are tons of creative and alternative ways to fund your company beyond the "usual suspects" of angel investors, venture capitalists and banks.
Written by Dave Lavinsky on Monday, April 16, 2012
If you're like me and passionately roll up your sleeves and get to work on something great for several years or more (your business), you owe it to yourself to have a final result for your efforts that is truly a masterpiece.
I'm talking about your business, once it's complete...Done...Ready to sell for as much as you can reasonably expect, often for several times its yearly earnings.
If and when it does come time to sell, you want to be selling from a position of strength-to sell it when it is at its most valuable point and not when you're burned out, in ill health, or in some other situation where you are rushed or won't make nearly as much from the sale.
Like any great work, you have to start with the end in mind, and to that end I'll be writing this to clarify just what a "sellable" business looks like. This will give you an ideal to work towards and guide your plans and work.
Below are several things to be aware of in increasing the value of your business to yourself and potential acquirers.
Positioned in its clearly-defined niche
Your business must be the best it can be at what it does, without trying to be everything to everyone. A business that knows its customer segments, their needs and language, and how to solicit a response from them is a lot more valuable than one that is a mixture of everything, or an unknown in its market.
Coach your team to run the business without you
Could other people ever run your business without you? They'll have to, if you're selling! So why not make this your goal from Day One?
Make an organizational chart of how your business will look when it's time to sell it. List all the various workers in marketing, operations, and those they report to. It's okay if it's just you or a handful of people currently filling all those roles. Doing this will help you organize who is going to do what in your business before you hire a new person.
Then, over time, you can find other people to fill those positions one by one until you're out of the picture.
Build relationships with customers
Goodwill, such as your reputation and brand in the minds of your current and prospective customers, is considered an asset on your company's balance sheet. You build this over time by treating people right and maintaining good relationships.
If you intend to sell your business someday, or if you just want to have the option, this is something you have to make a priority throughout the business's life. You can't just start doing it well suddenly in the final year. Relationships and recognition take time.
Make sure you're stable
Make sure you're not overly dependent on any one customer, vendor, employee, or anything else. Diversify your strengths. If you have any "whale" customers that make up a large portion of your business, try to get at least 80% of your business from other people.
The new owner does not want to take the reins and have revenues drop in half in the event your biggest customer leaves.
Maximize your revenues
This one's self-evident, but deserves to be repeated. In my last essay, I shared 4 proven ways to increase your revenues-getting more customers, increasing your average order size, get customers to buy more frequently, and finding new ways to monetize your customers and visitors.
A company with higher revenues and which shows growing revenues will be more valuable and attractive to buyers.
Hold expenses accountable
You boost your net profit (and therefore the value) by reducing your expenses. However, no one ever shrank themselves into wealth. You're not going to grow your business by keeping expenses lower-but the numbers will increase as it grows.
Your goal is to keep the percentages the same, such as keeping advertising at 20% of your revenues whether earnings are $100,000 or $1,000,000 per year.
Basically, you'll want to make sure that budgets are made and followed, to keep spending within projected limits and to avoid costs creeping up that don't generate more revenue in return.
Keep great records for the next owner
Keep excellent records of everything for the new owner-your files, databases, customer communications, marketing materials, financial records, employee agreements-everything.
Committing to do this now will make your life so much easier between now and the time you sell. Keep good records for your own efficiency, protection, and to make your business look a lot more attractive to buyers than one where all the records are filed away in the old owner's head.
Develop a plan for when it's "done" and ready to sell
I don't want you to have plans on top of plans, but each of these will take certain actions to make them happen. So here's what to do: Add these end results into your existing business plan, and use your best judgment when choosing how to make each of them happen in your company.
When it's all said and done, the next few years are going to go by whether you maximize your business's value or not. At the end of, say, 5 years, would you rather have a stable, attractive, polished business ready to sell for top dollar, or be left taking what you can get for what you have?
If it seems like a lot, remember you have until the time you sell to take care of these things. You don't have to do it all now! Just add these elements I described to your vision of what you want your company to be, and keep your eye on it until the big day finally comes.
Suggested Resource: Would you like to know more ways to maximize the value of your business. And specifically to turn it into one that exceeds $10 million in revenues? Then check out Growthink's 8 Figure Formula. This video explains more.
