Tag Archives: Business Planning

Business Structures

2 Small Biz Guys engage a pretty dry subject with a little flair – business structures. Although the topic is about as interesting as watching paint dry, business owners have to face the fact that their business must have some legal structure. We are not attorneys and you are advised to consult both an attorney and CPA when determining how to structure your business.

The basic business structures include Sole Proprietorship, Partnership, C-Corporation, S-Corporation, Limited Liability Company, Trusts and Employee Stock Ownership Plan. The structures move from very simple with complete liability of the business owner to somewhat complex and less direct liability. Often businesses go through a progression or evolution from one to another over the course of the business’ growth. We discuss the various forms and the distinctions of each regarding personal, financial and tax liability.

Initially, determining a business name requires various legal forms, checking with the Secretary of State for the availability of the name, and filing appropriate paperwork with the State Corporation Commission. Every state is slightly different yet very similar in the process. For branding purposes, your business name should be descriptive and distinct regarding the business itself. It’s always best to describe what you do in your business name.

We close the show talking about the growth of holacratic businesses, like Zappos, and their challenges as Millennials take over the world.

You will find some useful information in our discussion and perhaps gain insight toward your own business path.

Are You Fit to Be an Entrepreneur?

Are you fit for entrepreneurial endeavors or to be an entrepreneur? 2 Small Biz Guys explore the path to profitable returns. We explore considerations and questions regarding small business start ups. Some folks want to start their own business but may not be a good fit for becoming an entrepreneur. You can take a brief quiz and see where you stand on the scale before launching into something you may regret. On the other hand, you may be a perfect match for taking the leap. Find out here.

If you are a self-starter, can create good relationships and lead others you are on the right track. There are some recommended steps, though. We often leap without looking, especially when we accept and engage risk. When we plan strategically, looking for and filling the holes in the plan effectively, we have a much greater chance for success. Here’s the steps:

  1. Write a Business Plan
  2. Get Business Assistance and Training
  3. Choose a Business Location
  4. Finance Your Business
  5. Determine the Legal Structure of Your Business
  6. Register a Business Name
  7. Get a Tax Identification Number
  8. Register for State and Local Taxes
  9. Obtain a Business License and Permits
  10. Understand Employer Responsibilities

Often the latter is not fully appreciated until the business owner is taken off track because there are now employees to manage. Competitors, rather than wish you ill, may wish you more employees. Human resources are often the most important aspect of a business that is growing, maintaining good employee relations being imperative.

Cash flow is most important, though, and without it your business will suffer greatly and potentially fall without great fanfare. There are some key considerations in this article. There are also some excellent resources for short-term on-demand small business education at Practical Business University. We also discussed sales strategies briefly and these made the top ten, from the author of How to Say It: Business to Business Selling.

On to the show:

2 Small Biz Guys w Rick Murray CEO of ASBA

2 Small Biz Guys, Ray and Zen interview Rick Murray, ASBA CEO aka the Arizona Small Business Association, and travel many paths regarding small business in Arizona. Rick shares a little of his background with the State of New Mexico’s State Fair Grounds on his way to the leadership role of Arizona’s premier advocacy group.

Speaking of advocacy, we discuss the recent Crowd Funding legislation that he was instrumental in facilitating, a truly time sensitive opportunity and collaboration that met with success. It is a great win for small business owners and an example of what collaborative effort can do. You’ll have to hear the story. Look forward to further information coming from ASBA on the process and even some training on how to develop your own crowdfunding resources.

We explore various services that ASBA provides for both members and non-members, including a state-of-the-art health care coverage website that is open to anyone. You can hear more details during the interview. We talk about the ASBA Marketplace, too. We cover some critical points for the development of relationships and, of course, the follow up that is imperative for successful engagement.

As an entrepreneur or small business owner, no doubt you will benefit from this interview and, perhaps, decide to engage the Arizona Small Business Association to help develop your business. Ray and Zen are both members. Ray is also on the ASBA Mentor Board, which provides consultations for small business owners. Like any smart business owner knows, accessing those who have gone down the similar roads previously often provide insight and wisdom beyond measure.

Enjoy the show and feel free to reach out to us for help, too.

ASBA Mentor and Member (Ray and Zen) make ASBA membership work for you. We offer a special opportunity for ASBA members – EXTRA TIME (2 slots for the price of one – that’s double the time). Just fill out the appointment popup (Let’s Talk in the lower right) and tell us Rick sent you.

