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Making Choices & Getting Business Advice

New to owning a business?

You may find the following information valuable, and certainly of interest, even if you’ve already been in business for a number of years.

Every business owner needs advice on occasion. The key is knowing when to ask for it.

It is said you are never alone if you have a deck of cards. Start playing solitaire and someone is bound to tell you what to play where.

If you believe you can make your own decisions without counsel, go right ahead. Even if you do receive a professional’s expert opinion, you can always choose to ignore it and make your own choices. You own the business, so every decision you have to make is ultimately your responsibility. You reap the rewards or bear the blame.

One of our clients was looking to raise more capital. The company was solvent and generating close to $1 million in annual sales. More funds were needed to complete some upgrades, so the owner was curious about options. We discussed the ins and outs of venture capital, issuing stock, private equity investors, and traditional financing options for the investment the company was seeking. We had experience as licensed investment representatives, so we had a grasp of the basics. We continued the discussions as time moved forward and, eventually, the client was able to get some of his better clients to invest in the company and accomplish their shared objectives.

Was it our professional counsel that turned the tide? All the client needed was information to make an intelligent decision, and the right choice for the company’s survival. The client got advice from other sources as well, and used the accumulation of information to choose wisely.

In many cases, the advice is free because of the relationships business owners have with the resources available to them, whether vendors, friends, or business associates. In other cases, the counsel is part of the overall service the business owner is contracted to receive. Is one better than the other? Only the person receiving it and using it to make their business decision can determine that. There are occasions where the more expensive advice is better than that offered without cost, and the reverse can be true, too.

Back to the issue of knowing when to ask for advice. Your accountant should be consulted before you ask your banker to extend you a line of credit, so you know what your cash flow looks like for repaying the loan and other reasons. Your legal counsel should be asked to review legal documents before you sign them, just to protect your assets, if nothing else. There are other professionals and business associates out there that you can ask for opinions about a variety of topics, from buying company vehicles to advertising campaign strategies and from charitable contributions to lobbying legislators.

If you take the time to get the information you need, you are far more likely to make a better, wiser, and more profitable decision for your business. The secret: Knowing where to get the information and being able to interpret that knowledge to gain wisdom.

Work On Your Business

A friend recently reminded me of a four-quadrant diagram that, I believe, traces back to Steven Covey and emphasizes where most business owners spend their time … versus where they should spend it. It ties in to the concept that you – as a business owner – need to spend more time working on your business than in your business.

Easier said than done.

Urgent Important Chart The words in one of the quadrants (non-colored) identify tasks that are Not Urgent and Not Important. These are busy work tasks; work you do to make yourself look busy or that are simple and easy to accomplish. They can give you a false sense that you’ve accomplished something that day, but when you look back you realize it was wasted time.

Another quadrant (bottom left in grey) identifies tasks that are Urgent and Not Important. These, in general, involve the priorities of others. They have come up against a deadline, for instance, and are scrambling to find solutions. It’s important to them, and urgent because they want your input to handle the urgency of the situation. When you delegate authority, you must also delegate responsibility for making decisions, meeting deadlines, and accepting the consequences of actions.

The third quadrant lists tasks that are Urgent and Important (top left in brown in my diagram). In my book, these tasks are symptoms of crises. It’s a publishing deadline or a situation requiring an executive decision or things will begin to fall apart, such as a public relations crisis. This is probably the most stressful aspect or area of operating your business, and it’s the area where proper prior planning can reduce the stress and the impact of crisis situations. It can be minimized with a plan you should develop in the Important but Not Urgent quadrant (top right in green).

The beautiful “Work On Your Business” quadrant outlines tasks that are Important and Not Urgent. This is where you need to spend the majority of your time, working on tasks that are important to growing your business and moving in the right direction toward long-term profitability … including your eventual retirement or sale of the business. The sense of these items not being urgent enables you to relax and focus on the important nature of your work without that sense of urgency. You can slide into other quadrants as needed, but the most value to your company comes from working in the Important but Not Urgent area.

Try to spend as much time in that quadrant as you can.

Team Resource – Your Business Consultant

You may be thinking you know everything you need to know to operate your business, so you can get by without a business or marketing consultant. You probably could, if you truly do know everything you need to know about your business and feel an independent, third party perspective is unnecessary.

