If you're looking to start or grow your business, there's one person you need to speak with right away.
And this person is not a startup guru. Nor are they a marketing whiz.
Rather, this person is one of your target customers...someone that you're trying to convince to buy your product or service now or in the future.
In fact, one of my favorite quotes is Jay Abraham's "your customers are marketing geniuses; they know exactly what they want." This quote is so amazingly true. Your current and potential customers possess a goldmine of data that can help you. They know what their greatest challenges are. They know what they like and don't like about your competitors. And they know the media they read/watch/view and the most effective ways to reach them.
Sure, you have to extract this data from them. But that's much easier to do that then taking a guess at what that data is.
Importantly, your customers will generally have a lower IQ than you. In fact Scott Shane (author, entrepreneur, and angel investor who I had the pleasure of interviewing last year) uncovered several studies indicating that entrepreneurs have a higher IQ than the general public.
And even when you're selling to highly educated consumers or businesses, your knowledge of your product and market is generally light years ahead of theirs.
Why does this matter? Because in both your surveys and marketing to your customers, you generally have to "dumb down" your messaging quite a bit. Talk in terms of the customers' needs and benefits, and not the technical jargon that they won't understand.
So the moral is this: survey your customers and survey them often. Surveys don't need to be long drawn-out processes. Sure I love statistically significant numerical surveys (I started my career with a very large market research firm) but even striking up an informal conversation with a current or prospective customer could provide invaluable information.
Henry Ford once said that if he surveyed customers, they would have replied that they wanted a faster horse. He's right...if he surveyed them using the wrong techniques. If he simply spoke with them more colloquially, they probably would have told him that they would love to visit Aunt Sally more often, but she's so far away that it takes too long to get to her (hence the need for more convenient and higher speed transportation).
It's actually a bit ironic that today we live in a world of highly advanced communications (e.g., email, text messages, cell phone calls, Twitter/Facebook), but most of us ignore the most important business communications of all: learning what our customers want and need, and using that information to build the right products/services and marketing and sales programs that work.
So please add "speak to customers" to this week's To Do list, and make doing this an ongoing habit.
I get the same question a lot from entrepreneurs raising equity capital (venture capital or angel funding).
The question is whether they need to issue common or preferred stock.
The answer depends on how and what rights are defined in the preferred stock. One very popular "preferred right" or "preference" that adds very significant value to outside investors and is common in venture capital investments is a liquidation preference.
The liquidation preference means what is sounds - namely that preferred stock holders with this right get all of their money back (i.e. liquidate their shares) before any distribution of proceeds in the event of a sale of a company. This is an extremely valuable preference that can best be shown by example.
Let's say an investor buys 1,000,000 shares of stock in a company at $5/share and the company's total shares outstanding is 3,000,000 shares (implying a pre-money valuation of $10 million (2 million shares @ $5/share) and a post-money valuation of $15,000,000 (3 million shares @ $5/share)).
If, then the company were to be sold for $5,000,000 (i.e. at 1/3 of its original post-money valuation), then if the investor owned common shares (or preferred shares without the liquidation preference), then they would receive back $1,666,666 of their original $5,000,000 investment.
If, on the other hand, they owned shares WITH this liquidation preference, they would then receive their ENTIRE $5,000,000 original investment back. This is obviously a big, big difference to both the entrepreneur and the investor.
So make sure if an investor is offering you funding that you understand the type of stock they want to purchase and the specific rights (such as liquidation preference) that they seek, and negotiate accordingly.
I recently reviewed an interesting book titled "Covert Persuasion."
In it, the authors defined "covert persuasion" as the art and science of convincing others to do what you want without seeming pushy.
Understanding this skill is critical to your success as an entrepreneur; as you will need it to get more customers, partners, distributors, investors, etc.
So what are some of the "covert persuasion" techniques you should be employing? Here are my favorites:
Start by building rapport. We should all know that building rapport is the first step in the sales process (regardless of what you're selling). Building rapport allows you to create a bond and get your prospects to like you.
Showing that you genuinely care about your prospect's needs and success will help you build rapport and build trust in you.
Another good technique for building rapport is matching and mirroring, techniques in which you match your prospect's posture and tone. For example, if your prospect's arms are folded, you fold your arms too.
