Up and Running Blog

December 2010

Should You Prune Your Client List in 2011?

by Tim Berry on December 29, 2010

What to do better in business for the new year? If – and only if – your professional service business is positioned correctly for it, you might consider pruning your client roster. Some of your clients are easier to deal with, some are more reliable, and some are less so.

If you aren’t close to capacity in your business, forget it. Pruning clients is most important for businesses that can’t easily expand, most typically the one-person service that is mostly booked solid. If that’s not you, then pruning might be a bad idea.

But if it is you, you’re already thinking of how much nicer life would be without client X, who is always asking too much, tends to complain regardless, blows off appointments, and just makes your life harder.

Strategically, the idea is to give yourself room to expand with more of the the right kinds of long-term clients that offer more of a future that can help you build your company.

How do you do it? Consider changing your pricing or policies, perhaps, to allow the clients who are hardest to manage to fall gently out of your client base.

(Image credit: Anna Jurkovska/Shutterstock)

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Photo via Flickr user Emilio Labrador

Sell Benefits not Features

by Marketing Masters on December 28, 2010

A friend that works at a car dealership was recently discussing a sales technique with me. “We’re not allowed to let customers leave until they take a test drive,” she said. “If they take a test drive, the chances that they’ll buy really improve.”

Photo via Flickr user Emilio Labrador

That does this have to do with today’s topic? The car dealership’s policy clearly illustrates the difference between selling features and selling benefits.

So what’s the difference?

A feature could be the structure, physical description, or attributes of your product or service. When you talk about features, you are simply describing what it does, how it’s designed, what it looks like and how it works. It’s rational, makes perfect sense, and is really, really interesting—but mostly to the person who designed or sells the product.

Unfortunately, describing features is not a great way to actually convince anyone to buy.

A benefit on the other hand is the emotional reasons or connections your prospect makes with your product or service. Research shows that every single buying decision people make is based first on their emotional response. People use features to back up a decision they’ve already made emotionally.

Think about the largest purchase most of us will every make—buying a house. Real estate professionals know that if people fall in love with the house, they usually end up buying in less than thirty seconds! (If you watch those shows on TV about how to fix up your home to sell it, you’ll know what we’re talking about.) It’s only after they’ve found “the house for us” that buyers look at the features in detail to reaffirm their decision to buy.

At a car dealership, putting the consumer in the driver’s seat changes the way they view the vehicle. No longer are they looking at the “features” of the car, they are experiencing the benefits. (Hence the increase in sales.)

So what can you do to make sure your message is speaking to your prospect’s heart and not their head? Ask yourself a series of questions:

  • How will their life be better, easier, or more fun with my product or service?
  • Why will they want to tell their friends about my company?
  • Without my product or service, what will the prospect be missing?
  • How will the prospect justify this purchase to themselves or their spouse?

By answering these questions, you will discover the benefits that will attract your prospects. No matter how tempted you may be to point out the incredible “features” of your product, sell with the prospect in mind.

When you constantly put the prospects emotions first, you will create marketing messages that drive sales like you’ve never seen before.

ducttapemarketingbadgeKen Burgin and Elizabeth Walker are the Marketing Masters (www.MarketingMasters.ca), a full-service marketing and advertising partnership that helps build busy businesses. Send your ideas on How to Thrive in Times Like These to liz@marketingmasters.ca or ken@marketingmasters.ca, or call 1-866-908-5720.

web: http://www.marketing,masters.ca
blog: http://thebuzzwithkenandliz.blogspot.com/

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Please Join Me at Growth 2011 in Atlanta Jan. 20

by Tim Berry on December 28, 2010

I’m looking forward to a January 20 date in Atlanta at Entrepreneur Magazine’s Growth 2011 Conference. Last year’s conference in Miami was a great success, and this year’s looks even better. Serial entrepreneur and former governor John Brown will be doing the keynote, there’s an excellent list of speakers and workshops (modesty aside), three entrepreneur-of-the-year awards, and an organized opportunity to pitch your own business.

I’ll be there again this year talking about how to start a business in three weeks (yes, really, three weeks). And with that topic, taken from my most recent book, I’ll work in a lot about how to start a business right regardless of the timeframe, and how to avoid the top 10 startup mistakes.

You can go right now to the website to see the speakers and topics list, and, one of my favorites, videos on the finalists for the major awards to entrepreneur of the year, college entrepreneur of the year, and emerging growth entrepreneur of the year. See what they have to say and how they’ve done it.

