Written by Dave Lavinsky on Tuesday, July 23, 2013
Every successful business requires a lot of planning. From market research to internal corporate structure, the planning stages of starting and growing a business can be quite extensive. While this preparation is a key factor in the success of any company, there are a few things which far too many business owners neglect. Planning for success and growth is important, but smart businesses are also prepared for the worst case scenario.
Situation #1: Disability
No matter what a business may do, if it has employees then it needs to consider disability insurance. Accidents happen every day and they are not restricted to those jobs which would traditionally be considered dangerous. Even in an office environment, for example, there is a potential for an employee to be injured (perhaps outside of their work activities).
When an employee is injured while on the job, the company may be personally liable for medical bills and worker's compensation payments. This is why disability insurance is so vital. If something like this should happen, the insurance will cover any bills and fees for which the company will be responsible.
In addition to insurance, a smart business owner will spend time on succession planning. There is no telling who might be injured and it is entirely possible that this person is the business owner.
What will you do if you cannot run your business - temporarily or longer term? Do you have the right disability coverage to protect your income? Do you have people who are trained and familiar with different parts of the business so they can be called upon to pick up where you left off?
Situation #2: Natural Disasters
One thing which can rarely be predicted is a natural disaster. Regardless of where a business is located, there is the possibility of one natural disaster or another. Whether it is earthquakes, floods, fires or tornados, these disasters can literally destroy a company.
This is why disaster insurance is so important. It may seem unnecessary to pay for insurance for something which might never happen but, when it does, this insurance will be the difference between a temporary setback and total destruction. Smart business owners need to know what types of disasters are possible and find insurance which covers them completely.
No, this article is not about promoting insurance. It's about making sure you have the protection you need to keep your business operating and your income flowing.
While disaster insurance will help cover the financial aspect of such a catastrophe, contingency planning is equally as important. Rebuilding a business can take months and work should not stop during that time. A good business owner will have a contingency plan set up which allows the company to continue, even if an entire physical location was lost.
When reasonable for the business model, redundant operations, back-up equipment, data back-up, and/or employees/contractors in other geographical areas are critical components to recovering from and/or minimizing the impact of a natural disaster.
Situation #3: One Revenue Stream
One of the biggest mistakes many businesses make is relying too heavily on one customer or revenue stream. Most companies will work with different clients and customers, but may rely on one specific client for the majority of their revenue. The problem here is that the loss of this client can mean a sudden loss of the majority of a company's revenue.
Just as anything can happen to a business, the same can happen to clients and customers. Relying too heavily on one specific source of revenue is a recipe for disaster. Smart business owners will focus on diversifying their revenue sources and creating a situation where the loss of any one source only represents a small loss of overall income.
If you don't have the resources to handle more clients, create a client back-up plan. What accounts or work-streams can you quickly put into action if you lose your main client? If diversifying pushes to outside of your production capacity, always have other work lined up to fill any vacuums.
Landing a big client may make you feel like you can take a break from marketing and customer acquisition. But beware of this false sense of security. Every day, dozens of businesses, from small to multi-national corporations, close their doors because they lost their main account. Remember the old adage; don't put all your eggs in one basket.
Situation #4: Data Loss
We live in the information age and nearly every business relies heavily on stored data. This can include, among others, payroll records, inventory systems, emails, documents, and even client contact information. This data can be so important to the success of a company that the loss of it can be just as damaging as any natural disaster. With technology constantly changing, this sort of data loss is a very real possibility.
Smart business owners plan for this problem. Much of the stored information will be confidential and having it fall into the wrong hands can have far reaching consequences. It can open a business to lawsuits from clients and make your business liable for paying damages to hundreds if not thousands of clients.
A business's data and information needs to be protected through proper security measures and backed up in multiple ways. There are many online options from Google to specialty companies that can do this for you. If you are in a regulated industry such as healthcare or real estate, you have a legal obligation to store documents in a specific way for certain number of years.
Situation #5: Regulatory Changes
Speaking of regulations, most businesses have to follow certain laws and compliance guidelines. These can govern nearly any aspect of what a business does. The problem is that many of these regulations can change over time. These changes can be unavoidable and are often unexpected. As new politicians are voted into office and the economic climate changes, the rules for doing business will also change.
Smart business owners will familiarize themselves with the laws and regulations related to their business. What many of them fail to do, however, is plan for changes in these regulations. A business that refuses to be dynamic and able to adapt to such changes is one which is precariously close to disaster.
