Think like a wholesaler

Supply to as many as you can

Want to get stupidly rich? Then think wholesale not retail.

I don’t mean that you actually have to set up a wholesaler, just take the mentality.

Have a product and sell it to as many people as you can with a small margin.

By having a small margin – you product is more competitive and more attractive to more customers.

As your customer base grows, your brand grows and you will naturally attract more customers.

By having a product that reaches as broad a client base as possible then you maximise your chances of a sale, and you also minimise the effects of losing a single client.

And yes, this advice does go against the advice that is commonly given about finding an niche and becoming the best at it. While there are some good examples of that, most of the time going for high volume markets is a better choice.

The sticky bit for this model is that you need to have a good amount of working capital upfront to allow you to charge the lower margins from the beginning. Also, your suppliers will give discounts with volumes too, so your costs could go down over time on this basis.

There’s good money in thinking like a wholesaler.

Stop trying harder

Are you trying almost anything to get an extra sale?

Effort is rewarded isn’t it?  To a degree yes, but when things aren’t going great working harder may not make any difference. You could be putting extra hours in for nothing.

The key concept to keep in mind is that you can’t control everything. Let’s go through a few.

Location – you can choose where to locate, but vacancies and price determine whether or not you can take it.

Brand name – you can choose the brand and the image. However, what builds a brand is a large and growing customer base, not what you pay a graphic designer or an advertising agency.

Web presence – you can design a website with almost infinite variations, however, you need to understand what it is that drives your customers to the site and converts them to a sale. It is not your website – it is their website.

Costs – you can cut costs, hire and sack staff, change the quality of your product inputs, or even the quantity of your product. However, you need to keep your customers happy. If you take cost cutting too far then quality of service and quality of product will drop to a level that your customers will abandon you – overnight.

Revenue – generally the market sets the price.  You may be able to play on the margins, but generally speaking you are locked into a range. If you try selling an average product for a premium price then your lack of customers will let you know. If you believe that you can use packaging and gimmicks to sell bad product at a premium price – after all there are some companies that do exactly this very successfully – but for most companies it utterly fails.

General economic conditions – you have absolutely no control over the broader economy – so stop losing sleep over it. There may be rough periods, mostly you can just ride them out. You need to keep some working capital or savings to help you out over those periods. However, there is always need for a good product, so make sure you are getting the fundamentals right. Have a good product and good service with great customer experience and you can survive. 

Competitors – you can’t stop competitors setting up and taking some of your business. However, what you can do is recognise that customers will likely buy from all of you to varying degrees, with the best known and largest brands getting the lion’s share. Embrace the competition as it means there is a great market – go grab some of it.

It’s important to keep your sanity by limiting your activities to those things that actually make a difference. If you find yourself working harder than ever just to stay profitable then step back and take a look at your business – the problem may not be what you think it is.

Get out and walk the floor

One of the biggest mistakes you can make in running a business is to lock yourself away from your staff.

Get out and talk to them – regularly.

1. They need reassurance that all is well.
2. They need to know that they belong.
3. They need acknowledgement – in that they are contributing and are valued.
4. They need feedback.
5. They like to see that you are getting on well with your other key managers (i.e. that everyone in the family is getting along well).
6. They feel better that you know more about them, and that they can humanise you.
7. They put you on a pedestal and can be afraid to talk to you – talking to them can reduce their irrational fears about you.
8. You can talk directly about their concerns and pick up on how the overall culture of the place is developing.
9. They may have good ideas that were otherwise filtered out by the normal channels.

Get out and walk the floor – it is a good thing.

Grace and Gratitude

Act with grace under pressure

I’ve been doing a lot of sales calls and cold calling lately to drum up more business and have had a few good reminders on the importance of grace and gratitude.

When you are under pressure, it is sometimes hard to remain civil. If you find yourself getting cranky at people or picking fights with potential clients, then it is time to take a step back.

Here are a few rules to remember when you are starting to feel curmudgeonly or thin-skinned.

