Small Business Buying, Building and Selling

In that order.

For the first time in 2 years, I spent a few days in the last week onsite at other businesses doing some consulting and training. Since I’ve been working on my own business, I just hadn’t the time to put a lot of effort into helping others. After a few days of interfacing with some very successful small business owners, it intrigued me how interested they were in my own personal daily schedule…

A few months back I noticed sales were slipping and my stress level was rising rapidly. In those moments, when you finally realize that in the last 5 working days you got absolutely nothing of value accomplished, you really need to step back. Sit in your office with the door closed or take an extra long shower since you’ll have no interruptions and evaluate a few things:

1. What is your role as the business owner/leader? Literally, what is your job description and are you following it? No job description? Make one!
2. What can you do that would most benefit the company in 3 months, 6 months, 12 months, and 5 years? Forget about what’s needed to get through today for a few minutes and focus on longer term. Unlike public companies, you don’t have next quarters earnings report to cloud your long-term judgement.
3. Are you spending half of your time on marketing/sales (getting new customers) and half of your time on customer service/operations (taking care of existing customers)? Granted, your sales and marketing efforts should certainly include marketing to your existing customer base, do not make the mistake of convincing yourself that that ONLY means dealing with current customer issues. Your sales/marketing efforts to existing customers means up-selling, cross-selling, educating them on all the products and services you offer along with gathering referrals and testimonials.
4. Does your schedule allow you to acheive 1-3? Obviously, this is where most business-owners, myself included, often get side-tracked.

So what can you do about it? The answer is simple, create a daily or weekly schedule.

Initially my daily schedule looked like the following:

However, after realizing that the “creative” processes of Sales and Marketing weren’t really as effective in only an hour time-slot I converted to a weekly schedule with 2-hour blocks for Sales and Marketing in the afternoon and my standard morning schedule. Personally, I define Marketing as everything my business does to get a prospect to contact us to solve a problem. Once the prospect has contacted us, they are now in my sales process/system and everything from that point of contact, till we sit down with the new customer after our work is finished to make sure they’re happy and to gather referrals, is Sales.

Monday through Thursday I alternate between Sales and Marketing and Friday is a “flip” day where I choose which one will benefit the business more (or whether I need to just go for a motorcycle ride).

So now that you know what needs to be done, do you have any doubts that in 3, 6, or 12 months, let alone 5 years, your business and therefore you will ultimately benefit from such dedication to your job description as the business leader???

Businesses generally mimic their owners according to the 3 Leaders every business needs. If you’re sales oriented you’ll love that time spent working on sales and marketing. If you’re a more technical hands-on guy, you’ll feel much more in your element taking care of the customer issues and making them happy. If you’re just a numbers person, that time from 11-12 and 4-5 where you work on payables, reports, and other accounting needs will be right up your alley. That being the case, you have 2 options:

1. Commit to taking care of all of these items yourself.
2. Hire someone else to help you in the areas you aren’t good or passionate about.

If you choose the first, my Recommended Reading section is a great place to learn about books that will help educate you on all of these areas.

If you choose the second, I’d read some of the books anyway so you know if the team member or consultant you’re working with really knows there stuff. There are plenty who do not. The first item I would outsource would be the accounting stuff.

My blog title obviously infers that just by setting your schedule you’ll now have a sense of control over your business and more importantly your life… The only proof I can offer for that is to try it. Force yourself to make it a priority to follow your schedule and you will be utterly amazed at how productive you can be.

To your scheduling success, Bryan

P.S. At our weekly Team Meeting, I apologized to my team for not doing my job and let them know about my new schedule. I recommend you do the same so everyone knows things-are-a-changin.

In my Internet Marketing for Small Business series of blogs we reviewed the 3 pieces of your small business’ online presence:

1. Traffic
2. Website
3. Commitment

We then discussed the 3 primary ways to get Traffic (Search Engines, Online Ads/Google Adwords, Viral Marketing) and of course reviewed videos explaining some basics of Viral Marketing, Search Engine Optimization and optimizing your Google Adwords campaigns. We most recently looked at some great tips for your website in my last blog.

The final piece to the puzzle and the item we’ll be reviewing today is the Commitment. The commitment is simply the visitors commitment to buy from you or to contact you for more information if you’re not selling any products online. Obviously we’ve been talking about the sales aspect of your website, not how it caters to current customers, so with that in mind, everything you do to your website should be geared towards that goal. Here are a few pointers for achieving that.

1. Setup your website layout and design according to my last blog.
2. Use the 4.5 points of marketing to address their questions and concerns.
3. Offer them something for free in exchange for their email address.

Since the first 2 points were addressed in the last post, we’re solely going to focus on the third.

When buying a product, the primary reason people use the internet is to educate themselves by reading information about the product or service they are interested in. They may also be looking for the best value, but without knowing what makes a product or service valuable they’ll first have to educate themselves on that product or service. This is where you have the opportunity to set yourself apart. If you’re an online retailer, the best reason for someone giving you their email address would be to receive email notifications of special sales and promotions. However, if you’re a service or knowledge-based business, they can have many reasons for dealing with you. A few thoughts your prospect may have to consider would be:

1. Your level of expertise – Can you fix their problem the right way the first time?
2. Your history – If your business is less than 5 years old chances are you’re not going to be here in another 5 years.
3. Your prices – Are they fair and reasonable for the services you deliver?
4. Your credibility – What do your customers say/think about you?
5. Your guarantee – If you turn out to not do what you told me, what do I stand to lose?

