I opened up the bright blue Val-Pack envelope this morning like I sometimes do, more out of a marketer’s curiosity than anything else.  I don’t use coupons; it’s too much of a hassle for me to save a few bucks.  But I do leaf through the coupons just to see who’s advertising, what they’re advertising, and if can find anything in there to blog about. Just kidding. That’s just and added bonus today!

So as I’m perusing endless pizza and car wash coupons  I noticed a huge difference in how the bigger companies advertised compared to the small local companies.

Holy cow – this is exactly what I am always ranting and raving about and here it is in print. In full color even!  Eureka, I’ve struck marketing consultant gold!

But before I get into analyzing the coupons, let’s see if you can spot the difference.  I’ll give you 60 seconds… Ready? GO…

OK, time’s up. What did you come up with???

Give up?

I can best sum it up in one word: VALUE.

Did you notice that the local companies automatically assumed that all we care about is PRICE? And the bigger national companies spoke to our need, want, or pain??? Do you see that?

Petrillo’s says: “Professional Automotive Repair – For Less.”  Translation: We say we’re professional but we don’t expect you to pay us like professionals. We expect you to pay us less than you’d pay a professional…

Lucky Cleaners says : “Stop paying too much for dry cleaning… We’re the Finest Quality Cleaners in Town!”  Translation:  We are the finest quality cleaners in town, but we don’t expect you to pay us like we are.. you can pay us less than you pay the other, not-so-fine, not-so-quality cleaners.

Now in the real world, aren’t “quality” and “cheap” mutually exclusive? Really. Be honest. Think like a consumer not a business owner.  Can you really get quality and cheap?  Not usually. That’s why we buy name brands instead of generic and why we choose Starbucks coffee over McDonald’s, and Safeway over Food4Less.

Cheap to me says it’ll taste bad or it’ll break in a day. Quality says, it’s better, it’ll last a while.  So how can a company be “quality” and cheap?  It can’t.

Now compare that messaging to what the national companies say:

Sports Authority: “Got what you need for Spring? Find all the gear you want here…”  Translation: We know what you need and we know you’re willing to pay for it.  But because this is Valpak and you expect it, we’ll give you 20% off. But nowhere does it say, “Shop us because we’re cheap” – And anyone who has shopped there knows that even with 20% off, it’s far from cheap.

Anderson Windows: “Why deflate your home’s value with cheap, ugly windows?”   Translation: You don’t want your home to look ugly do you? So then why would you buy cheap windows?  We charge more – but we know you’ll pay it because you want to protect the value of your home and you don’t want ugly windows.

Lesson: 

The bigger companies understand VALUE.  They understand that when they communicate to potential customers in their words, on their terms, and with products and services they really need they don’t have to be the cheapest to get their business.

The reason I do what I do is because I’ve worked with huge multinational corporations and I’ve worked with small companies and I wanted to take the tools and practices that the huge companies use and teach small businesses how to stop wasting money chasing bad marketing.  This example makes that point perfectly.

Doing the groundwork is crucial. Studying your customers, your competition, and your market are fundamentals.  Knowing your target market and why they buy what they buy is critical. Figuring out how you’re different from your competition is essential. And learning how to communicate these things effectively is mandatory. Or you will always have to fall back on price.  Who wants to compete on price? Who wants to be CHEAP?  Wouldn’t you rather charge what you’re really worth and be known as the Quality company?

What does your advertising say about your company? Tell us!

Image via Wikipedia

The sluggish economy continues to be an issue for small business owners.  And now it appears competition may be getting tougher too.  According to the Guardian Life Small Business Trends Research Report, larger companies will aggressively market to prospects once considered “too small.”  That means those of us who own small businesses may find ourselves dealing with new and tougher competitors.

So how do you protect yourself.  For starters, you need to keep a close eye on the competition.  You’ve probably heard the old saying, “What you don’t know won’t hurt you.”  Well, guess what!  It can and it will hurt you. It’s important to know as much as you can about your market, your customers, your products and your competition.