For example, in 2011 there were far reaching changes made by the FCC that drastically affected how a telemarketer could get access to calling lists and contact consumers. Businesses that didn't adapt in time where shut down by the FCC. Only those businesses that made sure their business model could survive the new operational restrictions survived to dial another number.
How to Protect Your Business
Planning for negative possibilities can be stressful. And it is impossible to predict all of the threats facing any business. Fortunately, there are a few simple steps any business owner can take to protect themselves from these problems.
Take the time to review your business model and assess your risk in these 5 categories. Then start by mitigating your biggest risk. Work your way down the list so that within 90 days, you are completely protected.
- You need a plan to cover the potential loss of any vital employee, including yourself! Create and document systems that allow the business to run without current employees. Insurance should also be purchased to cover the company in the event of an accident or injury, and a firm succession plan should be updated every six months.
- Business owners need to be familiar with any potential natural disaster in the area in which they have assets such as offices or warehouses. Storm-proof your business as much as possible. Create a business continuity plan (example: can employees work from home while the office is restored?). Finally, get adequate insurance to protect your assets and income.
- Revenue sources need to be analyzed. Clients and customers need to be diversified to help mitigate the trouble associated with losing any one of them. If there is only one main source of revenue, its time put a client acquisition plan into action. If you can't handle any more clients right now, have other sources of work lined up at all times.
- All data should be backed up on a secure server which, if possible, is located off site. These days cloud storage makes backing up data easy and affordable. Information such as contracts and other legal documents should be printed out and stored in a secure location. Schedule a day each month or each week to back up all new data. Start this immediately.
- Smart business owners need to keep an eye on the current state of laws and regulations relating to their business. Make sure you have the systems in place to keep your business operational. If you are not sure how things affect you, contact an attorney with expertise in your industry. A consultation is a lot cheaper than losing your business.
These are relatively simple steps which any business owner can take. While there may be no way to predict the future, proper planning can help turn a major problem into a minor inconvenience.
You have the power to protect your business and your income. Not only will these steps help protect your business; they will help you sleep a little more soundly.
Written by Dave Lavinsky on Sunday, July 21, 2013
You've probably heard the term "a level playing field" which refers to a scenario where everyone has an equal chance of winning.
For example, the desktop computer leveled the playing field by giving individual entrepreneurs virtually the same computing power as individuals working at multi-billion dollar companies.
When starting a business, you should choose a space where the field is level; meaning going into a market where you have a fair chance of winning.
But after you start your business, and/or if you have a more mature business, I encourage you to unlevel the playing field.
What I mean by unleveling the playing field is to make it so that nobody wants to compete against you. I want you to have an unfair advantage (using ethical tactics of course) so that you win the game.
So how can you unlevel the playing field? One of the best ways is to create organizational assets that your competitors don't have.
Here are five examples of organizational assets you can build:
1. Customers: Most mobile phone companies offer 2 year service contracts that all new customers must sign (and face penalties if they leave before the two years are up). This essentially "locks up" customers making it harder for new entrants (or existing entrants) to come in the market and take their customers from them. Customer agreements and contracts are one of the most powerful organizational assets you can build.
2. Systems: Most franchise organizations (e.g., Dunkin Donuts, McDonalds) have made significant investments in systems such as systems to serve customers, produce products, handle customer complaints, etc. These systems make it easier and less expensive to hire and train employees and better service customers, making it harder for others to compete against them. Likewise, I know many companies who have built customized software systems that allow them to perform faster, cheaper, and more consistently than their competitors.
3. PPE (Plant, Property and Equipment): When I was a teenager, I made a lot of money shoveling snow. I used that money to buy a snow blowing machine. Equipped with the snow blowing machine, I was able to remove snow ten times faster than my competitors. This allowed me to dominate the market.
4. Product or Service Variations: A local pizza shop promotes itself as having 36 varieties of pizza. Offering this large variety makes it harder for new pizza companies to enter the market. Because a new company would have a very hard time creating 36 varieties from the start, it would be harder for them to satisfy customers.
5. Partnerships: I've created several partnerships with major websites and organization to be the only business plan provider they promote. This excludes my competitors from working with those organizations and serving their customers.
What I want you to consider now is how you can build organizational assets that unlevel the playing field. How can you make it so that nobody wants to compete against you?
