Welcome to our March business eNewsletter focused on growing your business.
Quote of the month:
“Step by Step. I can’t think of a better way of accomplishing anything.” – Michael Jordan
In this Issue…
- How These 5 Entrepreneurs Used Their Limited Resources to Grow Their Business Into a Successful Venture
- 7 Strategies Small Business Owners Will Adopt To Achieve Growth in 2017
- How to Use Your Website to Grow Your Small Business
- Three Must-Do Tasks to Support Your Small Business Growth
Message from our Chairman of the Board
How These 5 Entrepreneurs Used Their Limited Resources to Grow Their Business Into a Successful Venture
By Michael Glauser, Contributor
There are always ways to produce big results with small means, which is critical to an entrepreneur’s long-term success and sustainability.
The entrepreneurs I have interviewed over the past 20 years and the ones we met on our “Main Street Entrepreneur” tour are masters of efficiency. They create new ventures from practically nothing, get more from less along the way, and keep costs below industry standards. They have a real knack for finding and using a host of resources other than money: They find free advisors, acquire used equipment, defer compensation, negotiate excellent terms, partner with their customers, and use someone else’s building rather than buy one. They think resources first and cash second. The strategy is to create a low-cost prototype, prove that it works, and then grow with cash flow.
Here are some stories about how these resourceful entrepreneurs used what they had to grow their business. (Some of the stories have been edited for clarity and brevity.)
1. Turn a “No” into a Winning Solution.
Background: Justin Gold of the company Justin’s was making the best nut butters on the planet with a food processor in his home kitchen. When he decided to scale up his business, he talked with several large peanut butter manufacturers. He told them what he wanted to do: add honey, maple syrup, and other ingredients. They said it couldn’t be done.
What he did: “Instead of buying a $50,000 piece of equipment that everybody else had, I tried to think in terms of food processing. I went out and found the oldest industrial food processors I could find that were way cheaper than a peanut butter mill and got them to work. It’s a bunch of machines that do not belong together. The end result is the perfect peanut butter, and it has to do with being resourceful. It’s amazing how creative you can get when you have to be. Thinking outside the box gave us a completely unique product that our competitors can’t mimic… With everything our company has done, I’m constantly making sure we are not overspending.”
2. Be Innovative with Your Marketing Strategy When on a Budget.
Background: Allen Lim and his partners at natural sports-drink supplier Skratch Labs were building their company with cash flow. They had to get big-time results without spending a lot of money. To reach their audience, they needed to show up at sporting events like marathons, 10Ks, triathlons, bicycle races, and so on. Without funding, they had to get creative.
What he did: “What we decided to do was invest in an abandoned funnel cake truck. It was a 20-foot trailer that was at an old carnival. We converted it into a full kitchen. We started towing it around the country cooking real food for people while at the same time obtaining attention for our sports drink. The money we made cooking paid for our way to these events. It was really effective! At the end of our first year, our total marketing expense was about $800 because we made up that difference by selling burritos. Literally! We just took the carnival on the road.”
3. Look for a Helping Hand Wherever You Go.
Background: After earning a degree in mechanical and manufacturing engineering at the Oregon Institute of Technology, Jeff Wester moved to Sisters, Oregon, and started a horseshoeing business. He operated his small business in everything from a tent to the back of his house. In 1989, he decided he was ready to build his broader blacksmith business – Ponderosa Forge and Ironworks. He now needed his own shop. Since money was not available without significant collateral, which he didn’t have, he had to find a creative solution.
What he did: “There was this old guy named Joe Fought who owned Fought Steel in Portland. He started out as a blacksmith himself back in the 1920s. Anyone who wanted to start a business could go to this old guy, and if he liked your plan, he would give you whatever money you wanted at 12 percent. He owned this lot and said, ‘You figure out what you want to build, and when you need money, call me. I will send you the money and a promissory note. When you get your shop built and you are working in it, we will add up all the promissory notes and make a little contract.’ So that’s how I got started.” ‘
4. Don’t Necessarily Take The ‘Easy’ Road.
Background: Chris Washburn wrote a business plan and shopped it around for financing for his bike company Fezzari. An investor was willing to give him $1 million for equity in the company. On his way to the investor’s office to sign the papers, Chris called his wife, and she asked, “How do you feel about it?” Chris said, “It doesn’t feel exactly right for some reason.” His wife replied, “Well, don’t do it.” So he backed out of the deal and funded the company with personal savings and a couple of short-term bank loans. Initially, Chris built a good-quality but lower-cost bike for Costco. Though his company was vulnerable to the whims of one large customer, this contract produced cash flow and allowed him to further develop his product line and business model. Of these early days, Chris discusses how he used his limited resources.
