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.

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.