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!
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.
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.
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:
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.
While I believe every business owner should be an expert in direct-response marketing (e.g., marketing designed to solicit a direct response which is specific and quantifiable), I don't believe it's necessary to become an expert on building websites.
It's something a hired programmer can do while you focus on growing your business.
However, even hiring and managing someone to take care of this for you can be time-consuming-and you still have to know what to ask them to do in the first place.
So here are 5 simple things that can make your website more effective that either you or any programmer can easily do.
#1: Set up a blog
Even if you don't have a website, you can go to Wordpress.com and create one for free. Or download Wordpress and install a free Wordpress theme (google that-there are hundreds out there) to your existing site.
#2: Post at least once per week
Make a new blog post on your website at least once per week. Announce your new blog posts on Facebook and Twitter if you use them, as well as to your email list.
For your blog posts, think about what your customers and visitors want to see and learn that's related to your industry and product. What are their interests and concerns that you can address? If you solve a problem, what topics on prevention can you touch on that help them out?
You can also write about what you see in the news, and add your commentary. It's up to you, but the tried and true method is to ask your customers what they want, and give it to them.
Importantly, the more blog posts you have, the more likely you are to be found on search engines, which will bring more and more potential customers to you at no charge.
#3: Make & Upload Videos
If writing isn't your thing, then making short and simple videos might be even better. Get out your wireless phone's camera and film a 60-second video of you explaining how to clean out a garbage disposal, if you're a plumber, for example.
Upload the video to YouTube, and publish it for all to see. Then click the "Share" button on your video's page and get the "embed code" to paste onto a new post on your site.
Add some textual content to your blog post such as a keyword-based title (e.g., "how to clean out a garbage disposal") and text above the video (e.g., Check out the video below where I show you how to clean out a garbage disposal"). This will help you rank your blog post better in the search engines so you get more traffic.
#4: Add Tools for Sharing
Have you seen how on the Growthink blog, there are little buttons saying 'Share on Facebook'? You can get these buttons, called "badges," on your site pretty easily. Make sure to do so, at least for Twitter, Facebook, and Google Plus.
Each can be done in a pretty straightforward manner. Each of the sites have support pages to guide you through the process, so your best bet is to google phrases like "how to add twitter badge to website" and you'll find the instructions needed for your type of blog.
Or you can use services like ShareThis.com and AddThis.com that allow you to quickly and easily add sharing buttons for Facebook, Twitter, Google Plus, LinkedIn, and more.
#5: Register with Business Listing Sites
There are several local business sites where you can list your site for no charge. They don't take much time to get listed on, and they will drive traffic and boost your SEO rankings. So why not?
The most popular ones are:
You can implement each of these 5 tips pretty quickly and easily in order to generate more traffic to your website. So, add these to your "To Do" list.
Suggested Resource: Want to learn my complete strategy for methodically maximizing your online traffic, leads, sales and profits? Then check out my Ultimate Internet Marketing System.
There's been a lot of talk about Facebook over the last few years, and many business owners feel overwhelmed trying to keep up with all the buzz and developments.
What if you had a simple punch list of the "if nothing else, do this" items needed to get the most out of Facebook?
I made the following list of action items to get you started with a minimum of things to do or learn.
The purpose is to get you more exposure and attract new customers, and improve relationships with existing ones (or those on the fence).
Step #1: Create It
If your business does not have its own free Facebook Page yet, I strongly suggest taking 10 minutes today to set one up.
Go to http://www.facebook.com/pages/create.php, follow the directions, enter your business' description and some photos, and you're done. Don't spend too much time on this right now, just get one up and running quickly to start.
Then, ask friends and family members in your contact list (your email contact list or Facebook friends you already have) to "Like" your business and become a fan.
Your immediate goal is to get 25 fans, at which point you can ask Facebook for a "vanity URL." In other words, you will be able to choose a custom Facebook address to give people, rather than the lengthy one they give you.
To do this, go to Facebook.com/username and follow the instructions.
Step #2: Grow Your Fans
The next step is to work on getting found by more people, so you're not posting to an empty room. You want maximum results for your efforts!
Here's 3 helpful ways to increase your Fans over time:
Step #3: Engage Your Fans
Okay, so now what do you post and when? And how can you take care of this quickly with all your other business projects and tasks going on?
My advice is to start small and keep it simple. Commit to making one simple post per day, which can be as short as 1-2 sentences. It helps to sit down and write them in one sitting, over 15 minutes or so, rather than logging on every day and starting from scratch.
Once you have written the next week or two of Wall posts in advance, you can use a free service like Postcron.com to schedule the day and time they appear, so you don't have to remember to log in and do it manually each time.
The best times to post are just before people most typically visit Facebook; a recent study on social media revealed that these peak times are at 11:00 am, 1:00 pm and 3:00 pm (Eastern Time), with Wednesdays being the most popular day of the week.