What he did: “We ran a very tight ship and were profitable from day one. A lot of times we couldn’t get something done, so we would do it ourselves, whether it was designing ads, programming, photo shooting, or engineering. It was a lot of hard work, but as a startup company you don’t have much money you can throw around. I think it is best just to tell your story and be honest, as opposed to trying to do some exotic spin and pay a lot of money to have it done.”
5. Don’t Take ‘No’ for An Answer.
Background: After taking a three-year break to serve on a mission for his church, Jon Huntsman Sr. decided he wanted to start a new business in the petrochemical industry, calling it Huntsman Corporation. At the time, many products made of paper, wood, metal, and glass were being converted to plastic, so he knew there was a bright future in the industry.
Here is how he pulled off an unbelievable acquisition of his first plant with limited personal funding.
How he did it: “I began negotiating with Shell Oil Company to buy their polystyrene plant in Belpre, Ohio. They couldn’t conceive an individual paying $42 million for a single manufacturing plant. When I told them I would put up $500,000 in equity, they just about tossed me out of their office. But I was able to string together the most unique financing arrangement ever concocted. I persuaded Shell to take back a $12 million note that I would pay off over the next ten years. I then met with ARCO and told them I’d buy 150 million pounds of styrene monomer from them each year for 13 years – the raw material for polystyrene – if they would loan me $10 million upfront. They finally agreed to do it over the objections of many of their senior officers. With my $500,000, the $12 million note from Shell, and the $10 million loan from ARCO, I was able to persuade one of my former classmates at Wharton, who was now the executive vice president of Union Bank in Los Angeles, to loan me the remaining $20 million. It was literally hooked together with chewing gum and bailing wire.”
Read this article at Entrepreneur.com
7 Strategies Small Business Owners Will Adopt To Achieve Growth in 2017
By Brian Sutter
It’s a big year for small businesses. There’s a new president, a new administration with new policies and all the while, the increasingly digital world is becoming more complex and competitive. Even with all the changes, nearly half of the 1,100 small businesses surveyed in Wasp Barcode Technologies’ recently released annual State of Small Business Report say that they expect a positive impact on their business with a Trump administration. This is an increase from the 39 percent that believed the same thing around this time last year, when asked what kind of impact a new president would have on business.
The report also revealed that 50 percent of those surveyed don’t think the government is currently doing enough to support small businesses, and 13 percent don’t want the government involved at all.
Still, the mood seems positive, as 69 percent of small business owners and executives anticipate revenue growth this year, whereas 10 percent anticipate a decline and 15 percent predict no revenue change compared to the previous year.
Below are the seven strategies business owners plan to adopt to achieve growth in 2017:
1. Improve Existing Customer Experience and Retention
Forty percent of those surveyed say they will grow their business by improving existing customer experience and retention. This makes a lot of sense, as keeping the right customers and retaining them is much cheaper than acquiring new ones. In fact, a number of research finds acquiring a new customer costs anywhere between five to 25 times more than keeping existing customers happy.
Additionally, increasing customer retention rates by just 5 percent can increase profits by 25 to 95 percent, according to research done by Frederick Reichheld of Bain & Company(the inventor of the net promoter score). Still, most companies still spend more resources and put more effort into acquiring new customers rather than finding ways to retain existing customers.
What is your customer churn rate?
One way to keep existing customers happy is to keep communication lines open through a useful website. For instance, use blogs to engage with your customers. Wasp’s report finds that only 24 percent of those surveyed plan to offer a company blog on their website, compared to the 28 percent who planned to do the same the previous year. Another great engagement tool is allowing visitors to your website to watch videos, whether about your product or even better, videos that give a glimpse into the inner-workings of your company. Today’s consumers want to know that they are supporting a brand they believe in, and employer branding is a great thing to showcase through videos.