Small Business Help – Coaching, Consulting, Peers

We tend to address things in more of a general sense when talking about small business challenges. Tonight’s show was indicative of the reflections of our insights and understanding of various tools. Coaching helps business owner set up action plans once goals and objectives are determined through a variety of questions the coach presents. Consulting focuses on specific issues within the company, creating change management scenarios that, when the employees and staff are involved, provide the opportunity for better buy in and success. Peer advisory groups allow the business owners to engage and reflect with others who have similar challenges, which often isn’t possible in more confined environments.

All businesses rely on sales, but the process for garnering them is often vastly different. There are some basic that often get overlooked. If a sales goal is ‘X’ the construction of the process to get there is all important. It is a numbers game. In the digital world, ‘X’ is achieved through generating traffic and garnering sales as a percentage of the traffic. The rule of thumb is that a .05% success rate is good. So, the question is, “How much traffic must be generated to achieve ‘X’?” That is just a first step, but a necessary one that a lot of business owners forget to address. Numbers are your friend. Don’t leave them out of the process.

Here’s the recording of this week’s show with Ray and Zen:

Get More from LinkedIn

How to Get More Sales from LinkedIn

By Ray Silverstein

Everyone who uses LinkedIn suspects that they could get more from it, sales-wise, if they could only knew how.

So, my company recently sponsored a workshop presented by Larry Kaufman, a LinkedIn keynote speaker and one of LinkedIn’s Top 250 most-connected Americans. Larry is Chief Sales Officer and Partner of Sales Empowerment Group. He’s also a long-term member of my PRO peer groups, and in true peer group fashion, is generous sharing his knowledge.

Now, I’m paying it forward by sharing my top takeaways with you.

Polish Your LinkedIn Profile

Before anything else, make sure you’re presenting yourself at your best. This sounds basic, but it’s easy to overlook.

  • Update Your Profile – Chances are, you created your profile years ago and haven’t done much since. Things change; your profile should, too.
  • Take Your Time – A good update takes several sessions, so deactivate your “activity broadcasts” (under Privacy Settings) for now. You don’t want contacts receiving notice of every little change. Wait until you’re done.
  • Capitalize Your Name – It helps you stand out in any list.
  • Expand Your Headline – In addition to your title, add other notable credentials.
  • Use a REALLY Good Photo – First, you must feature a photo…no silhouettes. And if don’t have a great business portrait, get one.
  • Embed Keywords – Approach your profile the way you would a webpage or blog: use keywords.
  • Add Content – Did you know you can upload articles, PDFs, and videos, not to mention website links to get more exposure for your business? (Look for an icon/drop down box throughout your profile page.)

Build Your LinkedIn Presence

  • Create a Corporate Page – If you don’t have a company page, create one…yes, even if you’re a solopreneur. (This is one of LinkedIn’s most underutilized features.)
  • Use LinkedIn’s “Status Update” feature – It’s a quick, easy way to keep your name out there. If you’re excited about a new product or have industry news, share it.
  • Join Relevant Groups –You may learn something, and it’s more exposure. Plus, it puts you in touch with people you may want to know.

Start Connecting

  • Use InMail – InMail is LinkedIn-style email. The top reason to pay for an premium LinkedIn account is InMail access, but even a basic (free) membership lets you use InMail when sending inviting new connections. Instead of using LinkedIn’s default invitation, always craft a personal note.
  • Use “People You May Know” – This feature allows you to expand your network quickly. It draws from the former employers and schools listed in your summary, among other things. When you invite these people to connect, remind them of your shared history.

Leverage Your Connections to Kick-Start Sales

You probably use LinkedIn to mine information about existing prospects, but you can also use it to find—and cozy up to—new ones. Remember ‘six degrees of separation’? Well, two degrees is even better.

The idea: use your first-degree connections’ connections. Are there prospects for you there?

To find out, visit a contact’s profile and view his/her Connections box. If his/her network isn’t hidden, browse it or search it by title.

Make a list of, say, five people you’d like to connect with. Then, send your first degree connection an email, requesting introductions. Include a one-paragraph summary of yourself, and ask your contact to include it in his/her introductory emails. This makes things easy for your contact and lets you control how you’re presented.