Written by Dave Lavinsky on Thursday, April 12, 2012
Below I will show you four fundamental ways to increase your company's revenues, net profit and overall value.
Importantly, don't discount any of these ideas. It's too easy to say "I'm already doing that," or "that won't work in MY business." When, in fact, in most cases you can 1) do a better job doing what you're doing, and/or 2) creatively adapt the idea in your business.
So have an open and creative mind, and get ready to learn some great ideas to take your business to the next level.
Here are the four methods:
1. Sell to and serve more people
This one is obvious-get more customers. So break it down further and look into all the possible channels by which you can advertise and reach new customers. Print, internet, signs, trade shows, direct mail, and so on.
If you're like most of us, you're probably advertising in some places but not yet in others. You need to start testing lots of different marketing channels to find new ones that can work for you. Start with the one that, as best you can tell, stands out as the one most likely to pay off (getting the most qualified people to contact you per dollar spent).
Remember: the more marketing campaigns you try, the more likely it is you'll find the few that are solid gold. And these oftentimes become long-term assets, generating you profits month-after-month, year-after-year.
2. Increase your average order size
Restaurants know this one well. Once someone has come in to your store (or online property, or calls you) your goal is to maximize their total order amount. In doing so, you should simultaneously maximize your revenues and completely fulfill the needs of your customer.
And it doesn't have to be done obnoxiously. For example, when you're in a restaurant and the waiter suggests entrees, appetizers and/or asks if you want dessert, it's not seen as being pushy, and maximizes the restaurant's profits.
Another example of this you may have seen if you've rented a U-Haul or moving van. In those stores, you've probably noticed all the packing and moving supplies they sell. You could add to your customers' order sizes by finding out what accessories or related items they might need, and have them available.
Online, you can see this done when you're adding items to your cart and going through "checkout." Often, other items are suggested at the last minute when you're in buying mode. Amazon.com is the master of suggesting products (think "Those who bought X also liked...") and it's no wonder they have one of the highest conversion rates among online stores.
3. Increase order frequency
How often do your customers need your product or service? Is it something totally out of your control, like a real estate client not needing to buy another house for several years?
Or are there things within your control that can help customers to come in more often or purchase more often from you, like a restaurant inviting its customers in for specials on slow nights?
Loyalty and reward programs can help make this happen. For example, most coffee shops will give you a card to punch each time you buy a coffee to get the 10th one free. If you have 7 of 10 punches already, you know you'll be a little more likely to choose that place over others to get your reward sooner.
Continuity income is another huge one. If you can offer any kind of product or service on a recurring, monthly basis...do it. A winery or liquor store could offer a wine-of-the-month club. Bakeries can offer weekly batches of cookies to local businesses for team meetings.
The odds are that whatever you're offering, a certain percentage of people want it every month like clockwork and will pay accordingly for it.
4. Increase your monetization methods
Lastly, look for your business' byproducts that might be of value to someone else.
An example of this is when sawmills and furniture manufacturers stopped throwing away the tons of sawdust accumulating on their floors, and began selling it to other businesses who could use it (such as for making "starter logs" for burning in your fireplace).
Another interesting example is a group of real estate investors who built a brand around their vanity number, 1-800-NO-AGENT, offering homeowners a chance to sell their house to them at a discount instead of listing it and waiting.
They found they could sell the leads (those who responded but didn't' want to sell to them) to local real estate agents (who would contact them to see if they could represent them). They company ended up generating nearly as much revenue from selling "dead" leads as it did from their core business of "flipping" houses!
Doubling revenues just by thinking outside the box...that'll add value to your company.
Hopefully as you read through these value-adding methods, you were able to find things you can do right now to increase your revenues and profits. At a minimum, add one new idea to your To Do list to accomplish in the next 30 days. And you'll start seeing the benefits!
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 Dave Lavinsky on Sunday, April 8, 2012
In my many years of running businesses for myself, I've noticed (as you probably have) that no one cares quite as much about your baby as you do. I mean, no one is as committed to realizing your vision as you (or your co-founders if you have them).
This is okay! It's just human nature. It's one of those things you can whine and complain about, or you can accept it and work creatively with it. Look at it from your employees' point of view-they're not YOU! They are probably not as entrepreneurial as you are and what motivates you is not necessarily what "should" motivate them.