With little or no budget for competitive research, you’re probably wondering how to gather that intelligence.   There are myriad low-cost methods you can use get the information you need to stay on top of things in your market and protect your customer base.

Explore the Internet.  This should be pretty obvious, but you can conduct an internet search on your competitor(s).  You may discover a lot of helpful information.  For example, you may learn about personnel changes, a new product offering, even new clients/customers.

Visit Your Competitor’s Web site.  Web sites are a good source of information about a company.  Typically, there are backgrounders on the company’s management team along with a history of the company and its mission statement.  Some web sites also maintain client lists and  if it’s an e-commerce site, you can compare pricing

Contact Your Trade Association.  Many small businesses belong to trade associations which provide current research findings.  These studies focus on consumer’s perceptions of your product or service and growing trends within your industry.  Most of these studies are free to association members.  Additionally, associations typically publish newsletters or trade magazines where you might find competitive information.

Talk to Vendors.  One of the best sources of information is your vendors.  One of your suppliers who also sells to your competitor may be able to share a lot of insight about what your competition is up to.  Be careful, however.  If they disclose information to you, you can safely assume they are doing the same thing with your competitors

Pay Attention to Advertisements.  Watch for your competitor’s advertisements.  How are they positioning themselves?  How often do they advertise?  Where are they advertising?  To whom are their ads directed?  Collecting this information will help you get a better understanding of your competitor’s strategy in the market.

Secret Shoppers.  Secret shoppers can be a good way to learn about your competitor’s sales process.  Ask a friend or family member to pose as a potential customer and either call your competitor or visit their retail location.  Of course, this wouldn’t be appropriate if you are in an industry where every sales presentation is customized.

Network.  Reach out to business associates to learn more about the marketplace.  Chances are there are people within your network who have done business with your competitors.  Find out what they liked and what they didn’t like.

Talk to you Competitors.  Depending on what industry you are in, you may find your competitors are friendly ones and willing to discuss certain issues with you.  The Society of Competitive Intelligence Professionals (SCIP) is a good resource for guidelines.

Finally, whatever information you obtain, use it constructively to assist your firm’s growth.  Never use it to hurt your competitor.  And if you gain access to information that appears to be proprietary, destroy it immediately.

Competitive research doesn’t have to cost a fortune, and the benefits can be huge.

Your business idea is brilliant. Nobody else is doing it. You’ve got no competition. It’s sure to be a gold mine, right?

Maybe.

One mistake many new businesses make is thinking that just because nobody else is doing exactly what they’re doing, their business is a sure thing.

The smart thing to do is ask yourself  ”why isn’t anyone else doing it?” It’s possible that nobody’s selling cod-liver frozen yogurt in your area because there’s simply no market for it. Ask around, talk to people, do your market research. If you determine that you’ve got customers out there, you’re in good shape.

But that still doesn’t mean there’s no competition.

There may not be another cod-liver frozen yogurt shop within 500 miles. But maybe an online distributor sells cod-liver oil to do-it-yourselfers who make their own fro-yo at home. Or maybe your potential customers are eating frozen salmon pops right now.

Don’t think of competition as only other businesses who do exactly what you do. Think about what currently exists on the market that your product would displace. When Henry Ford started successfully mass producing automobiles in the U.S., he didn’t have other auto makers to compete with. His competition was horse-and-buggy makers, bicycles, and railroads.

Sometimes you have to think outside of the box when planning your business. Chances are, if you’ve got a product or service that appears to have no competition, you’ve already got a talent for thinking differently. Be sure to put that talent to use.

photo by flickr user TheCulinaryGeek

Did you miss any of Tim’s great posts from the last week? Never fear, we’ve got them listed out below. Click to your hearts content!