Ask that you be cc’d, and as soon as the introduction has been sent, follow up with the prospect. You know how to take it from there. Always thank your contact, and offer to return the favor. Instead of cold calls, you now have warm, personal introductions!

Bottom line: your connections are invaluable to your sales. Tools like LinkedIn let us leverage relationships in fresh, new ways…when we’re willing to take the time to learn how to use them.

If you are interested in a great workbook I’d recommend a great one from another cohort, Zen Benefiel, who compiled it for a workshop in Phoenix. How to Grow Your Business Using LinkedIn.

Measuring Risk – Don’t Be A Seymour

Growing a business means taking risks and making changes. But that’s not as easy as it sounds. And for most people, the longer you are in business, the harder risk-taking gets.

When you first started your business, you were willing to take some big risks. You had to. But ironically, as you grow more successful, chances are, you’re becoming more risk-adverse.

It’s simple: back then, you had less to lose. Now, you have something worth protecting. Along with success comes a growing sense of caution. Now, you’re invested in the status quo.

But too much caution is deadly for entrepreneurs. That’s best left to the professionals, namely, your attorney and accountant. They’re professionally trained to eliminate risk. Once you start thinking the way they do, your entrepreneurial spirit—the driving force behind your business—starts to dries up.

If you want to stay successful, you need to keep your edge. That means taking risks. Carefully calculated risks. Risks with a high probability of success.

So yes, you need to evaluate prospective risks thoroughly. But sometimes, the evaluation process becomes a reason for stalling. It’s something I see all the time in my small business peer groups.

Realistically, we can’t expect to obtain all the data needed to make a 100% foolproof decision. It’s tempting to delay taking action because we continually want to “see more” facts and information. Don’t be a “Seymour”…when it’s time, take the plunge!

Or, in the words of iconic business expert Tom Peters: “Ready, fire, aim!”

Okay, maybe that’s a slight overstatement. The point is, what you don’t want to do is “get ready…aim…check your sites…check the wind…re-aim…check the elevation…and fire.”

If you do that, by the time you finally get around to squeezing the trigger, your target will have moved out of range. Or someone else will have bagged it first. Opportunities are transient things. You have to seize them when you see them.

If you have goals, you’ll have to take calculated risks to achieve them. So, are you weighing some risks now? What’s keeping you from moving forward? What will it take to move you toward achieving your goal?

If you’ve been stuck in place for a while, request my free Goal-Setting Worksheet, and take a first step toward taking action. Don’t be a Seymour. Email me at Ray@ProPres.com.

 

Tracking Critical Numbers

How often do you review your critical numbers, those all-important figures that indicate how your business is doing? Do you wait until the end of the month, quarterly, or year to find out where you’ve been and how you’ve been doing? Or do you keep a constant eye on them?

And what numbers are you measuring and tracking? Because what’s truly ‘critical’ varies for every business, and sometimes it isn’t what you think.

Take profit and loss statements. They’re universally recognized as a key measurement tool, but they’re not without limitations. Because they’re historical snapshots in time, they don’t tell the whole story or reflect the here and now. They don’t tell you where you are going, until sometimes it’s too late.

As you know, I’m all about planning ahead. But you can’t do that effectively without knowing where you are and understanding your day-to-day progress.

So don’t wait for your financial statements to become available to assess the state of your business. Use other numbers closer at hand to keep a pulse on how it’s going. Like…

Cash on Hand – Cash is King. Do you know your cash, the cash you expect to collect in the short term, and the bills that you must pay?

Bookings – The orders you receive, and in some cases, the number of quotes you issue, reflect your success rate. If your bookings, quotes, or proposals are down, you can anticipate that you will have less business coming in and therefore less receivables and cash.

Order Backlog – Do you keep track of what’s in your pipeline?  Is your backlog made up of backorders or late shipments or fulfillment? While backlog becomes cash, remember that this is also a measure of service level. I often tell the story of a busy restaurant that only has four waiters, but really needs five. Pretty soon, they will only need three.

Inventory – If you have stock, how well do you know your actual inventory?  Wrong inventory estimates will throw off your profitability expectations. Inventory lower than your expectation means your cost of goods sold is higher than you expect or your selling prices too low, which results in a reduced gross profit percentage.

Open Purchase Order – Some people call this ‘open to buy.’ Are your open purchase orders in line with the business you are getting or expect to get?

