Doug Richard's School for Startups » starting a business

Never Let Someone Else Write Your Business Plan

Nancy Fulton Mazur — Tue, 27 Jul 2010 09:30:27 +0000

One of the benefits many angel networks tout is the ability to produce a business plan that investors will fund. This “service” preys upon the insecurity every entrepreneur feels when they seek funding the first time out. Costs range from a few hundred pounds to tens of thousands, and success is never guaranteed. If you go to someone for funding and they offer to rewrite your business plan for a fee, you should walk away.

Letting someone else write your business plan is almost always unnecessary and almost certainly unwise:

Generally speaking you really shouldn’t be out seeking investment until you have a solid business model, some customers or pre-orders, some products or detailed specifications and working prototypes. You should probably also have a good team working with you. If you have these things writing a business plan takes a few days or a couple of weeks. Without these things, you don’t know for sure that you have a working business and you will have a very hard time proving to investors that you do. This will delay funding for a long time. If you can’t even write a business plan, funding will be a real problem.
On the off chance you do convince an investor to put money into your business, he will tend to see your business plan as a kind of blueprint for how you’re going to run your business. If you see it as merely a convenient fiction to get his money, there’s likely to be some big trouble down the road. Since you probably don’t want a stranger creating a blueprint for your business you’ll have to abide by, you probably don’t want to have a stranger writing your business plan.
Good businesses are composed of teams. In every business there’s someone who sells, someone who counts, someone who produces. Usually one of those people writes as well. Why? Because every business needs someone to create pitches, draft letters, deal with company billing and legal matters. A writer is required. And almost no business that needs outside funding can survive without one. So, if you can’t write your business plan because you don’t have an effective writer in house, go find one to add to your team as a consultant or as an employee. They aren’t that expensive.
Writing a business plan isn’t that difficult. There are hundreds of templates around, and hundreds of others have been written that you can examine for reference. Once you’ve written it, you can hire an editor to help you clean it up so its easy to read and makes logical sense. The plan will be yours, the words will be yours, but you’ll simply have worked with an expert in grammar and formatting to put your best foot forward.

The key thing is that someone who is supposed to be helping you raise money should probably not charge you for giving you advice on your business plan.

They should either not work with you because your business isn’t ready for investment, or they should give you the advice free because they like your business so much that they are confident a slightly revised business plan is all they need to get the money your enterprise requires. A company that purports to raise money from investors, but charges to rewrite business plans and help you with creating pitches, is really making it’s money by providing services not by raising investment for people.

After you write your business plan yourself, you can find people to help you edit it at www.elance.com. There are many very cost effective professional writers and editors on the site for you to choose from. You’ll find you can have the services you need without getting scammed.

Measuring the Metrics That Matter

Nancy Fulton Mazur — Thu, 22 Jul 2010 07:45:43 +0000

As part of the overarching activity of running a business, an entrepreneur and his team usually create thousands of little assignments for themselves.

They:

Write blogs to generate traffic to their web site
Place ads on the website so people can see what is for sale
Create product and service descriptions on their site
Create Buy Now buttons that link to a place people can enter credit card information
Post links to articles on LinkedIn, Facebook, Reddit, etc
Tweet links to products, services and blogs to friends, family and business associates
Go to conferences to learn how to create better products
Etc, etc, etc.

These daily assignments, often made up on the fly without much thought, are executed day in and day out month after month, year after year.

A Less Painful and Dangerous Way to Run Your Business

While a new business may need to flounder around a bit and try new things in order to get on its feet, once it starts to acquire customers and generate revenue, it needs to take a less intuitive approach to running itself. If it doesn’t, it will tend to have very high costs and relatively low revenue. This is dangerous because it never gets strong enough to weather normal economic setbacks.

If you were to make a list of the 100 things you and those who work with you spend most of your time doing, you would likely discover that more than 90% of the tasks you undertake have no proven economic value. You think they help generate money, but you can’t prove it.

Don’t believe this describes your business?

Take a moment to look back over the last six months of revenue. Look at all the income that came in. What activities led most directly to that revenue generation? I bet those activities take up only about 10%-20% of your time. How would your revenue picture change if you spend 80% of your time doing just those activities and dropped everything else?

Count the Metrics that Matter

In your business, you have to count the metric that matters. For most small businesses, it is revenue generated. Not customers, not blog readers, not products produced, not services rendered. It is the amount of money that flows into the business through activities the business undertakes.

If you could get money without customers, without blog readers, without products or services, that would be great.

Generally you’ll find this impossible.

For example, you usually need the number of customers to go up for revenue to go up . . . but you may not have to increase the number of blog readers, blogs, ads, website traffic, number of products you generate or services you offer. If increasing those metrics doesn’t measurably improve your revenue, why increase them?

What you count, goes up.

Make sure your business doesn’t measure its success in hits and bounces, in clicks and links but in cash. Because otherwise you and your associates are almost certainly wasting most of your time on stuff that doesn’t make you money.