1. Always be grateful that potential clients give up their precious time to speak to you.
2. Let other people go through the lift doors first.
3. Take the time to talk to people and offer your appreciation for their efforts.
4. Let others with a greater need take precedent.
5. If they are having a busy and stressful time you should be calm and easy to deal with. That is often appreciated – you are like an oasis in the middle of the desert to them.
6. Don’t talk about all the things that are concerning you. There are probably a dozen things eating away at you that are on top of your mind, and you want to talk about them. Focus only on the positives when you are dealing with others.
7. Accept rejection with grace – that is, with a smile and no reflection of the hurt you feel to the person who is rejecting your business.
8. Accept muddleheaded thinking with grace – that is, a lot of people don’t know exactly what it is that they want and may express it in unusual or incomprehensible ways. Find ways to talk to them without being judgemental.
9. Allow others to save face – it is all too easy to stick the boot in on people who are acting above their level of competency. They don’t know what they don’t know. Some of them will remember later on.
10. Acknowledge that their hands may be tied by internal processes. They may want to make a difference but they can’t. Separate your frustrations with the system from your dealings with individuals and they may go out of their way to help you.

If you act like this – even if you have to remember to – then people will be glad to deal with you now and in the future. 

Just be there when a decision is made

Make sure you're in the mix

This is both one of the most obvious and profound statements you can hear about marketing.

When somebody is making a decision to buy your product, they need to know about your product and know that it is available as a choice.

Let’s start with something simple to illustrate. When you walk to the drinks fridge at the shops you know you want a drink. You look at the available options and choose which one to buy. The chances are that you will buy one of the major brands because they are rich enough to spend enough on advertising to keep it front of mind for you. However, if they see a lesser known alternative then some people will try that just to see what it is like.

To take an example from the other end of the spectrum, if a company is looking to buy a product then their procurement process will allow them to identify available suppliers. They will usually go with the usual suspects, but as they are mandated to be fair, they will also consider newer suppliers. How are you making sure that they are aware that you exist and that you offer the product they want?

Really, this is the essence of all marketing. Your product needs to be present either physically, or in their minds when they are making a decision. If you want to get ahead learn to think like your buyers.

It’s a leap of faith

Take the chance - it might all work out

There is no getting past the fact that setting up any business is a leap of faith.

The only person who can make the final decision is you. Either you believe it will work or it won’t.

If you believe it will work you will at least try.

If you have seen others succeed at something similar, then you know that it can be done, you just have to do it yourself.

If you are launching a new product or service then your leap of faith is bigger. The current ‘lean startup’ paradigm is to test the leap of faith type assumptions in your business model to find out what works and what doesn’t.

I know many of you out there have been playing with the idea of setting up a business for years now.

Here’s what I say to you.

There is no guarantee of success – but conversely there is no guarantee of failure. All you can do is set yourself up so that you are able to incrementally change your business to meet what the market actually wants, and then grow.

If you have picked too small a market, or your timing is bad, then you’ll have to decide whether to stick with it or to sell out.

If you have faith, then back yourself to give it a go. It will be stressful, it will be difficult, it will also be exciting and you will gain a lot of satisfaction. A couple of years from now you will look back and wonder why you didn’t do it earlier.

Pay for one hour of an expert’s time – not 15 hours of someone who means well

Yes Maam, he does indeed look like a pilot, I'm just not sure if he can fly yet.

Expertise is important. An expert is somebody who has accumulated sufficient experience on a subject matter to sell themselves as being able to provide you a shortcut through your own learning curve.

I have learned that it is better to pay for an hour of a Senior Law Partner’s time and ask a bunch of hypotheticals about commercial and legal matters, than to pay for a junior lawyer to go on a voyage of discovery for a few weeks.

An experienced tax partner at an accounting firm will let you know your main choices and advise on the due diligence and fact checking required for your actions.

An experienced engineer will be able to tell you the known issues with your technology or scale up ambitions.

A good commercialisation expert will be able to point out the known paths that you could take.

The key thing about actual experts is that they will usually couch their language with terms such as ‘could’, ‘might’, and ‘possibly’. This is for two reasons. First, nothing is certain. Secondly, they are taught to do so by their legal departments as many firms have been caught out by vexatious lawsuits from clients who thought that they were getting a 100% accurate prediction of the future.