- Can you lock-up customers with agreements and contracts?
- Can you build new systems to make your company more effective and efficient?
- Can you make investments in plant, property and equipment that allow you to cut costs or increase output?
- Can you develop new product and/or service options that better serve customer needs?
- Can you form exclusive partnerships to help you gain new customers that your competitors can't?
Importantly, whatever answers you come up with, realize that building these organizational assets will take time. Often times they may take as much as a year (or even longer). So make sure to properly plan their development. Set a long-term goal for when you want the asset built. And make sure that you build time into your daily, weekly and monthly schedules to move the development forward.
Suggested Resource: Would you like to know the eight other assets you can use to unlevel the playing field and dramatically grow your revenues and profitability? You'll learn this and more in Growthink's 8 Figure Formula. This video explains more.
Written by Dave Lavinsky on Monday, July 15, 2013
I wish I could just say that if you do X, Y & Z, you'll magically raise millions of dollars for your venture. But unfortunately, that's not how raising capital works.
One key reason for this is that most sources of money, like banks and institutional equity investors (defined as institutions like venture capital firms, private equity firms and corporations that invest), are essentially professional risk managers. That is, they successfully invest or lend money by managing the risk that the money will be repaid or not.
So, your job as the entrepreneur seeking capital is to reduce your investor or lender's risk.
For example, let's say that two entrepreneurs want to open a new restaurant. Which is the riskier investment?
• Entrepreneur A has put together a business plan for the new restaurant.
• Entrepreneur B has also put together a business plan for the restaurant...and he has also put together the menu, secured a deal for leasing space, received a detailed contract with a design/build firm, signed an employment agreement with the head chef, etc.
Clearly investing in Entrepreneur B is less risky, because Entrepreneur B has already has already accomplished some of his "risk mitigating milestones."
Establishing Your Risk Mitigating Milestones
A "risk mitigating milestone" is an event that when completed, makes your company more likely to succeed. For example, for a restaurant, some of the "risk mitigating milestones" would include:
• Finding the location
• Getting the permits and licenses
• Building out the restaurant
• Hiring and training the staff
• Opening the restaurant
• Reaching $20,000 in monthly sales
• Reaching $50,000 in monthly sales
As you can see, each time the restaurant achieves a milestone, the risk to the investor or lender decreases significantly. There are fewer things that can go wrong. And by the time the business reaches its last milestone, it has virtually no risk of failure.
To give you another example, for a new software company the risk mitigating milestones might be:
• Designing a prototype
• Getting successful beta testing results
• Getting the product to a point where it is market-ready
• Getting customers to purchase the product
• Securing distribution partnerships
• Reaching monthly revenue milestones
The key point when it comes to raising money is this: you generally do NOT raise ALL the money you need for your venture upfront. You merely raise enough money to achieve your initial milestones. Then, you raise more money later to accomplish more milestones.
Yes, you are always raising money to get your company to the next level. Even Fortune 100 companies do this - they raise money by issuing more stock in order to launch new initiatives. It's an ongoing process-not something you do just once.
Creating Your Milestone Chart & Funding Requirements
The key is to first create your detailed risk mitigating milestone chart. Not only is this helpful for funding, but it will serve as a great "To Do" list for you and make sure you continue to achieve goals each day, week and month that progress your business.
Shoot for listing approximately six big milestones to achieve in the next year, five milestones to achieve next year, and so on for up to 5 years (so include two milestones to achieve in year 5). And alongside the milestones, include the time (expected completion date) and the amount of funding you will need to attain them.
Example: Launch billboard marketing campaign over 6 months, spending $18,000
After you create your milestone chart, you need to prioritize. Determine the milestones that you absolutely must accomplish with the initial funding. Ideally, these milestones will get you to point where you are generating revenues. This is because the ability to generate revenues significantly reduces the risk of your venture; as it proves to lenders and investors that customers want what you are offering.
By setting up your milestones, you will figure out what you can accomplish for less money. And the fact is, the less money you need to raise, the easier it generally is to raise it (mainly because the easiest to raise money sources offer lower dollar amounts).
The other good news is that if you raise less money now, you will give up less equity and incur less debt, which will eventually lead to more dollars in your pocket.
Finally, when you eventually raise more money later (in a future funding round), because you have already achieved numerous milestones, you will raise it easier and secure better terms (e.g., higher valuation, lower interest rate, etc.).