Now your website can do a great job of addressing most of that, however you need to hold something back. You need to not let the cat out of the bag on your expertise right away. Why? After all, that may be the most important thing to your client and what they NEED to know about you before making a decision. Exactly. Because of that, if setup correctly, your potential client will gladly give you their name and email address in exchange for you sharing some of your expertise with them. Read that sentence again and let it sink in for a minute. That’s your hook. If the rest of your website is setup in such a way to address the other 4 items (and any others you may determine your prospects want to know) then they’ll trust that you are an expert.

This is where you utilize an “opt-in”. An Opt-in is where your visitor opts-into your mailing list or newsletter. Obviously the key to getting someone to decide to sign up for your newsletter is to offer them your expertise for free in return. So once they opt-in, you email them a PDF or direct them to a web page where they can download a PDF providing your expertise. (Mailchimp.com can get you started with this for free.) This would be in the form of an article, whitepaper, special report, expose’, or research paper addressing your expertise. For instance:

1. For a law firm – “The top 10 cost-saving questions you need to ask before putting down a retainer for a lawyer.”
2. For an accountant – “The top 10 things your accountant missed on your last tax return.”
3. For a plumber – “How to know if your plumber is more interested in your pipes or your wallet.”
4. For a an auto-body shop – “The quickest way to tell if your body-shop repair estimate is accurate or if the body-man has been spending too much time in the paint booth.”
5. For a photographer – “The 5 things a photographer must do to get the best picture of you – that have nothing to do with the camera!”

You get the idea. The goal is to provide a topic that is relevant and important to your visitors. Here are a few guidelines:

1. Make it generic – Don’t say “top 10 reasons to do business with us”. No one is going to give you their email in exchange for a sales pitch. They’re looking for a “free lunch” by learning from your expertise.
2. Set it up to paint a picture that only your business fits – This is, of course, the power of this sort of marketing. It allows you to define exactly what the perfect lawyer, cpa, plumber, beauty salon, etc. should look like. Make sure only your business can fit that definition. This is part of the way you can build value to demonstrate that your prices are higher but your overall value is unmatched.
3. Provide some real expertise – We’re all smart enough to see right through a thinly veiled sales pitch. This is the kind of thing that will help them decide to NOT do business with you.
4. Make it simple – Lay it out with a list or graphs and make it conversational. Write this copy, as you should with all marketing copy, as if you’re sitting across the table from this person explaining to them exactly what you’re talking about.
5. Promise not to sell their email – Unless of course you do plan to sell their email. But I don’t really recommend that.

Now some of the great internet marketers have learned that providing a PDF in exchange for an email only gets you so far. Instead they setup automatic email responder campaigns with the help of sites like aweber.com. This basically tells your visitor they’re going to receive some level of your expertise once per week for the next 4 weeks or something along those lines. This keeps you in touch with them constantly and helps you get closer to Jay Conrad Levinson’s claim that it takes 9 communications to make a prospect a customer. This is the reason gathering an email address is so important to begin with. If Levinson’s research is accurate, your chances of gaining a customer because of one visit to your website are pretty slim. However, if they visit your website and then you keep in constant contact with them via email, now the tide has turned in your favor.

To your success in gaining a commitment with your website, Bryan

In my last 3 blogs we reviewed the 3 pieces of your small business’ online presence:

Chichen Itza - the 7th Wonder of the World. Is your website this complex?

1. Traffic
2. Website
3. Commitment

We then discussed the 3 primary ways to get Traffic (Search Engines, Online Ads/Google Adwords, Viral Marketing) and of course reviewed videos explaining some basics of Viral Marketing and Search Engine Optimization for Small Business. We then looked at some of the best tips for optimizing your Google Adwords campaigns in my last blog.

This time around we’re going to take a closer look at your website. From my last 3 blogs you have a lot of great ways to get people to your website, but how do you know your website is any good? Let’s break this into 3 sections:

1. Goal of your website
2. Content
3. Layout
4. Tracking or Analytics

1. Goal of your website – This is so important to understand as I think most people never even consider this point. For most people they have a website because they’re supposed to have a website and then they leave it at that. That’s not at all true, the goal of your website is to sell something! Since my small business is service-based, my goal is to sell an appointment or, in other words, get the potential customer to contact us. For other businesses the goal is to sell a product directly online. If you fail to sell your product or appointment via your website your secondary goal should be to collect your visitor’s contact information for future marketing. We’ll discuss basic ways to do that in the future.

2. Content – Since your goal is to sell your visitor something, the content of your website should be geared to do just that. How do you accomplish that? You answer all the questions that might prevent them from buying from you. That’s what your content MUST do if your customer is ever going to make a commitment to purchase from you. Here are the basic points you must cover in any marketing to earn a customer. I call these the 4.5 points of successful marketing:

1. What problem can you fix for me? – Address and detail their problems to demonstrate that you understand their needs.
2. Is your solution the best? – Explain how your solution to their problem is the best solution available.
3. Why should I work with your company? – Compare your business to your competition to show how ONLY your business can meet their needs and requirements.
4. Why do I need your solution now? – Dollarize their potential losses by not having your solution so they understand that every month, week, day or hour that they wait they’re losing money by not working with you.

4.5. What am I risking? – Make the process of either buying from you or contacting you for an appointment as risk-free as possible.

The biggest negative business owners point out to me when addressing these points is that now their competitors can see their whole “sales pitch”. My response to that is firstly, so what? They’re going to find it one way or another anyway. Secondly, if your business and product can’t highlight enough advantages, benefits, and differences to make it IMPOSSIBLE for your competitors to steal your sales pitch then you need to go back to the writing board and come up with better copy and/or a better business plan.