To help sort out your own business go and make contact with some genuine experts and use your interactions with them to set the vision and strategy of your company. Then use your employees or less experienced contractors deal with the day to day work.

The past can be an inspiration for the future

Thought gimmicky car branding was new? Try this from the 30's in Brisbane.

Every generation likes to believe that it is the first to think of everything.

From food to sex, you name it, and you will find a younger person claiming it is a new idea, or an older person claiming that their generation were pioneers.

There are a few lessons here.

Every generation will discover the same problems at roughly the same stages in their life.

What this means is that you don’t have to ‘grow older’ with your customer base, just stick with your product based on what people entering the stage of life you are catering to.

Also, don’t always listen to your long-term clients for product improvement. It may be that they are about to outgrow or move away from needing your product. Throw a grain or two over your shoulder when you listen to them.

Take inspiration from the past with the understanding that very little is new. Businesses have always competed. Advertising was always required. Reputation for price, quality or service will carry through.

One classic example for me was the glorious one page ad for a hairdressers in my hometown Brisbane from the 1908 street map guide to the city, the wording was identical to that of modern hairdressers -" Come in and try the latest hairstyles from Europe".  Have a look at old car oil or product ads from the 1940s and 50s. The image may be updated, but I bet the advertising copy is the same.

If there is a way to make money from people and businesses then it has probably been tried and lessons learned can be used. Take inspiration from it.

As a good friend of mine (and retired entrepreneur) likes to say “web-based businesses haven’t even caught up with 20% of what’s happening out there”.

Take away pain for your customers

What barriers are you putting in the way of sales

Always keep an eye out for customers who are interested and then don’t convert to sales.

The reason for this is that most people have been raised to be polite, so you never get feedback.

A lot of purchases are impulsive – even though the purchaser will rationalise their decision later. Consequently, you need to make dealing with your company as painless as possible.

1. Have standard packages for products.
2. Clearly talk about the benefits.
3. Talk about their problems and let them know which solution best suits them.
4. Be easy to contact as many people still hate leaving messages. If they do leave a message get back to them quickly.
5. Have standard, easy to understand contracts.
6. Allow them to pre-pay for part or all of a deal up front.
7. Let them know about lead times and the maximum period it will take.
8. For issues around adoption and implementation tell them how they can help themselves and how you can help them.

Most of all avoid confusing them, and allow them to purchase as they’ve already likely decided.

Minimize their pain for your gain.

There’s no good days, there’s no bad days, there’s only days

Keep on rolling

This is an old piece of advice that I hear used in the professional services industry – and it is good to keep in mind.

It is easy to feel overwhelmed. There are so many things to do and never ever enough time.

You will have days or weeks where you feel stretched thin and ragged.

What you thought was a certain sale turns out to have been a colossal waste of time.

What you thought was a long shot turns into a big order.

You can feel like you’ve been kicked in the teeth, ostracised and treated with adulation all in the course of a few hours – depending on the mood of the clients you spoke to.

Milestones you were sure you’d achieve end up taking weeks longer than you thought.

Some things that you had on your ‘too hard to do list’ end up being easy to fix.

Keep your spirits up and follow your schedule. Have activities planned in blocks for each day and each week, and stick to them. Don’t panic just yet, and remember that there are no good days and no bad days, there are just days.

What to do when the economy turns down

Make sure you have a parachute

One of the good things about having a good network is that you get to hear about how many different companies are viewing the business environment. The bad news is that everyone is telling me that things are about to take a turn for the worse. Being a business owner now you have to think about how to be prepared for this. Here are some tips.

1.  Broaden your customer base immediately. If you have one or two main customers you are very vulnerable in a downturn.
2.  Take long term contracts where you can – whether for services or people.
3.  Reallocate your efforts to industries that are still going strong.
4. Consider how your products could be used by companies that are operational rather than project or transaction driven.
5.  For retail businesses, realize that wallets are closing so do whatever you can to make it easy for people to buy from you.
6.  Keep your good people and keep your standards high. Yes, you might be forced to cut costs, but when the quality of the experience goes bad for customers then you will lose your customers too. Bankruptcy will soon follow.
7.  Conserve cash where you can. Categorize your purchases or investments into necessary and nice to have. Only do the necessary.
8.  Try negotiating for longer payment terms for suppliers – you may lose any loyalty discounts but you will have longer to pay bills.
9.  Chase up overdue invoices immediately. Be nice about it, but be persistent. 
10.  Ask your staff for help – do they know any potential customers? Do they know ways to do things better? Work on this together.