Publishing your content a few minutes before these times keeps it in the public's eye when the most people can see it and participate.
And here are some ideas to get you started writing posts:
So there's the punch list! Create your page, grow your fans, engage them continually, and you will have opened up a new avenue for increasing customers, relationships, and sales.
Suggested Resource: Facebook marketing is one piece of an effective online marketing strategy. Want to learn my entire online marketing system? So you can methodically maximize traffic, leads, sales and profits? Then check out my Ultimate Internet Marketing System. In it, you'll learn how you can build the ultimate online lead generation machine. Click here to learn more.
The date was July 6, 2010. That's 623 days ago.
That's the day I first started publicly promoting Crowdfunding as a viable funding source for entrepreneurs.
At the time, entrepreneurs were raising approximately $1 million each month from Crowdfunding.
Since then, the market has absolutely exploded. I now estimate that $1 million is being raised from Crowdfunding each day!
When I first wrote about Crowdfunding two years ago, I predicted it would be huge. That prediction has clearly been proven true.
But what I also predicted was that some entrepreneur would shatter the million-dollar Crowdfunding barrier.
You see, at the time, tons of entrepreneurs were raising smaller amounts with Crowdfunding. But no one had raised over $1 million dollars.
And since then, many entrepreneurs have come close.
On December 6, 2010 Scott Wilson from Chicago raised $942,578 for his crowdfunded watch-kit product.
And on January 18, 2012, John Van Den Nieuwenhuizen from San Francisco, raised $938,771 for his Bluetooth speaker project.
But still no one could break the million-dollar barrier.
And then, just last month, it happened.
Casey Hopkins from Portland, OR broke the record with his iphone dock product. Casey breezed past the million-dollar mark, raising $1,464,706 for his product via Crowdfunding.
But here's the crazy thing....Casey Hopkins only had a few days to bask in the glory of raising the most money every from Crowdfunding.
Since, just last week, on March 13 to be exact, San Francisco's Tim Schafer completed a Crowdfunding raise for his new video game project.
And Tim raised a whopping $3,336,371.
That's right. 87,142 individuals from throughout the globe each chipped in an average of $38 each to give Tim $3.4 MILLION to launch his product.
I'd say at this point Crowdfunding has proven itself to be a huge success.
Over the past two years, I've not only helped tons of entrepreneurs launch their Crowdfunding projects, but I've scrutinized the ones which have successfully raised all the money they need.
And, from doing so, I've identified the common characteristics of those entrepreneurs who successfully raise Crowdfunding:
1. They start by having their close friends and family members Crowdfund them. You see, if I as a stranger go to a Crowdfunding project and see that no one else has funded it, I become skeptical. Conversely, if I see that 35 people have already funded it, I am more confident. This is called "social proof." Entrepreneurs who successfully raise Crowdfunding leverage social proof by getting their close friends and family members to fund them before they promote their raise to strangers.
2. They offer "tangible" rewards. Most strangers won't fund you out of the goodness of their hearts. Rather, they fund you to earn the rewards you have promised them. Such as you shipping them your $100 product later when they give you $65 in funding today. The more tangible your reward, and the more you can position it as something the customer wants, the more successful you will be.
3. They create a cool, personal video. Even if your product or service idea is great, most strangers won't want to fund you. But, if you create a video in which you are speaking about why you want to create the product/service, your success will skyrocket. In the video, you need to connect with people. You want to inspire strangers who watch it, so that they want to fund you and see you succeed, and they want to tell their friends about you.
4. They manage their Crowdfunding raises from start to finish (which usually lasts 60 or 90 days). Once you set up your Crowdfunding project, you're not quite done. You need to market it via social media and other channels (like PR which has worked really well for entrepreneurs raising Crowdfunding). You need to respond to questions that potential funders pose. And if the amount of funding you initially sought gets exceeded (which fortunately happens a lot), you need to post new videos and updates telling strangers that you will accept more money and what you will use it for.
I hope you found the 4 common characteristics of successfully crowdfunded entrepreneurs helpful.
Importantly, I've identified even more strategies and tips to ensure you succeed with your Crowdfunding raise. I put them all together in a simple-to-follow program called "Crowdfunding Formula."
Check it out now at http://www.crowdfundingformula.com/
I've been following the success of Crowdfunding since the very beginning. Since I knew it would become a very important source of funding for entrepreneurs.
And today I want to tell you just how big it has become.
To begin, "Crowdfunding" is getting a group of regular individuals (versus banks, venture capitalists or angel investors) to collectively fund your venture.
There are several "Crowdfunding platforms" or sites that facilitate the funding transactions between you and those who "back" or fund your company.
These platforms include Kickstarter, IndieGogo, RocketHub and PeerBackers among many others (the number of platforms seems to be growing monthly).