Yet it takes a motivated, productive employee to help you reach your vision. So how can you maximize your team's, and therefore your business' productivity?
I will describe a few ways here shortly, but first I want to drive home that some of the answers will seem counterintuitive. They may seem different from the way things have been done in the traditional workplace. But that doesn't mean they don't work, or that the principles behind them aren't sound.
Remember...you are not your employees and they are not you! Everyone is motivated by something. It's your job to find out what and then give it to them by creating an environment where your team can flourish.
1. Inspire them to be productive
If someone is working for an hourly wage, you just can't expect them to have consistently high levels of productivity when they have little incentive to do so. Yes, there's fear of losing their job, but is that really enough in today's world? This isn't factory labor from 1910.
Your team of human beings needs positive reinforcement from you. Be creative and find ways to reward doing a consistently good job. You could offer pay raises for good performance, bonuses for getting results, recognizing the most reliable employees, etc.
Be aware of and cater to the individual personalities of your team. For example, offering monetary bonuses is not going to motivate all employees. Salespeople...probably yes. Bookkeepers...maybe not. In many cases, non-monetary rewards like public recognition are more powerful than monetary rewards.
2. Lose the Overtime
Working more than 40 hours per week oftentimes hurts creativity. Particularly if your employees need to solve problems or do creative work (like most office roles an "information worker" engages in), their performance will drop from fatigue MUCH faster than the performance of someone working with their hands or in a factory.
The typical management model assumes that more hours will mean better results, but it's just not in harmony with psychology and human performance. Studies have shown that when someone works for 60 hours per week, they will have a short-term boost in productivity that lasts for about 3-4 weeks before declining far below original levels. The latter decrease and recovery period is not worth it!
So save overtime for finalizing the occasional deadline-driven project. Help your employees to be well-rested and vibrant. Hire more part-timers to work, if needed. Getting 8 hours of sleep (not something you can control, but you can make it easier without overtime) will increase their problem-solving abilities. And give your top people a rest to get even more of a boost from them. (And do the same for YOURSELF).
3. Have a Daily Focus Huddle
If you set big goals and come in to work each day with single-minded purpose, you're going to reach your goals sooner.
Start by documenting your goals and breaking them down into smaller projects. Then, make sure your team is focused on completing each project. You can do this by having a 3-5 minute "huddle" with them first thing in the morning (or work shift).
During this huddle, you remind everyone of the project at hand and the end results to achieve. Get quick reports or updates on progress, and then answer questions and assign or remind everyone of their individual commitments for the day.
I realize this is more easily done in a weekly meeting, but try it for yourself daily for a week and see how much closer you get to your goals when everyone gets grounded and on track every day.
4. Small team sizes produce best results
Studies have found that productivity is maximized in teams of 4 to 8 people. Fewer people than that usually results in a team that is not diverse enough in talents or knowledge to get the results needed.
And productivity is 30-50% LOWER in groups larger than 10. Maybe it takes too much time to manage that many people, or things get too cluttered. But regardless, think about how your team (or teams) of employees are organized and see if you can break things up a little. 12 people could become 2 groups of 6, or 3 groups of 4-each focused on creating some crucial result for your business.
5. Seat people on the same team together in a closed team room
Lastly, a work team's productivity can increase over 100% when they work together in a closed room. Give them at least 50 square feet of space per person to work.
When teams are grouped in a closed-door setting together, there is faster communication. Questions are answered faster for better problem-solving and decision-making. And there are fewer external interruptions to the team.
If your business is a restaurant or a place where this is more difficult than an office setting, you can't do this; but you can understand this key point: find ways to put people working on a common task in the same place at the same time.
Importantly, remember that productivity is the key to achieving your vision using whatever resources and time are available to you. Your team's productivity is even more important than your personal productivity, though you set the tone for everyone else.
Hopefully these 5 action items will help you to do more with less, and have a happy team and workplace in the process. Pick at least one and try it out for the next week!
Suggested Resource: Follow the tips above and you'll start maximizing the productivity of your team. And check out "Productivity Secrets for Entrepreneurs: How to Get More Done, Make More Money and Take More Time Off" if you'd like to access my complete program for maximizing your productivity and results.