Let’s do a little test of your understanding up front:

What is your operating profit margin?
What systems are in place to avoid employee theft?
How many of your customers made repeat purchases in the last year?
What kind of impact will the federal health care system have on your business?
How current is your unemployment insurance coverage?

These are questions you should be able to answer without much thought, although the larger concern is how well you are able to stay on top of this information and the related implications … and keep all your other tasks under control, too.

Your profit margin is a bellwether of how well you are doing. Grocery stores operate on a much smaller margin than jewelry stores. Your accountant can help you figure out your margins if you’re unsure how to calculate cost of goods sold and other variables.

A five here or a twenty that fails to make it into the cash drawer may seem inconsequential in the big picture, but nickels and dimes add up over time. Tills should balance at the end of shifts, and since cash is a measure of your success, you need controls in place to monitor your capital, even if you trust your employees completely.

Knowing your customers and their buying habits is market research, and it’s customer relations. You and your staff should be able to greet returning customers by name when they come back to your store. Their return is an indication you’re doing things the right way … for them. Or else they’ve got complaints, which means you need to get on top of those and solve them promptly or they could have a negative impact.

The new federal health care regulations and your unemployment compensation insurance are difficult matters to monitor on a consistent basis. Your insurance agent is trained to stay abreast of changes in laws and can be an asset to your business, managing your risk, saving you money, and covering your assets.

You have employee issues, inventory concerns, sales numbers and projections, customer service situations, payroll, taxes, marketing, production, and whatever else you have to deal with every day. Oh, yes, how much time do you take for yourself every week?

Your business consultant is a resource that is valuable to your business in many ways, from helping you manage potential threats and viable risks to staying focused on your mission and key objectives and guiding you in growing the business. If you avoid using a consultant because of the cost factor, demolish that thought process and look at it, instead, in terms of how that expense should manifest itself in double, triple, or even larger growth for your business. Round out your team with strong, professional advice. Your consultant should also become an advocate for your business and hold you accountable for prioritizing the work you must do to make the right decisions.

What’s In A Brand Name?

Okay, here we go with the marketing analysis of what constitutes a successful brand name. Is it the identity or the product behind it?

Allow me to start out with a professional football team that has made a least one Super Bowl appearance. For many years after that early appearance, the team compiled an unenviable losing record. A former client who played for the team provided some insight that relates to the team’s brand. When he signed with the team, the attitude of the players was more about when they were collecting their paychecks than if the team was winning. The end result was the team rarely won and was losing its fan base.

When the attitude began to change that if they played well, fielded a competitive team, and won more games, there would be more fan support and their pay would be greater, lo and behold, they started making the playoffs. They are now a serious contender consistently in their AFC division.

In this case, the product behind it was influential in the success of the brand.

Changing to a different product and a current client situation, there are many people who like to drink strong alcohol. In a lion’s share of cases today, the identity carries more influence in consumer patterns than the product. Significant advertising dollars are spent to create an image of the product that attracts consumers to drink and purchase the product. Think of the pirate concept behind a certain brand of rum. If you like, drink, and purchase that brand, are you buying the marketing concept or the rum? A discerning palate with an acquired appreciation of rum is less likely to consume that product when there are better rum products out there.

In these two examples, one is more about the product and the other more about the identity, or brand. The more closely these two can be married for your product or service, the greater likelihood you are to successfully market it and build your brand to the level it is capable of achieving.

How do you do that?

First, you must know your product or service from a different perspective; the viewpoint of your end user, the customer. You might think you sell camouflage hunting clothes, but in reality you are selling the ability of a hunter to blend into the surroundings where they hunt to increase their odds of bagging their prey. Your customer, therefore, is looking for a pattern similar to their hunting ground in a garment that is comfortable, quiet, and offers them the best chance of success in the woods.

Second, the better you know your customers, the more you can motivate them to use your product or service. Once they’ve bought, you want to keep them as customers and build loyalty to your brand. You want them to identify with your brand name and recommend it to others because of what they love about it! Even though it may not be the healthiest fast food restaurant on the planet, consumers flock to McDonald’s because they a) recognize the brand; and, b) know the products will be fairly consistent in quality and price wherever they see the golden arches. Brand loyalty strengthened by an identity that is reinforced by the product quality; you know what you’re going to get when you order at McDonald’s.

