Innovate Like a Lean Startup

Enterprise organizations are taking a rigorous look at the principles used in the Lean Startup movement. They are carefully considering how they can incorporate the approach for building and launching new products faster to increase revenues and reduce costs.

Why? Speed of innovation and time-to-market can translate to millions in revenue gained or millions in lost opportunity costs for organizations of every size. One known fact for product-based businesses is that the typical time for market development can no longer take years for planning to launch. Competitive forces require organizations to be in cycles of continuous improvement and a constant state of innovation.

Some businesses acquire other businesses to gain momentum, others set up lean approaches within their product development and design centers. If enterprises want to compete with the "young and restless" entrepreneur community, they need to consider moving faster in definition, development and bringing new products to market.

The father of the lean movement is Eric Ries, author of The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. The Lean Startup methodology promotes shorter product development cycles driven by experimentation and validated learning. Instead of waiting until the final product is "complete" before launch, the lean practice recommends to use iterative releases to confirm adoption and use cases for a minimum viable product.

The constant develop-release cycle provides for ongoing feedback to modify and pivot to meet buyer and user needs faster. The goal for this technique is to speed products to market, maximizing early product adoption cycles and capturing the most market opportunity. This all translates to revenue.

The risks associated to this approach are primarily related to creating products that seem to never be finished. Consumers must have a strong loyalty to stay committed to products that are always upgrading. Businesses have to evaluate the risk-rewards of being first to market with products that are viable and utilize the information gained in the customer feedback process during each release to keep customers happy.

The growing consideration of going lean for many business owners today is whether they do so through an M&A strategy or reorganization of the product development operation. "The only way to win is to learn faster than anyone else.” - Eric Ries

By Jamie Glass, President and CMO of Artful Thinkers, @jglass8

This article first appeared in the CKS Advisors CKS Updates May 2013 Newsletter.  Visit www.cksadvisors.com for additional information.

When Do you Create a Board of Advisors

There comes a time when assembling a group of experts to help grow your business is considered smart leadership and a business best practice. When you reach a stage in your business where you have exhausted the collective internal experience, knowledge and skill to achieve your next phase of growth — create a Board of Advisors.

Every purpose of creating a board will differ for each organization. A business owner may be faced with great opportunity for rapid growth or significant challenges from conquering the next ascent in revenue, market or product expansion. The appropriate time to consider assembling a board is when the business path forward is less clear or cluttered with obstacles that could derail you from achieving your business goals. You have reached that period in your business when their is more “unknown” and you fear what you don’t know.

A Board of Advisors is different from local peer groups, leadership councils, service providers and executive mentors. Your board is a committed team of individuals working on your business. Advisors should have congruent skills that compliment your leadership. As an example, you may find that by adding a distinguished industry expert or technical guru best serves the next phase of your business  Adding market or sales expertise can open new doors, while a finance or legal expert can provide insight to reduce risk.

Experienced executives want to help entrepreneurs, startups and leaders that seek advice to grow their business.  It validates their business “wear and tear”, while providing meaning and value to their experience. The board should round out your executive court, as these advisors are typically not available to hire as full-time employees and can be “unaffordable” for smaller businesses. They also may be those exclusive experts that will always be in a role of advising and never work for a single entity.

The reason you bring experts together as board members is to increase effectiveness and efficiency in decision-making and strategic planning. A board will perform best when there is an exchange of ideas in an organized environment, centered around a single business issue. The board format is designed to solve problems. Each board member brings a different set of experiences, viewpoints and resources. Having a board working together with you to assess challenges and discuss opportunities, gives you invaluable advise that can save you significant time and money versus the “learn as you go” approach.

Board of Advisors are not in a role of governance. They do not have fiduciary responsibility to protect shareholders or investors, though they should be very responsible in providing any guidance related to financials or spending company money. Only an elected Board of Directors for a public corporation or non-profit have governance over a company. The Board of Advisors is a non-binding group of mentors and experts that work collectively with company leadership to achieve your business goals.

Advisors should be completely aligned with your goal and mission and also be able to challenge you by providing recommendations and views that will differ from your own. You do not want a board that agrees with all your ideas or thinks as one. Why waste your time.  They should differ in expertise and have the ability to assess short-term and long-term strategies, out load in a group discussion, without fear of reprisal.

