Henry Pellerin
It's a well known fact that the failure rate for small businesses is extremely high. We have heard the statistics, but what are the reasons? More importantly, what can small business owners do to avoid becoming one of those dreaded statistics? In this report, the statistics for business survival rates will be dissected. We will also discuss the top three reasons why businesses fail and provide recommendations for what you can do to turn your business around and become a long-term success. Business Failure Statistics Although small business failure rate is initially very high, the chance for small business success greatly increases after the five year mark. According to a report in the May 5, 2004 issue of USA Today, the failure rate of small businesses is as follows: First year: 85% These statistics are, of course, reflective of small businesses in general. There is market and industry specific information available that can provide more detail for your particular business sector. Nonetheless, it can be deduced that no matter what industry you are in, there is a high failure rate, and generally speaking, the top three issues or reasons for small business failure are relatively consistent. Top Three Reasons Why Small Businesses Fail Almost every study or report indicates the main reason for small business failure is improper planning and expectations. When we dig deeper into these reports, there are three critical areas of planning that are often overlooked or underestimated:
1. Financial requirements to get the business started.
2. Generating/developing business and revenue.
3. Managing and controlling growth. The small business owners who are able to figure out how to accomplish and overcome the challenges that accompany those three critical areas will typically enjoy a long, fruitful business life. The variable is figuring out how to do it. Most small business owners are very proficient at the product they supply or service they deliver. It is rare that a small business fails because the owner does not understand what they are doing. So how can businesses take the variable out of the equation to increase their chances for success? Let's examine each reason in more detail. Financial Requirements: Misjudgment of the financial requirements of a business is the number one reason for small business failure. Why? Because sales are typically overestimated and expenses are typically underestimated. To properly estimate business expenses, here is a list of steps you can take to avoid this pitfall: 1. Seek advice from a small business accounting firm. These companies are in the business of evaluating expenses and will be able to help you accurately estimate your business expenditures. 2. Talk to other business owners and ask for advice. Even in different industries the initial headaches of starting a business are very similar. We recommend trying out the forum in the SalespreneurEDGE.com as a great resource to exchange ideas with other small business owners. 3. Utilize associations, i.e. local Chambers, Industry Associations, etc.
4. If you chose not to seek any advice and want to just do it on your own, list out every expense you think you will have and increase it by 50%. It is much better to overestimate expenses than to underestimate them.
5. Plan on hiring / outsourcing assistance, i.e., executive assistant, accountant, etc. One mistake that is often made is planning on doing everything yourself. It is easy to get caught up in activities that don't produce revenue, so don't let that happen to you. Stick with your core competency (your product or service) and outsource the rest. In the long run you will save dollars and many hours of revenue producing time. Once you have all of your costs determined for the first year, figure out how much revenue you need to generate to make a profit.
Generating / Developing Business and Revenue:
When a new business is started it is an exciting time, and small business owners have a tendency to be overly optimistic in the area of generating sales. Many have the attitude, “Build it and they will come.” It takes a lot of effort to build up a consistent flow of incoming business. Unfortunately, it is not as easy as placing an ad or putting up a sign. Consumers typically want to purchase from other businesses they know and trust. This is why referral sales are so effective. There are a lot of strategies and processes a small business owner can incorporate to be successful at generating business and revenue.
Here are a few to get you started on the right path toward securing ongoing revenue streams:
1. Identify centers of influence. Look for “connectors” or fellow business owners that have an existing client base filled with people who would be ideal prospects for your business. Once you have identified those centers of influence, meet with them and develop a strategic alliance or referral program. You may not have a client base of your own to share, but you could offer other things, such as a low cost seminar that would add value to their existing clients. You would be surprised at the number of people who are both interested and willing to develop a strategic alliance. However, pick and choose these people carefully so you have access to potential customers.
2. Mine and cultivate existing clients. How often do you evaluate customers you have served in the past? Do you have a new product or service? Is it time for your customers to renew or upgrade? It is surprising how many people ignore their old customers and continually only focus on getting new customers. On average, between 25 and 50 percent of a small business' database is full of opportunities. If you don't get the business and service your customers, someone else eventually will.
3. Understand your customer's needs and be solution oriented. The key to understanding a customer's needs is to ask questions and find out what their problems are. Once you clearly understand the problems and how they are impacting them, i.e., loss of work, increased overhead, increased costs, etc., explain how your product or service provides a solution to their problem.