3. Layout – In the online world you basically have 4 types of websites:

1. Complex – You have graphics and videos and Flash programming and javascript drop-down menus and somewhere amongst the entertainment you may even address some of your customer’s questions or needs.
2. Simple – You list your business name, phone, address, a short About Us, a Contact Us page and maybe even a bit about your products. These websites do nothing more than provide contact information for people who already want to do business with you. Most visitors, however, don’t care about you until you educate them on how you can make their life better.
3. Corporate – Every major corporation has one of these. It has all the standard pages for Contact Us, About Us, Investor Relations, Products, Store-Finder, etc. etc. It answers a few questions of the 4.5 points of successful marketing but often is bordering on the too Complex described above.
4. Long-winded – These are those scrolling 1-page sales pitch websites that you just hate to visit. However the truth is, these are some of the best tracked, best-designed, best-selling websites in existence. Millions upon millions of dollars in internet fortunes have been made through this style of website. These designers have often done their homework and tweaked their website sales-machines to perfection so don’t write these off as unprofessional or ineffective. An unprofessional website is the one that doesn’t generate sales – nothing more.

So how do you optimize your site to generate the best results without getting too far off-track like the site descriptions above?

1. Make it EASY to contact your business. Their should be a phone number, email, and/or contact us button on every page so that it’s visible at all times.
2. Never make anything more than 2 menu’s deep (unless you sell millions of products). This is a lesson learned from the “Long-winded” guys. You can’t direct people through the 4.5 points of successful marketing if you have too many clicks. People want their questions answered right away and in a logical progression and if they have to click through more than 2 menus deep to get those answers they’re much more likely to leave.
3. Relate your pages to each other. I was just searching for car parts for my 2008 Mitsubishi Evolution X on a performance parts website. The website had some awesome Youtube videos of their 10 second Evo with a listing of the parts they sell and used on that car. Only problem was the list of parts didn’t link back to the spot where I can buy the parts. After 30 minutes of navigating around I’m still not sure if the parts I found were the same ones they used on their own car! The point is, don’t make every visitor have to go back to your home page to find what they need. If you reference another product, idea, or reason to do business with you on an individual page, you better have a link to your reference.
4. Provide testimonials. You can say all you want about your solutions and business however that never has the same effect as third-party testimonials from your customers. If your website doesn’t have those, start gathering them right away. Gathering testimonials is literally as simple as asking for them so be sure to ask!

4. Tracking or Analytics – Since we’re all looking for the simple answer let me give you just that. The most important performance number for your website is your conversion rate. This is the number of customers created divided by the number of visitors. In other words, if you have 100 visitors and 4 bought from you (or scheduled an appointment for a service-based business), your conversion rate would be 4% (4/100). Some benchmarks for conversion rates by industry are available courtesy of Fireclick.com where the current internet average conversion rate is 4.3%. It’s also helpful to talk to other people in your specific industry if possible. As a point of comparison, my conversion rate in the 4th quarter of 2009 was 6.5% for my local service-based business. In a future blog we’ll discuss ways to really analyze your Google Analytics stats to determine how to improve your conversion rate.

To your website’s selling success, Bryan

P.S. Here’s another short article about website design by Barry A. Densa at Melissadata.com that I think is very appropriate.

Sorry for the delay in continuing our series on Internet Marketing for Small business however I’m back and ready to roll!

In my last 2 blogs we reviewed the 3 pieces of your small business’ online presence:

1. Traffic
2. Website
3. Commitment

We then reviewed the 3 primary ways to get Traffic and of course reviewed videos explaining some basics of Viral Marketing and Search Engine Optimization for Small Business:

1. Search Engines
2. Online Ads
3. Viral Marketing

This time around we’re going to take a closer look at online advertising and, in particular, Google Adwords so that if your website isn’t perfectly optimized it still pops up as the answer to searches by effective Google marketing.

Firstly, there are thousands of website to advertise on so why focus on Google? That answer is quite simple. Google is the internet search juggernaut. Over 80% of internet searches are performed on Google so why focus on the 20% when you can cover 80% in one fell swoop?

Secondly, this is not a tutorial on setting up a Google Adwords account and campaign. It’s very simple to do, however so if you’re looking for some hand-holding check out Google’s resources.

Finally, this post is about getting the best results out of your Google Adwords campaign. If you’re currently paying someone else to handle all of your Adwords marketing, I highly recommend you either take it over yourself or at the very least verify that they’re applying the principles I’m about to cover.

If at all possible, as a small business owner, leader, or manager you really should be handling your adwords campaigns yourself and here’s why:

1. It’s not that hard to get started. As a matter of fact, in a lot of respects it’s probably a lot easier than most other forms of marketing. Have you ever tried to produce a TV commercial? Now that takes work!
2. It’s the future. Let’s face it. Google is still growing and online marketing is here to stay. From my talks with marketers in TV, Radio, and Newspaper all of those mediums are in very difficult circumstances right now. Why? Because the marketing isn’t targeted. Broadcast or print advertising blankets thousands to millions of people of which a very small percentage “might” be interested in your product. Google Adwords allows you to only show your ads to people searching for your product (if you know what you’re doing). It’s much better bang for your buck!
3. You’ll learn lessons that can be applied to all of your marketing. Things like: which promotions draw the most attention and which headline phrases elicit the best response. Heck, even which words people are using to find you. This information can then be carried over to your email marketing, direct marketing, broadcast marketing and everything else because then you’ll know which headline will give you the best response.

Though I do claim that Google Adwords marketing isn’t that hard to get started, it can be quite complex to become a top Google Adwords marketing expert. Lucky for you, your small business competitors aren’t even remotely savvy on Adwords, let alone master marketers, so all you need to know are the top most important pieces that I’m about to cover to set yourself apart.

So here are the most important parts to your Adwords campaign that you must implement:

1. Split test
2. Mimic the keywords in your ad
3. Direct them to a page that answers their question
4. Use broad-match, match phrase, match term, and negative keywords
5. Track your results

That’s it. Five relatively simple pieces to becoming an Adwords guru. Let’s look at each in more detail.