A board is typically five to six members, excluding the CEO or business owner.  A Board of Advisors should consist of experienced and skilled individuals in varied areas where your business is lacking in comparable talent. In the early stage of a business, Board of Advisors are typically unpaid and may or may not have a long-term financial commitment through future equity.  As a business leader, be cautious of giving away ownership in your company early, this could be a note of contention with future financing.

The commitment of an advisor should be a minimum of two years.  It is valuable to set a term limit in reviewing board members, as you company is expected to grow and you need to be able to add new board members with different skills during later stages of your business.  Board members must also be committed to attend meetings.  A small business will typically meet with the entire board every 8-12 weeks.  If a board member misses more than two meetings a year, consider replacing the advisor.

Board members should not be family members, employees, contractors or service providers you pay for other functions in your business. It creates conflict of interests. Though a board of advisors are not employees, you should treat your advisors as accountable members of your C-suite. Set expectations, ask for help and use your board to help you achieve your goals.  If you simply assemble your Board and provide an update report on the business, you are wasting valuable resources and time.

Board of Advisors are trusted members of your inner circle. You can share with them confidential information and discuss highly sensitive matters that are not open for discussion with anyone else in your company. Your board should consist of credible experts that will provide insights you can not gain from any other resource. They should open doors, help you gain new customers or strategic partners and provide actionable ideas to help you achieve success. If you want to grow, create a Board of Advisors.

“You sit at the board and suddenly your heart leaps. Your hand trembles to pick up the piece and move it. But what chess teaches you is that you must sit there calmly and think about whether it’s really a good idea and whether there are other, better ideas.” - Stanley Kubrick

Jamie Glass, President and CMO at Artful Thinkers @jglass8

Innovation Arizona Summit 2013 on June 11, 2013 at the Tempe Center of the Arts

Join us for Innovation Arizona Summit 2013 on June 11, 2013 at the Tempe Center of the Arts 

You will be networking with hundreds of your peers while meeting up with incubators, accelerators, funders and investors, entrepreneur program groups, education and supporting growth organizations. All this and you can enjoy a little noshing and rocking out with a Grammy award-winning artist and his band. Don’t miss it.

Visit www.mitefphoenix.org today for details and to get your ticket to the biggest entrepreneur event of the year! 

Registration is only $25 for the BIG exhibition and main presentations! We have additional breakout sessions with experts for only $20 to get fresh ideas, hands-on-tools and insights on specific business topics that matter to you the most or go to seven special sessions for only $75! 

It all starts at 3PM on Tuesday, June 11. RSVP Now!

Investing in Co-Selling Partnerships to Grow

Small businesses and entrepreneurs can greatly benefit by selecting co-selling partners to drive revenues. Utilizing another company’s sales and marketing resources may be a great channel to aggressively extend reach and acquire new customers.

Co-selling partnerships with businesses selling complimentary products and services to your target customer can be smart business. These partnerships can cut existing sales costs and even accelerate growth in market share. The best sales partners create a synergy between respective offerings. There should be a “natural fit” of how the products and services add value for the customer. The buyer should inherently understand why you would partner, not question as to why you did or if there is any benefit in buying from a single vendor.

Co-selling partnerships can reduce sales costs. There is a required investment in sales and marketing to grow a business. The costs of a sales team can be crippling for a new venture or small business.The overhead expenses that enable a sales person to be trained, productive, and armed with the right marketing tools, technology and product support can be onerous in the earlier stages of an organization.  Lack of initial investment often produces lack luster results and can actually cost the business even more with unexpected turnover or lengthy sales cycles. Businesses need a specific budget and defined cost of sales to properly staff, train and equip a sales organization to get results.

Time-to-market and time-to-close can be reduced through co-selling partnerships. A new sales hire ramp-up time can be 3-12 months, depending on price of goods to be sold and anticipated sales cycles. Ramp-up requires an “blind faith” investment of time and resources. A business has to invest in sales with nothing more than the anticipation and belief that something is going to be sold. It is a huge price to pay and has great risk. Utilizing a trained and experienced sales team through a co-selling partnership can help you bring revenues in while you invest in building your own sales team.