Service Level – How do know or measure you are doing a good job? Keeping tabs on service levels is essential to continued success (see ‘Order Backlog’ above!).

Payroll vs. Revenue – Is your workforce becoming more less productive? Or is your business down? This is a quick and dirty test and that will ultimately show up your cash. Tracking payroll and revenue side by side tells you at a glance which way you’re headed.  If your revenue is up and payroll is down, life is good. If the opposite is true, you must find a way to change that!

In addition, some critical numbers may be meaningful only to you.

For example, one of my peer group members is a builder. He keeps a close eye on, of all things, his site managers’ monthly receipts from Home Depot and Lowe’s.

Why? Because if his crews keep running to local stores for supplies, they’re not properly planning ahead. It reflects their efficiency, which in turn impacts everything from customer satisfaction to profitability.

The same applies to forecasting future market conditions. One RV dealer I know keeps an eye on the fur industry. If fall and winter fur sales are high, he predicts a booming spring RV market. To him, it signals that consumers are confidently buying luxury items.

So ask yourself, what measurements are particularly meaningful to your business, both internally and externally? Make appointments with yourself to check these numbers on a regular basis. Don’t wait for P&L statements. The most critical numbers are right at your fingertips.

When it comes to numbers, are you on your game? Ask for my 10-question Financial Tracking Worksheet. Email Ray@propres.com for a copy.

Avoiding Growing Pains

How to Avoid Organizational Growing Pains

By Ray Silverstein

When it comes to growing a business, is it possible to experience too much of a good thing? Yes, it is. And while you might think this would be a good problem to have, think again. Many times this can put you out of business.

Too-rapid growth is actually more dangerous to a business than no growth at all. While we tend to envy ‘overnight successes,’ research shows that growth exceeding 25% per year puts a business at risk of failure.

Just consider all the demands that an unexpected growth spurt would place on the various facets of your business:

Financial – Suddenly, you have big orders to fill, but not enough inventory to do so (or people-power if you’re in a service industry). Nor do you have the cash on hand to purchase what you need (or to hire who you need). Plus, getting credit is trickier these days (especially for service businesses that don’t have hard assets to offer as collateral). Purchase order financing is a possibility, but it is almost impossible to obtain and very expensive.

Personnel – Regardless of what you sell, you’ll need more workers to push your products or services out the door. But you don’t yet have the dollars needed to meet a rapidly-expanding payroll, not to mention the acquisition costs of bringing on new employees. Speaking of which, you’ll be so busy, you won’t have the time to make wise hires or train your newbies properly.

Morale – Because you’re short-staffed, your employees are constantly under the gun. Even dedicated workers can only give so much for so long before they start to burn out.

Workflow – If you don’t have adequate technology and processes in place when business explodes, what you do have will short circuit your ability to service or produce. Now you have a new fire to put out, and even less will get done.

The end result is: orders will go unfilled, and service will suffer. Customers will lose patience and walk. And remember, business that’s lost due to service issues is very hard to win back.

Picture a tiny, start-up restaurant that unexpectedly receives a great review from a trendy food critic. Suddenly, it needs five or six servers to wait on the nightly crowds, but it only has four on staff. Service plummets; waiting time skyrockets…and unless management makes some quick fixes, soon it will only need three.

Manage Potential Growing Pains

You may think this will never happen to your business, but it may be sneaking up on you, on a smaller scale. My point: keep a pulse on your activity and plan ahead. Know Thy Business. Build on your strengths, shore up your weaknesses, and attend to these key areas now:

Financial – Lay the groundwork for acquiring credit in advance. Develop a relationship with your banker. Build a good credit history. Study your numbers and get them to a healthy place.

Personnel – Always know who your next hires may be. Think of your workforce as a major/minor league system. If you’re continuously scouting for talent, you’ll be halfway there when it’s time to hire. Your minor league is a list of people you believe have the right attitude and skills to do the necessary work.

Morale – Nurture it always. Build good communication habits with your employees. And remember, a little personal appreciation goes a long way.

Workflow – No one wants to incur the expenses of upgrades until they’re absolutely needed. But every new system has learning curves to master and bugs to work out, so who can afford to wait until crunch time arrives?