Here’s hoping that this is a temporary situation, but there’s no harm in being prepared and you outlast your competitors so that when the economy does normalise you can grow again.

Your network is your net worth

A lot of business is about knowing how to put opportunities together- and to do that you need to know people.

The only way to get to know people is by deliberately networking.

Simply put – make a habit of talking to strangers. The obvious places are at conferences or networking events where you can hand out your business card.

When you meet someone recognise that they are likely at the same event networking too, so swap details and then make the effort to follow up by email, and if you have something more pressing in terms of opportunities, then ring up and arrange a time to meet.

Make sure you contact the person within a week of meeting them, and then stay in touch.

It is amazing how often these kinds of contacts can turn into regular contacts, or even friends.

Your competitors may in fact become your closest network. You are all going through similar issues in terms of running your business and will understand each other well. Just avoid talking about specific clients or pricing and legally you are fine.

Ask your employees, wife, husband, friends, and existing network if they know people in a certain company or field. Then ask for an introduction.

Linkedin is pretty useful too, as is just Googling companies or professions.

And don’t forget the golden rule of maintaining a good network – use it to help others and then they will help you too.

Get on the tools

When you start out you will need to become familiar with a lot of things very quickly. Business development, technology, product development, marketing, law for contracts, websites, computer systems, accounting, HR, etc. You need to learn a bit about all of these things for one simple reason – you don’t have enough money to pay for the professional help you really need.

Most of us in startup land are coming out of companies where there were others to take care of all these issues. Well, its just you for now, and anyone whom you can cadge free advice from.

As they say in industry – it’s time to get on the tools. Learn how to update a website, learn how to literally use the tools to make the product, learn how to make cold calls for sales, learn how it feels to use the business processes you have designed, learn how to hire someone, learn how to fire someone.

You don’t have to become good at the above, just gain an appreciation, and do what you need to in order to get the business going.

So, don’t wait for someone else to do things for you in the early stages of your startup – get on the tools instead.

Believe and you will receive

Okay, so business success isn’t what the bible refers to with this idea, but it still holds true.

Self-belief is important to success.

I am not talking about the bulletproof, never had a reality check kind of self-belief that American Idol auditionees have, but the determination to succeed and the willingness to see the process through to the end kind of self-belief.

I’m also not talking about delusion or fantasy which are important in small doses, but if you have too much of that then you won’t come out of the clouds.

• Believe that your product is worth the same as your competitors and price yourself accordingly.
• Believe that your vision is worth following and others will too.
• Believe that your customers are valuable and they will pick up on that and appreciate you.
• Believe that your opinions are worth something and others will listen.
• Believe that you can grow the company into something bigger and you can.

When you believe you try to find a way to make things work and stop looking for excuses to not do things. 

Do you believe me?

But I don’t have time

There are a lot of excuses for not starting a business or following your dreams, but the most common one I hear is ‘but I don’t have time’.

To which I normally want to scream ‘Bollocks’ – but here is the politer version.

When you say you don’t have time we need to break that down.

Are you spending too much time commuting? – then move closer to work or find a job closer to where you live.

Do you spend too much time on housework? – then take the old midwives advice about taking care of a newborn and only keep a couple of rooms clean for when visitors come and let the rest go to seed.

Are you always worrying? – then find a way to simplify or declutter your life and your thoughts.

Everybody I know who gets a business up and going has found the time do so. Same with wannabe writers, moviemakers, models, actors, inventors, etc.

So don’t tell me you don’t have time, money or the skills. Find a way to make it work.

You don’t have time to not have time.

Inspiration is everywhere

It never ceases to amaze me where you meet potential entrepreneurs.

A few years ago I was at a dinner with a bunch of suits, and one of them bought along their girlfriend, who was feeling like a fish out of water as she hadn’t been to university. When she raised the idea of the business she wanted to do everyone else laughed at her, but I didn’t.