Co-selling is not free. There are costs of co-selling partnerships. A strong partnership requires investment in training and account management resources to keep top-of-mind awareness with your co-oped sales team. You also need to provide sales and marketing tools to properly equip the team to sell your goods and services. You need to be available when they have questions and to support them throughout the entire sales process.

You also need to create an incentive as to why a sales person in another organization should throw your offering into the mix. Higher commissions, faster time-to-close and value-add to the customer, are all good reasons; however, remember — sales people need to be sold too. If you extend the deal time or complicate the sales process, it will never work. Make it easy and valuable for the sales team through your co-selling partnership.

Incentives matter in co-selling. If the paired companies benefit but not the people selling, the partnership will fail. You need to set up a partner agreement for commissions and shared revenues.  A typical commission in a co-selling relationship starts at 10% of net revenue on the deal for a qualified lead pass. This type of agreement puts the burden back on you to close the deal. You are basically paying for marketing and an introduction. If the partner does all the work, including closing the deal, you may provide an incentive of 20% or more just to get that customer on your books. The structure of the agreement and commission rates should be based on your financial projections and cost of goods and associated expenses in managing the customer post-sale. 

What doesn’t work? Relying on commission-only sales teams and partnerships that are by name only. There are business owners that believe they can get a motivated, committed sales person to work for free. The odds of making this type of relationship work are close to nil. The relationship between a company and it’s sales team, whether a direct hire or partner, is measured by the commitment from both sides. Small businesses may have to tier commission levels based on the ramp-up of sales or find ways to create early non-cash incentives; however, no one should be expected to go out and sell without a financial commitment. The words “you get what you pay for” should ring loudly if you are thinking about commission-only or finding people to sell for you because they like you.  Sales people that are really good at closing deals are expensive because they have a huge ROI.

Attributes of great co-selling partners to consider are the size of the partner’s sales team, market reach, relationships with your customer and available support the sales team receives in training for new products. The partner must have the means, connections and existing relationships to introduce your products to market. Co-selling means they will take an active role in selling. Again, partners by name only often produce little value.

If you choose to use co-selling partnerships, embrace the model and build support for the partnership. Show your loyalty through your commitment to make the partnership last and benefit everyone including the customer, the sales person and the partners. Create value by talking about the partnership and promoting the relationship. The results you get from this co-selling will be directly tied to the amount of time and resources invested in the partnership. You have to give to make it work and really pay off.

“In reality, the only way a relationship will last is if you see your relationship as a place that you go to give, and not a place that you go to take.” – Anthony Robbins

Jamie Glass, President and CMO at Artful Thinkers @jglass8

What is Your Business IQ?

The question is not related to your personal or business intelligence, it is your business Innovation Quotient (IQ).  Your business IQ is connected to how you manage change and performance improvements in all facets of your organization, from operations to product. The origins of the word innovate go as far back as the 16th century.  It is simply introducing something new or different.

There are some companies that are perceived to “own” innovation and are frequently on lists of the most innovative companies. Expected and recognized mainstream mega brand companies like Apple, Google, Amazon, Nike, Target, Coca-Cola recently topped Fast Company’s 2013 Most Innovative list, along with newer innovators like Pinterest, Sodastream, Tesla, and Yelp . They all have visible innovations and a high “product” IQ.  We come to expect they are doing something new and different all the time.  What we do not see is how these businesses innovative internally. How they get on these lists takes more than smart, cool products. We don’t know how often they change employee policies, management teams, adopt new software programs or retire practices that no longer get results – unless you are Melissa Mayer of Yahoo!

What is your business IQ?  How often are you “innovating” the 4 P’s: product, people, processes and policies?  If you were to rate how innovative your company is today, on a scale of one to 100, with 100 being the most innovative, where do you rank?  If you are never changing, you probably have a low business IQ.  If you are always changing, your business IQ should be close to 100.  The most realistic place to be, without completely disrupting or killing your business, is to aim for above 50.

If you are an innovative trailblazer with a high IQ, congratulations and press on!  It is difficult to stay on the forefront and constantly introduce “new” into a business. Trailblazers make change and as a result, often make money. They innovate, pivot and innovate again. Maverick companies with high business IQ are in a continuous cycle of innovation and change.