2. Launch New Products and Services
Wasp’s report finds that 36 percent of those surveyed plan to diversify their business in 2017 by launching new products and services in hopes of growing revenue. Fortunately, 42 percent say they will be using social media to promote specific products and services.
The introduction of social media has completely changed the way businesses communicate with their customers, and even consumer behavior and expectations have changed. Customers today no longer trust traditional advertising methods, because they know it’s paid for and there is no way to have a two-way relationship with a traditional medium. On the other hand, social media is all about engaging and communicating with consumers. Brands can interact and get feedback from customers this way, an especially great tool when launching new products and services.
More than half (54 percent) of those surveyed in Wasp’s report say they will invest more than 4 percent of their revenue in marketing, with the top tool used being a website, followed by emails (likely newsletters), then social media and word of mouth or referrals. Does your business have a referral or loyalty program? Do customers feel like they are getting something out of being a loyal customer, and can they feel good about referring your products and services to others because you have a good employer brand?
3. Invest in New Customer Acquisition and Activities and Methods
Small business owners understand that retaining customers is important, but so is attracting new ones. In fact, 32 percent say they will invest in new customer acquisition in 2017, and 33 percent will do so by gaining likes and fans. Again, social media is great way to establish direct communication and build relationships with potential customers. A whopping 68 percent of those surveyed say they use Facebook as a marketing strategy, much more so than LinkedIn (39 percent), Twitter (34 percent) and Instagram (27 percent). Using these social media platforms is also a good way for keeping track of the way you communicate with the public. For instance, if you see a drop in your followers, you can examine the way you’re communicating on social media. And remember, always use social media to listen to what potential customers are saying. When they see that your brand is a customer-first kind of business, they will be inclined to learn more about you, and spread the good word for you.
4. Expand Into New Markets
Our world is becoming increasingly global and interconnected, so businesses that may not have had to care about what’s going on on the other side of world, now do. Wasp’s report found that 30 percent of the small business owners and executives surveyed plan to expand into new markets in the new year. With this, comes more complex inventory and management systems and way of doing business. Yet, only 18 percent of small businesses use an inventory control software and system. Sure, that’s an increase from the 16 percent that had a system in 2016, but the number is still too low. The last thing you want, as a business, is to lose customers and damage your reputation by not having the goods you promised, or having too much or forgotten inventory sitting on your shelves, destroying your balance sheet in the process.
5. Hiring New Employees
Bringing new talent in is certainly a great strategy for growth, but it also happens to be a top challenge for small businesses (50 percent agree hiring new employees is what’s keeping them up late at night). Still, 52 percent of small businesses plan to hire new talent to achieve growth in the new year. We know hiring the right talent is crucial for business success, so what’s the best way to source and find great new talent while also keeping overhead costs low? By involving existing employees. Do you have an employee referral program at your company? The impact of a successful employee referral program can be very beneficial to your bottom line, and studies show that referred hires tend to stay at jobs much longer than those who joined with no connections to the company.
Additionally, Wasp’s report found that only 24 percent of small businesses do not involve their employees in marketing efforts at all, which is a huge loss to the companies. It takes an entire company to find great hires, so why not empower your employees to do so. Ask them to share content on their social media sites and engage with potential candidates, which only happens at 30 percent of the small businesses from Wasp’s report.
6. Invest in Training or Tools to Improve Employee Productivity
Our increasingly connected, 24/7 world means companies that work smarter end up on top. Wasp’s report found that 21 percent of the small businesses surveyed say they will invest in new training tools to improve employee productivity in the new year, and 42 percent plan to increase IT spending. Looking back at 2016, the top IT changes were replacing computer hardware, updating networking security and upgrading network. This is all great, but adding a cloud computing software was number six and implementing an inventory management system was scarily number nine on the list from last year–and both of these IT systems are crucial for business success.
7. Open New Stores / Sites / Facilities
Out of the 1,100 small business owners surveyed, 6 percent say that they plan to open new stores, sites and facilities. There are lots of ways to do this successfully and get the word out there to the right customers, but just remember to involve the entire company and use marketing and IT solutions to your advantage. It’s all about working smarter, not harder.