It might surprise you what you can accomplish with less money! So write up your list of risk mitigating milestones and determine which must be done now and which can wait for later, focusing first on what is most likely to generate revenues.
Suggested Resource: Want funding for your business? Then check out our Truth About Funding program to learn how you can access the 41 sources of funding available to entrepreneurs like you. Click here to learn more.
Written by Dave Lavinsky on Sunday, July 14, 2013
The other day I wrote an article entitled "10 Obstacles That Are Limiting Your Growth." In it, I revealed 10 common things that block entrepreneurs and business owners from achieving the success they deserve.
Those 10 obstacles included:
1. Lack of Skill
2. Bad or Negative Attitude
Written by Dave Lavinsky on Thursday, July 11, 2013
There are many mental and personal blockages that can hinder you from achieving your full potential in business. Blockages in business can be compared to fatty deposits around your arteries that impede blood pumped from the heart from reaching its destination.
For you to succeed in your business, you must identify and eliminate such blockages promptly.
Here are 10 common blockages that can impede your success. As you read through the list, mark any of them that might be affecting you and/or your business:
1. Lack of Skill - As information increases, many business owners soon find out that there is much to learn. Whether it's getting up to date on new tax laws, learning about social media, or practicing negotiation techniques, take the time to keep your skills sharp.
2. Bad or Negative Attitude - While it may be easy to learn new skills, attitude is what makes or breaks a company. Whether you think you can or think you can't - you're right! Check your attitude frequently.
3. Lack of Focus - I always tell people that if they do one thing, they can do an A+ job; but that the second they do something else, they can only do a B+ job on each. And the bottom line is that to succeed in business, you must do an A job or better. So, make sure you focus on specific projects so you can excel at them.
4. Procrastination - Procrastination is high among the top five time wasters. Creating deadlines is an effective way of preventing procrastination. Though it may feel restrictive or even stressful, having a deadline can activate your brain and infuse new thoughts and ideas.
5. Monotony - It pays to try out something new once in a while. There is always a new instructional video with a different method from the text book methods learned in school. Doing something differently offers you the necessary relief from the routine and repetition that is common in many businesses.
6. Control Issues - Sometimes the tiny voice in your head may urge you not to give up control, so you end up micromanaging everything. It is important to have faith in the people you hire. Hiring qualified people for your business helps you to focus on specific tasks and minimizes your chances of overworking yourself.
7. Overworking Yourself - Sometimes you may overwork yourself even without realizing it. When you get overworked, you become less productive. Take it easy, go on vacation if possible. Your decision-making abilities become compromised when you are tired. Stick to a schedule and get some rest.
8. Seeking Approval - In business, you may sometimes unconsciously or even consciously wait for someone to encourage you or give you permission to take a step. Acknowledge your own abilities and make decisions on what is best for business, not based on pride of emotional approval.
9. Lack of Creativity - Keeping a journal can remedy a lack of creativity. Sometimes a new idea will pop up at a random time or place. Jotting down ideas and inspirations helps to unblock your mind. Apart from noting down random ideas for future reference, journals provide a useful way to track personal progress.
10. Thinking Small - With the current technological capabilities, it is easy to access success stories. Surround yourself with people who think big. Read books, blogs and watch motivational videos, etc. In business, if you aim low, you strike low. Aim high.
How many of these blockages did you circle? There is no right or wrong answer. Whether you picked one or twenty, you have work to do. Study the blockages you marked and start with the one you feel is impacting you the most.
Work on removing this blockage for 30 days. Then pick the next one that is having an impact on your business and start working on that one. As you stretch beyond your comfort zone and tear down barriers, your business will grow.
Written by Dave Lavinsky on Sunday, July 7, 2013
What Is Crowdlending?
In brief, Crowdlending is when individuals lend you money.
This is important because oftentimes banks don't want to lend money to entrepreneurs and small business owners.
Crowdlending eliminates the banks as an intermediary and allows individuals to lend money to other individuals. Another name for Crowdlending is "peer to peer" lending.
A Brief History of Crowdlending
Crowdlending has been around for several years. The biggest two Crowdlending companies/websites are Prosper and Lending Club.
While the crowd-loans on these sites are structured as personal loans to the business owner, they can be used for business use. For example, small business owner and clothing designer Lara Miller has received three loans via Prosper which she used to launch her new website and clothing lines.