Third, build your brand. If you have started a business and sales are lagging, it may be your identity – the perception consumers have of you – that needs to be adjusted. Make the adjustment, but only after you’ve had someone help you with viable consumer research. Talking to a couple of friends is market research, but comprehensive research and analysis goes a bit deeper. Do some test marketing. Get people’s perceptions of your product and the identity you put forth; it may reveal you simply need to change the color scheme to increase sales. Get feedback from your customers. What do they like or dislike about what you provide? Some answers may enlighten you – what I refer to as a BFO (Blinding Flash of the Obvious) – while other suggestions may be of little merit. You have to make the ultimate decisions. Your brand is your ticket to adding revenue to your bottom line.

Does Social Media Work?

If you’ve wondered whether you should engage social media for your business, the April 17th edition of USA Today shared the results of a study you might find interesting.

Here are some of the key elements of the article by Oliver St. John for you to consider as a business owner:

The CEO of Manta, Pam Springer, is quoted as saying the negative impression business owners have about using social media is “…probably because they don’t know how to launch a successful social-media campaign…” She recommends connecting with other business owners to get advice, but only 36% of businesses do this.

There are resources available for business owners to connect with other owners and discuss topics such as social media. In Green Bay, there’s a networking group consisting of only business owners that meets the 1st Wednesday of every month at the Green Bay Yachting Club. There are other networking organizations for business owners as well.

The CEO of Crackerjack Marketing, Stephanie Schwab, is cited in the article as saying many small businesses “…just don’t have a place in social media.” She’s right in the sense you need not put your business in the social media environment because of peer or media pressure to be there. What she adds is that you need to know what you’re trying to get out of a social media campaign.

That’s common sense when it comes to marketing your business. Far too many business owners lack a strategy for marketing their products and services. If the only reason you advertise on TV is because the sales representative talked you into buying the time, you will either stumble into success or endure costly failure. You need to strategize and, as Schwab adds, use “…marketing techniques already proved to work, such as having a website.”

One of the business owners covered near the end of the article said social media hasn’t helped her business, which sells $5,000 to $40,000 pool jobs. She added, however, that out of the 200-300 jobs she does every year, three or four come from people online. Even at the low ($5,000 level) end, that could be as much as $20,000!

She gets most of her customers through referrals. That is the preferred way to get new business for most of us, and what business owners fail to realize is that they should have a strategy for that aspect of marketing their business as well.

I always find articles such as this one fascinating, especially when 61% of small businesses fail to see any return on their investment in social media. A similar article in Advertising Age, a marketing trade publication, a few years ago cited a study that showed roughly the same percentage (62%) of advertisers were dissatisfied with their agencies. What I’ve discovered and believe strongly in is that, as a business owner, you must take the time to think through what your business is all about; less about where you’ve been and more on where you want to be.

When that picture is clear, how you need to market your business also becomes clear. The proprietary process used at Brand Irons can walk you through the process, save you money over the long run, and add to your bottom line if you’re willing to change the way you’ve always done things.

To answer the question posed in the headline: Yes, if you have a strategy that is designed to reach your target demographic.

Fresh Perspectives

head-scratcher Stop and think about this for a minute: How has the market for your industry changed in the last five years?

Did your target demographic age out of being able to use your products or services? Has the target audience gotten younger without you realizing it because you’ve been mired in “the way we’ve always done things”?

Every six months, and maybe more often depending on your business, you should take a step back from your business and get a fresh perspective on it. Take a good, hard, long look at it. Consider how well your marketing efforts have been doing. Your sales should be driving production and keeping inventory low or at a level you can fill orders for 15 or 30 days, depending on demand. Advertising should be introducing you to new customers and, at least, hitting the break-even mark on the return for your investment.

Remember to take a look at your products and services. Have they remained relevant to your customers and appealing to your prospects? Crunch the numbers for which of those products and services generate the highest profit margins for your bottom line. Think about whether one of your products has reached the end of its life cycle.

