5 Tips to Success in Business – Part 2

Lesson #3: Long-term Planning

The last lesson touched on this, but it’s important enough to reiterate. Taking the time to put together a long-term strategy is vital to your success in business. This means before you do anything else in your company, you come up with a plan, beginning with a reason for existence. Figure out your values; having these in place will end up shaping how others will perceive your business. Finally, lay out long-term goals and strategy. For us, this was to go high-end and focus on organic growth rather than a skimming approach (while our competition focused on grabbing as much territory as possible, we focused on penetrating the markets we were already in). Once these are in place, stick to it. One of our competitors, when reflecting on their business decisions, noted that they had initially developed a strategy which they had failed to follow. They experimented with different things, and doing so killed them.

Lesson #4: Focus

A Marketing 101 lesson (from freshman year Intro to Marketing professor Dr. Powell) is to stay focused; if you try to get too fat too fast, you’ll fail. We knew this, but failed to take it into account. Our initial product offering was diverse, and the consequence was, well, no sales. We corrected this and remained focused on our core strategies (back to the long-term planning), allowing us to do significantly better than our competition financially.

But at the same time, we were also able to recognize opportunity. While focusing on our core strategy, we realized that the only way to catch up to our competition (who were significantly ahead of us in market share at the time) was to slow them down. Therefore, we launched a new product in their primary product category (our primary product was in a different market than their’s), which succeeded in stealing market share and slowing them down (even better than anticipated). The quarter we launched this new product was the quarter everything changed and our growth skyrocketed (note here that this radical turn-around was a combination of the new product launch as well as having remained focused through quarter after quarter of struggle to get the right systems in place).

Lesson #5: Cash is King

Cash! The lifeblood of every business. I mentioned previously our struggle with cash flow. We had practiced careful cash management since the beginning, and it paid off. But the lesson we really learned came through reflecting on the actions of one of our competitors. This team came out badly at the end of three years of business. They ended up negative, thus losing their own investment as well as that of their investors. Part of the reason, as previously mentioned, was not sticking to their plan. But the biggest cause of failure was only taking the cash they needed when offered money by investors. They were offered $5 million (the maximum any team could get), but turned it down because they felt they only needed half that amount. The result: they burned through the cash and spent the rest of the simulation desperately trying to keep the business alive, rather than being able to focus on product improvement or stronger marketing campaigns. Only accepting the cash they needed sucked the life out of their company, which had, by the way, started out the strongest out of all the teams. The moral of the story is that you will always need more cash than you expect, and it is better to seek cash when you are in a position of strength than when you actually need the money.

In our business, these lessons enabled us to bring in an overall return on investment of 422%, crushing our competitors. Implement them, and you’ll be set for success.

5 Tips to Success in Business – Part 1

While finishing up the next book review, I thought I’d go ahead and share some lessons learned from running a business simulation last semester. This simulation was a three-credit, semester-long class that offered plenty of variety compared to the typical semester load. It offered the opportunity to launch a computer company (albeit in a world with no established competition), and served as an excellent tool for practicing teamwork. Of the three competing teams, our team (of four partners) started slowest but pulled out ahead at every level at the end. The reason for this success was because of several key lessons we learned early on.

Lesson #1: Pick your Business Partners Wisely

One of our key advantages was that our team worked well together. Our president, a friend of mine, and I sat down before teams had even been picked (even before we knew for sure we would be working together) and evaluated every person in the class to customize the ideal team. Of course, part of this was luck of the draw, as it sort of “just happened” that we picked a team that would learn to communicate well, work hard, and maximize each other’s strengths, but investing time up front to ensure that your team is able to rise to the level of your company vision is vital.

Lesson #2: Balance the “Manager” and the “Marketer”

While planning our final presentation and reflecting back on lessons learned, we realized that one of the vital things we had gotten right (again, without necessarily meaning to) was the ability to balance thinking like managers vs. thinking like marketers. The difference is that managers think short-term, about what needs to be done right now to keep the business afloat, while marketers think long-term, about what will bring the greatest benefit in the future. During our second year in business (the simulation was broken down into 12 quarters), we faced a crises. We couldn’t get our product design right (we spent four quarters fighting this battle), so couldn’t even begin to keep up with sales. We finally threw everything we had into fixing the product. But when we finally got that right, our cash was exhausted. We had hit a pit. Fortunately, our Board of Advisors (aka our professors) invested some funds in our company, but if we weren’t extremely cautious, it wouldn’t be enough to get us off the ground. The following two quarters or so were ones of extreme cash management; it was challenging, but thinking like managers saved our company.

Early on, we had set in place an overall strategy. At first, we slipped away from this strategy, but by the time we got our product development on track, we had figured out what we were doing. We planned long-term, and stuck to that plan. Sticking to the plan, despite the occasional temptation to try something different, allowed us to catch up and surpass our opponents both in product and market size. Thinking like marketers allowed our company to grow.


Self-improvement, 2012, and New Year’s Resolutions

Welcome to 2012! Obviously, for those of you who check here regularly, it’s been a while. A certain business simulation class (with some Mandarin homework thrown in for good measure) played a key role in keeping my time occupied for much of the last few months. However, I can say both came off quite well in the end.