The Insanity of Angel Investors

Doug Richard — Mon, 19 Jul 2010 08:45:05 +0000

The first outside money an entrepreneur gets usually comes from friends and friends of friends. Why? Because they know the entrepreneur personally and they know where he lives. They are the father that buys a company a new computer system for video editing, the sister who gives a new developer enough to buy an IPAD, the long lost uncle who comes up with the first fifty thousand pounds for a new hair salon. These first investors are crazy enough to take a risk on a business with no assets, no income, no customers, and no provable business model. Properly put, your first “investments” should usually be called gifts.

After that first money in, your next request for money will probably go to an “angel investor”. They come in when your business needs a few hundred thousand pounds to a million pounds to grow. By the time you approach angels, you usually have something to show for yourself. Maybe it’s a patent. Maybe it’s a few customers. Maybe its a few extra dollars in income every month. Maybe you just have a great team and a great business plan. The important thing is that you can demonstrate you’re ready to launch what lots of people think will be a properly profitable business.

As you begin to approach angel investors, you need to know one thing about them. They are crazy. You need to know this so they don’t drive you crazy too.

Here’s a quick overview of just how and why most angel investors are insane.

Angel investors are often entrepreneurs in their own right, and often they believe this gives them the expertise to run your business as well as they ran theirs. They are mostly right, but the devil in any business is in the details. Rules like “keep fixed costs down” are pretty universal. But the economics of the publishing industry are nothing like the economics of making aluminum cans. Angels understand this truth in the context of their own businesses, but not when it comes to discussing the merits of yours. This means they will often give you stupid advice based on complete ignorance and they’ll be cross when you don’t take it. Sometimes they’ll be right, and you should always hear them out, but don’t assume their advice has value just because they made money in some other business that’s nothing like yours.
Angel Investors often invest in industries they are not intimately familiar with. Why? Because if they wanted to invest in the kind of business they know how to run, they already have that kind of business. Investing money in your business is part of their “diversification strategy”. If you are very lucky, your investor will know your industry, and will have a rolodex that can bring you customers as well as cash. If you meet that kind of investor, take their advice, and take their cash and connections as well. Give them a good return on investment so they’ll work with you again.
Angel investors don’t believe in you either. If you’re so clever, why do you need their money to achieve your business objectives? How do they know things will work out as you’ve described? They don’t. They’re taking a risk on you. The majority of investment decisions they make are mistakes. This means if they invest in ten businesses, seven or eight will not generate a profit. That means you have to promise them a return that will pay for those mistakes. If you are offering them a 5% return on investment, they’ll laugh themselves sick. They usually want something closer to 30% compounded annually which is a bar very few businesses can hit.
Angel investors almost always look for investments at the top of their range. Like most of us, when they go shopping they decide how much they can afford to spend and that is how much they spend. So if an investor has five million pounds to invest, and you only need one million pounds, he’s probably not going to be interested, even if you can almost guarantee a great return on investment in a credible way. Why? He’s looking for a “larger opportunity” even if it is not a better one. Always start investment conversations with Angels with a question about the size of their “usual” investment. Work as hard as you can to tell them that’s how much you want.
Angel investors care more about the opinions of other investors than they do about the opinion of you, your experts or anything except your paying customers. Why? Because angels often invest in groups in order to reduce individual risk. So if they can’t get another investor to take part of their “action” with you, they feel like they are making an investment they’ll have to shoulder alone. That makes them nervous. Furthermore, they often owe one another favors. Two investors rarely have a very strong liking for exactly the same business, so one is always going along with the investment choice of another and they often take turns choosing opportunities. This means you can be hosed by coming along at the wrong time.
Not all angel investors have money and they won’t tell you when they don’t. Why? If they are in any kind of a network, when they run out of money they need to get more investors to join in order to continue making investments. This is harder to do if people know they don’t have any cash to invest. So, this means Angels may make up reasons why they can’t or won’t invest in your business and if you take them to heart the bad information will harm you. If you can’t determine, for a fact, that an angel has money to invest in your business, you might do well to assume they don’t.
The valuation of your business really doesn’t matter to Angel investors as much as the terms of the investment do. This is completely counter intuitive, but if you think for a moment, it makes sense. Whatever your business is currently worth, their investment, if successful, is going to make it worth more. The purpose of the investment is to increase the business’s income. Once the increased income arrives, investors want to know that income will be going to them or back into the business to scale it’s value. They care about those details because they care about your future income and your future value. Your present value is academic and uninteresting.
Almost all deals with angel investors fall through before completion. You’ll be happier negotiating with angels if you assume any given deal will fall through, but one sometime in the next five years, will work.
Angels will almost never admit they aren’t going to invest in your enterprise. They will waste your time instead. Why? Because it’s barely possible you’re worth investing in. So, if you bring them a business and tell them you’re expecting a big contract next month, they’ll decide to wait to see if that comes through. If you tell them nothing new is on the horizon, they’ll say your business is stagnant. Delay always favors the angel investor, so they will seek to delay an investment decision as long as possible.
Angels who don’t know each other will collude against you. Negotiation of terms for an angel investment start the second you meet. Remember that angel investors are not friends, they are not family, they are not mentors or bosses. They always have their own interests at heart. That means if you tell one investor that another is interested, they will call one another. If they decide to invest as a team it will be for less money at worse terms. Why? Because that best serves their economic interests. Never tell one investor the name of another investor or the terms being offered. You don’t owe them that and it weakens your position and reduces your value to them.