Clearly, you could consider taking a loan for your business from a friend or family member. However, with Crowdlending, you have a much larger number of potential lenders. Also, while not being able to repay your loan is always a terrible situation, it's clearly worse when you know and see the lender often.
Additionally, many individual lenders on Crowdlending websites take a portfolio approach. That is, they lend to several people. So one of their loans defaulting may not be devastating to them as it might to a friend or family member making just one loan.
Debt Versus Equity
In brief, raising equity is selling shares of your company. You are not required to pay interest on the funding or the principal back. However, the investor owns a piece of your company and if/when you exit, they will take their share.
Conversely, with debt, you have to pay both interest and the principle back.
It is important to note that equity is oftentimes MUCH more expensive than debt in the long-run. Let me give you a simple example.
Let's say you sell 40% of the equity in your business for $1 million. A year later, you are able to sell your company for $10 million. The investor would get $4 million of the sales price (40%). So, the cost to you of the $1 million investment was $4 million.
Conversely, let's say the investor lent you the $1 million at 10% interest. In that case, the cost of the funding would have been $1.1 million - which is the principle and interest you would have to pay back.
In this scenario, debt funding would have cost you ONLY $1.1 million, nearly 75% less than the $4 million cost of equity funding.
Crowdlending Versus Debt
Crowdlending, gives you several benefits over traditional debt or bank loans:
1) Your chances of raising Crowdlending are much higher since banks reject many more loan applications
2) Crowdlending gets you lower interest rates than banks because you are eliminating the bank as a "middle man"
3) Crowdlending has much fewer requirements with regards to the application and documents you need to submit
4) Crowdlending dollars are generally raised much faster than bank loans
Crowdlending For Businesses
I have been telling entrepreneurs about Prosper and Lending Club for years. Because they are relatively easy and low-cost forms of funding. However, they both have a big negative, in that you can generally only raise loans less than $35,000.
That's why I will thrilled when I recently spoke with Endurance Lending Network.
Endurance has amassed a bunch of non-bank lenders including successful entrepreneurs, wealthy individuals, family offices and institutional investors. And, these individuals lend between $25,000 and $500,000 to businesses - the amounts entrepreneurs and business owners actually need.
Crowdlending is a great new way to raise money to start or grow your business. It's much easier, faster and less expensive than both bank loans and equity funding, making it a perfect choice for most entrepreneurs and business owners.
Written by Dave Lavinsky on Sunday, June 30, 2013
July 1 is a critical day in your business. Because it's the day that officially starts the second half of 2013. That's right, the year is already half-way over.
So right now is the PERFECT time to take an honest look at your business, see how much progress you've made so far this year, and develop your plan for the rest of 2013.
There are three things I strongly suggest you do on July 1 as follows:
1. Give Thanks
I hate to sound too righteous, but I recently watched 'Girl Rising' on CNN. The show "documents extraordinary girls and the power of education to change the world." While this description seems and is uplifting, some of the struggles of the girls profiled seemed unbearable.
In particular, the segment detailing the lives of most girls in Afghanistan left me crying.
So, please take a moment to understand how lucky you are. Lucky that you are even able to run a company and control your destiny.
2. Assess Your Results from the First Half of the Year
You must assess your results from the first half of 2013. Start by looking at your goals and plans for the first half of the year. And then look at your results.
- Were your revenues as high as you had planned?
- Did your profits exceed expectations?
- Did you build as many new products/services as you had planned for the first half of the year?
In assessing your performance, the key question to answer is "why?" For instance, if you didn't achieve your revenues goals, what obstacles prevented your success? And, how can you overcome those obstacles going forward.
3. Create Your Goals & Plans for the Second Half of the Year
Now it's time to detail your goals and plans for the second half of 2013. Hopefully if you over-estimated your goals for the first half of the year, you can now do a better job of understanding what is more realistic to achieve in a 6-month period.
Think about this question: what must I accomplish in the next 6 months to make 2013 a great year?
Use this question as a guide in documenting your goals for the next 6 months and detailing your plans for how you will achieve them.
Remember, you still have half the year left. So even if you didn't achieve enough in the first six months, there's plenty of time left to make 2013 a banner year.
But importantly, make sure you set goals for the rest of the year, and have a way to measure your progress on them. If you don't, as some of you unfortunately just learned over the last six months, you won't achieve the success you desire.