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Comparing Twitter and Facebook Stats

by Tim Berry on December 27, 2010

I don’t know how far I would go with this, but it certainly got my attention, and the site it came from looks very good, too. This Infographic compares Facebook to Twitter in terms of use, demographics, and activities.

You can click the picture for a larger view.

And let me clearly thank Dave Larson of tweetsmarter for posting this. It’s his creativity, not mine.

If you’re curious, read the comments, too.  And there is one correction: “in college” should have read “had some college.”

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A Thoughtful Look at Next Year's Trends

by Tim Berry on December 23, 2010

As things wind down during the holidays, as you reflect on this year and next, check out John Jantsch’s 5 Trends that Will Shape Small Business in 2011 on the American Express OPEN Forum.

John does some of the best work ever on marketing for the small business. As he mentions in that post, his trends for 2010 were “spot on.” See what he says about next year. Hint: mobile, apps, and, well, read it.

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A Rose Maybe, but Not Your Business

by Tim Berry on December 22, 2010

As I write this I’m looking at an email question that got to me through the bplans.com network. She’s buying a business she’s worked at for five years, and wants to change its name. She thinks a new name would be better and, as I read the email, I sure like the new one better. But she asks “if there is an additional fee to change the name.”  I decided to answer that question here.

A rose by any other name might smell as sweet; but a business? Not necessarily.

1. The fees are trivial.

Yes, depending on where you live and what the situation is, you’ll almost certainly have to spend something between $35 and $100 to register a legal name change. These are usually done by the county, not the state. They are called ficticious business names, or DBA, for “doing business as.” You have to go to some office, fill out some forms, and take out a legal ad. It’s a pain, but only about half a day and one good dinner’s worth of pain.

2.  Nothing else about a name change is trivial

You’re asking the wrong question. The legal part is by far the easiest. You also have to deal with the trade-offs between five years of business history going up in smoke, all the signage, advertising, word of mouth, not to mention collaterals, website, domain names. It goes on and on.

A company with a changed name looks to all the world like a brand new company. It may have history in its legal soft white underbelly, but to the world, it’s new.

We moved Palo Alto Software from Palo Alto, California to Eugene, Oregon 18 years ago. We never considered changing its name.  It’s been mildly annoying as we get more and more immersed in the local community; it would have been nice to have been Eugene Software (or Cascade Software, or Willamette Software, maybe) when we won some local awards. But we had more than five years of history when we moved, and we didn’t want to lose that. We might have considered it for a split second, but we dismissed it.

In most cases the most powerful asset a business has is its name. Changing the name of a healthy business is often a disastrous idea, to be taken only in very special circumstances.

3.  And yet, sometimes, it is still a good idea

Here’s where I contradict myself and the rest of this post: there are those special situations when a new name is a great advantage. Think of why people might post “under new management” in the window of a retail shop or a restaurant.

Change can be good. Maybe the business was dragging its ass, stale, and badly in need of a new name, a new look, and a new vision. Maybe this is the perfect touch for the transition that’s actually happening, you buying the business. It says it’s you now, not the previous owners. It says fresh start.

And if that’s the case, do it. And if you do, there will be a small legal hassle, but that will be the least of your worries.

(Image credit: Frescomovie/Shutterstock)

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Ten Winning Startups of 2010

by Tim Berry on December 21, 2010

Starting a business takes a whole lot of hard work, some vision, some luck. Getting one to go fast and generate millions of dollars with a big liquidity event, well, that’s gold. That’s the one-in-a-million win that makes the rest of us happy just to think about it.

Which is not to say that there aren’t a lot of other good reasons, beyond just the big pot of gold, to start a business and to work hard, grow it, and keep it healthy.

Which is not to say that there aren’t a million or so businesses dropping every year, probably more so this year, although those numbers are hard to keep track of.

But still, it’s fun to acknowledge the winners. It’s sort of like that feeling you get when you buy a lottery ticket, before the results come out, when you get to dream. What would I do with a whole bunch of money?

So here it is. Enjoy.

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Business Margins are Fundamental

by Tim Berry on December 20, 2010

In How to Get Past the 3-Year Hump on BNET, John Warrillow, author of Built to Sell, boils it down to gross margin:

Whether you’re starting a lemonade stand or the next Groupon, arguably the single most important predictor of your future success is what you pay for the stuff you need to make your final product.

