Many small business people think they can create a great product, get funding, and start producing that product, and everyone in the world will flock to their business to get that product.  It’s not going to happen.  The “better mousetrap myth” ignores one concept: you have to tall people about your mousetrap so they know where to find you.  Even more, you have to convince them they want that mousetrap, need that mousetrap, and can’t live without it.

Napoleon Hill, author of the classic motivational work Think and Grow Rich, said:

In the end, the customer doesn’t know, or care, if you are small or large as an organization.  She or he only focuses on the garment hanging on the rail in the store.

And Peter Drucker, probably the greatest management guru, said,

“Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality.”

if you want your small business to succeed, it’s not enough to build a better mousetrap.  Think first about what problem your customer has and how your mousetrap can solve it. That’s value.  That’s what will make your business successful.

Image: sxc.hu

Post from: Bizzia

Calvin Coolidge, the only U.S. president born on July 4, is famously quoted as saying, “The business of America is business.  Here is what President Coolidge really said, in a speech called “The Press Under a Free Government” in 1925:

“After all, the chief business of the American people is business. Of course the accumulation of wealth cannot be justified as the chief end of existence.“

In the last paragraph of the speech Coolidge said:

We make no concealment of the fact that we want wealth, but there are many other things that we want very much more. We want peace and honor, and that charity which is so strong an element of all civilization. The chief ideal of the American people is idealism. I cannot repeat too often that America is a nation of idealists. That is the only motive to which they ever give any strong and lasting reaction.

In the midst of the toughest time since the Great Depression, a little charity and idealism would be nice this Independence Day. Have an enjoyable Independence Day.

Image: Newscom

Post from: Bizzia

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.    Sun Tzu

I was talking with a friend the other day about how difficult it is to run a small business today.  Small businesses are going bankrupt at a greater rate, they have fewer opportunities to get loans, and yet some survive, even thrive.   People are still starting small businesses, they are finding new ways to make money, and they are still optimistic about the future of small business.  The people who thrive in small businesses today are, as Sun Tzu says, responsive to change.

We live in a time of great change.  The ways we have thought about business success are no longer valid.  Our expectations about the financial system, the money system, and the government are out of date.

If you want your small business to be successful, you must be willing to change your ways of thought.  I am not a fan of the phrase “thinking out of the box,” but maybe that’s what you will need to do to survive.  You can’t count on bank loans, traditional financing, marketing plans, employees, or anyone else.

What will you change to make your small business successful?

Sun Tzu, who may or may not have lived, is said to be the author of a work called The Art of War.  Much has been written about this work, which you can read in full from Project Gutenberg.

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Post from: Bizzia

My husband and I headed out to our favorite breakfast place last weekend and found it closed for two weeks.  I can certainly see benefits to closing up your business and taking off, from a personal standpoint. After all, everyone needs a break.

I have seen the “closed for vacation” sign mostly on restaurants, but other retail establishments seem to be doing this more and more. The kinds of businesses that take vacations are usually those that have the kind of business in which people will continue to come back and can wait several weeks for service.  I don’t see the local dry cleaner taking vacation, for example, but other service businesses like barbers and beauty salons certainly take time off occasionally.

Some questions about taking time off from your business:

• Do you force employees to take the time off with no pay? Or do you give them paid vacation?  There is no law that says you must pay a vacation (nor sick pay or personal time or holidays, for that matter).  But most employers do give some vacation time to stay competitive.  Paying employees for vacations can add significantly to the cost of that time off.
• How do you notify your customers? Is a sign on the door enough?  If you have a newsletter, you could let them know.  My restaurant had little cards on the tables as well as a sign on the door.  You won’t catch everyone, but you will prevent an irate customer leaving nasty messages on your answering machine.
• Have you considered keeping the place going while you are gone? That decision probably depends on how much you trust your employees, or if you have a manager you trust.
• Do you worry about losing customers? I would.  But I would weigh the cost of my sanity and the benefit to my family with the thought that a few customers might find somewhere else to shop and not come back.

I hope you are taking time off from your small business this summer. You deserve it.

Image: sxc.hu

Post from: Bizzia

My town has a large farmer’s market downtown two weekends a month.  I was expecting to see fruits and vegetables and baked goods, so I was surprised to see how many products were being sold there, like:

• Candies and chocolate (notice how this one’s at the top of the list)
• Coffee and Teas
• Meats (particularly free-range)
• Crafts
• Wines from local wineries
• Soaps, skin care products and organic cosmetics
• Antiques and collectibles of every imaginable kind
• Canned foods like jams and jellies, salsa, and relishes
• Jewelry
• Hand-made clothing
• Toys and games
• I even saw a local chiropractor talking to people about his services.