Written by Dave Lavinsky on Tuesday, June 25, 2013
If you don't know Peter Drucker, you should: he's known as the man who invented modern business management. He wrote 39 books on the subject and is widely regarded as the greatest management thinker of all time.
And Peter Drucker is credited with two of the most important quotes in business management.
Here's the first: "If you can't measure it, you can't improve it."
When you think about this quote, it should immediately become apparent how true it is. Because, if you can't measure something, and know the results, you can't possibly get better at it. For example, it's nearly impossible to lose weight without stepping on a scale once in a while to measure your results - if you don't, you have no idea if you are succeeding or not.
Or it's like trying to improve your golf game, but never keeping score, so you don't know if you're actually getting better or not. Makes sense, right?
Now, in business, Drucker's quote is particularly true. If you can't measure every part of your business, you can't manage or grow it.
- Do you know the number of new website visitors you received in the last 30 days?
- And do you know what percentage of them turned into new paying customers?
- And do you know how the level of satisfaction among your customers has fluctuated over time?
- And do you know the precise average lifetime value of your customers?
There are nearly 50 questions such as these that measure each aspect of your business.
And if you don't know the answers, if you can't measure them, then you can't possibly manage or improve them.
And that's why your sales are too low, profits are too low, employee performance isn't high enough, and you need to work too hard and can't take enough time off.
Now, let's move on to Peter Drucker's second famous quote: "Management is doing things right; leadership is doing the right things."
Let's start with the first piece of this critical quote. "Management is doing things right." Well, as we learned from Drucker's first quote, you can't manage and you can't do things right in your business if you're not measuring it. So that's not happening and it's hurting your business.
And now the second piece: "leadership is doing the right things." So, my question for you is this: are you doing the right things in your business? Now before you answer this, let me ask you this: do you know exactly what you should be doing, every single day, to generate the most value from your time?
- Do you know when you should focus on improving your website?
- Do you know when you need to spend time on improving customer satisfaction?
- Do you know how much attention you need to give to securing new clients?
- And do you know when you should focus your time on better training your team?
Unfortunately, most entrepreneurs and business owners don't. Or their businesses would be much more successful than they currently are.
I give you these two Peter Drucker quotes along with their interpretation to help you figure out the answer to the question, what is the #1 Business Mistake you are making.
Which for most entrepreneurs and business owners is this: Your #1 business mistake is that you're running your business blind!
You're not measuring your performance throughout your business, so you can't improve. And worse yet, you don't really know what you should even be focusing on
It's like running around in a maze, and you haven't kept track of where you've been, and you're not sure what to do to get out.
But don't take it personally, virtually all entrepreneurs and business owners operate like this. And that's why business failure statistics are so terrible. As you might know, according to Dun & Bradstreet, 91% of businesses fail within 10 years. And according to United States Census, only 3.9% of businesses make it to $1 million in sales. And only 0.6% of businesses make it to $5 million. And less than 0.1% make it to $10 million and above.
The reason for this lack of success is that these entrepreneurs and business owners are running their businesses blindly. They are not measuring performance, so they can't improve. And they are focusing their time on the wrong areas of their business.
Now the good news is that there is a solution to this common problem of running blind. And it's called BI or Business Intelligence. Business intelligence or BI refers to computer-based techniques used to spot, dig-out, and analyze business data, such as sales, marketing and production in order to make significant improvements.
Importantly Business Intelligence uses the data you already collect in your business. For example, if you have a website, you probably have Google Analytics or another program installed that captures key information like the number of visitors you have to your website each day, where they are coming from, and what pages of your website they are visiting.
And you're probably using an accounting software like Quickbooks that includes information about your revenues, expenses and cash balances. And you might be using a customer relationship management or CRM system like Salesforce.com that identifies the number of leads and sales you generate.
And you might be using an email management system like Constant Contact or MailChimp that shows how many email subscribers you have and how often they open or click on your emails.
With the right Business Intelligence system, all the information from these applications and programs you already use automatically and in real-time is entered and analyzed. So you can quickly see, manage and improve your performance.
Importantly, you not only measure performance so you can improve it, but you instantly spot weaknesses in your company. And those are the areas you should focus your attention on. Remember, "leadership is doing the right things" - now you'll know exactly what you should be doing.