4. Have a strong and compelling reason why a customer should do business with you. Offering the best service and price are not strong enough reasons. Every competitor in your space will tout these as their reasons and you want to differentiate yourself from your competition. Additionally, today's marketplace buyers and consumers are more educated than ever, and they need tangible reasons. Strong validators include a high ROI (return on investment), case studies with successful clients, customer testimonials, etc. Managing and Controlling Growth: The third most popular cause for small business failure is managing growth. When a business is in a growth or expansion mode, some get caught in a vicious cycle of replacing old customers with new customers. The scenario is that growing companies get so busy they cannot handle the increased workload, and disgruntled customers leave. When this happens you are canceling out any new business and working twice as hard, reaping little to no growth. Just as important is managing business during a downturn in the market. It is extremely important to rein in expenses and control growth; otherwise, the extra expenses and overhead will drain the life (cash flow) out of the company. Once you have identified your immediate cyclical needs, you should also create a plan for your growth. Take some time to write down your short term and long terms goals. Short terms goals would be those that you would like to meet within the current business year. Then, write down goals for growth for a three, five, seven and ten year outlook. Once you have these goals written down, create a plan to meet each of these goals.
Make sure the following factors are addressed for each goal:
1. Customer to revenue ratio - make sure you can meet financial obligations of growth with the number of customers you need. You will also need to determine how much revenue you will need from each customer to reach this goal.
2. Short term financial needs - as you grow your business, whether it is by introducing a new product line, acquiring another business or adding more staff, you will have some short term capital needs. Determine how you are going to reach these needs. Can you solve them by increasing business or do you need a helping hand with some short term financing? If you need to go the route of financing, make sure you have a plan to pay it back. You want to avoid incurring ongoing debt if it is at all possible.
3. Spend wisely - if you have a good growth plan you will know when you will need extra cash flow and you can prepare for it. Take simple steps like not giving raises or bonuses during a time when you need cash flow. Make sure your inventory is stocked and your vendors are paid up to date. Rein in extras and decrease your operational burn for a short period and you will see how the extra cash flow can help fund your company's growth. Overall it is important to keep the big picture in mind. By tracking and planning for your growth it will be easy to see where you are going and not get lost in the day to day burdens of growing your business. It is easy for the small business owner to get overwhelmed and panicked about incurring debt and experiencing growing pains. Keeping your eye on the prize will allow you to systematically take steps toward controlled growth.
Article Source :http://www.bestmanagementarticles.comhttp://small-business-management.bestmanagementarticles.com
About the Author :
With over the 15 years of sales training and sales management experience, Henry Pellerin, SalespreneurEDGE™'s founder, realized there was a fundamental problem in the world of traditional sales training. So we took our sales training experience, in-house sales experience and developed useful processes that are flexible and can meet the specific objectives of our client organizations. Learn more here: http://www.salespreneurEDGE.com
Monday, September 24, 2007
Tuesday, September 11, 2007
Leverage the Six Stages of Customer Loyalty: Attract Suspects and Convert Prospects
By Jill Griffin, The Griffin Group
There's an old saying, "Rome wasn't built in a day," and neither is customer loyalty. Customers become loyal to your company and its products and services one transaction at a time. In today's digitized world of ever-expanding customer-touch tools, finding the right tool for the right loyalty-building job can get downright confusing. I find that it helps to think in terms of loyalty stages, as people evolve into your best customers. They are: suspect, prospect, first-time customer, repeat customer, client and advocate.
In this three-part series, I'll give you a quick tour of these stages and the various tools and techniques a cross-section of firms are using to leverage them. In this first part, I look at the earliest stages—attracting suspects and converting prospects—before a person has even made a purchase.
Loyalty Stage 1: Attracting suspects
In today's "connected" world, ideas drive buzz when they are:
Simple
Word-of-mouth friendly
Supported by tools to facilitate customer conversation
This three-step success formula worked exceptionally well for Blendtec, a small, Utah-based maker of high-end home and commercial blenders. The fledging company needed more business, so executives brainstormed: How do we earn more market awareness on a shoe-string budget? Their answer? Online videos with a simple, word-of-mouth friendly premise: CEO Tom Dickson, dressed in white lab coat and goggles, blending up a host of everyday objects (baseballs, a Tiki Torch, Transformers, an iPod, a video camera) in a light-hearted, don't-try-this-at home presentation schtick.
‘By Week 3, the company had dropped all other search engines from its budget.’