Written by Dave Lavinsky on Tuesday, April 3, 2012
I speak to my friend Steve about once a month. And every few times we speak, he hits me with his latest new business idea.
Once in a while, the idea has merit. But most times it doesn't.
The other day Steve told me his latest idea. I could barely mutter two words in reply when he cut me off. "I forgot who I was talking too," he blurted out, "you don't like any of my ideas."
Interestingly, when he said that, I felt like a venture capitalist. You see, venture capitalists or VCs hear tons and tons of business ideas. And when you hear tons of ideas over many years, and see the vast majority of these ideas fail to materialize, you start developing a pessimistic attitude about new ideas.
And, after hearing so many ideas myself over such a long period of times, it seems that even I have gotten a bit negative or skeptical (well at least on ideas that my friend Steve tells me about).
Interestingly, I went to business school nearly 15 years ago with several bright guys who became venture capitalists. When they first became VCs, they were very positive people. They heard ideas with the mindset of "how can we make this work."
But after hearing thousands of ideas over many years, and investing in lots of companies that didn't pan out, their thinking shifted. In fact, today, their attitude is more like "what are the reasons that this idea won't work."
I tell you this not to be a downer. But to let you inside the head of a venture capitalist, or any investor that's been around a long time. Like it or not, these investors inevitably develop a bit of pessimism when considering new investment opportunities. And while you are speaking, their mind is constantly asking, "what are the reasons this idea won't work."
Why this matters is that you need to understand and play to this pessimism.
Here are four ways to accomplish this:
1. Pre-emptively address their concerns
As you now know, while you speak with VCs, they are considering the reasons your venture won't work. So, address these concerns before they even ask about them. For example, state in your presentation the top 5 concerns you think they might have and why you will overcome/address them.
Generally, you should address these concerns in the core part of your investor presentations. You should also have four or five back-up slides (that you keep at the end of the presentation for use if and when needed) that address other less-common concerns that you guess investors might have. By pulling up these slide when the investor voices the concern, you will have the best possible answer and seem ultra-prepared (which you will be).
2. Avoid superlatives
Most VCs I know hate superlatives.
Superlatives are words like "best," "greatest," "most powerful," "world-class," etc. Unless you can back up these words, don't use them. Since VCs have been promised everything under the sun, and are turned off by such claims.
3. Relate your ideas to proven companies
One way to make your ideas appear more viable is to tie them to proven companies. For example, say that your company is like eBay but you [fill in the blank regarding how you differ]. Both consciously and subconsciously, this simile gives VCs and other investors the impression that your company might become as successful as that other proven company.
Importantly, don't bad mouth another company (particularly a successful company); as this will cause you to lose credibility. Rather explain why you are unique and can perform better and/or differently.
4. Boost your credibility wherever possible
Skeptical and pessimistic people (including VCs) are skeptical of grand claims. Hence why I told you to avoid superlatives above.
But you should also avoid other grand claims and bolster your credibility wherever possible.
For example, having a financial model that shows you are going to grow from $0 to $100 million in revenues in 3 years is generally going to be frowned upon. Since achieving such a feat is extremely rare.
Conversely, by researching the growth profile of similar firms, you can come up with more credible forecasts that will escape skepticism and show investors you really understand the business and its potential.
Likewise, you can boost credibility by getting customers. One of a VCs greatest concerns is whether you'll be able to acquire enough customers. Proving this early on significantly enhances your positioning and chances of raising VC dollars. Even if you don't have a product or service that's ready for customers, there are things you can do. For example, you can get alpha or beta customers. Or, at the least, you could survey customers and show VCs survey results and testimonials from customers saying they are seeking the precise solution you are building.
Finally, building a Board of Advisors and/or hiring accomplished employees will boost your credibility and show VCs that you know how to execute, and can thus effectively grow your business with the funding they invest in you.
Don't get me wrong. Most VCs aren't pessimists or curmudgeons that aren't fun to be around. But many do develop a natural pessimism against new entrepreneurs and ventures they meet. It is your job to overcome this pessimism. And once you do, you can gain the funding and the guidance of a VC that could help you dramatically grow your business.
Suggested Resource: In Venture Capital Pitch Formula, you'll learn exactly how to find and contact venture capitalists, exactly what information to include in your presentation, and how to secure your financing. This video explains more.
