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|// by Gabrielle Boko / Jul. 2, 2015 0 comments|
Rules are meant to be broken. We hear that so often it almost sounds like, well, a rule. But is it always true? There’s the golden rule, should we break that? There are banking rules? Are those breakable? Probably not all rules are meant to be broken.
The trick is to know which rule to break, and when. I’ve given that some thought and there are three specific times when rules really are meant to be broken.
Rules About What Not to Do
Where do you put high-end retail properties, such as sophisticated theater complexes or a Starbucks? According to well-honed rules developed over decades of experience, you look for affluent suburban areas where the residents have lots of discretionary spending power. You would certainly pass over under-privileged neighborhoods with poor residents.
That’s a rule former Los Angeles Lakers great Magic Johnson knew was ripe to be broken. While other developers steered clear of urban neighborhoods, Magic saw a strong market just waiting to be unlocked—poor, middle class and rich families spend similar shares of their budgets on clothing, entertainment, and on food outside the home. When Magic looked at inner-city neighborhoods he saw consumers ready to spend but with nowhere to go. The fact that real estate prices in these underserved neighborhoods were a fraction of prices in more upscale locations was simply a bonus.
Instead of following his competitors into the affluent suburbs Johnson focused on underprivileged neighborhoods, leading to fast growth and high profits. Today, Beverly Hills-based Magic Johnson Enterprises now owns or operates gyms, Starbucks coffee shops, Burger Kings, movie theaters and other businesses in 85 cities across 21 states. His Canyon-Johnson Investment Fund has been behind nearly $4 billion in urban revitalization projects that resulted in the creation of 4.5 million square feet of retail and commercial space.
The old real estate axiom “location, location, location” was supposedly an unbreakable rule, but Johnson has proven otherwise. You may think the best spot for your bricks-and-mortar store is as close to your biggest competitors as you can get, and that may be correct. But the primary factor in your decision should relate directly to your business plan and market research: who are your target customers, what are their wants or needs, and where are they in relation to your store or restaurant? If you are able to find an area that your competitors mistakenly ignore, you will be ahead of the game.
Rules That Benefit Businesses, Not Customers
For years, the primary weapon in the fierce battle among cell phone services providers AT&T, Sprint, T-Mobile and Verizon was to secure the exclusive rights to the newest devices. But when it came to customers’ contracts, there was little variation among the four carriers.
Customers who did not want to pay hundreds of dollars up front for their new phones were locked into two-year contracts that carried stiff financial penalties for breaking. That meant that as device manufacturers introduced new faster and more powerful models every year, customers had to wait another full year before they could trade in their current, outdated phones. T-Mobile was the first to break that industry rule, and in the process is turning itself from a fading also-ran into an industry powerhouse.
You may remember when Steve Jobs unveiled the first iPhone back in January 2007, it was only available on AT&T (formerly Cingular). The first Motorola Droid smartphone was at first only available on Verizon. T-Mobile became caught in a vicious circle: it was unable to secure the exclusive rights to the newest models, so customers left for its competitors. That dwindling customer base in turn continued to make T-Mobile less and less attractive product launch partner for manufacturers.
When T-Mobile appointed John Legere as its new CEO September 2012, he turned the company’s focus from the competition for new phone models to his “Uncarrier” campaign that broke the two-year customer contract rule.
Customers can now trade in their current phones every six months for a new model with no financial penalty. If they want to leave T-Mobile for another carrier, they only pay the remaining balance they owe on the device, there are no early termination fees. T-Mobile even pays new customers up to $500 to offset any early termination fees their current service providers require.
As T-Mobile’s competitors introduce similar programs, T-Mobile continues to look for other rules to break, such as eliminating data usage overage fees, and excluding streaming music services like Pandora and Spotify from counting against high speed data usage caps.
Has Legere’s strategy worked? The headlines the company’s most recent earnings report generated, including “T-Mobile shares jump off earnings,” and “T-Mobile went on an absolute rampage in 2014” sum up the results nicely.
The splashy headlines, rising stock price and millions of new customers all validate Legere’s decision to break the industry rule that the best way to keep customers is to lock them into inescapable two-year contracts.
The lesson for any small business is to do your research to identify what needs and/or pain points your current and prospective customers may share, and work to address them. Worry less about building revenue and more about improving customer satisfaction, because there’s no more valuable marketing tool than happy customers advocating for your brand across their social media tools. Legere knew the costs of tearing up two-year contracts and paying off new customers’ fees imposed by their former carriers would be a drag on T-Mobile’s bottom line initially. He also knew it would continue to draw customers and the revenue would follow.