If your business is lacking in the innovation department, it may be time to set new company standards.  If you asked everyone on your executive team to provide you a recommendation of an old idea or way of doing something that needs to be retired, without measure of cost or risk to the business, what do you think would be on the list?  Perhaps it is time to find out.  Innovation begins by identification.  Where there is opportunity in your business to innovative, there is opportunity to improve.

Old or young, businesses need to always be monitoring their business IQ.  Innovation takes place within companies as well as in products and services.  Being an innovative company requires a constant and systematic evaluation of how the company will stay competitive and continue to grow or maintain sustainable profits.  The lack of innovation is a one-way ticket to performance doldrums.

Not all innovation is good and there are certainly small and big failures to note.  One point is certain, if your business is low on IQ, it is probably not maximizing the potential of products, people, processes or policies.  Start by asking the questions first, what needs to go? What is holding your business back?  Identify where you can improve your business IQ and then go — innovate!

“If you want something new, you have to stop doing something old.” - Peter F. Drucker

Jamie Glass, President and CMO of Artful Thinkers @jglass8

Sales Referral Partners Leads to New Customers

Using partnerships to grow your business is smart business. Partnering drives market awareness, aligns your brand with other credible brands, opens doors to new customers and can even provide value-added products and services to increase your average sale.

There are different types of partners, which are defined by the level of engagement and the agreements each party enters into to manage the relationship. Sales Referral Partners are the entry level of business development partnerships. This type of partnership has little accountability and responsibility for performance. The value of this strategy is often used to grow market credibility or to align with a partner that has strong relationships with your prospective customers.

Entering into a partnership for referrals is a first step to test the waters in a relationship. It allows both entities to measure the commitment, willingness and effort required in working together to develop business. A sales referral partnership gives you the ability to determine if this is simply a PR initiative or will actually grow revenues. You can also monitor the organizational support in sales and marketing required to get deals closed.

The relationship can be a one-way lead pass or a two-way referral agreement. Both parties need to determine the best opportunity to refer business by passing on leads, receiving referrals or both.

Sales Referral Partners can be “handshake” in nature if you do not plan to hold anyone accountable for the outcome. It is commonplace for business service professionals who network together to develop non-binding relationships to help open doors and extend value by making credible introductions to other service providers or their respective clients.

If you plan to use compensation as an incentive to drive referrals you need a legal agreement, signed and executed between both entities. Compensation is a way to show appreciation for the referral and is an incentive to work together. If your partner offers to pay you for referrals, you also want to make sure it is in writing.

There are two ways you can determine the referral compensation.  Referrals can be compensated at the same rate as your sales commission.  For example, you can offer a set figure between 5-10% of the net proceeds of any closed deal.  You can also set the commission rate at the percentage of your average marketing spend to acquire a new customer. No matter the rate chosen, it should be perceived by your partner as rewarding and drive the expected behavior. Make it worthwhile for someone to act as your front-line sales person and help find you new customers. If the rate is not worthy of the effort, you can expect to pay few or no commissions, as you will likely not drive the behaviors needed to get a referral.

If you do choose to enter into a binding agreement that includes compensation for referrals, you need to set rules just as you do for your own employees. Specifically outline in your agreement how payments will be made and when the partner will be paid. For example, will you pay when the sale is made or when you are paid by the new customer? Be sure you state in your referral agreements if the referral fee will be paid over the lifetime of the relationship or for only the first sale.

It is critical that you track all your sales referrals, whether you enter into a formal agreement or simply take an email of a lead pass from a trusted business partner in your network. Enter the lead into your CRM with the proper tag to identify who gave you the lead. Enter when you receive the lead and monitor the progress of the lead as it moves through your sales pipeline. Measure all your partners quarterly to see how they are helping you grow revenues. It will provide you intelligence in how to manage the relationship for maximum profitability.

If you do enter into a sales partnership where the other entity is representing you on the front-line, you need to equip your partner with the same tools and resources you provide to your own sales team. You need to give them the ability to introduce you, what you do, the problems you solve and the value proposition of your products and services. Spend time providing regular updates about your business and services to keep your partners informed and engaged.