Read this article at the Business2Community.com
How to Use Your Website to Grow Your Small Business
By Wes King
Making sure that you are owning your backyard is critical when you are trying to grow a small business. When you are trying to get a potential client to know, like and trust you, their first impression of you is a backbone component.
People want to know who you are before they buy, so making a solid first impression is crucial. In the small business world, being visible on the web is an area that a lot of small businesses don’t spend a lot of time.
They might be showing up in directories and online review sites like Yelp, but a lot of times they don’t have their business listed with Google My Business, barely have a Facebook page and sometimes don’t even have a website.
Making sure that you are owning your backyard is critical when you are trying to grow a small business. When you are trying to get a potential client to know, like and trust you, their first impression of you is a backbone component.
So here are some of the keys to building a local website that can help you grow and thrive as a small business.
Bring Your Contact Information to the Forefront
Having contact information readily available in multiple places on your site allows you to appear accessible if your customer has any problems or questions. When people are making a decision on a purchase, they want to know that you are there for them if they need anything.
There are also the questions that come up around the the quality and reliability of your work if you don’t want to be contacted directly. Think about it like this: if you are unwilling to give your contact information that readily, then perhaps there is something less legitimate about the business your are doing.
In addition to appearing accessible to your potential customers, consider search engines as well. Google and other search engines have been known to give a little boost to businesses who put their information contact information on the homepage, even more so when paired with placement in online directories that have the same contact information.
Keep Your Customer in Mind When Building Your Site
From navigation to images to language and jargon, your potential clients and customers will be at different places in their journey to purchasing your product or service.
Whether you are selling a lawn mower to a new home buyer or selling packaging materials to a local manufacturer, you know your business, products and terminology – but your prospect doesn’t. If you immediately start talking about things like deck size to a new home buyer, you are going to lose them. If you are deep into talking about break strength for the hand grade polyester strapping that you sell, you are going to have a problem.
Many small business owners feel like using this type of language really establishes them as a credible and informed seller of their goods and services. However, the customer is getting more than they need to make an educated choice.
When your prospect comes to your website, they are looking for a solution to a problem. They trust you to be able to take the information that they have given you and be able to apply an adequate and not over-sold solution that will not take advantage of them and will meet their needs. They are buying locally after all.
Other areas to consider include the actual design of your site and how your “user” will experience it. Making sure that you take into account the way that your website makes you look specifically to your target market is an essential key to building a website that works locally.
We recently had a client who was having a hard time driving down into their target market, which was local private practice health care providers, because their website was making them look too high priced and corporate or enterprise level. Their images were very technical and included a number of board rooms and glass walls, two things that don’t exist in a small private practice.
So we redesigned their website so that the language and the funnel that was developed moved their prospect to the areas of the site that they needed to be in order to get the information that they need for the problem that they are having.
Reach Your Potential Prospect Where They are and Build for Mobile
If your potential customer or client is looking at your site on the go, making sure that the site that they are looking at is responsive (or modifies the content in a way that is digestible on the device that they are using) becomes critical. If you are asking your prospect to zoom in and out of pages and click tiny links and navigation buttons to get around your site, then you will almost always lose them as a buyer.
When you are building your site and keeping the mobile experience in mind, make sure that you are asking the question of what does your prospect need when they are engaging with your content through their mobile device.
If you are a local pizza delivery company, they probably do not need as much information about whether you are hiring or the history of your company or photos of the staff. However, they probably need to know what your specials are and how they can contact you for a delivery or carry out.
Small to medium-sized businesses are way behind the curve on developing mobile websites, with nearly 95% of SMBs have not built a mobile platform. This is a key area where SMBs can improve, grow and thrive.
Regularly Update Your Site with Fresh Content
I can’t tell you how many small businesses miss the mark on the content that is on their website. They allow the website to become stale and the language and way that they are representing themselves to be stilted and dated.
People want to experience what it is like to work with you. If you are an traffic or criminal attorney, you may want your potential clients to know that that you are professional and established but also that you are a common person who understands the problem that your client is facing and why it is important to them. You don’t want to come off as though you live in an ivory tower.
Additionally, keeping fresh content on your website that talks about the problem that your prospective client is facing allows you to further legitimize yourself as the expert and solution provider. When you are talking about the problem, they know that they have a local resources that they can tap into with questions who can help them get over that next hurdle.