Having described all these common flaws, it is worth noting that Angel investors can and should be the best friend your business ever had.

The best Angels help the businesses they invest in immeasurably. They recognize good teams when they see them. They offer mentoring, advice, encouragement and occasionally a harsh word that keeps an entrepreneur focused, effective and motivated. Good angels are few and far between, but they are entirely worth looking for.

Every angel, like every entrepreneur, will have their own weaknesses, misconceptions and moments of irrationality, but like good entrepreneurs they will be able to surmount those on the way to building a strong business.

Entrepreneurs Teaching Entrepreneurship

Nancy Fulton Mazur — Fri, 16 Jul 2010 09:47:53 +0000

Doug’s habit of hiring entrepreneurs to teach entrepreneurship often to leads to a bit of extra-curricular excitement here at School for Startups.

A film I made last year was just made an official selection by the Action on Film festival happening in Pasadena California this month. Next week I find out if I made an award winning political film.
Triona is currently a finalist in ‘The Challenge 2010’, a competition run by Australian Business & Qantas. She’s a member of Team Two, competing against two other teams to produce the most outstanding networking event for young professionals here in London. It’s going to be a pretty spectacular event with food, drink and great company. If you happen to be in London, and you’re looking for a great event to hang out at, we obviously recommend this one thefutureleadersfete.wordpress.com. You can buy your ticket’s here http://www.australianbusiness.co.uk/eventdetail.aspx?eid=28.
Kaja is studying Economics and Business at University College London. This is her final year, and she just set up a sole trader business to provide some research services for an international media firm.
Mark Boyd, who has just this weekend graduated from Robert Gordon University in Aberdeen, is receiving a first class honours degree in Marketing. While at university, Mark mastered affiliate marketing, search engine optimisation, pay per click marketing and social media optimisation and managed affiliate marketing campaigns for the likes of Sky, LoveFilm, Betfair, Amazon UK and Hotels.com. He was recently added to the affiliate marketing experts at AffiliateDoctors.com. Mark details some tips and tricks in digital marketing at his affiliate marketing blog.
Alex Webb, who has been coaching in the UK and internationally for more than a decade, is about to run a 1 week summer netball camp for 10 – 14 year olds in Bermuda in concert with two UK coaches and with the help of 5 Bermuda coaches. You can learn more about her on www.springcoaching.co.uk.
Vanessa Knight, until recently, worked as a sole proprietor building commercial websites for artists and designers, and also owned an incorporated company, called 100% Creative, which sold graduate art and design works online. She recently took part in the City’s Top Model Entrepreneur competition.

All that’s in addition to working full time for School for Startups. We routinely work 50 to 60 hours a week which is something we share with most of you.

In founding School for Startups, Doug has consciously chosen to hire effective entrepreneurs to support his entrepreneurs. I think this is due to his core belief that entrepreneurship is a skill that can be taught and must be learned. I’ve certainly heard him say that what is wrong with most government and academic programs that purport to teach entrepreneurship is that they are led by people who’ve never, ever, started and run a successful self-sustaining business.

I suppose it is obvious that you can’t teach what you don’t know.

In working with School for Startups, I see that each of us brings a great deal of first person experience to the table . . .

The wide range of businesses we’ve run
Our understanding of the challenges entrepreneurs face
All the solutions we’ve individually come up with to meet those challenges
The business relationships and networks we’ve created

. . . all feed into the work we do for Doug’s social enterprise each month.

It is why we have such a broad range of things ongoing at any given time.

Live events, like the upcoming MADE in 48 HOURS hands-on course in Sheffield,
Online training delivered all the time through S4Stv.
Articles and entrepreneurs guides released four to six times a week
Books to support our classes
Initiatives to expand our support like the upcoming Mentor group
New charity, social enterprise and competition activities we undertake to help the communities we work in

It is our wide range of skills and resources, and our desire to help new businesses get off the ground, that lets all those things happen each and every month. It’s why our events routinely receive at 95%+ satisfaction rating on every occasion. We know how to help the entrepreneurs we’ve chosen to serve . . .

Our diversity really is our strength.