While I don’t particularly put much weight in New Year’s resolutions, I have taken it upon myself to better refine my ability at balancing everything going on. Thus I am coming to you with my goals for the coming semester, as a means of holding myself accountable. And, of course, to better refine the information I offer here. One of my goals is to focus on book reviews here. Currently, with my priority being scraping together the cash to buy textbooks this semester, those book reviews will be limited, but we’ll see where it gets us.

Meanwhile, I am currently developing a “self-improvement” plan, designed to allow me to put on paper all of my thoughts concerning strategies to address what I’ve identified as weaknesses that hinder me from getting where I want to go. For this task, I am using a Mind Map. Many of you will probably be familiar with this tool. For me, it is simply a means of loosening up my “thinking-space” on paper, allowing me to brainstorm more freely. I am working on revising my sleeping habits (if I allow my old habits of this past semester to have their way, my sleeping schedule over break would run from 4:00 A.M. to 1:00 P.M.), incorporating physical activity back into my day, and attacking my propensity for procrastination and poor time management. Sleep is coming first, with the goal of midnight bedtime and 7:00 wake up. My efforts so far have been rewarded with somewhat sleepless nights.

Finally, I am working on some feasibility analysis reports for a professor. These will help me determine which idea I want to run with for next spring’s business plan competition. The candidates are in publishing and manufacturing. Which will take this year’s competition by storm? The mystery remains to be solved…

 

Q&A from Last Post

After the last post, I had a great question from a subscriber that I’d like to address. Here it is:

Q: “Where would you put your emphasis in creating value added; Face to Face interaction or the booming, untamed world of Social Media?”

I want to try to answer this question from both sides, both from the perspective of the marketer as well as the perspective of the customer.

From a marketer’s perspective, face-to-face is the most expensive per-customer form of advertising, yet it has the highest conversion rate. The reason is rather obvious: from the customer’s standpoint, face-to-face builds trust as it shows that the marketer values them enough to make a personal investment in getting to know them. It becomes personal. On the negative side, creating the atmosphere where you can be intentional in meeting customers face-to-face is becoming more and more difficult. Customers want nothing to do with marketing that feels invasive. If you watch customers around salespeople, you will see the customers intentionally go out of their way to avoid the salespeople. People don’t want to be bothered. However, creating a way to draw in potential customers so they actually want to talk to you (such as being at a location where people expect to interact with business owners/marketers/salespeople or using point-of-purchase displays to attract attention) will overcome this.

Social media, from the marketer’s perspective, provides an amazing platform for building relationships with potential customers. While it doesn’t allow for as high a conversion rate as face-to-face, it does allow for a much broader reach (for much less expense). Another advantage is that social media is where people are. An increasing number of people are chilling on social media sites (between 2007 and 2009, for example, according to a report by Nielson released in January of 2010, the number of global visitors to social media sites has increased from 210,928,000 to 307,428,000 and the average time spent on SM sites per month has increased from just over two hours to five and a half plus hours (source:http://www.briansolis.com/2010/02/time-spent-on-social-networks-up-82-around-the-wrold/)). Up until currently, Face Book’s friend limit has been 5,000, meaning as a marketer you could have 5000 “friends” (implying loyal supporters) that all see when you post something. And anyone who “likes” that post will then spread it to all their friends. You could hold a conversation with several thousand people at the same time. To top this all off, you can also maintain close relationships with many of these people.

My conclusion is that, as there are many advantages to each, one should seek to use both (as long as his or her business model will allow this while maintaining efficiency). This might be done, for example, by building a following online then launching a seminar to your “friends” and fans. Those who are really committed to your “cause” through the social media will jump at the chance to be a part of a live event, and that live event will only increase their loyalty to you.

Content Marketing – Value Adding at it’s Best

The struggle as of late has been primarily between reading history and practicing Chinese versus posting more often here. Unfortunately, as of late, the history and Chinese (as fascinating as those subjects are) have been winning out. Well, that’s about to change…. Okay, no promises there. However, I am committed to not entirely abandoning you yet.

On that note, the first subscriber-only content will be coming out at the end of the month. Be looking for a three-to-five page report on the key essentials that you as an entrepreneur need to have in place to be successful. If you haven’t subscribed yet, now’s the time.

Today I want to briefly talk about content marketing. Content marketing is essentially the idea that contemporary consumers don’t just want someone to tell them about a product and then they’ll buy it; rather, they want to get to know the product or service themselves, so will seek to become informed on the subject. From buying a car to giving to charities, today’s customers want to know everything they can before investing their hard-earned money. What does that mean for us as business people? We need to be willing and able to put the information they are seeking out on the table where they can easily find it. Do you sell used musical instruments online? Than blog about some unique aspect of music, build a following, and use that as a basis for building your instrument business. But don’t only think of providing content for the sake of driving customers to your website or shop. Find creative ways to provide value, even if it doesn’t immediately benefit you. Treat your content as a product, in every way from a “loss leader” to an “up-sell“. I recently heard a quote from a successful internet entrepreneur (sorry, I’ve forgotten the name) who said that you should give 80% of your content away for free, and that will allow you to sell the last 20% very well. This guy is in high demand as a speaker and consultant and people pay thousands to get his advice. Craig Ballantyne, whom I have mentioned here before, provides so much free, excellent content on his blog that he has people constantly asking him to sell them some form of coaching. They are willing to pay anything to work one-on-one with him, because they trust that he is legit.