Test Your Leadership With These Two Questions

Are you running a business, or an organization, or a team? For a quick rating of your own leadership, ask yourself these questions about bad news:
1. How quickly do you get the bad news? and  2. How do you respond to bad news?

Are Business Social Media Campaigns About Listening?

Brian Solis, author of Engage, expert on social media for business, posted  The End of Social Media 1.0 last week on his blog. Not that there is a 2.0 or 3.0 exactly, he explains, but he says we’re at an inflection point.

Are Spelling and Grammar Obsolete?

Am I being too critical? Do you react like I do to blatant spelling errors? Do they spoil messages for you?

Don’t Compete on Price. Please.

I caught Ted Coiné’s 12 Most Irrefutable Laws of Business Heresy the other day. I really like that list. And it’s a great title for a post. And it’s an excellent post, great advice coming one delightful rule after another.

Can I ask you for a quick favor?

Tim Berry, the founder of Palo Alto Software and a personal friend, was just nominated as a Small Business Influencer in the Guru category on SmallBizTrends.com. Everyone at Palo Alto Software would love to see him win. We’re hoping that you can help us out by voting for Tim Berry.

Tim Berry, via Crunch Base

Can you take a quick break from reading this article and go vote for Tim Berry as a Small Business Influencer? You don’t have to register and they won’t ask for your email address. All you need to do is click the big yellow vote button.

If this is your first time on Up and Running (Welcome! We’re glad to see you), you might be wondering who Tim Berry is.

• Tim is the Founder and Chief Blogging Officer of Palo Alto Software
• Business Week listed Tim as one of the top 20 entrepreneurs to follow on Twitter
• The New York Times included Tim on the list of 11 companies to follow on Twitter
• Business Insider included Tim in their list of the top 25 entrepreneurs to follow on Twitter.
• Pamela Slim, author of Escape from Cubicle Nation, calls Tim the Obi-wan Kenobe of business planning
• Jim Blasingame calls Tim berry the Father of Business Planning
• Tim wrote The Plan-as-you-Go Business Plan and Hurdle: the Book on Business Planning. He also co-wrote 3 Weeks to Startup.
• Tim is the principal author of Business Plan Pro, the #1 selling business planning software
• Tim is a successful entrepreneur: He founded Palo Alto Software and bplans.com and co-founded Borland International. He built Palo Alto Software from 0 to 40 employees, multimillion dollar sales, no debt, and a 70% market share without outside investment.
• He’s written thousands of pages and posts on his blog Planning Startups Stories (the business planning category includes over 200 posts!)

I first met Tim when I took his course on Business Planning and Entrepreneurship at the University of Oregon in 2008. Today, I’m a marketing manager for his company, Palo Alto Software. I’m working here because I believe in his passion and vision for business planning, business management, and entrepreneurship.

Tim is the expert on business planning. If you enjoy the articles, books, and essays he’s written, or if you’re a satisfied customer of Business Plan Pro, Sales and Marketing Pro, or LivePlan.com, please take a second and vote for Tim berry as a Small Business Influencer in the Guru category on SmallBizTrends.

Thanks for reading. And thanks for voting.

A friend asked me this in twitter:

What to do when you’re launching a company and competition launches 3 months before you ?

Build on top of what the competition is doing. Slipstream. Let them pave the way, let them break the ice, and you follow along with a different angle, or different spin. I’ve had personal experience with this problem. It was a couple of decades ago, but it’s perhaps still valid. I was consulting with Therese Myers of Quarterdeck Office Systems in the early 1980s  when VisiCorp came out with VisiOn just a few months before Quarterdeck’s release. VisiOn and VisiCorp failed within a year or two, but Quarterdeck succeeded and was acquired by Symantec in 1987.

That’s in a post on my main blog, titled Second or Third Mover Advantage. My conclusion on that one was:

So yes, being an original is much more satisfying, and if you can seize that advantage and keep it, it’s great business. But being second or third works well too. It’s sometimes easier to explain.