Ready to stop operating blindly? If so, check out Growthink's Business Intelligence solution, The Growthink Dashboard, by clicking here and start expertly managing and growing your business.
Written by Dave Lavinsky on Thursday, June 20, 2013
Lead generation is critical for all entrepreneurs. And once you master it, your business will thrive.
To help you with lead generation, below I have answered the most common questions entrepreneurs. However, let me start with some definitions.
Your "leads" are simply your pool of prospective buyers who might be interested in your product or service.
For physical stores, your lead list can be residents in a certain zip code or a list of shoppers with certain demographic characteristics. For online or virtual businesses, your lead list is often defined as the list of prospects that subscribe or "opt-in" to your email list or otherwise contact you so you have their contact information.
Whether online or in a physical store, communicating with your lead list is a primary marketing strategy for generating new and repeat customers. A general rule in marketing is: the bigger your list of leads, the more opportunities you have to generate new clients and sales. This is why lead generation is so important. Sound lead generation tactics grow your lead list. Great lead generation strategies grow your list with prospects that are most likely to buy.
Below are answers to the most common lead generation questions I get:
1. How Do I Create a Lead List?
There are many ways to start building your lead list. The easiest is to put an opt-in box on pages of your website where visitors can register their email addresses - typically in exchange for content or freebies. Most websites offer free guides, e-books, tools or a newsletter.
You can also offer free samples of a one-time discount coupon. Make sure the freebies are enticing. Once the website visitor opts-in to receive the freebie, he or she now becomes part of your email list.
2. Does My Target Audience Matter?
Yes. Know your niche and determine the people you want to target. This important element should be clear to you from the beginning. You will likely fail if you do not understand what type of customer best appreciates your product or service.
Once you truly know your target audience, you can do a better job of "talking" to them on your website. For example, you will use different verbiage to convince a 20 year old, single, suburban woman to buy your product than you would to convince a 60 year old, married, rural man to buy it, since each has different wants and needs.
3. How Will My Audience Find Me?
In order for your prospective customers to find you, you should be promoting your website in places where your targeted audience already frequents. For example. Let's say your business sells electronic gadgets. If so, make sure customers find you on other websites that discuss electronic gadgets. You can advertise on these sites or submit guest blog posts and articles to them. You can do the same with social networking groups that discuss this topic. In many cases you can also pay the other websites to send an email promoting your company to all their subscribers.
Likewise there are other tactics to reach these customers such a direct mail, door hangers, radio spots of TV ads. Naturally, you must align your strategy to your specific product or service, and to your budget.
4. What Should I Put On My Site To Attract Visitors To Opt-In Or Buy From Me?
Content is key. When your visitors find your site helpful and informative, it will be easier for you to get them to opt-in or buy. They will see you as the expert and be hungry for more information from you. The key is to provide quality content that gives solutions to your audience's problems.
Also, the more quality content you have on your website, the more other websites will link to you and thus drive new visitors. Likewise, these links will boost your search engine rankings, so you'll get more organic search traffic.
5. How Do I Maximize Social Media In Getting More Opt-Ins?
Most of your customers are using social networking sites (event if you're in the B2B space). Build your reputation as an expert in your niche when you are creating your social media presence. Become the "guru" of your circle of influence and continuously expand that sphere of influence.
Even brick and mortar businesses have a huge opportunity to build genuine, trustworthy relationships with clients and prospects on social networking sites. Offer tips, publish sales offers, share today's menu, teach a skill, publish testimonials and so forth. These steps create opportunities to get followers and convert sales.
It's All About The Relationship
A growing email and/or lead list is crucial for business growth, especially for businesses that operate online. You can publish a website or open an online store and HOPE that customers come. Or you can build top-notch content and opt-in system that allow you to communicate and build relationships with your prospective customers.
It's a common phrase that "people do business with people they know, like, and trust." Using social networks and content generation strategies (like newsletters and quality emails) you can develop strong bonds with people who you will never meet in person.
The strategies detailed herein will deliver prospects to your business that are interested, ready, and able to buy your products and services. It will take some time to implement these strategies, so get started now!
Written by Dave Lavinsky on Sunday, June 16, 2013
Astute entrepreneurs and marketers understand that as much as 80% of their revenues come from repeat customers. Because once you transform a prospective customer into an actual customer and then give them a great experience, getting that customer to buy again is much easier. In fact, many times the next sale will be initiated by the customer; you won't have to do anything.