And that simple math is sales less cost of sales, or sales less direct costs, which we call gross margin. In a store, it’s what you sell it for less what you paid for it. In a service business, it’s what you charge less the service costs you incur in delivering the service. It gets trickier with services because there are people costs involved. Do you include yourself as part of your costs?

From that gross margin, subtract your expenses, like the salaries that aren’t part of direct costs (most aren’t),  rent, and of course all those sales and marketing expenses, and you get profit before interest and taxes. Next step, take out interest and taxes, and that’s profits.

It’s  a good reminder of fundamentals. He says you get three obvious advantages from minding the underlying profitability of the gross margin:

1. Cash preservation

2. More money for sales and marketing

3. More profits.

So then he gets to the real message, how to increase your gross margin:

The secret to fattening your gross margin is differentiating your product so it doesn’t become a commodity. There is an expensive way and a cheap way to differentiate your brand.

The expensive way is to slug it out through advertising in a Coke vs. Pepsi-like battle for the mind of the consumer. If you win, you can charge obscene margins. Tiffany’s pays about the same for its diamonds as your local jeweller does but charges you three times as much for the privilege of presenting your gift in the little blue box.

The cheap way of raising your gross margin is to differentiate your business by redefining your company as the only player in a specific niche instead of a small fish in an ocean of larger competitors.

Good stuff. Nice post. I haven’t read the book yet (it’s in the active stack, waiting) but the post makes me believe in the book.

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New SBA lending program promising approval in minutes

by Chelle Parmele on December 17, 2010

The Small Business Administration has announced an all new “Small Loan Advantage and Community Advantage Loan Initiatives”  program.

From the SBA.gov website: “SBA is committed to expanding access to capital for small businesses and entrepreneurs in under-served communities so that we can drive economic growth and job creation.”

The new initiatives promise a smaller application process and faster turn around – from a few minutes to a few days, for SBA 7(a) loans up to $250,000.

Read all the details on www.sba.gov/advantage

The new programs should be live on or around March 15, 2011.

‘Chelle Parmele

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4 Reasons to Celebrate "Write a Business Plan Month"

by Jay Snider on December 16, 2010

Every month is National Something-or-other Month. In fact, if you spend a few moments searching the Internet, you’ll find that just about every day is actually an “official” day for some cause, event, activity, or even pastry.

  • March 21 is National Common Courtesy Day
  • June 4 is National Donut Day
  • September 19 is International Talk Like a Pirate Day (matey)
  • October 2 is Name Your Car Day.

In addition to being the unofficial month of conspicuous consumption, December also happens to be National Write a Business Plan Month. Just how official this designation truly is may be up for debate, but it’s still a good reason to discuss why you should be working on your business plan this month.

  1. You’ll beat the New Year’s Resolutioners
    Let’s say you’ve been putting off working on your business plan, but you really need a loan to get your business started or to make a big purchase that will help your business expand. You’re not the only one. And when is everyone else most likely to buckle down and tackle a project they’ve been procrastinating on? That’s right – January 1st. So if you get in gear in December, you’ll be done by the time those other guys start getting serious.
  2. Last minute tax benefits
    If your tax cycle runs on a calendar year, this is your last chance to make sure you’ve actually incurred all the tax-deductible expenses in your budget. You don’t want to miss out on significant tax savings this year by waiting a few too many weeks to make a purchase, so looking at your plan versus actual before the end of the year is a really good idea. And while that’s not ‘writing’ a business (as the name of the month would imply), it’s working on your business plan, so it counts.
  3. You’re already planning
    December is a month full of plans. Between figuring what gifts to buy for whom, planning meals, scheduling events, arranging travel… The only time in life that involves more planning is when you’re getting ready to bring home a new baby. Since you’re already in “list and schedule” mode, why not apply it to your business and avoid the neglect that can result from being overwhelmed during this hectic time of year?
  4. The gas station gift
    Remember the Friends episode where Joey and Chandler run out of time for Christmas shopping and end up buying presents at a gas station? What do you think happens to your business when you put off planning? In this case, in place of wiper blades and toilet seat covers, your business may end up with fewer profits, less cash, or worse.

So, whether it’s the official month for writing business plans or not, it’s a great idea to take some time in December to work on your business plan. After all, you can’t just sit back and rely on a Festivus miracle to get your business off to a good start in the new year.

photo by flickr user respres

Jay Snider
Palo Alto Software

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