Split-testing – This is the same thing in the online world as it is in the physical world. In the physical world of marketing this would be like creating 1 direct mail marketing letter with 2 different headlines and determining which one had a better response. With Adwords this means you setup 2 different ads at all times for each Ad Group. The 2 ads will alternate and after a few dozen people clicking on your ad, you’ll know which one generates a higher Click-Thru Rate (the number of people who click on your ad/the number of people who see your ad). A high click-thru rate is very important because the higher percentage of people who click on your ad the cheaper your marketing will be. Part of Google’s formula for determining your cost-per-click is to include your Click-Thru Rate. For instance if your ad has a click-thru rate of 1% and you pay $2/click, your competitor with a click-thru rate of .5% will have to pay $4/click. Google does this because they want to offer the most relevant content so the more people who like your ad the more relevant they consider your content. Your goal is not more impressions. It’s more clicks with less impressions.

Mimic the keywords in your ad - This simply means that your ad must answer the question to the search someone typed in. For instance, if you’re selling clothing for dogs, and you purchased a keyword for “Dog Sweaters”, your ad better have the words “Dog Sweaters” in it somewhere. If you also bought the keyword for “dog collars” you better show a completely different ad touting “dog collars”. In Google Adwords there is an organizational hierarchy that includes a few pieces:

1. Your account
2. Campaigns – for budget, language, and territory restrictions
3. Ad Groups – primarily for grouping similar keywords
4. Ads – to split-test 2 ads against each other

Your account can have multiple campaigns, campaigns can have multiple ad groups, and each ad group can have multiple ads. For each set of similar keywords, you’ll have a single Ad Group. For instance the following keywords may all be in one Ad Group: “dog collar”, “dog collars’, “decorative dog collars”, “fashionable dog collars”, “unique dog collars”. Keep in mind that Ad Groups will have 2 ads to split-test headlines, promotions, benefits, domain names, or features. You will then create another Ad Group for your keywords related to: “dog sweaters”, “dog sweater”, “pink dog sweaters”. Again, each group of similar keywords requires its own Ad Group with 2 ads competing for the highest click-thru rate.

Direct them to a page that answers their search - People search for answers so whatever you do, don’t direct your traffic to your home page. If they search for “dog sweaters” then send them to the page that talks about your high-quality dog sweaters. Don’t send them to your home page which they now have to take time to navigate to find more information on dog sweaters. In your hiearchy, this will be done at the Ad Groups level. Both ads that you’re split testing within an Ad Group should point to the same page on your website. If you need a different Ad Group to answer the customers’ search, you need a different landing page on your website.

Use broad-match, exact-match, exact-term and negative keywords – Your main reason for doing this is to only show your ads to people who are actually interested in what you have to offer. This will in turn drive down your cost-per-click and improve your click-thru rates. Let’s look at each one:

1. Broad-Match – (simply type the keyword to make it broad-match) if anywhere in a search your words are found, your ad will be displayed. So, for instance, if someone searches for: why do people put stupid sweaters on their dogs? Your broad-match keyword for dog sweaters will display your ad. Now do you think the person who typed in that search is going to click on your ad or have any interest in your product??? Of course not. But he will drive your cost-per click up because he just saw your ad and didn’t click on it.
2. Term-Match – (put brackets around your [keyword] to make it term-match) this means that your ad will ONLY be displayed when that exact search is typed in. If your term-match keyword is [dog sweaters], the only time someone will see your ad is if they type in dog sweaters exactly as you have it in the brackets. Generally you can get lower costs-per click and higher click-thru rates with these type of keywords because you can target your ad to answer a very specific question.
3. Phrase-Match – (put quotes around your “keyword” to make it phrase-match) this means that your ad will be displayed in any search where your exact phrase is found. If your phrase-match keyword is “dog sweaters” then your ad would be displayed if someone searches for: sign a petition to ban dog sweaters. Again, not a likely customer for your business.
4. Negative-Match – (put a negative sign before your -keyword to make it negative) This is where you can really optimize your campaign to target just the people interested in your products. In the examples above for broad-match and phrase-match if -ban and -stupid were negative keywords, your ad would not have been displayed. Now there are potentially millions of keywords that could be negative so how do you determine which ones to add to your group? You use the free keyword tool we talked about in my last blog to determine the most common phrases people are searching related to each of your keywords. Simply type your keyword dog sweaters into wordtracker’s search tool and add negative keywords to your Adwords campaign for every search that doesn’t sound like a likely customer. For instance the second most popular search including the term dog sweaters is dog sweaters pattern. If you don’t sell dog sweater patterns you’d add -pattern as a negative keyword.

Track your results – This is the easiest one because Google provides you with all of the reports and graphs that you need. For the most part you only need to look at your click-thru rates for each keyword, each ad group and each ad. You look at click-thru rate for:

1. Each keyword to determine if your ad is catching the attention of people searching for that word.
2. Each ad group to determine if that overall group of keywords is adequately being addressed by your ads or if you need to break up your keywords into smaller more specific Ad Groups.
3. Each ad to determine which one had the higher click-thru rate in your split-test so you know which one to keep and which one to ditch for a better one.

Though learning and implementing all of these tactics in your Google Adwords campaign isn’t overly complex, it certainly takes some time and effort. After you’ve setup a few, you can easily go from nothing to a new account, campaign, half-dozen ad groups and dozen ads in half an hour. Make the effort to learn these rules and your business will improve.