Almost any kind of retail business or small business selling a product could participate in an outdoor market.  The businesses lease the space from the promoter (often a town or city).  Most markets operate rain or shine and you would be surprised how many people come out in the rain.

A Small Business Example: I found a local coffee company at a flea market a couple of years ago.  She gave out free samples and I found out about her fair trade water-processed decaf coffee.  She said she doesn’t have a store - too expensive. So when I needed coffee I called or emailed and she would send it to me (I paid online).  The flea market gave the coffee merchant an low-cost opportunity to introduce her products and get people to try them.

If you are considering a new way to sell your products or promote your services, try selling at an outdoor market.

Images: sxc.hu

Post from: Bizzia

The TED Conference has some great “commandments” for public speaking:

In addition: Some tips from my experience as a public speaker and teacher of public speaking:

• Find a topic you enjoy talking about. If you don’t enjoy the topic, your lack of excitement will show through.
• Show your expertise. As I mentioned yesterday, don’t directly promote your business, but show your expertise indirectly and people will want to learn more.
• Work on one good speech. Spend time honing the content of that speech, so that you are extremely comfortable with it.  DO NOT MEMORIZE the speech.  Expect to take notes with you and refer to them if necessary.  I have seen too many people attempt to memorize a speech, only to freeze when they get up to deliver it.
• Practice your delivery. HOW you give the speech is much more important than what you say.  About 87% of what your audience is paying attention to is your delivery and the way you smile when you are talking.
• Make it interesting. Add lots of stories.  If you don’t have them, make them up.  People want to hear about other people, not about dry dull statistics.
• Focus on the start and finish. People remember the end of a great speech, followed by a great beginning.  The middle is the place for those stories to keep the folks interested until you can get to the end.
• Finish with a “call to action.” Tell people what you want them to do - Brush every day, learn a language, start a business.  Make your call clear and specific and memorable.
• Use the “tell ‘em” principle.  Tell them what you are going to tell them; tell them; then tell them what you told them.  Every speech must have those three parts.
• Watch the distractions. Pay attention to those things that distract your audience’s attention from what you are saying: non-words (um, ah, yaknow, like…), body language, clothing (nothing too flashy), movement (pacing, jumping from foot to foot).  Anything you do too often will be distracting.
• Keep it short. People want speeches to be (1) interesting and (2) short.  You can give an excellent speech and make your point in 15-20 minutes.  If you go longer than that, people will lose interest.

Finally, and most important of all, PRACTICE, PRACTICE, PRACTICE. Practice helps you get comfortable, eliminates the distractions, and hones your speeches.  You can’t learn public speaking from a book or by watching people speak on YouTube.  If you want to be a good speaker, you must speak.  The more you speak, the more comfortable you will get and the better your speaking ability.

So, get a great speech, practice in front of the dog or your best friend, and get out there and speak!

Image: dullhunk@flickr

Post from: Bizzia

Why Speaking is Important. If you want people to know about your business, you have to talk to them.  I don’t mean one-on-one, although that’s important too.  I’m talking about sharing your business story with a group of people in your community or with a larger group of business people.  Speaking is the most effective way to promote your business.  It’s also the cheapest, because you don’t have to spend money except for a lunch or travel. What a deal!

Speak to Get New Customers. Your ability to talk about your business will get you more first-time customers than just about any other promotional strategy I can think of.  Most community groups are looking for speakers (free, of course), and if you contact them they would be happy to put you on the agenda.  State groups connected with your business field can also be good places to speak.  For example, if you are selling home-made salsa, find a restaurant association meeting and give a presentation on Mexican foods.

Promote Your Expertise. The best type of speech is one that promotes you as an expert, rather than a specific pitch for your business.  For example, if you are a dentist, talk about the various ways people can whiten their teeth.  If you are the salsa-maker, talk about the health benefits of Mexican foods or how to make a great Mexican meal.  Indirect pitches are better than direct “buy my stuff” promotions.

How to Learn Public Speaking. If you are terrified of public speaking, the best way to learn is to join Toastmasters.  The Toastmasters meetings are designed to help you learn how to speak in a non-threatening environment.   Find a local Toastmasters group (almost every city everywhere in the world has least one) and see how the meetings work.