Finally, learn to recognize the symptoms of growing pains. An easy way to get started: use my Growing Pains Diagnostic Test to conduct a DIY five-minute checkup. Just email Ray@propres.com and request a copy. Do something easy and healthy for your business today.

 

About the Author: Ray Silverstein is President of PRO, President’s Resource Organization, a network of entrepreneurial peer advisory groups in Phoenix and Chicago. He is author of “

President's Resource Organization - Duct Tape Marketing

Duct Tape Marketing

Duct Tape Marketing

      John Jantsch, reviewed by Ray Silverstein

Michael Gerber states, “This book is just like its namesake–Duct Tape–it’s good, incredibly smart, amazingly practical, and immensely sticky stuff.”  I found the book to be a good basic outline of a marketing strategy and it had many useful hints.

Everyone thinks their plight is unique, “Why is it so hard to market my business?”  “But what if I told you, no matter what your business claims to do or provide, you’re actually in the marketing business.  That’s right–every business is actually a marketing business.”  “You simply can’t afford to be no good at marketing if you plan to stick around and grow your business.”

“Marketing is getting people who have a specific need or problem to know, like, and trust you.”

Many small businesses do copycat marketing.  Copycat Marketing is a surefire way to guarantee that your marketing will fail.  Copycat marketing simply reinforces that you are the same as everyone else.

Another practice by small business is Ostrich Marketing.  Ostrich marketing is practiced by owners who simply have no idea what to do with marketing, so they do nothing–they stick their head in the sand and hope.

The primary activity in Duct Tape Marketing is to narrow and focus.  The lead generation is a two step process.  What do you think it would mean to your marketing activity if you had just five hundred highly qualified prospects and your only job was to get them to know, like, trust, and contact you?

The following are the steps for Duct Tape Marketing:

Step #0.  State Your Primary Marketing Goals for the Year.  Until you can get very clear about what needs to happen in order for your marketing system to be successful, you will never get there. One year from today, what will your business look like?  How will it change?  How will it grow?

Step #1.  Describe Your Ideal Client.  Carve out a narrow target market or narrow market segment and find out everything you can about what people in that market segment want to buy and why they want to buy it.  Build a marketing strategy just for this market and make sure that the world hears that you are better at serving that market than any other business.  Describe the ideal client and market as though he or she is sitting across the table from you at this moment.

You can choose to attract clients that value what you offer, view working with you as a partnership, and want you to succeed, but only if you have a picture of what that ideal client looks like.  Identify, describe, and focus on a narrow target of clients or segments that are perfectly suited for your business.

One of the easiest ways to start to get this picture of who or what makes an ideal client is to take a close look at the customers your business has attracted to date.

Physical Characteristics:  Are, Employment Status, Gender, Occupation, Income, Education, Industry, Number of employees, Type of business, Geographic scope of business, Revenue levels.

Emotional Characteristics:  Discovering common emotional characteristics is more of an art than science.  What you are looking for are things like values, fears, desires, and goals.  What do they want out of life?  What are they not getting?  What do they need to know to feel comfortable?  What is holding them back?

One of the best way to accumulate this type of information is to retrace many of your sales calls, including the ones where you did not get the results you had hoped for.  Another clue is to understand lifestyle patterns of your Ideal Prospects.  Find out about their hobbies, interests, books and magazines they read, musical preferences, and travel tastes.  This can provide a deeper glimpse into what your Ideal Prospect really cares about.

Know, Like and Trust–It’s a fact that people often like people who have the same interests.  All things being equal or unequal, a buying decision will tip to the business or salesperson who the buyer likes the most–It’s called human nature.

Without a need or problem, you don’t really have a market.  So, what’s the problem?  What are your customers attempting to solve when they buy your products or retain your services?  You don’t sell goods and services, you sell solutions to problems.  What you really sell is peace of mind, status, pain relief, etc.  State this revelation as bluntly as possible, and your marketing business will benefit immediately.

A guiding principle of marketing is the ability to charge a premium for your products and services within a chosen target market.  You must determine if this market values what you have to offer enough to pay a premium for your expertise and understanding of this given market.

Factors to consider if it is a viable market:

  • Is the market large enough to support your business growth goals?
  • Can you easily promote your business to the decision makers in this market?
  • Does this market value what you do enough to pay a premium?