Entrepreneurs & Disruptive Technologies: A Match Made in Heaven

Nancy Fulton Mazur — Mon, 12 Jul 2010 06:41:37 +0000

Every era has its oddly apt phrases. “Solution Selling” was common in the 80’s. How apparent. Sell solutions because that’s what people buy. “Just in Time Production” was the talk of the town in the 90’s. Obviously. Why make something you have to warehouse and ship when you can just produce what people want and drop ship it to them without warehousing.

One of this decade’s fancy phrases is “Disruptive Technologies” and it was coined by Clayton M. Christensen. Christensen divides technologies into two types; sustaining technologies evolve incrementally and support existing market leaders, and disruptive technologies represent complete paradigm shifts that displace market leaders.

For example… the accounting ledger was replaced by the Burroughs adding machine, which was subsequently displaced by the calculator, which yielded to the computer spreadsheet, which now appears ready to succumb to the shared online spreadsheet. Each of these technologies replaced the one that came before it, causing business empires to rise and fall in the process.

As an entrepreneur you should actively look for disruptive technologies in the economy.

Why? Because they give the young companies that adopt them a competitive advantage over established competitors. There was no one who could unseat IBM at it’s zenith except Microsoft, its MS-DOS application, and the millions of little under-powered PC-clones that ran it.

There are several disruptive technologies wreaking havoc on big markets these days.

Bit Torrent is making it impossible to prevent the widespread distribution of entertainment content almost upon initial release. This is is dismantling entertainment distributors worldwide.
Services like Hulu, BlinkBox and Amazon’s Video on Demand look poised to make cable and satellite television superfluous.
It seems likely that iPad will replace the workstation and the laptop in the years to come, and it may play a significant role in eliminating books and magazines from most households.

It’s business unusual everywhere you look.

If your inclination is to say “My industry is as old as the hills, and there’s nothing disruptive about it,” you must realise you are dead wrong. There is, for every enterprise, a disruptive technology you can use to compete more efficiently. If you’ve found the one case where that’s not true, you picked a bad industry to start a business in because your established competitors will have every advantage.

So, if you are starting or running a business now, take a good look at your industry and the universe of solutions your customers face. What disruptive technologies can you put to work in better meeting their needs and reducing your costs? How can you take advantage of these new solutions to compete with your market leaders? You’ll be startled by just how much this kind of analysis can improve the outlook for your enterprise.

Adopting disruptive technologies is key to being an effective entrepreneur.

12 Free Press Release Sites: Great for SEO & PageRank

Nancy Fulton Mazur — Mon, 05 Jul 2010 06:31:01 +0000

Why submit press releases about your business to free press release sites? Because Google determines where to rank your website, in part, based on how many sites like to it, and in particular, how many high-value sites link to it. Since many of these press release sites report to news.google.com, which one of the highest ranking sites on the internet, posting releases on them provides a great boost to your search engine ranking. Furthermore, if the topic of your release is something many people are interested in, wide distribution on news.google.com may result in even more incoming links.

The following list of sites accept releases for free or cheap (as 6/29/10).

MediaSyndicate.com

MediaSyndicate is a free press release and newswire posting website that enables small and medium sized businesses to get information out to the general public in a fast and efficient manner.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by Google News: Yes

www.MediaSyndicate.com

AddPR.com

AddPR.com is a press release submission tool for every marketer. They are offering free and low cost press release distribution services.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by Google News: Yes

addpr.com

Free-Press-Release.com

Free press release distribution service for small business. Press release marketing service. Free to submit press news by county and by category.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by news.google.com: No

http://www.free-press-release.com/

ClickPress.com

ClickPress is a free press release distribution service. Public relations (PR) professionals can post their news releases to this site for free.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by Google News: Yes

http://www.clickpress.com/

NewswireToday.com

Free PR press release & newswire distribution services news wire network distribution to companies. You can submit your press release online free of charge.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by Google News: Yes

http://www.newswiretoday.com/

PRZoom.com

Free press release submission & PR distribution online service, submit press release free of charge. Free press release distribution to Google News.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by Google News: Yes

http://www.przoom.com/

PressBox.co.uk

Pressbox is the online press centre offering press release and copywriting services providing a professional resource for news / press releases / postings

Submission Fee: Free

Accept image(s): 0

Registration required: No

Indexed by Google News: No

http://www.pressbox.co.uk/

FileCluster.com

File Cluster accept news or press releases from Publishers, Authors or their authorized agents. The press release must be approved by the editors in order to be published. Only relevant press releases will be approved for publishing. File Cluster accept only Technology related press releases (software, hardware, general IT).

Submission Fee: Free

Accept image(s): 1

Registration required: No

Indexed by Google News: No

http://www.filecluster.com/submit-press-release.html

Digital Media Online, Inc.