The idea here is to avoid change merely for the sake of change, but if the offering has served its purpose and the profit margin continues to shrink, it may be time to shift your corporate emphasis to other products to meet emerging markets.

Ah, emerging markets! This is probably the most prolific reason to take the time to get a fresh perspective and think things through. A recent meeting with a professional in the HVAC (Heating, Ventilating, and Air Conditioning) business drove this point home. The market for HVAC services amongst the 55 and older demographic had become stagnant. The audience had, in essence, become arthritic and uninterested in change when they’ve had the same HVAC company for their entire home-owning life.

This professional sought a new perspective and did some market research. Lo and behold, it was discovered there was an emerging market being woefully underserved. You may be able to guess the demographic, but out of deference to my friend’s research and marketing efforts, I will abstain from divulging secrets that would aid the competition.

The more I see business owners searching for answers to keeping their company alive or expanding their culture and growing the business, the more obvious it becomes that a fresh perspective is essential. When you engage a consulting firm such as Brand Irons, you get a different, customer-oriented viewpoint backed by research that can be critical to your long-term survival.

Brand Enthusiasm

Creating enthusiasm for your brand begins with you. The consciousness you want consumers to have about and for your product or service flows through you and your company into the marketplace.

The energy and creative power of your actions are essential for your business, products, and services to permeate and imbue the culture you want to build around your brand.

A basic energy level is one of acceptance. Acceptance as it relates to marketing your brand means you are content with the position you have and get by with doing what you need to do to establish and maintain market share. You may have an audience that is aware of your brand and supports your products and services, but the energy level is low. Unfortunately, a majority of businesses generate this basic level of energy about their products and services. It is due more to a lack of understanding of how to take it up a level than it is the desire or willingness to add to the bottom line.

If you ramp things up a notch, the energy level turns to excitement about your products and/or services. The energy you generate because you are enjoying what you are doing makes every aspect of your business come alive. Your joy shines through in the activities of the day and, as a result, flow through you to the people and customers around you. People enjoy being around you and your glow reaches out through a deep sense of being alive and finding great value in every moment. That feeling of excitement is contagious and when people are excited about you, your products and services, the cash register rings.

The acceptance energy level is a basic requirement for being in business, while the level of excitement is the minimum requirement for developing your brand. They are unlikely to guarantee great success or broad brand acceptance, but without them the chances of failure certainly increase.

Where the energy level for your brand needs to, and must, be to grow and sustain your brand is the level of outright enthusiasm! This is where you have taken your excitement for your brand and developed goals you want to achieve that are measurable, smart, and within reach. These goals convey your vision for the brand and your enthusiasm. Dedication to achieving those goals adds intensity and super-powered energy to their pursuit. You bring the creative power of the universe to bear and generate a tsunami effect for your products or services.

Your enthusiasm engulfs others; your employees, your vendors, your customers, your prospective customers, and the general public. When you meet obstacles with enthusiasm, like a massive wave you either go around them, encompass them and they move with you, or they are washed away. You become unstoppable as long as you have that enthusiasm, remain motivated, and are one with the universe.

Creating the enthusiasm for your brand begins with your goals for the brand, which should be dynamic and connected to your market. Then the energy you transmit must flow in such a way as to inspire and enrich people’s lives so they, in turn, are swept up in the enthusiasm for your brand.

An exceptional resource is Eckhart Tolle’s book, A New Earth: Awakening to Your Life’s Purpose, that has proven valuable in determining successful approaches to marketing your business when you read it from that perspective. Tolle also wrote The Power of Now!

The Bible also has a great viewpoint to consider, from Mark 11:24: “Whatever you ask in prayer, believe that you have received it, and it will be yours.”

If you need help on how to build your brand, contact Brand Irons at (920) 366-6334.

Budgets & Bullet Points

2013 Budget graphic When you are sitting down to develop an annual advertising budget, think about where you’re going to spend your hard-earned dollars. Will each dollar generate a return? How much will it cost you to acquire a new client, or to keep your existing customers?

You must measure these metrics to know if your strategies are working. If you plan on spending $20,000 on television advertising as part of your budget, you should also know what the value of a prospective client is to your business. Why? If your business is building websites and each prospect potentially represents $5,000 in business when they become a new client, that TV campaign would need to result in four new clients to cover the cost of advertising. More than four and you’ve generated a positive return on your investment (ROI).