Top of mind awareness in this type of partnership is essential to getting value from your relationship. When you provide value, you will get value in return.  A partnership requires efforts by the giver and the receiver. Be persistent in developing good partnerships, measure activities and reward the efforts of those that help grow your business.

“Try not to become a person of success, but rather to become a person of value.”
- Albert Einstein

Other types of partnerships that will be discussed in future posts include Co-Selling Partners, Channel Partners, Strategic Partners and Investment Partners.

Jamie Glass, Founder, President and CMO of Artful Thinkers

Over the Hill or Through the Woods

The beginning of every year is an opportunity to set your direction and communicate your path forward. It gives you the chance to review and define your goals, personally and professionally. For everyone else, it gives them the ability to know how to best support and follow the leader. Does everyone that can impacts your business know your 2013 plan?

The lack of a defined plan for the year, leaves everyone taking their “own” best path forward. In the end, this may not produce or represent the organization’s goals or objectives. People will be moving, activities will be happening, yet you may be headed to exactly where you did not “plan” to go. It is up to you to stop the wandering effect of your business and your followers. Set the direction. Communicate your exact plan. If you don’t have a plan, create one now — before it is too late.

If you have a plan and you have not shared it, this is the week to get it done! People and businesses need goals and plans. You can work endless amounts of time, expend great energy and spend a lot of money to end up in the wrong place. How did that happen? Usually it is because everyone is not working collectively on the same outcome. Everyone is heading in a direction, but it may not be the “right” direction.

As a leader, it is critical to everyone working with you that they understand your strategy and goals for the business. A plan provides the road map empowering you to define the activities and tasks. It opens the door to assigning responsibilities and setting accountability. More importantly, it gives you the capability of making a pivot or shifting your plans by creating a benchmark for how you will measure success along the path forward.

Working on a shared and communicated plan, gives business leaders a reason to stay in touch with employees, measure their progress and assess performance. People thrive on accomplishments and desire feedback. Knowing how they are contributing to the success of the business can only be measured by stated goals and objectives.

Get everyone working together. Options may be limited or options may be bountiful based on the path you choose to take the business. Communicate your choice. Will you be headed over the hill or through the woods. What will be in the basket full of goodies you will offer to your customers, vendors, employees and partners. How do they prepare to avoid risks? What will be awaiting when they arrive at the determined destination?

Your team is waiting for you to tell them the story. How it begins this year and how it will end. Provide regular updates and know that people will be looking for you to lead them in the direction you have shared.

“If everyone is moving forward together, then success takes care of itself.” — Henry Ford

Jamie Glass, Founder, President and CMO of Artful Thinkers

Growing Your Business by Word of Mouth

If you had to solely rely on word of mouth and referrals to grow your business, could you? Would you?

It depends on your word of mouth power, the factor from which you attribute new customer acquisition by recommendations from others. The ultimate test to measure your word of mouth power is to forecast the growth of your business through a single source — referrals. Would you miss your revenue target or exceed financial expectations?

Word of mouth (WOM) requires talkers. People who are willing to stake their reputation on telling others about you, your business and your value. Word of mouth marketing (WOMM) may be the most cost effective way for you to grow your business, if you have invested in creating an army of talkers. Talkers are promoters, followers, happy customers and raving fans.

WOM marketing and advertising is often advocated as free. This is simply not true. The outcome of word of mouth may be free from cost of sales. WOM requires a significant investment. An investment in resources that will carry your message forward. An investment of time educating others on the value of your products and services. An investment in exceeding customer, partner and employee expectations. Acquiring new customers may factually require a smaller investment than buying ads and cold calling; however, it is not investment free. You need to invest in your word of mouth strategy to make sure it really pays off.

You can invest in a WOM strategy by giving people a reason to talk and by continually asking others to talk about you and your business. Invest in WOM by giving people the proper tools to share your message. Talkers are your most valuable source for marketing, if they can speak from first hand experience. You can buy fans. Buying fans does not create loyalty or truth telling. The best talkers are those that trust you will deliver your value. They are someone who has found your solution to be worthy of sharing and promoting to others.

Knowing what others are saying about you and your business is measured by the amount of customers acquired through word of mouth.  If no one is referred to you by WOM, that is a danger sign. People are not telling others about your value. A bigger red flag might translate to a reputation problem.  When is the last time you asked your fans, customers or employees to spread the word? Are they enthused to get the word out or hesitant to refer others to your business?