Some other techniques mentioned in "Covert Persuasion" are essentially repeats of techniques mentioned in Dr. Robert Cialdini's "Influence: The Psychology of Persuasion" (which I consider to be the "bible" in this space). These techniques include the following:
Specificity: when you say that your solution increases sales by 25%, it's not very believable since the number is so round. Saying that your solution increases sales by 23.9% (a very specific claim) is more powerful (in fact, it's generally more powerful than saying 25%, even though it's a smaller figure).
Tell Stories: all of us (hopefully) were told stories by our parents when we were young. These stories and storytelling are engrained in our psyche, and humans react very well to stories. Telling stories allows your prospects to better understand and get excited about your message...particularly if they can personally relate to your stories.
Create scarcity: We see this all the time by successful marketers. For example, our sale ends today; or, we only have a limited quantity so buy now. Scarcity works really well since people hate thinking that they'll lose out on something.
Create contrast: The book tells a story of the nation's top seller of Girl Scout cookies. She would request a $30,000 donation to the Girl Scouts. When the prospect said no, she'd say, "Would you at least buy a box of cookies?" This approach makes the $3 box of cookies seem like nothing, and incites people to buy.
This is a great example specifically applied to marketing and sales. However, I personally like the "contrast" example better in Dr. Cialdini's book. His example is a great letter written by a college girl to her parents. In it, she tells about the horrible situation she got herself into -- she had gotten pregnant, the father of the baby was a drug dealer, etc. She then ends the letter by saying that she made the story up but that she is failing her English class. Clearly, in contrast to the fake horrible situation, failing a class is put in perspective and is seen as not being very important.
"Covert persuasion" is a strong title, and I can see lots of people saying that it's unethical or unfair. I certainly agree that some of these techniques can be used unethically, and clearly I don't condone that. However, to be a great marketer -- which you need to be in order to be a successful entrepreneur -- you need to ethically use these techniques. So think about the techniques I've described herein and how you might employ them in your business.
In 1960 a series of presidential debates were held between then Vice President Richard Nixon and John F. Kennedy.
After the debate, pollsters surveyed the public to see who had won.
Interestingly, the results were atypical. One group of respondents claimed that Nixon had won by a lot. Another group of respondents felt that Kennedy had clearly won.
What was most interesting was that these two groups each had a similar makeup. For instance, it wasn't that one group was mostly Republicans and the other Democrats. Or that one group was from the North and the other the South. Etc.
Rather, the difference was that people who listened to the debate on the radio felt that Nixon had clearly won. Conversely, people who watched the debate on television believed that Kennedy was the clear winner.
Below is one of the videos of the debate:
(This is just an 8 minute clip of the debate....but I think that Kennedy seems a lot more confident and sincere than Nixon.)
So what is the business lesson here?
The lesson is that business communications can comprise up to three factors -- Verbal (the words you say), Vocal (the pitch, speed, volume, etc. of your voice) and Visual (what the audience sees).
When you communicate with important audiences (customer, partners, investors, etc.), we typically rely on email (verbal), telephone (verbal + vocal), or in-person (verbal + vocal + visual).
When you are able to combine all three factors, as you can do in an in-person meeting, you can generally convey the most effective and powerful message (if you practice it of course).
So, while email or telephone may be the most efficient communication method, if there is a potential partner, investor, customer, employee, etc. that you absolutely must convince to say "yes" to you, you must go the extra mile to get the face-to-face meeting.
Successful entrepreneurs are highly productive entrepreneurs.
They set SMART goals and achieve them. They leverage the Pareto principle. They understand the Four Quadrants of Productivity. They "chunk" their goals out. They multiply themselves and scale their efforts.
If you aren't doing each of these things, you need to start doing them today. If not, you can't expect to achieve success. But if you do them, the sky is the limit.
Watch the three videos below now to start becoming much more productive and to ensure that you achieve all of your goals.
The Pareto Principle and Four Quadrants of Productivity
SMART Goal Setting
Multiplying Yourself & Scaling Your Efforts
Did you get value from these videos? Want more?
Get my full "Productivity Secrets for Entrepreneurs" program. The program is specifically designed to help you get much more done, make much more money, and be able to take much more time off.
Click to learn more: http://www.growthink.com/products/productivityCourse
Carlos Brito is the CEO of Anheuser-Busch InBev.
Clearly Anheuser-Busch InBev is an impressive company; it is the leading global brewer and one of the world's top 5 consumer product companies. It has nearly 120,000 employees in 23 countries, manages over 200 brands, and maintains the number one or two position in 19 markets.