How did Blendtec facilitate online awareness and conversation? By posting the video on YouTube! Within a week, the Will It Blend? videos became a YouTube hit. Uploads followed on such other sites as Revver.com and Digg.com. At the end of the first seven days, the Will It Blend? video campaign had six million views. But that's not all. Other product makers, anxious to leverage the campaign's popularity, began paying Blendtec on average $5,000 to film promotions for their firms using the Will It Blend? format. Bottom line, the videos became a revenue producer in their own right. Awareness went way up, along with sales. Blendtec reported a 43 percent sales increase for 2006.
Loyalty Stage 2: Converting Prospects
Search engines are a great source for prospecting. But, to weed out high-potential prospects from mediocre suspects, it is vital that a firm's online search campaign be as "spot on" as possible in three areas:
Whom to target
How to position your products and services
How to effectively qualify prospects.
The right way. One company that did it the right way is Citrix Systems, a U.S.-based infrastructure software maker, which, in an effort to generate better sales leads, in early 2006 began using real-time, post-click analyses (conducted by Ion Interactive) to maximize paid search campaign conversion. The campaign was designed to attract buyers to Citrix's new HIPPA-friendly (Health Insurance Portability Act) software product.
The campaign's purpose was to generate high-quality leads that Citrix Systems sales agents could follow up on. Based on post-click marketing segmentation analysis, Citrix immediately learned that more than 70 percent of search engine respondents were not in the target audience of hospital decision-makers. But even with only 30 percent of the respondents in the target audience, conversion rates still soared 525 percent, based largely on the new campaign's use of directed click paths and audience-specific messaging.
Within 10 days of launch, Citrix used RTP analyses (which looks at respondents, traffic sources and paths) to confirm Google as the best-performing search engine. By Week 3, the company had dropped all other search engines from its budget. The sales lead campaign launched with two test paths. Immediate real-time analysis revealed that Path A was performing significantly better than Path B. Based on real-time data, Citrix Systems crafted and launched Path C, with nearly double the results of the already- successful A path. This segmented traffic converted at a sales lead rate of 12 percent—or almost 2,500 percent better than the previous campaign, launched in 2005. All in all, the campaign recalibration was impressively achieved within the first three weeks of campaign launch.
Too much too soon. Like Citrix Systems, 247 Workplace, a Los Gatos, California, maker of office furniture, wanted to generate better sales leads. And also like Citrix, the furniture maker looked to the web to help the generation/qualification process. The 247 strategy was to make virtual salesmanship more proactive. Rather than wait for the web visitor to click on a "help" button, 247 Workplace went one step further. When the visitor logged on the web site and looked around for several minutes or clicked seven or eight pages deep into content, a service agent detected the presence and solicited a real-time dialogue through an Instant Messenger-like prompt that read, "May I help you?"
A year into this more proactive stance, the company dropped it. While some web visitors liked the prompt attention, others found it intrusive and in direct conflict with the anonymity of web browsing. So the company listened to customer feedback and wisely dropped the feature, opting, instead, for customers to make the first move at chat engagement. The lesson here is just because you can doesn't mean you should in today's connected marketplace. On the web, as in person, it's important not to be perceived as too pushy. Both online and off, prospect conversion is a delicate dance that requires a "lead and follow" balance on both sides of the sales transaction.
In Part 2, I'll look at the middle stages, the first-time customer and the repeat customer.
Jill Griffin is an internationally published business author and speaker and corporate board director of a NYSE company. Her book, Customer Loyalty, has been published in six languages. Her co-authored book, Customer Winback, earned Soundview's "Best Books" award. Since 1988, she has led Austin-based Griffin Group, serving Fortune 500 companies.
There's an old saying, "Rome wasn't built in a day," and neither is customer loyalty. Customers become loyal to your company and its products and services one transaction at a time. In today's digitized world of ever-expanding customer-touch tools, finding the right tool for the right loyalty-building job can get downright confusing. I find that it helps to think in terms of loyalty stages, as people evolve into your best customers. They are: suspect, prospect, first-time customer, repeat customer, client and advocate.
In this three-part series, I'll give you a quick tour of these stages and the various tools and techniques a cross-section of firms are using to leverage them. In this first part, I look at the earliest stages—attracting suspects and converting prospects—before a person has even made a purchase.
Loyalty Stage 1: Attracting suspects
In today's "connected" world, ideas drive buzz when they are:
Simple
Word-of-mouth friendly
Supported by tools to facilitate customer conversation
This three-step success formula worked exceptionally well for Blendtec, a small, Utah-based maker of high-end home and commercial blenders. The fledging company needed more business, so executives brainstormed: How do we earn more market awareness on a shoe-string budget? Their answer? Online videos with a simple, word-of-mouth friendly premise: CEO Tom Dickson, dressed in white lab coat and goggles, blending up a host of everyday objects (baseballs, a Tiki Torch, Transformers, an iPod, a video camera) in a light-hearted, don't-try-this-at home presentation schtick.