But Kickstarter remains the biggest. And Kickstarter recently released statistics of what happened on its site in 2011. These included the following:
Now, let's compare that to Kickstarter's 2010 stats:
To me, the most exciting thing was the 259% increase in dollars pledged, which is the amount given to entrepreneurs by others to fund their ventures. This amount grew from $27.6 million in 2010 to $99.3 million in 2011.
My best assumption is that 40% of all Crowdfunding raises are done on Kickstarter. So, my estimate of total 2011 Crowdfunding raises is $248 million. Not bad.
Here are some lessons and key thoughts I'd like to share with you:
1) Kickstarter is one of the pioneers in the Crowdfunding market. As a first mover, it won't necessarily win, but if it continues to innovate it probably will.
2) There are now many different Crowdfunding platforms. The newer "me too" ones must innovate in order to compete.
3) The trend is clear. Crowdfunding is growing like crazy and is now a significant source of funding.
4) Crowdfunding has an incredibly high success right making it a no-brainer to use. As shown above, the "Project Success Rate" or percent of entrepreneurs who post projects and get funding is 46%. Compare that to angel funding, which has a success rate of just 15%. And compare it to venture capital which has a success rate of less than 1%.
5) It will get harder to raise Crowdfunding. Right now Crowdfunding is a bit like the California Gold Rush which started in 1848. Those that went to California first were MUCH more likely to find gold than those that came later. The same will be true of Crowdfunding. As more and more entrepreneurs seek this form of funding, the project success rate will go down. Right now, it's still a novelty and people will fund ideas that seem interesting. Those same funders will be a lot more stringent when they start receiving tons of Crowdfunding requests a year or two from now.
The bottom line is that the Crowdfunding business is doing great right now, which is great news for entrepreneurs like you.
Want Crowdfunding for your business? I recently developed a simple-to-follow program called "Crowdfunding Formula."
The program is a series of videos I recorded that walk you through each of the 14 steps to raising Crowdfunding. Many of you have already joined the program and raised money.
If you haven't, click here to get Crowdfunding for your business now!
I've spent years starting and growing my own companies and helping thousands of entrepreneurs do the same.
And one thing that's helped me and others succeed is keeping track of key numbers. We refer to these number as KPIs or key performance indicators. KPIs allow us to better manage our businesses. Since they allow us to clearly see what figures correlate with success, and allow us to focus on improving them month after month.
Recently I was talking with a business owner who asked me a great question. "What is the most important number or KPI in a business?"
And without hesitation I gave him the answer.
And that answer is "Profit Per Impression."
Let me explain. Profit Per Impression (PPI) is the amount of profit you generate from everyone who hears about your company.
Here's an example...let's examine the PPI of one of your competitors (a fictional example of course).
Let's say they run an ad (radio, TV, print, it doesn't matter). And let's say that 1% of people responded to the ad.
Out of the 1% that responded to the ad and called them, they were able to convert 35% into customers.
Your competitor was selling a $500 widget, and the average purchaser bought 1.5 widgets. Your competitor's profit margin on each widget is 30%.
Your competitor has little customer follow-up, so only 10% of customers will repurchase from them.
Here's a summary of your competitors KPIs:
Assuming the ad reached 10,000 target customers, your competitor's profit from the ad would have been $8,662.50 (minus the cost of the ad).
Now, let's assume your company ran a similar ad, but did a 20% better job on each KPI than your competitor. Except, let's assume that you still charged the same $500 per widget.
So, your KPIs would be:
With these KPIs, if your ad reached the same 10,000 target customers, your profit would have been $19,596.
That's 2.3 TIMES greater than your competitor's profit.
So, what would happen if you generated 2.3 times greater profits per impression than your competitors?
Answer: You would absolutely dominate them!
You would advertise them out of the market. You'd be able to advertise in places where they couldn't. For example, if that ad space cost $10,000, they couldn't have purchased it (since they only generated $8,662 in profits from it). But you would pay for that ad all day long.
So, how do you get 20% higher Profit Per Impression KPIs than your competitors and absolutely dominate them?
Let me show you:
The first metric where you beat your competitor was response rate. This was the percentage of people who heard/read/saw your ad and contacted you. How do you improve this rate?
Well, there are a few answers. First, the more you really knew about whom your customers are and their wants and needs, the more you could design advertisements that really appeal to them.
Likewise, the more you know about them, the better you could craft a USP (unique selling proposition) that attracts them.
You could also boost response rates by developing better "offers" that attract customers (such as an offer giving them a 90-day guarantee).
The next metric on which you could have beaten your competitor is conversion rates, or the percentage of prospective customers that you converted into actual customers.
You could have done this by having a better process for training your staff and sales team, by providing a better culture and incentives for them to perform better, and/or by developing and testing sales scripts that boost results.