Certain rules are so obvious there is no point in challenging them. These are precisely the kinds of rules you need to challenge.
As Facebook has grown so enormous in terms of the number of users, businesses are constantly trying new ways to catch the attention of those users and sell to them. In the face of some high-profile failed attempts, a new retail industry rule has emerged: do not try to open a virtual store on Facebook. But a full-time mom working out of her home broke this rule and has succeeded where so many others have failed.
JCPenney in 2010 became the first major retailer to open a Facebook store, creating an entirely separate e-commerce tab on its Facebook page, and many other retailers followed suit. The tactic was labeled “F-commerce.” Are you familiar with that term? If not, I’m not surprised. By the end of 2011, all of those Facebook stores closed their virtual doors. Analyst firm Forrester told Inc. Magazine “it was like trying to sell stuff to people while they're hanging out with their friends at the bar."
That’s what makes the story of Lolly Wolly Doodle (LWD) so remarkable. Brandi Temple, a mother of four, started sewing clothes for her two girls as a hobby because she could not find anything in stores she thought were “tasteful and fun.”
She had some leftover fabric and decided to make some additional dresses and put them up for sale on eBay. She tells her own story better than I can, but to summarize, she decided to also put some remnant garments on Facebook and offered them first-come-first-serve to anyone who commented on the posts. The response was so overwhelming that in less than a month she had moved her entire eBay store over to Facebook.
Today LWD reportedly does more sales on Facebook than any other brand in the world. The company brought in about 11 million in 2013, and has roughly doubled its revenue every year since its inception in 2009.
How do your customers want to communicate with you? JCPenney and the other big brands that tried to create official storefronts on Facebook were not able to capture the attention and dollars LWD was by simply posting updates and offers right in the newsfeed. This more relaxed, informal approach clearly resonated with Facebook users while the former approach did not. Social media has become an invaluable marketing tool, but not all platforms may be appropriate for your business. Do your research to determine how your customers are communicating with one another and recommending their favorite brands and products, and follow their lead.
Not all business rules are meant to be broken, but sometimes doing so can help any company – from the smallest start-up to the large enterprise trying to unseat its industry leaders – not just compete, but grow. The keys are to figure out which rule to break, and after you’ve done so, identify the next one you can take your hammer to.
Gabie is excited to attend Sage Summit 2015 this July in New Orleans. Sage Summit brings together subject matter experts and top business leaders to inspire small and medium-sized businesses with the energy, insights and guidance to achieve their own visions of success. Register with the code SCORE.
|// by Verisign / Jul. 1, 2015 0 comments|
Recently, Google updated its algorithms to favor websites that look and perform better on mobile devices, making them appear higher on search results. If you find this disconcerting, Google may actually be doing you a favor by forcing you to implement a mobile website. The reality is that today 50 percent of people use mobile devices to search the Web. Mobilefriendly websites make it easier for users to search, read and interact with content on the inherently smaller screens. With mobile users expected to reach 6.1 billion by 2020, search on mobile devices is only expected to increase. If this data doesn’t convince you, ask yourself or your customers how they search the Web for information. For many, a phone or tablet device is likely in the equation.
If your small business doesn’t have a mobile-friendly site, there are two issues you could face:
1. You risk losing business because potential customers may not be able to see all you have to offer when accessing your website on a mobile device.
2. You risk your business becoming invisible with Google’s new change as you will fall lower and lower in search results. The good news is that it’s relatively easy to create a mobile-friendly website or to convert an existing website to a mobile-friendly site.
Here are some actions you can take to keep your small business competitive:
1. Find out if your site is mobile-friendly - Take Google’s mobile-friendly test.
2. Contact your website provider or developer and ask them how to update your site so it’s mobile-friendly. You can sometimes customize this yourself depending on your website software. If there’s a choice in Web design, opt for responsive Web design. Responsive Web design recognizes the type of device you are using to search and enables a site to seamlessly adjust on any screen, like a desktop, tablet or smartphone. This creates a better mobile experience for the consumer – so there’s no zooming, pinching or scrolling. A positive user experience can mean more mobile sales for your business.
3. If you don’t have a website, create your own mobile-friendly website. It’s easy to do by using tools available through registrars, website builders and other hosting service providers. These tools range in cost from free to expensive depending on your need and budget.