She had a goal, she had worked in the industry, she was curious, she was talking to anyone she could to find out more and she was going to make it happen.

The rest of the table were in the post-MBA honeymoon period – you know, those 5 years after you finish during which you believe your own hype about how wonderful you are and your divine right to rule. None of them had a clue and they actively scorned her.

I would back the lady to succeed in a heartbeat. The rest of the table I wish well with their careers in middle management.

There are inspiring and amazing role models around us everywhere – it’s just that they don’t look like they do in the movies. Stop looking for the Prada wearing, BMW driving role models and start looking for the tradesman made good, the successful retailer, the manufacturer who is growing, the online retailer who is carving out a niche, etc.

Look to those who know how to do business and you will truly be inspired.

Prototype, prototype, prototype

Hmmm... I am not sure this will suit a family of three afterall

An idea without movement towards a product is worthless.

If you want to make a feature film, show me your short films.

If you want to make furniture, show me the models.

If you want to make a product – show me the mockup

If you want a web-based business – show me a functional website.

There isn’t much funding available for the early stages of a business – and there are good reasons for this.

Maybe only one in a million good ideas ends up as a decent product.

The early stages of a business are formative. You learn to sell your product, you learn to raise funds, you learn about legal and commercial acumen, you learn about customer needs, you learn about the market, and most importantly, you learn about yourself.

These early stages are your apprenticeship.

During the dotcom boom investors did throw money at any idea, but now we have reverted to normal. You are going to have to fund or find ways to fund the early stages of your business. This early funding is termed ‘Hurt Money’ for a reason.

After you’ve been through all this, even if your product isn’t a success, you will be ready for your next venture. You are the product.

You are allowed to have off days

Whoops!

You are a human being (well, I hope so anyway).

When things aren’t going your way, a little depression is normal and you’ll have to force yourself to keep going.

Sales and outcomes can take a long time to complete – this can get to you.

There are only so many times you can chase up potential customers before you piss them off.

Some days the loneliness of being the decision maker will get to you.

Some days you will just not have much energy, on other days you will have a lot of energy.

Some days the answers to intractable problems seemingly drop into your head out of nowhere. On other days 

everything seems impossible.

Some days you wake up grumpy – you are under a lot of pressure and it will show.

Some days you will be a klutz, dropping things, having near misses while driving and generally just wishing you were back in bed.

Then there are days you are sick or you need to care for others or take holidays to spend time with your children.

You will have off days. I am here to tell you it’s normal and that you should forgive yourself for it.

Celebrate the small things

If you believe in the movies one day all your hard work will pay off and you will cross a threshold called success. You will have lots of money and freedom, and all will be good.

It would be nice to have a single day that allows you to celebrate victory wouldn’t it. What happens the next day?

Don’t put off celebrations until that big day. You will go mad waiting.

Celebrate the small victories you have every day.

Celebrate each sale, no matter how small. Celebrate each other’s birthdays. Celebrate being alive. Celebrate being able to afford to keep your company going. Celebrate the fact that your employees believe in your vision enough to stick with you. Celebrate the fact that the sun is shining. Celebrate the rain. Celebrate that the printer didn’t break down again.

Celebrate anything you can, and take what joy you can whenever you get the chance. It’ll help.

Business model versus business plan

Is your business plan holding you back?

Everyone needs a business plan – right? Wrong, wrong, wrong, wrong.

A business model is better.

Your business model fits on a single piece of paper (A4/letter). It says what you produce, who you sell it to, who does what to whom and for how much. It will also set the vision/mission and show funding requirements, basic budget and exit strategies. 

The emphasis on the single piece of paper (one-sided only please) came about because that is about the most tolerance most experienced investors have for reading a proposal.

Then we had the excesses of business plans. A classic example is the 150 page IPO product disclosure statement that utterly fails to say what the business does, how it intends to make a profit, and how it intends to pay back investors. I read a number of those in the last decade and secretly think that the people who wrote them deserve some kind of literary award – 150 pages of hype that doesn’t actually say anything – that’s a superhuman effort right there.