When you are searching for a target market that is hungry for a solution, there are three questions that must be considered:

  • Do they want what I have?  It does not matter if they desperately need what you have.  If they do not want it for one reason or another, then you are sunk.  People rarely act to their own benefit unless they want to.
  • Do they value what I do?  You must look for people who are already investing in the type, or at least the category of service you have.
  • Are they willing to pay a premium for what I do?

The Ideal Prospect Profile:  Using the information you have gathered about an ideal customer you create an Ideal Prospect Profile.  This is one or two paragraphs you write that describe a picture of your ideal client, almost as though you were describing someone sitting across a table from you.

Try this formula:  Physical description+What they want+Their problem+How they buy+Best way to communicate with them=Ideal Prospect.

Action Steps:

  1. Look for common characteristics such as age and gender among your best clients.
  2. Uncover a common frustration among your target market.
  3. Write a description of your ideal target market in terms that are easy to communicate.
  4. Determine whether your ideal target market is large enough to support your business.

Step#2.  Write Your Core Message Points.  Uncover three or four unique benefits that your business or product can provide to your ideal target market, and then make these points of difference your central marketing themes.  If need be, change your entire business model to take advantage of an opportunity to serve a narrow market.

Get  Out of the Commodity Business.  You’ve got to uncover and communicate a way in which your business is different from every other business that says they do what you  do.  You’ve got to find a way to stand out and stake your claim on a simple idea or position in the mind of your prospective clients.  This claim must be powerful and intentional.

Find something that separates you from your competition become it and speak it to everyone you meet.  Quality isn’t it, good service isn’t it, fair pricing isn’t it.  The difference needs to be in the way you do business, the way you package your product, the way you sell your service, the fact that you send cookies to your clients, the fact that you show people how to transform their lives–It’s in the experience you provide.

The Core Message Process:

  • Discover capture, and commit to a unique position.
  • Create a Marketing Purpose Statement.
  • Turn your purpose statement into a Talking Logo.
  • Craft a simple Core Message to use in all of your marketing.

It’s worth noting that being different for difference’s sake isn’t enough.  An identifiable target market must value the difference!  Example:  Trust With Your House Keys.”

These are some ways to communicate your core message:

Unique habit, Customer service, A way of doing business, A memorable personality.

The best way to get your positioning is to ask your clients.

  • Why did you hire us in the first place?
  • What do we do that others don’t?
  • What’s missing from our industry as a whole?
  • What could we do that would thrill you?
  • What do you find yourself simply putting up with in this industry?
  • What would you do if you owned a business like ours?

What you really sell is what the eventual buyer think they are going to get from your product or service.

Your Marketing Purpose Statement:  This statement is not meant to be communicated to your clients, but rather is meant to be the basis for your marketing and customer service activity.  Your Marketing Purpose Statement should become not just a goal but the overriding purpose for the business.  A powerful Marketing Purpose Statement should give you and your staff a vision for the future of the business.

Create a Talking Logo:  This is a short statement that quickly communicates your firm’s position and forces the listener to want to know more.  The Talking Logo is created in two distinct parts.  Part 1 addresses your target market, and Part 2 zeros in on a problem, frustration, or want that market has.

Example:  I show small service professionals how to triple what they charge.

Step one:  Create a compelling answer to “What do you do for a Living?” one that focuses on a benefit or solution and forces them to want to know more.

Step two:  Prepare a simple supplementary answer that tells them the unique way you get them that benefit or solution.

Your Core Marketing Message:  This is the message all of the activity you have performed to create. Now that you have discovered the marketing purpose for your firm and answered what you do for a living, it is time to fashion the creative marketing messages you will use to communicate your purpose in a way the clearly demonstrates the benefit of doing business with your firm. Example:   Electrical contractor: Marketing Purpose Statement:  We want to be known as the one electrical contractor who will show up when we say we will and do the work right the first time.

Talking Logo:  We help homebuilders eliminate callbacks.

Core Message:  Wired Right on Time.

Step #3.  Develop Educational Marketing Materials:  Create a list of the educational marketing materials your ideal client might find helpful in an attempt to understand the value that your firm has to offer.

Attempt to move your target prospects along a logical path toward a group of offerings geared to addressed the various stages of client development.  This gradual, trust building approach allows businesses to charge much more for their products and services while enjoying a much greater relationship with their clients.

Step #4.  Outline Your Lead Generation Strategy:  Create a list of every conceivable way you can reach your target market.  This is not limited to mail, public relations, referrals, e mail or advertising.