Number of Widgets Per Buyer
The next metric on which you could have outperformed competitors is the amount of their initial purchase. You could have gotten buyers to purchase more widgets. Or, you could have upsold them on related items they needed. In either case, customers would have paid you more money per sale. Like with conversion rates, you could have achieved this through better hiring, training, etc.
By better systematizing your business, and implementing the right operational processes and procedures, you could generate higher profits per sale than competitors.
The final metric where you beat competitors was "repurchase rate." This is more commonly referred to as "customer lifetime value."
By doing a better job of communicating with your clients, and showing them how special they are, you would get them to buy from you over and over again. This would give you a massive competitive advantage.
What I just showed you was a way to dominate your competitors. I mean really dominate them.
The bad news is that this takes real work, as the things I showed you (particularly improving profit margins) require you to go through and improve every aspect of your business.
However, there are seven things you can do very quickly to start dominating competitors. Mainly:
1. Clearly define who your customers are and what their biggest needs are that you can fill.
2. Based on this definition, develop a unique selling proposition (USP) that really appeals to them.
3. Develop an offer that makes prospective customers contact you (e.g., call you, visit your website/store, etc.).
4. Hire and train better so that your sales and other staff boosts conversions, that is, increases the percentage of prospective customers who become actual customers.
5. Develop an upsell strategy so that you increase the transaction price each time customers buy from you.
6. Improve your communications with your customers (e.g., customer newsletter, emails, telephone calls, etc.) so they stay loyal and buy from you more often.
7. Track each of these areas to ensure your performance in each area improves month after month.
You CAN do this; so get started today.
The resource below will walk you through achieving these seven steps so you can dramatically boost revenues and profits and crush your competition.
Suggested Resource: Growthink's Ultimate Marketing Plan Template allows you to expertly create your marketing plan. Importantly, it allows you to quickly and easily achieve the 7 steps above, and much, much more in order to dominate your market. Click here to learn more.
I recently attended a marketing conference. The conference was geared towards entrepreneurs and small business owners, rather than marketing professionals at large corporations.
As a result, I met lots of successful entrepreneurs.
Why does this matter?
It matters because having relationships with other successful entrepreneurs will dramatically improve your success.
These other entrepreneurs can provide funding to you as "angel investors." They can introduce you to other angel investors they know. They can partner with you or introduce you to other partners. They can help answer key business questions. And so on.
Importantly, I'm not a great networker. I mean, I'm not all that comfortable going up to people I don't know and introducing myself. Yet, I was successful in meeting a lot of great folks at the event.
How? I attended all the breakout sessions and the evening get-togethers they held. In these closer-knit spaces/events, it was much easier to meet people, speak with them and form relationships. I suggest you do the same.
One of the key points I want to stress here is the answer to the question I get all the time: where do I go to find angel investors?
On one hand, it's unfortunate that no one has a comprehensive "magic" list of angel investors. On the other hand, this is good. Since if such a list did exist, those angels would be bombarded with investment opportunities, making it too competitive for most entrepreneurs to use to raise funding.
So, one of the best answers to "where do I go to find angel investors" is to go hang out with these angel investors. And one of the key places they hang out is at events.
There are several types of events you should attend to meet these entrepreneurs/potential angel investors. The first are local events such as those put on by local Chambers of Commerce. Such events feature a variety of local entrepreneurs and business owners running all types of businesses.
The second type is industry events such as events in the software business or real estate business. These feature lots of great people who know your business inside-out and can provide great strategic and financial value to you.
The third type are functional events that focus on a specific function or discipline like marketing. The marketing event I attended falls into this category, and featured entrepreneurs in a variety of businesses.
Finding these events is also pretty easy. Simply sign up for industry newsletters and you'll hear about industry events. Find local chambers of commerce or networking group, and they'll tell you about local events. Or simply subscribe to your local business newspaper and you'll hear about them. And functional/discipline events are well publicized in relevant magazines and e-zines.
Websites such as meetup.com also make it simple to find the right events to attend.
Here's a killer tip: host your own event.
A colleague of mine created his own listing on Meetup.com. He set up an event and invited "entrepreneurs generating $1 million or more in revenue" to attend. Over 20 entrepreneurs showed up, and as you might imagine, HE was the center of attention. How's that for a great way to gain awareness among other successful entrepreneurs who could fund or otherwise help your business!
Simply present your event as a local networking event for entrepreneurs; successful entrepreneurs love meeting other successful entrepreneurs. And the cost can be very little; if you don't have your own office space, you can simple find a local bar or restaurant willing to host it in return for the customers.
Angel investors and entrepreneurs who can help you are all over the place. But they're not going to knock on your door unprovoked. So, take action by attending events or putting on your own event so you can meet them right away.
Suggested Resource: In Angel Funding Formula, you'll learn exactly how to find and contact angel investors, exactly what information to convey to them and how, and how to secure your financing check. This video explains more.