Written by Dave Lavinsky on Sunday, April 1, 2012
When I think about the great entrepreneurs of our time like Steve Jobs, Bill Gates and Richard Branson, I not only admire the companies they built, but their leadership skills. Since even the best idea, or the smartest individual, can't evolve into a massively successful company without leadership.
Below I will explain the difference between leadership and management, and steps you should take to improve your leadership skills.
Leadership vs. Management
Leadership is future-oriented, and determines what the company's desired future should be and what strategy to take to get it all done.
On the other hand, management focuses on getting things done in the present through the wise use of systems, people, and resources.
Leadership skills tend to be more intuitive, "big picture," and holistic. Managerial thinking tends to be more analytical, detailed, and logical. Both can be creative, but management thinking is definitely more process-oriented.
So how can someone become a better leader?
There are several areas of leadership for which each of us has some degree of skill. Take an analysis of yourself and where you stand on each of them below.
While this can be a real eye-opener, doing this can let you know where improvement is most needed. It might just be the thing that is holding you back without you knowing it!
Seeing the Future
As I mentioned before, leaders have the ability to see the big picture and devise an effective path to make that vision come true.
As a leader, you have the vantage point of looking at your entire business or any of its parts - sales, marketing, accounting, management, etc. You can look for opportunities or accept the need for change and create a vision in your mind of what could be.
The clearer you are about what you want and what specific results are required, the easier it is to map an appropriate strategy that will get you there.
Leaders create the core values and philosophy of the business, grounded in their own values and passion. It's up to you to be consistent with regards to your company's values, so that it becomes "the way we do it" in your business.
For example, Zappos CEO Tony Hsieh attributes much of his company's success to the 10 core values he helped establish:
1. Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and A Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More With Less
9. Be Passionate and Determined
10. Be Humble
Leaders are committed. You must be willing to make sacrifices to achieve success. And you must be persistent and passionate to see things through to completion even with setbacks along the way. No one is going to be more committed to the success of your business than you, and your commitment will inspire those who work for you.
And lastly, leaders are influencers. As you frequently and powerfully communicate what your vision and strategy are, others will catch your spirit as well and see what you see.
It can often be difficult to help other people to "get it," so as a leader you have to tailor your message to get through to them.
The funny thing about leadership is that it's the thing that most of us need to work on but we are perhaps the least aware of. After all, you don't know what you don't know. Where do you stand?
To help you, here are 3 simple steps to boost your leadership skills:
Step One: Take an inventory of yourself and your skills in each of the areas in bold above. Specifically, ask the following questions:
- Seeing the Future: Do you have a clear vision of your company's future? Do your employees know this vision?
- Values: What are the values you live by and that your company needs to follow. Do your employees know these values?
- Commitment: How committed are you to the success of your business? What would you forego in order to achieve that success (would you risk everything? give up watching TV? etc.)? Do you always follow through on company projects to completion?
- Influence: How much have you been able to influence employees and others? Have the 100% bought into your vision? Do they come to work with "fire in their bellies"?
Not only should you answer these questions yourself, but ask someone you trust (including key employees) to give you their thoughts as well so you get a second point of view.
Step Two: Determine where you are lacking and see how it has impacted your business. Specifically, are you happy with your answers to the above questions? If not, what might be the result if you don't change? What could be the result if you do change? Commit yourself to focusing on the area(s) in which you need improvement.
Step Three: Map out a plan for how you can improve in that area. Choose activities that will help you to practice that skill, and schedule them.
For example, if you feel like your vision for your business still isn't clear enough and needs some work, you might hold periodic vision meetings, attend conferences where you can scan for upcoming opportunities, or use some creative imagination techniques to explore possibilities in your mind.
Commit now to making your leadership skills an area of focus this year. With steady attention and effort, you'll find that you get results and realize your dreams more easily and quickly, and with a lot less confusion and spinning your wheels.
Suggested Resource: To become the ultimate leader, you need to do a lot of things, like hire the right people, create the right culture, establish accountability structures, etc.
If you haven't led a highly successful company before, there are a lot of mistakes you will make. However, I've put together a program that allows you to skip the mistakes and get it right the first time.
In my program, I'll teach you everything you need to do to find, recruit and train the right people, and build an amazing organization that allows you to thrive. Click here to access it now.
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