The Client Stages Defined:

  • Suspects–     The list of people who fit your target description.
  • Prospects–     The list of people who have responded to an offer for more information.
  • Clients–     The list of people who have tried your product or service.
  • Repeat Clients–     The list of people who have upgraded or purchased more.
  • Champions–     The list of people who tell others and sell for you.

Marketing Offer for Suspects:  Your suspect database responds to offers of complete information designed to help them solve a problem or answer a question.  These take the form of free reports, tips, white papers, workshops, demonstrations, evaluations, newsletters, books, guides and checklists.

Example:  10 Things You Must Know Before You Hire a Roofing Contractor.

Marketing Offer for Prospects:  Once your suspects raise their hands and request your fee report, they are giving you permission to market to them.  Your prospect list is now ready for an offer to become a client.  In many cases this requires a low cost or trial service offering to gain the ultimate trust needed to become a premium client.  You may need to create an introductory product or version of your service that can be priced low enough to offer a low barrier to becoming a client.

Your Clients Become Premium Clients:  Once your clients move to premium status, the focus is to also find specific ways to turn them into a referral source.

Premium Clients Become Champions:  Some amount of your clients will automatically become champions.  These are repeat clients who voluntarily look for way to promote your business.  In effect, this potent group can become your informal sales force.

ACTION STEPS:

  1. Understand the client stages.
  2. Develop marketing, products, and service offerings that address every aspect of the marketing funnel.
  3. Map every point of customer contact and look for holes in the funnel

Produce Marketing Materials That Educate:  Done well marketing can eliminate the need to sell.

Educate, Don’t Sell.

Create a Marketing Kit.  This should include your case statement, your difference summary, your ideal client/customer description, your marketing story, and your offerings.

Your Case Statement should address the following:

  • A statement of a challenge, frustration, or problem that your target market experiences.
  • An image of what life is like when the problem is solved.
  • How they got here in the first place.
  • A path for them to follow.
  • A directed call to action.

Your Difference Summary:

Don’t tell them what you do; focus on how you do it.  Tell them about your unique approach, your processes, and the little things you do.  If you have studied your competition and you know what your target market craves, make a point to summarize you solution.

Your Marketing Story:

Tell them your story in an open, honest, and entertaining way, and you will win their hearts as well as their heads.  The ability to connect by way of personal stories is one of the greatest advantages that small businesses possess over big businesses.  Most importantly—stories build trust.

Your Product/Service Offerings:

This page should outline the various services, products, and packages that you have available.  Clearly describe and detail the benefits of each.

Your Marketing Kit may also include Case Studies, Client experiences, Testimonials, FAQ, Processes and Checklists, Articles, and anything you believe would be of value to the prospect.

Marketing kits are not intended for mass, direct-mail campaigns.  They are much more effective once you have generated a lead and want to proceed to fully educating the prospects.

MARKETING IS MOSTLY YOUR JOB, BUT GET YOUR ENTIRE COMPANY INVOLVED.  EDUCATE THEM!

LEAD GENERATION PROGRAM:

Use a two step lead generation program whether it be advertising, direct mail public relations, web, etc.  This is simply to set into motion by advertising an offer, such as a free how to report, tip sheet, industry insider scoop, or survey results.  The goal is to have suspects request information and thus giving you permission to market to them.

Step #5.  Describe Your Sales/Education Process:  Write down the steps you will take when a prospect contacts your business by way of one of your lead generation strategies.

Have a process for Discovery, Presentation and Transaction.  Sales should not be off the cuff, but a planned process.  Create several questions you will ask prospects during the discovery phase that will allow you to get a feel for how ready they are to understand the need for your products or services.

The Discovery phase may be done over the phone.  The Presentation or Internal seminar is a planned approach.  When you take control of the meeting and present your points in a structured way, you will either connect or you won’t, but when you do it will be the right connection.

The Presentation consists of weaving the key elements into a concise message that includes:  The Problem, Your Solution, Your Core Difference, Your Story, A Real Client Example, How You Work and The Expected Results.

Thinking Fast and Slow

Thinking, Fast And SloThinking Fastw
Daniel Kahneman

reviewed by Ray Silverstein

Daniel Kahneman won the 2002 Nobel Prize in Economic Sciences for his pioneering work on how human judgment sometimes defies logic or probability—and how even supposedly scientific decisions are influenced by human bias and irrational assumptions. This was alarming news to economists.