And just in case you think I’m inventing this consolation idea to make you feel better, I posted The Myth of the New and Only Idea on this blog earlier this month. It said:

I say, so what? Is there still a need? Has it been done right? Is that one existing company serving the entire market perfectly, so that nobody else can jump in? Apple wasn’t the first personal computer company, Federal Express wasn’t the first courier/delivery company, and Google wasn’t the first search engine. Microsoft wasn’t the first personal computer operating system. So?

That’s pretty much the same case here. Don’t worry. Go for it.

David Fincher’s new film, The Social Network, could be subtitled “The Unauthorized Biography of a Startup.” Based on the book ‘The Accidental Billionaires’ by Ben Mezrich, The Social Network tells the story of Facebook’s founding and rise to fame through the lens of the lawsuits that arose around it almost from the beginning.

While critics contend that the movie is as much fiction as truth, it’s based on an all-too-typical scenario: business founders get started without a clear understanding of the legal implications of partnerships, intellectual property, and non-compete agreements, and are then surprised when complications arise.

Whether or not you’ve seen The Social Network yet, we found some great lessons any startup should take away from the movie.

Business ideas aren’t protected
Central to the storyline of the film is a misunderstanding about what constitutes intellectual property.

The facts: In late 2003, Cameron and Tyler Winklevoss and Divya Narendr asked fellow Harvard student Mark Zuckerberg, already known as a genius programmer, to write some code for a social networking site for students. Their oral agreement with Zuckerberg later created disputes as to whether they hired him, contracted with him for a portion of the profits, or what, but Zuckerberg admits to doing about 6 hours of work for them on the project, and claims he never committed to completing the project, but just that he was “helping out” some fellow students. At some point, he stopped answering their emails and in February 2004 launched his own social networking site, “Thefacebook.”

The basis of the resulting lawsuit was that Zuckerberg had “stolen their idea” and used it for his own profit.

But, as our own Tim Berry points out, “Business ideas aren’t protected. In 30 years of business and consulting, I’ve never heard of any laws to protect business ideas. Laws protect inventions with patents, creative works with copyright, and trade names with trademarks.”

If they had alleged instead that he had stolen their original code, that would be protected by copyright, so long as:

• they, and not Zuckerberg, had actually created the code, or
• they had an enforceable contract with Zuckerberg as an employee or contractor that gave them rights to anything he created while in their employ.

Alternatively, if they had made Zuckerberg sign a non-compete agreement before beginning work, in which he agreed not to create his own social networking site, or not to do related work for a certain period of time, they would have had a legal basis for the lawsuit.

Spoiler alert:
On Monday, we’ll talk about partnership agreements, and how they could have saved Eduardo Saverin and the Winklevoss twins a lot of time in court.

Sara Prentice Manela
Editor

P.S. Speaking of Facebook – Have you joined our fanpage?

We’re in the middle of business plan competition season, and we’re seeing some great plans, and a lot of common mistakes. We’ve assembled some of our best advice on business competitions, below.

Ask Tim Berry – Tips for Business Plan Competitions

• Don’t Shade Your Eyes, Summarize: “I don’t care if you’re the next big thing, with an unimaginably exciting new idea and a great team, you can still create a meaningful summary in 10 pages.”
• Writing an Executive Summary: Hit these highlights, and customize your Executive Summary for the intended audience.
• Estimating Unknown Expenses: How do you predict expenses? Normally you need some experience. If you have no idea, then you might think again about starting this business.
• Why not do your best? If you’re going to a graduate level intercollegiate and international venture competition, ask somebody to edit the plan for simple practical writing. Make sure your projected income and balance link up correctly with the cash flow, and that the cash flow understands working capital. Use business charts to illustrate the main numbers.
• How to Succeed in Competitions: Competitions normally receive far more entrants than they can practically screen any other way, so the business plan is the critical document. This white paper explains how to customize and improve the output you create in Business Plan Pro to meet the sophisticated needs of a venture contest.