Content marketing also allows you to re-purpose some of that content on other areas of your marketing. You can build that content into a mailing list, strip out some content and use it on social media, have it as a resource that you can point people to who are asking the same question over and over again, and, since you know it is a problem people are having locally, use it to drive the content of your ads.
Content marketing can be a lot of work; but when done correctly, it can become a vital component in growing your local business.
While this list is in no way comprehensive, it is a good place to start for things that are important to remember to look for when you are having your website designed. If you arehiring a local web designer, these are the types of things that you want to hear them talking about to help your business’s website be successful.
Read this article at the Business.com
Three Must-Do Tasks to Support Your Small Business Growth
New business establishments make an important contribution to the economy; however, it is inevitable that some of these establishments will eventually fail. Despite the recent surge in the number of new small businesses and start-ups, too few of these companies manage to achieve sustained growth, according to a recent report from the Center for Urban Future (chart below is for NY metro). According to the Bureau of Labor Statistics (BLS, 2016), survival rates for establishments vary by industry. The health care and social assistance industry, for example, consistently ranks among the industries with the highest survival rates over time, while construction ranks among the lowest.
Many cities and states are actively exploring ways to provide operational and investment support and can help – by investing in infrastructure and technology from green buildings to 3-D-printers, incenting small business lenders, creating affordable workspaces, etc., to create more opportunities for firms to grow. However, growth begins with the entrepreneur and business owner.
1. Invest in Your ‘Secret Sauce’
What got you started in your business? What gets you up in the morning? To quote Oprah Winfrey;
“Everybody has a calling. And your real job in life is to figure out as soon as possible what it is, who you were meant to be, and begin to honor that in the best way possible for yourself.”
What does your business do best? Better than anyone else? What is your ‘secret sauce’? Is it your response time, your creativity, your ability to raise funds, your customer service; what is it? When companies seek to finance investments, they often struggle to explain their businesses to non-experts. You may still get rejected for the loan, but it should not be because you didn’t have or couldn’t quickly explain what you do best. Knowing your ‘secret sauce’ also helps prevent you from going off on tangents and down the rabbit hole. Unfortunately, too often businesses are spending scarce resources ‘validating ideas’ instead of further developing their secret sauce anchored on a sound business plan and model. This may even lead to a ‘game over’ scenario.
2. Shed Your ‘Multiple Hats’ and Create a Support Network of Advisers
Wearing too many hats can hurt your head and your business’ performance. No matter how ‘passionate’ you are or how many hours you put in and no matter how smart you are, you cannot achieve rapid growth solo. You need advisers and you need employees. As Heleynn Boughner, a successful African-American realtor in White Plains commented:
“When I first decided to become an entrepreneur, I had no solid mentors or advisers. As a result, my growth was significantly limited, and I made some very expensive mistakes along the way.”
Heleynn has since become an active mentor in the community. In order to grow, it’s important to take guidance from experienced advisers and spend the time to find the right people, and then create a mission-aligned collaborative culture.
3. Develop Processes and Systems to Simplify the Ever Emergent Complexity
As you scale, there are more moving parts. Complexity is simply an emergent feature of this increase in the number of moving parts.
Like cholesterol, there is good emergent complexity and bad emergent complexity, as you scale. Offering new products and services to new segments is good complexity and helps increase your top line and your margins. Bad complexity, on the other hand, is just like bad cholesterol, it erodes profits and limits capabilities.
You will be overwhelmed by this increase in moving parts, especially if you are doing things ad-hoc or even the old (your!) way. The right processes and systems help simplify complexity. Of course, some things simply can’t be automated via systems or outsourcing. For everything else, build process based systems; they’re a lot easier to quickly scale than people. While implementing completely new processes and systems are inherently risky (operational risk, cultural risk etc.), if they are built or based on what is currently working or something you’ve already been doing, you can eliminate much of this risk. As long as these processes and systems are aligned with and support the growth and execution of the ‘Secret Sauce,’ it is okay to experiment and tweak as needed to get them right.
Have fun and remember, to quote Oprah again:
“The key to realizing a dream is to focus not on success but on significance – and then even the small steps and little victories along your path will take on greater meaning.”
Read this article at the SmartHustle.com