Providing content is a way to legitimize yourself, your expertise, and your business. It is a conversation with your customers, with the goal of better finding out what they want so you can successfully give it to them. Your business tip (and challenge!) of the week is to find one new way of creating content to better converse with your customers. If you don’t currently have customers than find a way to converse with someone who represents your dream customer.

The War on Terror vs. America the Beautiful

Date: September 11, 2011

Ten years ago Americans were forced to accept they were not as secure as they had previously thought.  Ever since then, the American mind set has been radically altered.  There is now a pervasive fear in our culture.  We have surrendered an ever increasing amount of freedoms to our government in exchange for security.  Today we live in a society where the government has a right to know everything; from where we travel, to what we pack; from what we own, to how our children are educated.  They have the right to watch our every activity, to listen to our every conversation, and to know everything we do.  In exchange, they supposedly protect us.  But is that protection even real?  The majority of terrorist threats are halted by the vigilance of civilians.  The threat of in-home criminal activity such as theft, arson, or physical harm against the inhabitants is much greater than any terrorist threat.  Yet the government can do little to prevent that.  Police units are spread too thin to deal with every in-home crime.  In fact, criminal laws do more to protect the criminal himself from the defensive action of the home- owner then the private property being threatened.  For example, if a potential thief is injured in any way on your property, he can press charges.  As Simon Black, of sovereignman.com, has pointed out, if any one individual or organization were to take any of the actions that the government uses to maintain control of society, that individual or organization would be considered criminal.  Yet the government is legally able to take those same actions.

On September 11, 2001, 2977 American citizens were killed.  Since that day, as of June 5, according to the Washington Post, 6026 U.S. soldiers having killed.  What have they died for?  Did they die to protect Americans?  It was too late for 2977 them.  Did they die to avenge those lives lost? How can it be of any consolation when twice as many men have died as citizens they were seeking to avenge? Did they die to safeguard the rest of America? Perhaps. There have not been any other successful attempts. Yet was the risk enough to be worth 6000 more lives? Did they die to offer the same freedoms we think we have to oppressed citizens of foreign lands? For all intents and purposes, it seems that goal has not been achieved. What have our soldiers died for?

Rather than seek to understand why we were attacked and properly deal with the real issue at hand, we retaliated. Because of that decision, mothers have wept both here and over there. Because of that decision, countless minds will replay time and again horrors we can’t even imagine. Were we wrong to launch this war? Was this decision a poor decision? Can we even realistically answer that?

Today is not a day of celebration, but of mourning. For what do we mourn? The lives lost? Shouldn’t we mourn more that, in all appearances, those lives were lost in vain? Is our world better because of their deaths? Is our nation better because of their deaths? Are the lives of their loved ones better because of their deaths? Beyond mourning, today should be a day of questions. Are the rewards we have received worth the price we have paid? Have the deaths of our soldiers and civilians defended our freedoms, or opened the door for the government to do more to steal them than any radical terrorist ever could? Have their deaths mattered? You have to answer that for yourself.

A Sobering Moment (or, “Customer Needs”)

As an entrepreneur and innovator, it’s very easy to get caught up in formulating great ideas and developing a powerful vision. So easy, in fact, that we, as business people, often forget the fundamentals of what we are supposed to be about. I currently find myself in a place where I have brought together several great ideas that I would like to pursue. But the reality is that there is a gap between what I would like to be doing and what I can actually offer to the market. In an attempt to bridge that gap, I have developed a strategy for building a portfolio to demonstrate my experience. However, I received a sobering email from a close friend today reminding me of the limitations I face. I am reminded that my portfolio-building strategy is based on expecting something from my market. I expect that a core group of my target market will accept that I can bring certain things to the table without my being able to demonstrate that ability. I am prepared to present certain things to the market without confirming that my market will actually have a use for what I am able to present.

What it comes down to is that I haven’t taken the time to get to know my customers. I have a vague idea of what needs they might have, but I haven’t really gotten to know everything I can about them. I began with a wrong presumption: I began with an idea and tried to fit customers to that. Rather, I need to begin with a set of customers and determine what exactly their needs are. From there, I can build a business that will meet those needs.

On that note, my customer avatar is a young entrepreneur, perhaps high school/university level, who has a great idea but isn’t sure how to get started with it. Perhaps he has an idea for a product but doesn’t know how to go about producing it. Maybe she has an idea that she has started taking action on, but doesn’t know how to structure a “business” around the key idea. He or she is creative and passionate about this idea. What are the needs of this young person? Can he or she find enough support in online forums, through free, easily accessible information, or from non-profit agencies? Or is there so much information available that this young person doesn’t know where to begin?  If you have been in that place (as a young entrepreneur) or know someone who is or has been, and have feedback on what those needs are, your advice or suggestions are welcome!