To your Google Adwords success, Bryan

In my last blog we first reviewed the 3 pieces of your small business’ online presence:

1. Traffic
2. Website
3. Commitment

We then reviewed the 3 primary ways to get Traffic and of course reviewed a video explaining some basics of Viral Marketing for Small Business:

1. Search Engines
2. Online Ads
3. Viral Marketing

This time around we’re going to take a closer look at search engines and, in particular, optimizing your website for search engines (search engine optimization) so that your website pops up as the answer to searches.

As with everything in life, there are dozens and dozens of things you can do to improve your business, cut expenses, increase profits, grow sales, and even optimize your website for a search engine. However, the 80/20 rule applies in this situation, just as in all the others, so we’ll just look at the top 4 things that will generate the most results.

1. Title Tags – The title of your webpage that shows in the top left-hand title bar of your web browser.
2. Keyword Density – The percent of times the keywords you’re optimizing for show in relation to all of the words on your page.
3. Easily crawled and indexed – Using Google Webmaster Tools to make sure your site is indexed and crawled.
4. Incoming Links – Google’s goal is to provide relevant content. So they theorize that the more people who link to your website, the better the content must be and so they give you better results on searches.

In the video I referenced:

Free Keyword Suggestion Tool on Wordtracker
Google Webmaster Tools
Merchant Circle
Google Local

To you search engine optimizing success, Bryan

You have a small business, you don’t sell anything online, but you realize that whether you sell something directly online or not, most people are still searching the internet to learn about your business and what you have to offer.

Beyond that, you’ve heard a bit about Viral Marketing, Google Adwords, Facebook, Myspace, Digg, Twitter, Youtube, and have even heard that businesses are somehow doing free marketing with these online tools. But how can your small business benefit from this latest method for getting in contact with your customers?

As you know, I own a small business with the average ticket price for a sale in excess of a few thousand dollars. My business requires an onsite inspection and analysis of a prospect’s home prior to completing a transaction. So my business doesn’t allow for a direct internet sales approach at this point and quite frankly, that’s part of our Niche. We take the time to learn what you need because we’re the experts and you shouldn’t have to be.

So let’s break down how the internet can help small businesses by looking at the 3 pieces to an online presence.

1. Traffic – You need to get people to your website.
2. Website – This tells your story and prompts people to take the next step… Whatever that might be.
3. Commitment – This is the next step. Whether it’s committing to buy a product, contacting your for more information, or to schedule an appointment, as is the goal with my business, this is the most important piece. Another smaller commitment would be to simply capture a name and email address to keep them up-to-date on products, services, news, and even specials.

Traffic

For this blog, we’re just going to focus on getting traffic to your website and there are basically 3 ways to do that:

1. Organic Search – In other words people type in a search for a product and your business appears. This is often called SEO or Search Engine Optimization or Organic traffic. That simply means that your website is designed to answer the questions that people are asking. That brings up the question, so what are people asking? Well a great tool to use for optimizing your website to find out what are the most popular searches is located at freekeywords.wordtracker.com.
2. Online Ads – This is where you have to pay someone else to drive traffic to your website. The most popular way to do this is SEM or Search Engine Marketing. Whether you’re doing Google Adwords, Facebook advertising or the Microsoft Network, you’re paying someone to bring more visitors to your site.
3. Viral Marketing – This is your free marketing that has the power to expand itself. Well this can be a tricky one because there are so many ways and pieces to viral marketing these days… The video below will explain this key aspect to online marketing in a bit more detail

In my video I referenced the following tools:

Google Adwords – To buy keywords to market your website. This is paid traffic.

Twitter – Mircoblog (every post has to be 140 characters or less) to keep your followers up-to-date on the latest things going on at your business.

My Facebook Fan Page – Promote your business to all of your friends on Facebook… And all of their friends…

Youtube – Create your own videos to integrate with your content and to provide another way for people to find you online.

Digg – Submit a blog or article for people to “digg” if they like it to push up your blog or site’s popularity.

Reddit – Same concept as Digg above.

Shareit – Share your shareware software programs with the world.

Del.ico.us – Social bookmarking site that allows you to keep track of all of your bookmarks no matter what website your on. It also provides you lists of the most bookmarked sites to help users determine the best content.

Stumlbeupon – Helps you better navigate the web by you telling Stumbleupon what topics interest you and then others will “stumble” articles and blogs in those topics to provide the best content based on the number of “stumbles”.

To your internet marketing success, Bryan

Adam Penenberg’s book, Viral Loop: From Facebook to Twitter, How Today’s Smartest Businesses Grow Themselves, is addictive. That’s quite ironic considering the content so maybe he even designed it that way.

In my last blog, I wrote about the amazing valuations that companies with little to no revenue and often huge losses can achieve. The mantra was more about getting big (meaning getting a lot of customers not necessarily profits) and getting bought up. It’s happened dozens of times with businesses ranging from Facebook (valued at $15 billion thanks to Microsoft) to Twitter (who still has no source of income) to Bebo.com (which sold for $850 million) to Myspace (which sold for $508 million) to…. Well you get the point. Companies got real big, real quick with no marketing. But how did they do it???

Well Penenberg focuses this growth on businesses achieving a Viral Coefficient above 1.0. That simply means that for every person who signs up for your website or service, they influence at least one other person to also become a customer of yours.

Let’s say for every person who signs up for your new social networking site, they invite (on average) 20 of their friends to also join. Out of those 20 people who are invited, if  one person signs up (i.e. 1 out of 20) the viral coefficient is 1 (20*.05) and so the product is considered to be viral and therefore will experience exponential growth. If instead, 2 out of those 20 signed up, the viral coefficient would 2 and the growth would be ridiculous.

Table illustrating the power of viral marketing for viral coefficients of .8, 1.0, and 1.2 when starting with 10 initial users.