The time is now for you to make sure your website provides the best user experience, and that means making your website mobile-friendly. Google’s new algorithms have just provided you with the incentive to make a mobile-friendly website your top priority.
Download this information to discuss with your webmaster and SCORE mentor.
|// by Rieva Lesonsky / Jun. 30, 2015 0 comments|
If you own a service business, like the majority of small businesses in the U.S., you face some unique challenges. To dig deeper into the issues facing service businesses, The Schedulicity study of the Relational Economy polled the owners of several hundred small service businesses, ranging from IT consultants to beauty salons, about their biggest business problems.
“Finding new customers” ranked as the number-one business challenge for entrepreneurs in the survey, followed by “business growth” and “customer retention.” When asked how they feel about the challenges they’re facing, “frustrated” was the most common answer.
Asked what types of tools would help them better handle their business challenges, 27 percent cited “better advertising tools” and 21 percent said they need better customer communication tools.
It’s not that small business owners aren’t putting effort into customer communications—they are. In fact, about half spend between one and three hours a day managing customer communications. However, only 18 percent think their current customer communications methods are “very effective.”
Lack of time (cited by 58 percent), lack of budget and increasingly high consumer expectations are all barriers to effective customer communication, according to the survey respondents.
Communication is vital to small business success, especially for a service business. After all, building relationships with your customers is the foundation of repeat business in the service industry, and you can’t have a strong relationship if you don’t regularly communicate with customers and make it easy for them to communicate with you.
Ease of use emerged as a common theme in the study. The small business owners polled know their customers are impatient and want to do everything quickly and conveniently. One of the top complaints businesses in the survey get from their customers is that the business is “not convenient for my schedule.”
That’s why nearly half of respondents say being able to have customers schedule and update their own appointments on a mobile device would be extremely helpful to their businesses. In addition, 51 percent say the ability to accept online payments would be extremely beneficial—this gets customers on their way quickly and enables them to pay wherever they are.
Providing good customer service is more important than ever today, as customers’ expectations increase. The good news—there are many options available to your business to accomplish this goal. In addition to Schedulicity, online scheduling tools for small businesses including FlexBooker and Booker help customers “serve themselves” by scheduling their own appointments online on their computers or mobile devices. Some of the tools also enable you to accept credit and debit card payments online so customers can even pay at the same time they make their appointments.
The end result: You free up your and your employees’ time to handle more important tasks—like actually providing your service and running your business.
Another interesting stat from the Schedulicity survey: More than half (58 percent) of small business owners polled admit they’ve never sought help from outside resources for their business challenges. What are you waiting for? A SCORE mentor can help you with every difficulty you’re facing—all for free. Visit www.score.org to learn more.
|// by Community Merchants USA / Jun. 29, 2015 0 comments|
Whether you run a retail store, restaurant or service business, one thing your customers all have in common is that they want to save time. And, since time is money, you want to save time too, right? Here are 10 ideas for ways you can save your customers (and yourself) time at the point of sale.
Save yourself time by:
1. Choosing an integrated point of sale (POS) system. A POS system that integrates with other software you use, such as CRM (customer relationship management), loyalty and inventory management software, saves you tons of time. These systems streamline information gathering and reporting. Instead of inputting data, you can capture it automatically at the POS, then export it into dashboards and reports to spot trends, create marketing campaigns and ensure you don’t run out of a key ingredient or item that you’re promoting.
2. Looking for a POS system that accepts all types of payments—debit cards, credit cards, checks, cash and even digital or mobile payments. That way, your employees don't have to switch back and forth from a cash register to a credit card reader when customers are paying.
3. Putting POS in the cloud. Cloud-based POS systems enable you to access POS data anytime, anywhere, so you can get your work done faster. No need to stay late crunching numbers in the shop or office—access your information from home whenever you have a spare moment.
4. Simplifying tax preparation. Good POS software sorts and calculates total sales, sales tax, tips and other payments. That means you can easily pull that information from the POS system at tax time and know your income is being reported accurately.
Save customers time by…
5. Going mobile. Accepting mobile payments via digital wallet or even swiping payment cards in a mobile device using an app such as Square, PayPal Here or Intuit’s QuickBooks GoPayment gets customers in and out faster.
6. Training employees on the system. Whatever type of POS system you use, good training and regular updates are key to making sure employees can make the most of the technology. Without adequate training, customers will suffer as employees struggle to figure out how to accept a payment or input a discount. In addition to the technology, make sure employees are kept up-to-date on current promotions, discounts and codes so there’s no delay in confirming a sale price.