Digital Media Online Newswire is a service that offers PR and Marketing professionals the ability to submit your press releases directly into the DMN Publishing Network, which allows your company news to be published easier and faster throughout the DMN Network of publications.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by Google News: No

http://www.digitalmediaonlineinc.com/

1888PressRelease.com

1888 PressRelease.com’s services include free press release submission, press release distribution, sample press releases, press release writing tips, and the most popular press releases. You can submit your press release here for absolutely free.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by Google News: Yes

http://www.1888pressrelease.com/

SanePR.com

SanePR is a new service, that aims to set the standard in free online Press Release Distribution, to all from, small to medium sized companies to large corporations.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by Google News: No

http://www.sanepr.com/

Free Press Release Center

A free online news and press release distribution service. Distribution to Google News and others. Specially optimized for search engines.

Submission Fee: Free

Accept image(s): 0

Registration required: Yes

Indexed by Google News: Yes

http://www.free-press-release-center.info/

Google PageRank & Search Engine Optimization

Nancy Fulton Mazur — Thu, 01 Jul 2010 06:44:52 +0000

Almost every business owner benefits from understanding the fundamentals of Search Engine Optimization (SEO). It allows them to derive more revenue from the time and effort they spend marketing their products and services. PageRank is, perhaps, the key concept you must understand in order to optimize your web site design for maximum profitability.

Why Page Rank is Critical

The internet represents millions, if not tens of millions, of customers for almost any product or service. On any given day thousands of those customers are actively looking for what you have to sell using the internet’s search engines. Google, the most widely used search site on the internet, receives billions of requests every day.

Where your website appears when customers search for your products using keywords has a great deal to do with whether or not they find your products and services. You can, through Google Adwords, put your business at the top of any search engine list, but you’ll pay for each and every click. This can be very expensive. It is far more effective to make your “natural” or “organic” list position in Google search pages as high as possible. To achieve this objective, you need to understand how Google orders a list of websites using PageRank.

Google describes PageRank as follows:

PageRank relies on the uniquely democratic nature of the web by using its vast link structure as an indicator of an individual page’s value. In essence, Google interprets a link from page A to page B as a vote, by page A, for page B. But, Google looks at more than the sheer volume of votes, or links a page receives; it also analyzes the page that casts the vote. Votes cast by pages that are themselves “important” weigh more heavily and help to make other pages “important”.

A quick overview of the PageRank process follows:

Google continuously “spiders” the the internet, scanning at all the sites in its database.
It looks at the most frequently used words on each page.
It looks at the connections between pages.
It looks at the number of pages on a site.
It looks at the amount of traffic each site gets when searches are performed.
It gives the highest PageRank for a given keyword to the pages that use the keyword frequently, have lots of traffic, and have lots of incoming links from other high traffic pages that have the same keyword.
The highest page rank is 10. The lowest is 0.

Page rank goes from 0 to 10, with new sites having a rank of 0 and good sites having a rank of 10. In theory, the steps for increasing your page rank, called search engine optimization, are simple:

Have a keyword or key phrase for which there are not many sites
Have many sites with a page rank of 10 point to your website.
Have many sites point to your page.
Use the keywords on your page that customers search for when they want to buy what you sell.

Not surprisingly, people try to game the system and Google detects it:

If you use a keyword too frequently, Google lowers your rank. Higher than 3% use of a given keyword is though to make google suspicious.
If you pay sites to link to you, Google is likely to detect a problem. After all, the site that points to you only has outgoing links.
If you trade links, Google is likely to detect a problem. Links that come in and right out again are suspicious.

Taking time to optimize your website for maximum PageRank is a good investment of your time and effort. A high ranking site can be your most effective sales tool, and it can add significantly to the value of your business. To learn more about how to design and promote your site so it moves to the top of its Google listings more quickly, join us at the Made for 48 hours event in September. We look forward to helping you build a better, stronger business.

Doug’s Fundamental Tips for Starting-Up and Running a Business

Mark Boyd — Wed, 23 Jun 2010 15:35:50 +0000

Doug Richard addresses the fundamental issues of starting-up and running a business. Doug’s Tips start from page 15.

[VIEW THE MAGAZINE HERE]

Entrepreneur’s Guide to Creating & Testing Business Models

Nancy Fulton Mazur — Wed, 23 Jun 2010 12:20:07 +0000

A magazine is nothing like a trade show and creating and distributing open source software is nothing like making and distributing printers . . . or so it seems.

To Entrepreneurs starting a business for the first (second or third time) every business looks different. To an investor, who evaluates hundreds of businesses a year, businesses clearly fall into groups with common costs, benefits, requirements, risks, vulnerabilities and opportunities. Some of those business groups are better than others because they are, by their nature, likely to be far more profitable.

Successful serial entrepreneurs adopt the investor’s perspective. They see businesses they are developing in terms of their underlying components and the dynamics between those elements. They explore and evaluate businesses similiar to their own, even when those businesses are from vastly different industries. They work to build a “best of breed” solution for their customers based on what they learn. In short, they model their businesses before they are built to determine exactly how to build them right.