‘By Week 3, the company had dropped all other search engines from its budget.’
How did Blendtec facilitate online awareness and conversation? By posting the video on YouTube! Within a week, the Will It Blend? videos became a YouTube hit. Uploads followed on such other sites as Revver.com and Digg.com. At the end of the first seven days, the Will It Blend? video campaign had six million views. But that's not all. Other product makers, anxious to leverage the campaign's popularity, began paying Blendtec on average $5,000 to film promotions for their firms using the Will It Blend? format. Bottom line, the videos became a revenue producer in their own right. Awareness went way up, along with sales. Blendtec reported a 43 percent sales increase for 2006.
Loyalty Stage 2: Converting Prospects
Search engines are a great source for prospecting. But, to weed out high-potential prospects from mediocre suspects, it is vital that a firm's online search campaign be as "spot on" as possible in three areas:
Whom to target
How to position your products and services
How to effectively qualify prospects.
The right way. One company that did it the right way is Citrix Systems, a U.S.-based infrastructure software maker, which, in an effort to generate better sales leads, in early 2006 began using real-time, post-click analyses (conducted by Ion Interactive) to maximize paid search campaign conversion. The campaign was designed to attract buyers to Citrix's new HIPPA-friendly (Health Insurance Portability Act) software product.
The campaign's purpose was to generate high-quality leads that Citrix Systems sales agents could follow up on. Based on post-click marketing segmentation analysis, Citrix immediately learned that more than 70 percent of search engine respondents were not in the target audience of hospital decision-makers. But even with only 30 percent of the respondents in the target audience, conversion rates still soared 525 percent, based largely on the new campaign's use of directed click paths and audience-specific messaging.
Within 10 days of launch, Citrix used RTP analyses (which looks at respondents, traffic sources and paths) to confirm Google as the best-performing search engine. By Week 3, the company had dropped all other search engines from its budget. The sales lead campaign launched with two test paths. Immediate real-time analysis revealed that Path A was performing significantly better than Path B. Based on real-time data, Citrix Systems crafted and launched Path C, with nearly double the results of the already- successful A path. This segmented traffic converted at a sales lead rate of 12 percent—or almost 2,500 percent better than the previous campaign, launched in 2005. All in all, the campaign recalibration was impressively achieved within the first three weeks of campaign launch.
Too much too soon. Like Citrix Systems, 247 Workplace, a Los Gatos, California, maker of office furniture, wanted to generate better sales leads. And also like Citrix, the furniture maker looked to the web to help the generation/qualification process. The 247 strategy was to make virtual salesmanship more proactive. Rather than wait for the web visitor to click on a "help" button, 247 Workplace went one step further. When the visitor logged on the web site and looked around for several minutes or clicked seven or eight pages deep into content, a service agent detected the presence and solicited a real-time dialogue through an Instant Messenger-like prompt that read, "May I help you?"
A year into this more proactive stance, the company dropped it. While some web visitors liked the prompt attention, others found it intrusive and in direct conflict with the anonymity of web browsing. So the company listened to customer feedback and wisely dropped the feature, opting, instead, for customers to make the first move at chat engagement. The lesson here is just because you can doesn't mean you should in today's connected marketplace. On the web, as in person, it's important not to be perceived as too pushy. Both online and off, prospect conversion is a delicate dance that requires a "lead and follow" balance on both sides of the sales transaction.
In Part 2, I'll look at the middle stages, the first-time customer and the repeat customer.
Jill Griffin is an internationally published business author and speaker and corporate board director of a NYSE company. Her book, Customer Loyalty, has been published in six languages. Her co-authored book, Customer Winback, earned Soundview's "Best Books" award. Since 1988, she has led Austin-based Griffin Group, serving Fortune 500 companies.
Sunday, September 02, 2007
Good ol’ Emily Post! Vs. Today’s Entertainer
Pieces of 19th century etiquette, entertaining and how “to show hospitality” may be a disappearing art. Aside from charity balls and fund raisers, that intentionally offer “high end” appeal to entice guests to donate money, I find that most parties offered today are most casual and relaxed. Many people forward invitations, but few take it to the formal extent that Emily Post is so well known. Today’s society is claiming its right to a “new” etiquette. Taking on some of the old rules and imposing a few new ones brings us to today’s entertainer.