Is it a negative ROI if you fail to land any new clients? From the bottom line perspective, probably so. From the viewpoint of the exposure you’ve generated for your business with TV spots, hardly. The bullet point becomes how effective was the message in your commercial.

And that is another bullet point. If your advertising fails to generate a positive impact on your bottom line, that should not result in the wide-ranging opinion and a deep-seated conviction that “advertising doesn’t work.” It only means it was somehow flawed.

More bullet points that impact your marketing budget when it comes to advertising:

Make sure you know your target audience for any advertising;
Verify that the delivery vehicle (TV, radio, newspaper, Internet) is effective in reaching that target market;
Find the market research that gives you reasonable assurance the audience will respond favorably to that message delivery vehicle;
Know what you’re offering but, more importantly, what the consumer is buying;
Craft a message that focuses on what’s in it for the consumer, not you;
Deliver the message by getting the audience’s attention first; and,
Finish with a strong call to action so the consumer has little doubt.

Back to my point about the effectiveness of your commercial. If you threw out a campaign or message that was missing some of the bulleted items above, chances are your results were less than what you anticipated. Add in that the commercial may have run at the wrong time for your audience or been buried on a seldom seen page of the magazine, and your results deteriorate.

We once worked with a jeweler who insisted on having the largest ad in the phone directory. We roughed out the concept and had the directory’s graphics department design an effective and attractive ad. We were good to go. When the directory hit the streets, we opened a copy to the “Jewelers” spread of pages and the ad wasn’t there! Phone directories place ads alphabetically. Our client’s ad was there, but it was on the page before the spread with all the other jewelers in town. Good effort wasted and beyond our control. Subsequent ads were mere bold-faced listings under Jewelers.

Rather than succumb to a sales representative suggesting your business belongs in their publication or on their station, take the time to think things through. Can they answer the bullet points you’ve established for your products and services to your satisfaction? If not, simply let them know that what they’re offering fails to meet the demographic profile of your target audience. They’ll understand, but not give up easily.

Another option is to use the professional consulting services of a business such as Brand Irons to help you come up with a solid profile for your customers and help you make those marketing decisions so they have a positive impact on your bottom line.

Do You Know Your Customers?

How well you know your customers, their preferences and their buying habits, can be the difference between adding to your bottom line or closing your doors. This knowledge also needs to include your prospective customers, so who are the people who consume or are most likely to consume your product or service?

The recent Coca-Cola ad during Super Bowl XLVII implied that Coke consumers were badlanders, cowboys, or showgirls, chasing through the desert after the elusive soft drink. At least that was part of the impression I took away from the spot as an evaluator. In other words, Coke created the perception that their product is for everyone, and that everyone wants (thirsts for) Coca-Cola. Consumers voting for the winner at cokechase.com gave the edge to the showgirls and even sabotaged the cowboys and badlanders (I put the kibosh on both groups once). It was a commercial that played out on the Internet, which was a different but not unusual way to stimulate consumer interaction. The outcome was understandable if you consider most of those voting were probably men.

In that last statement lies the root of understanding your customers.

If the consumer most likely to purchase your service is male, your message should be male-oriented. If it’s women, it should be female-oriented. Super Bowl viewers were most likely men under the age of 50, so scantily clad women garnered a better response than cowboys or bad boys. I haven’t seen the demographic breakdown, but it’s quite likely the women voters were split between the cowboys and the badlanders, but you never know, they could have been for the showgirls as well. The point is that knowing your customer makes the decision about spending your marketing and advertising dollars easier and smarter.

Let’s consider the consumer’s buying habits, too. A recent market research study we conducted showed that buying decisions are most often influenced positively by a friend’s recommendation or by word-of-mouth referrals. After those two, the Internet came up as the source for purchasing information across all demographic age groups. Television commercials also ranked high in influencing buying decisions. For those 55 and older, newspaper ads ranked quite high. A column in USA Today (2-4-13) http://www.usatoday.com/story/money/columnist/2013/02/04/wolff-print-advertising-upswing/1890205/ reported that the newspaper method of advertising may yet survive the digital onslaught.