So the best way to get more sales from repeat customers is to get more first-time customers (and then really satisfy them of course).
For instance, if your initial sale to a customer is $40, but the average customer will purchase four more times within the first year, then a new customer is actually worth $200 in the first year. Much more than the initial $40! So, clearly, you want to attract as many new customers as possible (and take care of them so they keep purchasing from you).
To help you achieve this I have detailed below three key tips for attracting new customers.
New Customer Strategy #1: Give Them a Deal
Some companies go as far as to lose money on their first sale (known as a loss-leader), knowing they'll make it back with an immediate upsell, monthly service plan, or future sales. Your goal is NOT to make as much money as you can on the first sale. It's to make a first sale!
But of course, it's better if the first sale naturally leads to selling your next item or service. For example, I know a pressure washing company who will clean your house's exterior at cost the first time. But then it upsells 80% of these customers to their "twice yearly" plan -- this is where it derives massive profits.
Restaurants offer specials, phone companies offer you deals if you switch providers, etc. - I'm sure you've seen this. You need to give customers a powerful offer either in the form of a low price or incredible value for their money. When you do, they'll be much more likely to buy from you.
You've also probably seen coupon offers and deal-of-the-day sites like Groupon offering $20 massages and other great deals all the time. This works in getting tons of new customers. However, be careful. A lot of businesses have reported "The Groupon Effect," in which they will post a special, get a herd of penny-pinchers in the door that take advantage of the offer and then disappear to find the next deal at whoever's cheapest tomorrow. In other words, it can attract the wrong crowd and may not produce repeat business-which is the whole point of making a first sale.
So use these special offers carefully. One idea is to use direct mail. Doing so allows you to target the specific customers you want with your special offer; the ones who are most likely to keep buying from you.
New Customer Strategy #2: Incentivize Your Sales Force
If you have a sales force, give them great incentives to close new sales. Particularly in the case where you know you have significant lifetime customer value (i.e., customers will purchase from you many more times in the future), be more generous with your commissions.
In fact, I've heard of companies giving 100% commissions to salespeople who secure new customers. While the company clearly loses money in the short term, such a strategy really motivates the sales team to get new customers. And over time, the company's revenues and profits grow much faster since they have so many new customers that keep buying from it.
New Customer Strategy #3: Give Them an Experience
Think about how much money people spend on vacations, sports, dining, and entertainment. What do these all have in common? They're experiences that people want and for which they are willing to pay.
Try positioning your service as a personal experience. It's one thing to offer a massage, it's another to offer a "spa experience" with music, lights, nails, and a free facial.
You can also plan and offer group experiences like luncheons, parties, open houses, or tours. Or find a way to piggyback on existing events going on in your community, like parades, festivals, expos, etc.
These will take a little creativity, but remember that people are naturally drawn to fun times. Make it memorable and do it a few times per year.
Look to Zappos.com for inspiration. Even though it sells a commodity (shoes), the company provides a great experience through exceptional customer service. For many other businesses, providing a great experience is much easier than this.
New Customer Strategy #4: Give Them Information
Every business needs to educate its customers, whether you charge for that education or not. I love it when my mechanic, Vinny, explains to me my car's problem, what caused it, how to fix it, and what it will cost. Sometimes we even go through options together, and I couldn't make a decision on the right one without getting the facts first.
Providing education demonstrates that you're an expert, increases your trust, and gives you higher credibility in the customers' mind. It also gives you an easy segue into showing the benefits of what you're offering and how it will help.
Some lead generation methods tie in very well with education. For example, if you're trying to get blog posts ranked in the search engines, you'll need to write articles on topics of interest to your readers; like how to do something, the pros and cons of different products or services, etc. These posts will show your expertise and educate the reader.
You can do the same with videos. Simple, informative videos can get the attention and interest of prospective customers. End each video with a special offer or a "call to action" that encourages the prospect to contact you.
To summarize, figure out how you can give new customers a great deal, an experience, and the information they need. And consider giving better incentives to your sales team. Use these 4 tips to get new customers. And then once you secure them, deliver high quality products and/or services. When you do, you'll start building a strong book of repeat business that helps your sales and profits soar!
Suggested Resource: Download Growthink's Ultimate Marketing Plan Template today in order to quickly and expertly complete your marketing plan. Among other things, your marketing plan will give you multiple strategies for gaining new customers.
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