What is a Business Model?

Businesses are “machines” that deliver “stuff” to “people”. These machines have several fairly well defined “components”. You may believe that it is simple to identify the elements your business is built on and that the relationships between those components are easy to document. You may believe that every other business in your industry runs the same way and that you’ll just build your business to their proven template. If that’s the case, you are who this article is written for. You probably don’t know your business as well as you think you do, and its likely you’ll be losing out on some great opportunities going forward if you don’t take time to really analyze the business you are planning to build.

Here is a quick, and fairly complete, list of the elements you use to build a successful business. Review these elements and see if you think of your business components in these terms.

A product (which may also be a service) is the “stuff” a business trades in order to get money from others. Note that the following list of products is described in terms of the benefit the product gives to the customer.

A magazine publisher’s product is access to a well defined target market which are their readers. Magazine publishers may have a secondary product which is information they sell to their readers.
A trade show producer’s product is also access to a well defined target market. In that case the market is called attendees. They may have a secondary product which is access to people and products of interest to their attendees.
A printer manufacturer’s product is the ability to accept data in one format and display it in another. From this point of view a printer manufacturer, a scanner manufacturer and a fax manufacturer are all in the same business. And indeed they are.
An open source software developer’s product is code that creates and store data in a specific format. It also, often, produces consulting and training products as well.

A team is the group of people that make a product. Usually the term team is defined by startups to be the management group that start a business, but really the team is everyone who works on a product. High quality products come from great teams. Teams can be fairly fluid when the product or products being built are predominantly media or intellectual property related. In fact, they almost have to be. The ability of a team to continuously recycle itself to meet changes associated with fast moving markets is key to the success of some enterprises.

For a magazine publisher, the team is the editors, designers, printers, photographers and writers that produce the publication.
For trade show producers, the team is the producers, location managers, caterers, event managers, marketers and speakers that produced the product.
For a printer manufacturer, the team is the management of the business, the support staff, the engineers who design the printer, the folks who work on the shop floor to produce it, the firmware developers, the web developers who deploy and connect the product to the outside world, and the marketing team.
For an open source software company, the team is the management of the business, the support staff, the application developers, the web developers who deploy and connect the product to the outside world, and the marketing team.

A network is the group of people who support a team. They can be insiders at suppliers, distributors and customers, as well as personal friends who work for competitors and old friends from college. They are people you don’t pay, and don’t take money directly from, who help your business.

For a magazine publisher, the network may be those who make introductions to new advertisers or writers.
For a trade show producters, the network might include those who make introductions to new advertisers, new speakers, and find new venues for events.
For a printer manufacturer, they may be contacts at software developers who test printers with new applications.
For an open source software company, the network may be friends from college who recommend the product to the businesses they work for or connections who provide connections to new programmers. They may also be “strategic partners” who produce related products and join in co-marketing arrangements.

Customers are the individuals who buy a business’s products. Note that these are people with whom you already have an existing relationship because they have purchased what you sell.

For a magazine publisher, if the publication is ad supported, those who buy ads are customers, as are those who buy the publication. When companies with products featured in the publication purchase reprints, they are customers. It is worth noting, from an analytical standpoint, each of these customers is buying a different product though all their products are attached to the same item.
For a trade show producer, those who advertise at a given show are customers, as are those and rent exhibit space are the customer, attendees (if they pay) may be secondary customers.
For a printer manufacturer, whoever has purchased one or more printers is a customer.
For an open source software developer, those who try the software are “prospects” and those who actually pay for advanced features, support, training and other services are customers.

A market is the group of people who share the properties of our customers, but who have not purchased anything from us yet. Startups who haven’t sold anything don’t have customers, they have markets. They may even have market segments, which are well defined sub groups within their market.

A magazine may target the market of “mothers”, and may incorporate articles for market segments like “stay at home moms” and “working mothers”.
A trade show may target the market of “film distributors”, and may create specific events that target “US domestic distributors” and “international distributors” and “theatrical distributors”.
A printer manufacturer may target all people who print documents, but within that group it may identify the “student”, “home business”, “small business” and “large business” segments.
Open source software developers may target “all US businesses that do their accounting in house”. They may have market segments like “businesses with fewer than 20 employees” and “businesses with 20-100 employees”.

Our competitors are those who produce competing or substitute products or services. Our Industry is the group of businesses who share the properties of our competitors. Occasionally members of an industry, though competitors, will band together to achieve common objects like passage of new laws that favor their businesses. In those circumstances they become part of our network.
Our prices are the amounts of money, and occasionally other resources, people give us in return for our products. The vast majority of businesses have multiple prices for the same product. They use bundling of products and services as well as variation in packaging and delivery method to justify price differentiation to their customers.