7. Staffing appropriately. Use your POS system to monitor and track busy times, days and seasons. This helps you plan when to staff up or down. Have a backup plan in place in case too many employees call in sick. Do whatever you can to ensure you’re not short-staffed.
8. Doing triage. Depending on the situation, creating one line for cash customers, one line for customers paying by check and one line for payment card customers can help speed the process. You can also institute 10-items-or-less lines, or a separate line for returns, to speed purchasing.
9. Being aware. Train employees to be alert and aware of customers and their moods. A well-placed comment like “Thank you for your patience!” can do a lot to defuse a grumpy customer who’s been waiting in a long line. Empathy and friendliness always help time go faster.
10. Making it fun. Waiting in line can be fun—just ask customers at Sephora, Barnes & Noble or any other store that puts intriguing impulse buys near the checkout registers. While this doesn’t technically save time, providing products for customers to look at (and hopefully purchase) offers distraction that will help the wait speed by. If your business doesn’t sell products, putting TV screens playing sports, movies or talk shows near the POS can have the same effect (just be mindful of your customer base and keep it family-friendly).
|// by Aliana Marino / Jun. 26, 2015 0 comments|
While optimism has been steadily growing since 2012, it dipped in the second quarter of 2015. Lower revenues and tighter credit in 2015 are discouraging small business owners.
Small businesses with less than $5 million in revenue have a loan approval rate of less than 50%.
Therefore, owners had to use their own money. Owners of small businesses with under $5 million in revenue used 36% of their personal assets, while owners of companies with 5 to 10 million dollars in revenue only used 16% of their own money.
When small business owners were asked what they’d do with $100,000:
|// by Community Merchants USA / Jun. 25, 2015 0 comments|
Does your small business only accept certain kinds of credit cards? Are your point-of-sale systems a decade out of date? Do you perform business services for customers, and then wait weeks to send them an invoice (by snail mail)?
Here are seven ways your old-fashioned approach to accepting payments could be hurting your company’s sales.
1. It’s wasting money and time.
2. It’s slowing down payments.
3. It’s making your business look outdated.
4. It’s not offering customers choices.
5. It’s putting your business at risk.
6. It’s limiting your customer base.
7. It’s limiting your average sale.
Are you ready to modernize the way your business accepts payments?
|// by Aliana Marino / Jun. 24, 2015 0 comments|
In this month’s client success story, Leslie Taylor explains how SCORE helped her gain both confidence and clients for her graphic design firm, Buffalo Creative Group. The business not only offers print and website design services, but book cover art and book trailer videos, a hot market in the world of self-publishing.
Over 17 years ago, Leslie freelanced as a graphic designer while working fulltime in a corporate marketing company. She took a 15 year break from her side business ventures to focus on raising her children. As her kids grew older, Leslie had the itch to return to freelance work. She decided to return to what she loved.
While working with her accountant on her taxes, Leslie declared that 2013 would be the year to start her own business. Her accountant suggested SCORE, and Leslie took full advantage of the free resources. She attended an 8-week intensive SCORE workshop for startups to help transition her side job into a viable graphic design business.
Leslie felt like she was “floating around at first and didn’t know what direction to go in.” She met her SCORE mentor, Max Ellis, at the perfect time. Max, a founder of one of the largest creative agencies in the nation, Crowley Webb, had struggled with the same challenges in the advertising industry.
The two met monthly to develop her business strategy. He advised her on how to acquire and retain clients. She learned how to negotiate and communicate with all types of clients. Max recommended using LinkedIn, and she found several steady clients from the social media channel alone. Max also encouraged her to join nonprofits and the Rotary Club. Her pro bono work led to paying jobs.
When Max didn’t have the answers, he simply asked another SCORE mentor for help. Attorney Fred Witherby reworked her client contracts which she still uses today.
Working with mentors built Leslie’s confidence and inspired her to keep going. She appreciated finding Max who worked in her industry and “built a wonderful company out of nothing as well.” She says he was “more helpful than some seminars that you pay for and are run by younger people. You can’t do everything on Facebook. You get a different perspective…from people who’ve ‘been there, done that.’” Even a year after they stopped working together, Max still checks on her. Just a week ago, he emailed her with a client suggestion.