If we consider that it takes 1 day for a current customer to bring you another customer, after 20 days, you’d have 50 customers with a coefficient of .8, 210 customers with a viral coefficient of 1.0, and an astounding 2250 customers with a viral coefficient of 1.2! Some people might suggest that 1 day is a very short time frame and for some businesses it is indeed short, however when Mark Zuckerberg launched TheFacebook.Com at Harvard University with no marketing just by telling friends, he had 1200 people sign up within 24 hours! Within 24 hours of HotorNot.com launching their website (again with no formal marketing) they had 100,000 visitors. Adam Penenberg’s book goes through the numbers of many more of the businesses that I’ve mentioned above so I’m hoping you can start to see the amazing growth potential of businesses that can become viral.

So what does it take to become a viral business?

Well Penenberg’s book addresses this a bit, however he never really provided a precise formula simply because the way Facebook or HotorNot grew was not the same as Hotmail, or even Tupperware. That being said, he pointed out, and I’ll expand on some items that were similar in his viral businesses.

1. It has to be something people REALLY want. – How do you know people really want it? Because they’ll pass it along to their friends without being asked to do so. Another way things can automatically get passed along would be how Hotmail put a tag at the bottom of all of their emails that said “Sign up for your free Hotmail account.” Obviously they’ve changed it to rotate marketing about Windows 7 now.
2. It has to be simple. – Becoming a customer or user has to be quick and easy. The more steps or pages or data to fill out and the fewer people will join. That was obviously the beauty of HotorNot and Twitter. Even Ebay and Paypal make pretty quick work of buying and selling online.
3. There has to be an incentive for people to spread the word. – At first it sounds like this may counter my first point, however that’s not the case…  An incentive can simply be “if all of my friends are on it, this <product>” will be so much better for me. Think of MCI’s Friends and Family plan for instance. I just bought some pants from Bonobos.com and for everyone I refer they give me a $50 credit. Obviously I racked my brain to think of people who might enjoy some high-quality pants.
4. It has to be easy to spread the word. – Businesses like RockYou and Slide popped up literally overnight because of the viral design of Myspace and Facebook. Myspace and Facebook themselves even make finding and inviting new friends easy by accessing your email addresses from Yahoo, Gmail, Aol, and Hotmail. The easier it is for people to tell their friends, the more people will tell their friends.
5. You have to be the first one to achieve critical mass for your market. – There are dozens of examples of this from Hotmail to Ebay to Facebook however let’s just look at Paypal for now. Paypal was the first to market and adhered to all the steps above including allowing you to send money to people without a Paypal account (which was simply a way to get new people to sign up). With their viral hooks built-in, they became extremely popular on Ebay in short order. However, Ebay (along with several other companies) wanted their own payment processing company and they even partnered up with Citi Bank to make it happen. They made rule changes to their online listings so that their payment system would show prominently for every item and Paypal’s logo would be pushed to the bottom of the listing. But they did it all too late. They spent millions to make their payment processing company work. Ebay even considered (threatened) banning Paypal altogether. Eventually they decided to just buy Paypal which at the time was privately owned. Unfortunately they didn’t think it was worth the $1 billion dollar asking price and so they let Paypal go public and a few months later were forced to buy the public company for $1.5 billion. You think you had a bad year, at least you didn’t make a half billion dollar mistake (at least I hope you didn’t).

As you know, I own a small “brick-and-mortar” business. Less than 1% of our business currently originates on the internet and my business has a designated service territory so my market is limited. That certainly is a much different playing field than all of the businesses in Penenberg’s book and quite realistically only a tiny fraction of businesses in the world will ever fall into that realm. So for the rest of us in the real world, how can Viral Marketing make a difference to us? Well, understanding the power of a viral business where you develop systems and programs to encourage every single new customer to bring at least one other new customer with them is the key. In the small business world we call this developing referrals. It’s a powerful (and cheap) way to grow any business so I look forward to addressing some ways to do that in the future.

To your viral success, Bryan

As I’m reading Adam Penenberg’s book Viral Loop: From Facebook to Twitter, How Today’s Smartest Businesses Grow Themselves, 2 main themes have caught my attention. Firstly, the power and consistency of creating a viral loop for your business. Secondly, though the item I’m blogging about first, is how differently businesses can be valued.

I’ve written regularly about valuing small businesses based on the mantra “it’s all about profits”, and yet have learned of dozen’s of businesses worth hundreds of millions to billions of dollars with little to no profits to back that up. Penenberg references HotorNot, Hotmail, Paypal, Ebay, Bebo (even though they didn’t use their venture capital money), Myspace, Facebook, BirthdayAlarm, Netscape, Ning, Twitter and others that almost universally had substantial losses each month when venture capitalists started investing millions or 10’s of millions of dollars into these businesses. A good friend of mine, and MBA student, had argued with me many times that business is all about getting customers. I always countered that you can have a million customers but if you lose $1/month on each one, that’s not a good business. It seems, however, that both of us weren’t looking at the entire scope of business.

So when we value businesses, there are basically 3 primary groupings to consider:

1. Small, closely-held businesses (which is what I most often write about)
2. Internet Businesses
3. Public Companies

In small, closely-held businesses, I am right. It’s all about profits and your business should be valued on that. If you’re buying one of theses businesses and it has a loss, you may just want to offer to take it off of the seller’s hands for them so they don’t continue to incur the losses. These are your every day “main-street” (pardon the cliche’) businesses that you find for sale on Bizbuysell.com and other websites. Theses businesses are generally your first step toward wealth creation.