How to lose a business plan competition

• Top 10 Business Plan Mistakes: From “hockey stick” forecasts to technobabble to numbers without charts, Tim Berry discusses the most common planning mistakes in business plan competitions, and why they irritate judges.
• Big Mistake: On Business Plans, Cash, Investment, and Whose Peace of Mind Matters: You don’t ask for investment so you can have cash in the bank.
• Big Mistake: Business Plans And Investor Returns: Investors care about returns, but you can’t predict them accurately. Show them credible management, sales, and market knowledge instead.

Presenting your plan to judges:

Guy Kawasaki’s 10/20/30 Rule: How listening to crappy business plan pitches is giving Guy Ménière’s disease.

Ask Tim Berry – The Elevator Pitch

Sara Prentice Manela
Editor

In most lines of work, people ripping off your ideas or designs is a bad thing. Illegal, even. But such is not the case in the fashion world, where not only is copying legal, but some say it’s beneficial. As the old cliche goes, imitation is the sincerest form of flattery. Turns out it may be the best source of job security as well.

As discussed on the Freakonomics blog last week, the fashion industry has periodically tried to fight copycats. Keep in mind, this discussion is about copying designs. Copying labels — trying to pass the copies off as the real thing — that’s clearly illegal and nobody’s suggesting it should be otherwise. But Kal Raustiala and Chris Sprigman (both counterfeiting and intellectual property experts) maintain that for the most part, limits are not only unnecessary, but are even harmful to the industry.

…the reason copying is permitted is in part that, in the fashion world, copying has hidden benefits. Styles, as we all know, rise and fall in a ceaseless cycle of trends. That is the nature of fashion. As copies of trendy or noteworthy garments are freely made, fashion-forward consumers recognize that it’s time to jump to the new new thing. The fashion cycle turns even faster.

It’s a unique situation. Using the example of the Oscars, you have millions of home viewers seeing movie stars wearing expensive designer dresses. But at thousands and thousands of dollars, the average person has no chance to ever afford anything they see on the red carpet. Yet the fashions seen on the red carpets and in gossip magazines (where we see more celebrities wearing more fabulous, and fabulously expensive, clothes) do influence what the general public wants to buy. And what they ultimately do buy, thanks to the openness to copying.

So does buying an approximation of, say, Sandra Bullock’s dress, when you never in a million years could have afforded the real thing anyway, harm the original designer? Or does it help the designer, whose work is seen and appreciated and sought after more, once it’s been proven to drive consumer demand?

Then, just when all the prom-going high schoolers are wearing that trendy item, the next hot new thing comes out. And the designer wins again. Not only was their original design a hit, but now there’s demand for their new “hot” item, which will be worn by the rich and famous and eventually trickle down to the masses. Again.

As Raustiala and Sprigman wrote:

The bottom line is that there is no shortage of innovation in the U.S. fashion industry.  Right now, in studios in New York and Los Angeles, uncounted thousands of designers are busy churning out new designs. And they are also busy copying and “interpreting” one another.  And that’s good.

In a previous post on the Freakonomics blog, Raustiala and Sprigman had this to say about what they call “the piracy paradox:”

In sum, it is through copying that the fashion industry creates trends. And it is trends that sell fashion. For this reason, fashion designers’ freedom to copy does not harm the fashion industry, and indeed may be one key to the industry’s continued success.

Think about it. You generally don’t want imitators or competitors stealing your ideas and selling to your customers. In any industry. Yet there are clearly times when getting ripped off can work in your favor. Can you imagine a scenario like that for your business?

Jay Snider
Palo Alto Software

Time and again we’ve read a plan where someone thinks they have a unique service or product and proclaims they have no competition. Wrong. So very wrong. Everyone has competition. It’s a fundamental.

This week our Back to the Fundamentals article points out that Competitors are a fundamental reality of doing business.