The “invitation” is still an important key of party etiquette today. Like 19th century, the task of creating what the party, gathering or dance is about comes from the first impression of the invitation. How will the guest “read” the invitation? For example, a wedding invitation is either simple or elaborate, and the party or wedding reception would follow suit. The wording of the invitation is most important because it verbally communicates what is taking place, how it is taking place and where it is taking place. Unlike 19th century invitations, today’s invitation is worded more casually and stiff talk is out of the picture. With the advent of mass media, the need to communicate in an “EXACT” worded fashion is most lax. TV, radio and the internet provide places to chat, see, hear and understand with ease.
I believe Wedding invitations still hold true to the rules of Emily’s “etiquette” and one must explore the proper wording for a specific situation, ie. Divorced parents send a joint invitation:
Amy Lee Chen
(or Mrs. David Smith, if remarried)
Stephen Robert Wong
(or Mr. Stephen Robert Wong)
request the honour of your presence
at the marriage of their daughter
Sarah Amanda
To
Jason George Harris
Saturday, the third of November
(invitation sited from Brides Magazine Sept. 2007)
But it’s the code of behavior in today’s society that differs greatly from Emily’s time. For starters as I’ve learned from Emily, behavior dictates how the “host” will be remembered. Confident? Kind? Friendly? Fun? These traits may be important for today’s entertainer but the guest usually wants to remember whether or not they had a fun time, if the food was good food, if there was good music and were there other friendly guests there? And the “Where” is where today’s guest is most likely to show a unique behavior. Think about it, would an Emily Post entertainer be found at a dance party in NYC, her voice shouting: “I pray you’ll have a seat and a spot of tea”. Or a local bar for that matter? And if a party of today is at home with a close knit circle, those guests don’t usually ask themselves “how to address the butler”. We already know the wealthy of today aren’t the only ones throwing a party! And from what I’ve experienced, Emily may not feel so comfortable seated at the dinner table, after all not everyone wants to be rigid fork holder with a salad, dinner and desert fork to the left of the plate, or is it the right?
19th century wealth may have been the model to follow and learn from but today’s entertainer tops off all “codes” of behavior with a twist of modernity that Emily would have been appalled! I’m sure of it!
The “invitation” is still an important key of party etiquette today. Like 19th century, the task of creating what the party, gathering or dance is about comes from the first impression of the invitation. How will the guest “read” the invitation? For example, a wedding invitation is either simple or elaborate, and the party or wedding reception would follow suit. The wording of the invitation is most important because it verbally communicates what is taking place, how it is taking place and where it is taking place. Unlike 19th century invitations, today’s invitation is worded more casually and stiff talk is out of the picture. With the advent of mass media, the need to communicate in an “EXACT” worded fashion is most lax. TV, radio and the internet provide places to chat, see, hear and understand with ease.
I believe Wedding invitations still hold true to the rules of Emily’s “etiquette” and one must explore the proper wording for a specific situation, ie. Divorced parents send a joint invitation:
Amy Lee Chen
(or Mrs. David Smith, if remarried)
Stephen Robert Wong
(or Mr. Stephen Robert Wong)
request the honour of your presence
at the marriage of their daughter
Sarah Amanda
To
Jason George Harris
Saturday, the third of November
(invitation sited from Brides Magazine Sept. 2007)
But it’s the code of behavior in today’s society that differs greatly from Emily’s time. For starters as I’ve learned from Emily, behavior dictates how the “host” will be remembered. Confident? Kind? Friendly? Fun? These traits may be important for today’s entertainer but the guest usually wants to remember whether or not they had a fun time, if the food was good food, if there was good music and were there other friendly guests there? And the “Where” is where today’s guest is most likely to show a unique behavior. Think about it, would an Emily Post entertainer be found at a dance party in NYC, her voice shouting: “I pray you’ll have a seat and a spot of tea”. Or a local bar for that matter? And if a party of today is at home with a close knit circle, those guests don’t usually ask themselves “how to address the butler”. We already know the wealthy of today aren’t the only ones throwing a party! And from what I’ve experienced, Emily may not feel so comfortable seated at the dinner table, after all not everyone wants to be rigid fork holder with a salad, dinner and desert fork to the left of the plate, or is it the right?
19th century wealth may have been the model to follow and learn from but today’s entertainer tops off all “codes” of behavior with a twist of modernity that Emily would have been appalled! I’m sure of it!
Author: Kristine Sheehan, Sept. 2, 2007
The Merry Bird...pen, ink and design
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