Toastmasters as Networking.  An added benefit of Toastmasters is its value as a networking vehicle.  When I moved last winter, I found a new Toastmasters group and gave a short speech about the benefits of starting your own business.  I got a phone call from someone who turned out to be a great client from that speech.  Other business people recognize the importance of Toastmasters and you can meet some interesting business contacts there.

As you start a business or want your business to grow, get out there and talk abouit it.  Tomorrow I will give you some tips on public speaking for business growth.

Image: Newscom

Post from: Bizzia

Develop a protection and preparedness plan for your small business that includes:

Business Data Protection. Have a physical backup or backup on the Internet every day, so you know you have the most recent files. Read my recent Small Business blog post on protecting business data to get more ideas.

The University of South Florida has a USF SafetyFlorida website that includes a Hurriplanner, which takes you through the decisions you need to make, phone numbers and emergency help you can receive.  The Hurriplanner creates a Word document that you can save and make changes to as needed.  It includes all kinds of information about how to prepare for disasters, including hurricanes, tornadoes, and wildfires.  So get going and put that plan together.  Then put it in a safe place and hope you don’t need it.

Image: karliehenbauer@flickr

Post from: Bizzia

Should This Pizza Restaurant Expand? Our favorite pizza place is a little hole-in-the-wall place where people stand in line for tables and wait hours for a take-out order on the weekends.  Every time we go there, my husband says, “They should expand.”  But should they?

Expansion means:

• More overhead. Overhead includes rent or an additional mortgage, higher utilities, possibly more taxes if you own the facility.  The pizza place, for example, would have to pay more for more ovens, and utilities and rent would certainly be higher.
• Moving costs. Moves, like everything else, cost more than you expect, and you will need to either have the cash to pay the moving costs or increase your debt. Imagine the cost of moving all the restaurant equipment for the pizza place.
• More employees. Increase your payroll costs very carefully. It is easy to get too many people, and payroll is one of your highest costs.  More servers would be needed for a larger dining area.
• Construction costs. If you can expand into an adjoining space, you won’t have the moving costs, but you will still need to pay for the construction.  At $25 to $100 a square foot, depending on your location, those costs could be prohibitive.

Plan Carefully Before Expanding.  If you are considering expanding, do a business plan.  Carefully figure out the costs for the move and for operations and overhead.  Determine how much money you would need to borrow and talk to a bank to see what your monthly loan payments would be and the total cost of the loan over its term, including total interest.

Loan Availability. If you are determined to expand, you may want to look into one of the SBA loan guarantee programs, like the 504 loan program, which helps small businesses purchase real estate and equipment. The SBA recently announced changes to this program which make it possible for small businesses to restructure current debt to make it easier to expand.

Over-estimate Expenses and Under-estimate Income. Assume higher costs than you would expect, and get verification of costs, as much as possible.  Don’t over-estimate income.  In the example of the pizza place, I would tell them to determine how many more people would have to buy pizzas to make the expansion break even.  If this number doesn’t seem very reasonable, don’t expand.

Remember, you can always get bigger.  You can’t always get smaller.

Image: sxc.hu

Post from: Bizzia

The Secret: The value for a business is the amount agreed to by a willing buyer and a willing seller, for which both parties are  mutually uncomfortable.  I love this definition!  My husband created the “mutually uncomfortable” thing, and I agree.  It means neither party thinks he/she got “taken,” and neither party thinks he “stole” the thing.  Both parties feel a little uncomfortable (I think I sold my business for just a little too little; he thinks he bought it for a little too much.) In other words, the value of a business is what the parties think it is.

Valuation Drivers. A recent Forbes article discussed the valuation of a flower shop and mentioned the key valuation drivers:

Location and Facilities: For local businesses, a location that draws customers and facilities that look fresh and inviting are important.  Not so much for online businesses, although you could call the look of a web site “location.”

Reputation: Otherwise known as “goodwill,” reputation is the key driver of valuation.  Goodwill can be measured in some businesses which have a continuing clientele, but it is difficult to measure goodwill in a flower shop or other retail business that has no way to track repeat customers.  One possibility is to check customer reviews on  Yelp.com.or other online rating site.

The true value of a business depends on the skill of the negotiators and the willingness of both parties to see the deal through to completion.  Sure there are some “rules of thumb” for such things, but each situation is different. For more information, see my About.com article on Valuing Your Business for Sale or get a copy of Business Valuation for Dummies.

Image: popaver@flickr

Post from: Bizzia