Leslie stresses that small business owners take advantage of SCORE’s resources. The free mentoring and training seminars were crucial for her success, and she knows they can help others. She valued her mentors keeping her on track and inspiring her along the journey.
|// by Rieva Lesonsky / Jun. 23, 2015 0 comments|
How did you finance your small business’ startup (or how are you planning to do so)? If you’re like most companies, you used personal savings or debt. Last year The Kauffmann Foundation polled all the companies that have made the Inc. 500 since 1996 to find out where they got their funding. Here’s what they said:
Kauffmann points out some pros and cons of the various types of funding:
Debt lets you maintain complete control of your business, even though you do have to pay the money back. Equity investors can provide expertise and assistance that go beyond the money they provide. For example, Kauffmann says, VC-backed companies overall have faster sales growth, greater employee growth and higher sales than companies without VC.
On the downside, borrowing money just gives you money—you don’t get access to any expertise or guidance. But taking equity can tie you to investors who may have a different vision for your business, or could even force you out.
While many entrepreneurs are curious about government grants, Kauffmann notes that grants are typically extremely specific, with stringent requirements. For example, in one government grant program, SBIR, more than two-thirds of entrepreneurs receiving the grants were previously academics.
What about crowdfunding? It’s a great way to test your idea in the marketplace by seeing if people are willing to invest in it. However, some entrepreneurs have disclosed too many details of their intellectual property. In addition, since the SEC still hasn’t finalized how equity crowdfunding will be regulated, this type of crowdfunding is not yet fully available to startups.
What do the statistics in the Kauffman report have to tell us? First of all, bank financing is still a viable way to fund your business—perhaps not in the actual startup stages, but during the growth phase. If you consider credit card financing to be bank financing, this can be an option for startup, as long as you are aware of the risks. You need to have a good business plan and well-thought-out financial projections to ensure you can actually make payments on the credit cards and not get into trouble.
Do you need help running the numbers and determining which type of financing is best for your business (or to get your business off the ground)? The mentors at SCORE can help. Visit www.score.org to get matched with a mentor today.
|// by Hal Shelton / Jun. 22, 2015 0 comments|
Sources of funding go far beyond traditional bank loans. From family and friends to leasing and factoring, crowdfunding campaigns and government grants, businesses have plenty of options to consider.
Although there are a variety of financing options out there, about 95 percent of all start-ups are funded, in part, by personal savings and funds from family and friends. So, that is the place to start.
Beginning with personal funds, consider taking a home equity loan, maxing out your credit cards, or using your savings and retirement accounts.
Family and friends are your next source. This route tends to be informal as they are investing as much in you as in your business idea. However, it is still an investment, and you don’t want to lose friends or relatives if your business should go south. It’s best to treat the arrangement like any other business deal. Present your “investors” with your business plan (you can simplify it if you like) so they can make an informed decision.
Once they are on board, draw up a formal business agreement detailing the terms and if the money is expected to be paid back or only if the company does well.
If you still need capital after using personal funds and going to family and friends, your choices other than a traditional bank loan or an angel investment come down two categories: sources that either require you to pay the money back, with interest, or carry no payback obligation.
Here’s a brief summary of these options:
Sources that need to be paid back
Sources with no Payback Obligation
In general, crowdfunding companies provide the site and the mechanics for contributors to make a donation. Each site has different operating details, so make sure you know what they are. Your goal is to develop and tell a story — often with a video — that is compelling enough to have individuals make a contribution.
If you are considering a crowdfunding campaign, start building your followers/fans now on social media. According to Kickstarter, the most popular contribution is $25, so if you have a $25,000 campaign, you will need, on average, 1,000 contributors, and if 1 in 10 followers/fans contribute, you will need a starting list of 10,000 names.
Crowdfunding is not well suited to companies that do not have a competitive advantage secured by trade secrets or strong patents, as once posted, your idea is ripe for being copied or stolen.
In most instances, funds secured from crowdfunding are considered contributions, and do not need to be repaid. To provide an incentive for contributions, you may provide a prize or reward.
|// by Rochelle Robinson / Jun. 19, 2015 0 comments|
Many small business owners find it challenging to obtain financing from banks or other traditional lending institutions. Peer-to-peer (P2P) lending has changed the process of borrowing money by allowing businesses to pitch to an online audience of potential lenders.
Peer-to-peer Loan Process
Small Business Benefits
Peer-to-peer lending is a new way of small business financing that is still being evaluated. It’s not available in all states and the rules and terms are changing constantly. It could be a great resource for new and existing small business owners and offers a viable alternative to traditional banks.