Kahneman spend decades of research digging deeply into the human brain and the often-flowed way in which we make decisions and arrive at conclusions supported not by objective fact but by subjective assumption.

The brain thought process switches between automatic response or kneejerk reaction, System 1, and System 2, which involves concentration and deliberation. Although System 2 believes itself to be where the action is, the automatic System 1 is the hero of the book, according to Kahneman.

He argues that overreliance on System 2 can result essentially in tunnel vision. System 1, however has a bias to believe and confirm and neglects ambiguity and suppresses doubt.
He also shows that “hindsight is 20/20” is more than just a cliché’ in revisiting past beliefs and opinions. People tend to paint a much more flattering picture of themselves

Research in the areas of risk aversion and prospect theory to learn more about the ways in which humans make decisions and weight risk. Research suggested that the negative often trumped the positive; that is, if presented with data that a 50 percent positive and 50 percent negative, the general tendency is for out brains to come away with an impression of “negative.” Even though the positive/negative factors are equally divided.

Similarly, people tend to overestimate the probability of unlikely occurrences. In a business setting, that may mean failing to take a smart risk because of an unlikely hypothetical scenario. A gambler may refuse to cash out on a hot hand because he or she has a “feeling” that it will continue. The fear of regret is a factor in many of the decisions that people make.

There is also the relationship between the “experiencing self” and the “remembering self.” Taste and decisions are shaped by memories and memories can be wrong. We sometimes feel our preferences and beliefs so strongly that they can seem to be somehow rooted in fact; this however, is often not the case. This applies even to our choice of vacation. For many people, the value of a vacation is not the experience but the anticipation beforehand and the memory afterwards. Kahneman sums up, “I am my remembering self, and the experience self, who does my living, is like a stranger to me.”

Key terms and concepts:

Anchors: are related to how people try to estimate an unknown quantity. An example, the amount of money you will offer to pay for a house is in large part influenced—or anchored—by the asking price.

The Certainty effect: describes a process where your chance for success escalates from very high to certain. An example, if you are bidding on eBay and knew you had a 90%^ chance to win an auction with a $20 bid, would you still be tempted to use the “Buy It Now” option for $25, thus paying five dollars more to offset the 10% of chance of losing your bid?

In his study of decision making related to gambling Kahneman found that people tended to overvalue small risk, again showing that people make calculations and conclusions that are not aligned with probability.

The Halo effect: can be seen whenever a person makes assumptions based on a factor. An example, a beautiful stranger at a dinner party may be automatically assumed to be successful and confident. The Halo effect impacts not just social situations, but economic decisions as well.

Loss aversion: is a term that reccurs repeatedly throughout the book. Case studies show how people tend to be more driven by fear of failure than by the promise of success. This is loss aversion.

Optimistic bias: explains the decisions that we make or the beliefs that we should in the face of ample evidence to the contrary.

The major theme of Thinking, Fast and Slow is that our brains are divided into System 1 and System 2. System 1 houses our emotion and intuition, and it processes information making decisions automatically. System 2 describes the part of the brain that gets wrapped up in rationalization and concentration and value based judgments. While System 2 saves us from many of the unchecked kneejerk idiocies of System1, its decision-making capacity is more limited than we often think.

WYSIATI—“what you see is all there is.” WYSIATI basically describes our minds jumping to conclusions, drawing simply on what is in front of us without looking for missing evidence or data.

Interesting observation: studies on the impact of money on happiness, Kahneman found that there was a predictable dramatic difference between people living in poverty and people making 69K a year. Beyond that, though, the studies offered some surprise: Millionaires didn’t show any greater emotional happiness than people around the 50K zone.

The general conclusion is “We have a very narrow view of what is going on. We don’t see very far in the future, we are very focused on one idea at a time, one problem at a time, and all these are incompatible with rationality as economic theory assumes it.”

Wall Street Journal: “One major effect of the work of Messrs, Kahneman and Tversky has been to overturn the assumption that human beings are rational decision-makers who weigh all the relevant factors logically before making choices.”….”What Messrs. Kahneman and Tversky argued that, even when we have all the information that we need to arrive at a correct decision, and even when the logic is simple, we often get it drastically wrong.