But what's exciting to me is that the lessons given by Brito at the recent World Business Forum Event don't just apply to large organizations, but are equally (if not more) applicable to earlier stage entrepreneurs and business owners.
These lessons include:
1. "Dreaming small or dreaming big takes the same energy, so dream big."
I've heard similar comments before and it's true. Not only does it take the same amount of energy to dream small or big, but the amount of energy to execute on a bigger opportunity is often not that much greater than the energy required to successfully execute on a smaller opportunity. So think big.
2. "Keep raising the bar to dream, and be public about it."
Brito explained how a high jumper's mindset is relevant when setting company goals and expectations of people. The point is this -- no matter how high the bar is set, the high jumper merely needs enough height to clear it.
By seeing the specific goal, the high jumper focuses all of his energy on achieving just that, and no more and no less. Likewise, having a specific business goal allows an organization to laser focus on it, and it thus has a much higher likelihood of achieving it.
To grow your company, you continue to raise the bar. And the more public you are about telling others about your goals, the more accountable your organization becomes.
3. "You have to worry about getting the best people. Great people attract other great people and challenge them. Similarly, mediocre people attract mediocre people."
Great organizations are built on great people. Leaders can't be afraid to hire people that are smarter and better than they are. In fact, they need to seek these people out. Leaders must also spend time to really know and develop their people to build winning organizations.
It takes a unique type of person to successfully run a 120,000 person organization. It also takes a unique type of person to start a business and/or take a small business to a high-growth, high-profit one. In each of these cases, that person needs to dream big, set and achieve goals, and surround themselves with high-quality people. Follow this simple formula to achieve the success you desire.
My wife came across an interesting quiz on the NY Times' website.
Called the "The Sustainable-Marriage Quiz," it poses 10 simple questions which assess the strength of your relationship with someone.
Importantly, while I think this is a valuable quiz for your personal life, there is definitely a key place for this in your business.
Mainly, you should take this quiz BEFORE taking on a business partner, investor or key employee.
The quiz was developed by Gary W. Lewandowski Jr., associate psychology professor at Monmouth University in New Jersey. You can see the quiz on the NY Times website here.
A copy of it is below:
As you can see from the questions, virtually all of the marriage partner questions apply to business partners.
Importantly, the ideal partner (business or personal), according to Lewandowski's research:
* Gives you greater awareness
* Increases your ability to accomplish new things
* Allows you to expand your own capabilities
* Has strengths that compensate for some of your own weaknesses
* Gives you better perspective on things
* Allows you to learn new things
* Increases your knowledge
* Makes you a better person
Clearly all these things can lead to a more successful business. So use this quiz in judging new business relationships you are considering...or as an impetus to get out of a bad relationship you might already be in.
As many of you know, Jay Turo and I have been partners in Growthink since we launched in 1999. I just took the quiz with Jay in mind and scored a 62 which means that it's a great partnership.
Take the quiz and let me know your thoughts on it in the Comments section below.
A lot of entrepreneurs are excited to start their business and get a business card that lists their title as "CEO."
But what does being a CEO really mean.
According to Jack Welch:
"My main role as CEO was developing talent. The team that fields the best talent wins. That's in baseball, football, life and business. Business is a game. If you don't suit up the best team, you don't have a prayer. In the end, it's what it's all about."
Most entrepreneurs don't think this way. They think the best idea wins. However, this isn't the case. In fact, as this blog post proves, many great companies started out doing one thing and switched course when it wasn't working. And they were able to switch course because they had the right team members who spotted the issue and were able to change strategies and effectively execute on the new opportunity.
So as you are starting and/or growing your venture, spend the time to find and train the best talent. Since you will not have the luxury (you won't have the time, nor can you be an expert at everything) of doing all the functions your company needs yourself.
If you don't have extensive experience hiring and training winners, watch my Leadership video by clicking here.
At the recent World Business Forum Event in New York City, business consultant and author Jim Collins said that "great enterprises are more likely to die of indigestion than starvation."
He further cited Packard's Law (which was named after Hewlett-Packard co-founder David Packard). Packard's Law states the following: "No company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth and still become a great company. [And] If a company consistently grows revenue faster than its ability to get enough of the right people to implement that growth, it will not simply stagnate; it will fall."
So what does this really mean? It's better to execute on a small opportunity and do it right, then go after multiple and/or larger opportunities without the appropriate resources.