Using a Business Model

One may start a business with the idea that one will sell a product to customers only to discover that no one will pay for it, but they will accept it when it is provided for free. When that’s the case, advertisers may pay for the production and distribution of the product. A printer manufacturer may find that to compete he must sell his printers for very low margins, but the toner and replacement parts he also produces are far more profitable. Using a business model to fully understand all that your business is, and all that it can be, is an exceptional investment.

To get the most value from modeling your business:

Start by very carefully working through the business you plan to create, or the one you already run. Identify all the components outlined previously in full detail. Remember to describe all the products you plan to offer your customers, and all possible products you could offer them. Remember to describe products in terms of their value to your customers.
Identify all possible customers and consider all paths to them. Think about your network and how they shorten the path from you to your customers and how they can help you reduce your costs. Identify your competitors and consider, carefully, what sets you apart from them.
As you work through your model, identify other businesses in any industry which are similar to your planned business in structure, purpose, market or customer. Look at successful examples of those businesses and consider their business models. Can your business benefit from the solutions they use? For example, you may be producing a product, but maybe you will make more if you deliver your value as a service. Ross Perot, who used to work in sales at IBM started Electronic Data Systems which delivered data rather than computers. He saw that the value to his customers was in the data, not in the machines.

Document what you discover as you work through your model with your team. You’ll find, in years to come, that when the market gives you a challenge what you learned while modeling your business will help you rise to meet it.

And Now a Word of Warning . . .

Anyone who has read my work, or attended my lectures, knows that I very strongly believe in Shipping Early, Shipping Little and Shipping Fast. This means that I absolutely do not think you should laboriously create an intricate and complex business model and then set out to implement it.

I think exactly the opposite of that.

Take the analysis you’ve done for your business and then isolate the one or two exceptional values that your business can give your customer. That is the business you will develop and deploy first. Your sole job is to get one or two of your best values out to the customers that need them most at a profitable price. That will be the start of your business. The insights gained from modeling your enterprise will subsequently help you grow and evolve your business to do more for your customers, and to do more with what you have created for other customers.

You make a business model so you can do less, not more.

I hope you take time, over the next several days, to begin modeling your business. I am certain, based on decades of experience in my own businesses and in supporting those I’ve mentored and those I’ve funded, the process will prove transformative and profitable.

An Entrepreneur’s Guide to Marketing Well At Little Expense

Nancy Fulton Mazur — Sat, 05 Jun 2010 06:44:24 +0000

“It takes money to make money” is one of those cliches people tend to use right before they spend money for no good reason. People almost never say that when they can see, immediately, exactly how their investment is going to pay off. This phrase is frequently used by new business owners as they undertake their first marketing operations, because marketing done badly is almost always both expensive and ineffective. On the other hand, no business gets off the ground without finding its customers . . . and that is what marketing is supposed to achieve.

The key thing to understand about marketing operations is that they are supposed to make your company more profitable almost immediately. If you’ve sent out postcards, engaged in cold calling campaigns, run ads and twittered to no effect, you need to step back from your marketing operations entirely. You need to get a solid grounding in what good marketing does, why it works, and how to develop the solutions that will best connect your company to your customers.

Market Research: A Short, Sweet, Practical Introduction

Marketing is the process of introducing your product to the people most likely to buy it. The easiest way to find out who is most likely to buy your product is to look at those who have purchased it in the past. For example, if you run an expensive dog walking service called, Dogs On Parade, and you have three customers, you need to find out what makes those three customers use your service. The easiest way to get this information is to ask them the next time they place an order. If you have 30 or 300 customers, then you will probably find it easiest to email your customers a link to an online survey that asks the questions you need answered. You can use a survey tool like SurveyMonkey.com to create survey forms.

Many marketing surveys are pointless beyond belief. They ask demographic questions like age and income, but don’t ask questions about how far someone lives from the store where they bought something, where they found a given product or service, why they bought it, who uses it, and if they liked what they bought. You should ask if they have ever recommended your service to anyone, and if so what words they used. You should ask what websites they visit and what publications they read. Your objective in asking all these questions is to try and determine what three or for characteristics about your customer make your product or service appeal to them.

For example, surveying a hundred Dogs on Parade customers might lead you to discover that all your customers like their dog walked twice a day, every day. They found Dogs on Parade because it is a street away from their gym and had big red awning with a dog on it. They wanted a dog walking service that had friendly outgoing people in it. Price was not a particularly important factor in their choice of service because they spend more on a single meal out than the service costs in a month.

Armed with characteristics that identify your customers, you are ready to “sift the world” to find more people like them and to give them the little bit of information they need in order to contact you about their needs. For example, to expand Dogs On Parade’s sales through marketing, you might make friends with the folks that own the gym so you can put up some signs and fliers. You might keep your bright red awning and and add some big red shades with dogs to your street-facing windows. You’ll make sure every flyer mentions that your service can walk dogs twice a day, every day, year round. Your price will not compete with the 15 year old dog walker down the street because it doesn’t have to.