Some secrets: Work hard to get and keep word-of-mouth marketing working for you. There is a lot of marketing truth in the concept that a client who has a negative experience with your business will tell 20 people or more while those who have a positive, enjoyable experience are likely to tell 5 or 6 people. Talk to your customers and deal with any negativity immediately. However, when it comes to social media rants (negative comments), your best response is often no response or to let your favorite fans knock down the negativity. Your response might only give credibility to the negative comment, but an apologetic tone may minimize the damage. Think before you act.

You should have a strategy in place for dealing with social media issues, as well as any potentially negative publicity about your business. Hopefully, you never have to use it, but it is better to have a plan in case it does.

Here’s a case in point: When I worked for the U.S. Jaycees, there was a case before the U.S. Supreme Court about allowing women to join the all male organization. I was lobbying for a plan of action should the 350,000+ member organization lose the case. I was told by the higher ranks “We’re going to win” so there’s no need for a loss strategy. We lost and had to scramble to put a response in place, which was poorly planned and executed as a result. Today the organization has less than 50,000 members.

Your Internet presence must be user friendly and relevant. Being relevant means you need to know your consumers and prospective customers. They will scan and leave your website if the content is not relevant to what they’re looking for or takes too long to find. Seconds count when it comes to Internet success. How often your website content changes and is updated is also critical for the major search engines to find you, and the relevance of that content to what users are searching for is also vital.

When you have a grasp of who your clients and prospects are, your success in reaching them can be ensured with a sound marketing strategy to deliver your message to your target audience in a way they are receptive to and that makes them buy from your business … and feel good about it. Consumers should be coming to you for the experience you give them.

Sex Sells – Part 2 – Super Bowl Ads

The January 28th edition of USA Today carried an article – http://www.usatoday.com/story/money/business/2013/01/27/super-bowl-commercials-pressure-volkswagen-of-america/1836881/ – about Volkswagen’s Super Bowl commercial that will air on Sunday, February 3rd, during Super Bowl XLVII (47).

In the article is this report about Mercedes-Benz: “While appearing in the Super Bowl is nothing new for Mercedes-Benz, there is a special twist to this year’s ad: It will try to attract a younger customer with a new lower-price-point Mercedes.

“With an average age of 50, we know we have to work to capture the minds of younger buyers,” says Stephen Cannon, president and CEO of Mercedes-Benz USA.

Little wonder that Mercedes put hotter-than-hot supermodel Kate Upton Upton, Kate in the spot. To assure plenty of eyeballs, she’s dressed in an extra low-cut evening dress that reaffirms Super Bowl ad wisdom: Sex still sells.

“The pressures follow the price tag,” says Cannon. M-B’s effort, too, could exceed $10 million for the spot, the airtime, all the promotions behind it and the brand’s naming tie-in with the New Orleans stadium where the game will be played. “It’s the biggest single marketing investment we’ve ever done. We’d better deliver.”

The Super Bowl exemplifies the epitome of how well sexual attraction can boost the sale of a product in the United States (and around the globe, for that matter). The football game attracts a predominantly male audience and, although there are millions of women who also watch, the game of football is about men being macho, tough, and masculine. The high levels of testosterone make the Super Bowl an easy mark for using sex to sell during the commercial breaks. Even the female viewers are likely to appreciate the messages, whether blatantly obvious or merely suggestive.

More than likely, your business is unable to afford the close to $4 million price tag for a 30-second commercial during Super Bowl XLVII, but there are still ways to employ the powerful “sex sells” method to attract customers.

Selling a woman on spa services can be as simple as letting her know she’s worth it. Looking and feeling good makes her feel good about herself and that can be quite attractive to her partner. That aspect of a spa treatment, however, is implied and need not even be mentioned in the marketing message.

Marketing is all about perception. If you’re planning to watch the Super Bowl on Sunday, pay close attention to the illusions the advertisers try to create in your mind. Each company is investing millions in the hope you will have them and their product at the top of your mind when the game is over.

And when Monday rolls around and you’re ready to ramp up your marketing strategies and improve your bottom line, give Brand Irons www.brandirons.com a call.