Internet Businesses open up an entirely other ball of wax. These businesses rarely have any income and certainly no profits early on in their life-cycle, however manage to attract anywhere from hundreds of thousands to hundreds of millions of dollars in investment capital before turning a profit. Does that mean it’s not about profits for these businesses and that’s not their top goal? Of course not. That’s just crazy talk. The difference is simply this. These investors appreciate that their is profit potential when you’ve captured the daily attention of hundreds of thousands or millions of internet users. One particular story that caught my attention was the start of Hotmail. Initially Hotmail had no users, no website (didn’t even have the hotmail.com domain name) but they had an idea and managed to raise $300,000 for a 15% stake in a company with no customers or income or profits, in return for being the first company to come to market with webmail. About 2 years later, that initial $300,000 investment from the venture capital firm was turned into $60 million dollars as Hotmail was sold to Microsoft for $400 million dollars. Without going into the details, the power of a viral business model made this all possible. So our question is, how did the venture capital firm decide that a 15% stake in JavaSoft (which eventually became Hotmail) was worth $300,000? Negotiating. The only thing JavaSoft had was an idea. Through negotiating they decided the idea was worth $2 million and so 15% was worth $300,000. For the dozen’s of businesses I’ve mentioned above that have followed a similar trajectory, obviously there are hundreds that failed. Beyond that, Microsoft, has certainly profited far more than their original $400 million investment in Hotmail in the last 10 years so don’t ever lose site of the importance of profits.

Public Companies can potentially bring another set of rules. Firstly, you can’t buy a public company for less than it’s stock is worth. In other words, if a stock is trading for $10 and there are 100,000 outstanding shares, the business is worth $1 million dollars ($10 x 100,000) and you can’t pay less for it. In theory, the company’s stock price should be based on it’s profits (generally called earnings) however many public companies have price to earnings values ranging from 5:1 to 50:1 or higher. This simply means that the business is “worth” anywhere from 5 to 50 times more than its profits. If a business is currently losing money, it’s price to earnings ratio effectively doesn’t exist. So, for instance, if the business above had $100,000 in profits, it’s PE or Price to Earnings ratio would be $1,000,000 to $100,000 or 10:1. Make sense? So the natural question is, what determines a business’ stock price? And the answer to a great degree is the same as with an Internet Business. It’s based a lot on speculation. More specifically, if a bunch of people think a business is a great business, and so buy a lot of stock, the price of that stock will go up regardless of whether the business has profits or not. In theory, over the long-term the stock price will match the actual value of the company which is how guys like Warren Buffet have made billions investing in companies that are undervalued.

So what does this mean to us? If you have no profits but can convince a bunch of people you have a great business anyway, you can make a lot of money.

The reality is actually, if you can convince buyers, venture capitalists, or investors that your unprofitable business has the potential to return remarkable profits in the future, you may just be able to throw EBIDTA out the window and value your business on whatever feels right at the  moment. In other words, no matter where or what your business is, your business is worth whatever you can convince someone to pay for it.

To your success, Bryan

P.S. If you’re looking for a real-life argument between a small business “profit is king” entrepreneur and a “customers are king” large business builder, check out Perry Marshall’s blog.

Have you ever hit a game-winning shot, scored the game-winning goal, or converted the game-winning touchdown?

How about setting a new Personal Record for swimming, running, biking, car, quad, or motorcycle racing while taking first place?

It feels good, doesn’t it? As a matter of fact, there are few things in life that will ever rival those feelings of accomplishment and the adrenaline rush that ensues. For the rest of your life, those moments will be remembered and often relived as you just love to tell those stories. Athletics have the power to evoke such an amazing feeling because they bring together a few main things in one place:

1. Competition – No one is letting you win or succeed. Actually there are plenty of people hoping you fail so that they can win instead.
2. Recognition – When you have the ball, or the wheel, or are on the track, it’s up to you. All eyes are on you whether it’s because you’re doing well or failing. When you succeed, they’re all cheering for you!
3. Public Pressure – You are not behind closed doors. As I pointed out in my blog asking Are you putting yourself out there for criticism? public pressure forces us to be good or embarrass ourselves trying.
4. It’s not easy – By definition, if everyone could (or even wanted to do it) there would be no competition. You worked hard to acquire the skills and talents you have, that brought you to that moment of victory. In other words, you’re doing something you are good at.
5. Exclusivity – You’re in front. Everyone else is behind you. Only 1 person can be in that position.

So what does that have to do with employee motivation and business building? Everything. If you can understand and appreciate that feeling and those emotions, you understand what motivates people.

Though I used sports as an analogy there are parallels to this feeling of accomplishment throughout our lives. Here are just a few other ones so you can see the universal appeal of accomplishment:

1. Getting the girl (or guy) – Especially if you had to take a risk to do so by approaching a stranger and your buddies were watching.
2. Closing the sale – Especially if you’re paid on commission and you’re in competition with either yourself to do better or to be the best in your group.
3. Buying a house or car or something of great value – Generally this provides a major sense of accomplishment as not everyone has the ability to do this (except for a few years during the mid 2000’s when anyone could get financed).
4. Winning a competitive bid – You proved that you are the best and it felt good.
5. Making a profitable stock transaction – You bought low, sold high, beat the market odds and beat all the “experts” while doing it.
6. Getting recruited – Instead of being “hired”, someone actively and aggressively sought you out because of your talents.

The list can go on and on… My underlying point is simply this – If you, as a leader and manager, can find a way to bring Competition, Recognition, Publicity, Exclusivity and a Challenge to your business, most people will rise to the occasion and LOVE their jobs because of it.

If you can remember back to those 2 hour practices, or twice a day camps in the summer (3 runs/day at cross-country camp), it was not always easy, fun, or painless. As a matter of fact, the majority of the time it wasn’t fun at all. However, human beings are generally willing to sacrifice and struggle through all of those obstacles because the rewards of success, particularly the feelings that come along with it, are worth it.