With an existing business, marketing is easy. Existing customers are easy to find and interview.

With a startup up, you have to find your first customers before you can market to them. Sometimes you have to find them before your product or service is ready to buy. Never the less, you must still find customers. You must find people who would buy your product today if it were available. Ideally, you’d like them to place an order even before there’s something to buy. That seems impossible, doesn’t it. But people are often willing to commit themselves to purchasing something before it exists, if it delivers exactly what they want. For example, if someone told you that you could purchase a battery-based four hour power source for your laptop that could be fully charged by an hour in the sun, would you sign up to get more information on when the product was released? Most folks with a laptop would. That’s a product that has customers standing in line already. Your product should be that appealing to its target market before you start your marketing.

Contacting & Closing Customers Cost Effectively Online

Marketing is a sales operation. One markets in order to create a relationship in which a contact becomes a customer.

If your marketing is very good, you may be able to go all the way from first contact to closed sale without human intervention. For products and services that can be ordered and delivered online, this is the ideal. Amazon does this daily. People hear about a book, they go online, they find it, they buy it. Amazon’s marketing has been so exceptional, and their performance so good, that most people feel no need at all for the “personal touch” until something goes wrong. And even then, most returns can be quickly handled by customers without contact from a customer care representative. When you are selling houses, it is unlikely that you can close a sale entirely online. You can, however, fully qualify your prospects so that by the time they are talking to you or your employees, all their questions are answered and they are ready to make the final decision and sign on the bottom line.

To market efficiently and cost effectively online follow the steps outlined below:

Have an attractive website that provides a good overview of your product or service. If you do not have a website, you can go to GoDaddy.com, purchase a domain, and set it up to use WordPress. It takes about a day to set up the site just described using WordPress and Godaddy. If you need training in how to use WordPress, there are several hundred tutorial sites for it on Google.
- It should very clearly outline the defined in the market research outlined above.
- Your website should offer a way to buy your product or service immediately, a way to ask for more information, a way to join your newsletter list, and a way to tell others about your site easily.
- It should also offer some some useful information or tips that your customers will find interesting and worth forwarding.
- It should, in most cases, allow people to place an order for the product or service immediately. The easiest and most reliable way to take money online is using PayPal. Learn more about how to use it at www.paypal.com. WordPress has many plugins that will make it possible to take orders through PayPal. They take minutes to install and configure.
- You can get clipart to make your site pretty at www.iclipart.com.
- Keep your website simple and professional. It should be easy to read and cleanly formatted. Complex and overly artistic websites lose sales.
Once your website is live, email your customers and let them know it is live. As an incentive for them to visit the site, you may want to offer discounts, free trials on new services, or something else of value to them. There is no need to give away products and services at a loss in order to make your site attractive if your website offers information of interest to your customers and to people who should be your customers.
Create a press release that announces your new business. Make sure that its title has the keywords that your customers will use to search Google for the type of product or service you sell. For example “Premium Dog Walking Service Launched in Cambridge” or “Solar Battery for Laptop Computers”.
- Include the search term in the first one hundred words of the press release and again in its summary.
- Make sure the address of your website and your phone number appear in the release.
- Post this release on sites like prlog.com, bignews.biz and openpr.com. Note that all these sites will get a well written release listed on news.Google.com as well as hundreds of other sites. That means that when people search for what you sell it will be easier to find you.
- Publish one or two similar news releases every week. Reuse the same keywords and phrases over and over again so that your company will climb to the top of listings for those terms on Google. You can write a release about new customers you’ve acquired, hassles your customers face, solutions for problems you’ve found for your customers, etc. This is one of the best marketing investments you can make.
Add your press releases to your website. That helps insure that your natural Google ranking for the search terms is maximized.
Use a tool like MailChimp.com to send a newsletter to your customers every week. Use it to cover the information you put in your press releases, and to mention any special offers or new services you have. You might also point to news headlines your customers will find interesting and useful.
Get a Twitter account at www.twitter.com. Add this information to your website. People will follow you on twitter and you can send them tweets about changes to your site, news items of interest, or special offers. Repeat this process for facebook.com and myspace.com.

But Will This Really Work?

If you follow the instructions outlined in this article, you will see a very quick and profitable result from your marketing operations. The only way this process will fail is if:

You have not actually identified and assessed your customers, and thus your market, well.
You have not professionally implemented your website. Using Word Press to create a website is about as difficult as sending email. It takes a few hours to setup if you are the least bit computer friendly. If you are not, hire a kid from your local University and have them set it up while you watch.
You do not create press releases and deploy them efficiently.
You do not keep up this effort for, at minimum, three months.

The whole process will be very inexpensive. It should cost you well under £120 to follow all the instructions outlined in this article.

Want to learn more inexpensive fast-growth marketing techniques? Check out our upcoming events. We offer new online and face to face courses in these techniques all the time.