I tell this to entrepreneurs all the time. If you focus just on one thing, you can do an A+ job. But if you focus on 5 things, there's no way you can do above a B+ job on all of those things. And to be a successful entrepreneur, you need to put in an A+ effort.
Now, I'm not saying not to dream big. Because I want you to. But, you need to break your big dream into small pieces that you can execute on with the resources you currently have. As you accomplish each piece, you will gain more resources, making it easier to progress. (Note that I call these smaller pieces your "risk mitigating milestones" - I explain this more in this blog post - http://www.growthink.com/content/business-plan-milestones-how-they-are-essential-your-success).
Success rarely comes all at once. Rather it comes from continuously achieving small goals that are aligned with your big goal. So, make sure you have the right resources (particularly human resources), and create action plans to accomplish smaller goals that continually bring you closer to achieving your big goal. In other words, "think big, but act small!"
Last night I watched a great documentary about legendary football coach Vince Lombardi.
The man's track record speaks for itself. The year before he became head coach of the Green Bay Packers, the team had just one win. In the subsequent 8 seasons, Lombardi coached Green Bay to 5 NFL championships.
In the documentary, there was footage of him saying he regretted coming up with phrase "winning isn't everything, it's the only thing." He said that as long as every player on his team gave 100% of themselves during every game, that he would accept a loss. I like that leadership lesson -- you can't criticize team members who didn't win if they truly gave it their all.
Some other great lessons from Lombardi (all of which can be applied to business):
1. Model the best: Before going to Green Bay, Lombardi accepted an assistant's job at the U.S. Military Academy at West Point. In that position, he worked under legendary head coach Colonel Red Blaik (who had just coached Army to two national championships before Lombardi arrived). At West Point, Lombardi learned from the best.
2. Love What You Do: Lombardi had incredible passion for coaching football. You could see that he truly loved his job. And that's why he was so successful. As an entrepreneur, you have to be passionate about your business and what you're trying to achieve if you're going to be successful.
3. Focus on Goals: Lombardi had incredible focus on specific goals he set. When he was an assistant coach, he focused on his dream of becoming a head coach. When he became a head coach, he focused exhaustively on his dream of winning an NFL championship. Once he won his first NFL championship, he focused exclusively on winning a second NFL championship. And once he won his second NFL championship, he focused on becoming the first coach to ever win three consecutive NFL championships (which he did).
4. Nurture employees. Lombardi was incredibly tough on his team. He put them through extremely rigorous drills and calisthenics. However, he truly cared about his team. And he felt it was his responsibility to not only make them winners on the field, but winners off the field. He believed it was his responsibility to build the character of his team members so they became "fine men." Because he cared so deeply for his players, they cared deeply for him. And they gave it their all on the field not only to win, but to please the coach who they truly admired.
5. The final lesson from Lombardi may be a lesson he didn't want to teach. This lesson is that with success there are trade-offs. Lombardi was neither a good husband nor a good father to his two children. In fact, his family couldn't even speak to him on Mondays, Tuesdays or Wednesdays during the football season (because Lombardi was preparing for the next game). And Lombardi worked extremely long hours too.
Importantly, not all successful people work ridiculous hours nor neglect their families. But you need to figure out the trade-offs you're willing to make. I believe a lot of these trade-offs have to do with the type of venture you are starting/running. For example, some ventures may require you to go to events, trade shows, etc., and thus a lot of traveling. This may be too big a trade-off for some folks. If so, that's fine...just choose a venture that requires less travel.
Vince Lombardi was the son of a butcher. And he was passed up on an important coaching job once because "his last name ended with a vowel" (meaning that they were prejudiced against the fact that he was Italian). So, nothing was handed to Lombardi. He went out there and took it! Which is what we all need to do too!
Final note: I hope you learn these lessons from Vince Lombardi. I also hope his story inspires you. Finally, I want you to realize that if he can do it, so can you. Reading and watching biographies of successful people allows you to see that they really didn't have anything that you don't. They are just ordinary people like you and I. But they had powerful dreams and weren't afraid to go after them.
Final, final note: Want to be like Vince? Want to run a company where not only do you have the best employees, but they give it their 100% all every day? If so, watch my Leadership video by clicking here to learn how to build this type of organization (FYI, the US Army bought several copies of this program to train their top people -- nice validation that this program is that good!).