Again, though I use sports as my analogy, this lesson certainly isn’t limited to the sports arena so don’t let that prevent you from getting the point.

The other day in my office, I started to ask some of my team about their experiences with sports. Even the ones who “sat the bench” understood what I meant by that great feeling of accomplishment at hitting the game-winning home-run. Ironically, the one who admitted to being the bench-warmer instantly latched on to our current inter-office competition. Every day she gets so excited about it she tells me about every single customer she signs up for this program and then “trash-talks” me for not getting as many as her. She’ll even walk into my office to receive a high-five to commemorate her latest score. Talk about fun and excitement at work! What may be most impressive, is that for all intents and purposes, her job is “secretarial.” Something most of us would never consider to be competitive or exciting.

Let’s take this concept one step further. According to Marcus Buckingham in his book “First, Break All the Rules: What the World’s Greatest Managers Do Differently,” the primary motivator for most people at their job is not how much they make. The primary reason for someone leaving or staying at a job is their relationship with their direct superior (remember that coach you hated or loved?). Take a moment and recall some of your favorite stories about your life. How many of those were directly related to your income at that time? Even your stories of accomplishment at work are rarely simply “I got a raise.” The accomplishments you made to get that raise are what makes for a great story and the true sense of accomplishment. The raise was simply the reward (i.e. winning the game) for showcasing your talents.

So to take this concept full-circle, compensation should be tied to these competitions and other measures of success. This is why I’m not a fan of an hourly wage. An hourly wage does not incorporate a single one of the 5 items that motivate people to make sacrifices for success. Admittedly, several of my team members are at least partially compensated hourly. The biggest problem with this is obviously that it breeds complacency. Once you’re used to getting that $10/hour, you are no longer motivated to keep working hard to get it. It’s a given; it’s guaranteed; all you have to do is show up.  What kind of motivator is that???

Great coaches, great leaders, and great managers find ways to motivate their team members to do their best by rewarding them for their talents.

To your “motivational” success, Bryan

P.S. Since you’re the coach of your team, make sure your competitions and motivators encourage both individual and team performance. ER9Y2V4W6YK5

There are 3 reasons to build recurring revenue to fix your business:

1. It can generate immediate cash.
2. It will generate consistent cash over time.
3. It will increase the value of your business if you’re looking to sell.

Since your business is struggling, building recurring revenue by offering payment plans for your equipment and services is not what we’re focusing on right now. At the moment, we need to generate cash today with little up-front investment, which I covered in detail in my blog on this topic. For that reason I won’t spend any more time on it again. Since August 2009, my business has created an additional $314/month in recurring revenue. That doesn’t sound like a lot (and it certainly isn’t considering our potential), however we’re just starting this program, everyone is still learning how to sell it, and our up-front costs, for a predictable $3768/year, are very close to nothing. Our goal is to have $500/month by 2010 and $3000/month by 2011.

In reality, the idea behind building recurring revenue and improving your sales and marketing is the same. Your goal at these last 2 steps is to develop a way to create consistent cashflow. Whether that means you need to sell something new to your customer again and again, or you need to bring in new customers regularly, a great sales and marketing system will generate predictable income for your business. I would venture to suggest that if you had a sales system in place during boom times, you wouldn’t have nearly the problems you do now in a slow economy.

So let’s summarize once again what it takes to fix any business in trouble (and though I write passionately for small businesses, nearly everything can be applied to Fortune 500 companies):

1. Change yourself - By making a commitment to do so, particularly by working ON your business instead of IN it, and making by making lists.
2. Know your numbers – If you don’t know where you are, you have know idea where your problems lie and can’t develop a plan of attack to fix them.
3. Cut Costs – As drastically as necessary based on your current circumstances.
4. Improve Efficiency and Productivity – Since your business is not doing well, your profit per person is obviously lower than it needs to be for you to succeed.
5. Improve Marketing and Sales – Though this is number 5, you need to work on it along with the rest to make sure you always have money coming in.
6. Build Recurring Revenue – Make this a priority. It can help you through the next tough time.

Several times I’ve mentioned the importance of lists, systems, and procedures. These items are not just for your team members, they’re for you (and me). You need your checklist to fix the weak links in your business systematically without losing focus. You also need a daily schedule to block off your time for each of the 6 items above. You literally need to block off time for each one without any phone calls, emails, door knocks or other interruptions.

My final bit of advice is 3-part:

1. Steal the best ideas you can. This can be from your competitors, other similar business, businesses you see on TV, from reading books, asking people who are doing well, taking classes, or almost any other business related source. Granted, there are a lot of people who don’t provide much “meat and potatoes” advice, however when you find a source that does, learn as much as you can. As I like to say, “It’s always better to learn from others’ successes than your own mistakes.”
2. Apply the pareto principle. 20% of what I’ve covered in the last 5 blogs will give you 80% of the results. The trick is determining which 20%, right? Well if you know your numbers this isn’t that tricky. Your numbers will tell you where you have the greatest potential for improvement. This is how you will prioritize everything.
3. Know when to cut your losses and move on. If you’ve legitimately done almost everything we’ve reviewed over the last 5 blogs and you’re seeing little to no improvement, you need to move on. Don’t be the guy who holds onto GM’s stock thinking “they’ll never go bankrupt.” Salvage what you can and sell either the whole business or the assets and move to the next project. No amount of money can ever buy you more time, so if your time isn’t being invested in a business that’s moving forward and making your life better, you need to get out of that business.

In less than 5,000 words we’ve reviewed literally dozens of directly applicable things you can work on today to improve your business. Take action and make the improvements.

To your success, Bryan

P.S. If you’re looking for a business to buy, find one that does very few of the things reviewed in the last 5 blogs yet is still making money.