Yet everywhere you go people say – what’s your business plan? You must have a business plan or you’ll fail. These people generally don’t work in startups and don’t understand startups, or even business in general.

A business plan or business case is needed for a purpose – such as for your bank so you can borrow, or for equity funders, or for employees.

A business plan covers the same topics as the business model, but in much greater detail. This in itself is not a problem. The problem is that it takes a long time to prepare and can become a distraction from your real business. Also, because it was such a monumental task to pull it together, then it just gets taken as gospel, whereas it was really just a first pass guess.

Using a business model allows for quick and frequent changes when you find the market has changed. It encourages you to focus on the fundamentals and the core drivers of the business. It can be understood readily by anyone who joins your company, or who wants to invest in your company.

Most of all, the ability to put it all on one page is the best possible demonstration that you actually understand the business you are getting into. 

All sizzle, no steak

It seemed like a good idea at the time - but now I'm having doubts.

Following on from the previous article about the need to sell the steak and the sizzle, this blog post is a warning not to get carried away with aspirational statements.

I was recently shopping round for new CRM software and was appalled at a couple of the major brands (yes, you heard me Microsoft Dynamics and Oracle Business on Demand). Their websites were almost entirely aspirational statements. I still have no idea what their products actually do, how they tie into the existing Microsoft Office suite, how I can use them or even how to buy them. There were You Tube videos showing people saying how much it transformed their lives and businesses while utterly failing to mention how it actually worked.

I settled on a third product that explicitly gave the features and the benefits including Microsoft Office plug-ins, third party APIs, detailed examples of feature, ease of use, etc.  This third party even listed pricing right up front for software as a service (SaaS) solutions. I signed up on the spot.

We also saw a similar debacle in Australia with Telstra (the nation’s largest telco provider) launch of it’s T-box (T-hub or whatever… I forget). This was a touch screen device that would become the base station on your fixed line at home and provide SMS messaging and Apps. They had a whole TV and print media campaign based around a preserved head of Thomas Edison saying that he wished he had invented such a transformative technology (or something like that). At no point did they say what it was or how to use it – we were told it was transformative and to bow down and worship its awesomeness. Let’s be polite and just say that it didn’t sell well.

In the same week Apple was running iPad ads on TV which showed people using the machines (demonstrating features and  benefits) in their everyday lives, and also with an aspirational element by showing educational benefits (i.e. be smarter) and people working away from their desks (i.e. this will bring you freedom). Apple are smart at marketing – you could do worse than being inspired by their marketing.

If you are trying to introduce a technology that no-one has seen before then you must show the features and benefits.

If you are selling into a well commoditised market then apart from price, features are pretty much taken care of, so focus on benefits and you can play with the aspirational or why your product is different.

When you are talking to anyone in marketing have a good discussion first to make sure that they understand that the campaign is there to make sales – and not just test out the latest theory such as niche marketing, social media, online content tie-ins etc.

And remember, advertising types get bored with doing the same thing over and over again, so make sure they understand you want simple but solid solutions, not the fanciest or most exciting trend.

Sell the steak and the sizzle

Let’s talk about marketing material and the fundamentals.

Good marketing sells features, benefits and has just enough aspirational statements.

Features are the properties of your product such as its size, colour, weight, how much electricity it uses. Etc.

Benefits are what using the product brings to the consumer. Examples include ‘spend less time cooking dinner’, ‘improved communication processes to bring better control over your business’, ‘press one button and the device makes the correct decision for you’, etc.

Aspirational statements are intangibles such as ‘ be the leader in your class’, ‘enhance your ability to affect change’, ‘be all that you can be’.  These statements call out to the dreamer inside all of us who wants to be better, smarter, respected, beautiful, etc. We all know it’s not really true, but by using products that say these things we do actually buy into the possibility.

If you only sell features, then your customers won’t know how to use your product or what it can do for them.

If you sell benefits and features then you are telling them what it is and how it can be used to their benefit.

If you sell the aspirational as well then you are just adding the icing to the cake. Sprinkle in odd words such as enhance, improve, etc. and anything else that may tap into your customer’s desires.

If you don’t feel comfortable with aspirational statements, you still need to sell the benefits and the features.