People talk about what they like, what they trust and what they value.  All of these are earned markers of success in business. You earn them by doing a great job and exceeding expectations. The markers are currency. A currency that is transferred by word of mouth referrals. Start by setting your marker to do great work and then ask people to start talking. When they start talking, you have power. You have the power to win new customers by word of mouth.

“I would rather earn 1% off a 100 people’s efforts than 100% of my own efforts.”  J. Paul Getty

Jamie Glass, Founder, President and CMO of Artful Thinkers

Take the Chill Out of Cold Calling

Call reluctance is experienced by all business professionals, no matter their role.  Executives returning messages from upset customers, accounting personnel calling on past due notices and technology team members shopping for service providers.  Imagine if your entire day’s success was measured by the number of calls you made to convince strangers to buy your goods and services.

No. Not right now. No, thanks. Not interested. Maybe. Not in our budget. Hang up. Send me information. Yes.  That is the typical day of a sales person who is building their pipeline, repeated over and over again.  And we wonder why it is hard to find and retain great sales people. There are not many of us who would put at the top of our career ambitions to be rejected several times a day.

Cold calling is rarely listed as a favorite work activity; however, for millions it is what pays the bills. Selling is fundamental to our economy. There is no business until something is sold. Embracing the fact we all need to make cold calls, how can we take the chill out of one of the most important activities in business?  Here are a few tips to prepare for a day of cold calling:

1.  Know your target market. Every buyer is unique; however, they will have similar demographics, sociographics and psychographics. Spend time understanding the common data characteristics, along with behaviors and motivators.  For example, if you are targeting a small business owner, know what drives them to change.  What fears do they face in making buying decisions? What would benefit them the most personally and professionally when they say yes?  The more you know about them, the easier it will be for you to make a “warm call” into a known, targeted buyer.

2.  Feel the buyer’s pain. There is a natural tendency for inexperienced cold callers to talk about their reason for calling more than finding out why the buyer would benefit from their products or services.  Stop. Listen. If you are doing the most of the talking, you are losing.  You will never hear the buying signals when you are spewing facts, features, and generic benefits.  The best technique is to understand and relate to your buyer so they have confidence you are doing what is best for them, not you.

3.  Quantity matters. It is far easier to deal with rejection if you can get a “win” during your calling spree.  Plan with enough time in a single day to make calls in blocks of several hours. One, right after the other. Hang up, dial the next.  If you stagger your calls throughout the day or over longer periods, you are simply prolonging the pain. Dial until you get to yes and then dial more. Target how many yes calls you need in a day to hit your weekly and monthly goal.

4.  Needs analysis pays off.  Do your research on your buyer. You will be expected to speak to their individual business needs. There is no excuse to cold call blindly. ”Google them”. It takes seconds now to find valuable data online about buyers.  You have access to profiles in LinkedIn, you have company websites with executive profiles, products and company information, public reports and news. Do your homework.

5.  Call with intent. What is your goal in cold calling?  What qualifies as a “yes”?  As with any business function, have a goal and objective with every call. The only way to get to the yes is to ask – ask for the sale. Get agreement along the way of your presentation and make sure you are aligned in your mutual objectives. You are solving a problem for the buyer. Countless deals are lost because people think making the call is the goal. That is not the win. The win is getting the deal.  Ask for their business.  It only counts when they say yes. When they say no, ask again.

A sales person has to remain calm in the chaos of measurable rejection. They have to keep their eye on the “prize”.  One more call to a yes.  One more opportunity to use their real skills and talents of negotiation and the power of persuasion to fulfill a need.

Respect and reward those that you depend on to make the calls to grow your business.  If you are the cold caller, prepare to win.  Know your target, be diligent in your process and never forget to ask.  It is the glimpse of hope, the possibility of acceptance and the incredible satisfaction of closing a deal that keeps a cold caller motivated. Commissions aside, most sales people will say they get the greatest reward from winning.  Winning when a customer says yes!

“For every sale you miss because you’re too enthusiastic, you will miss a hundred because you’re not enthusiastic enough.” - Zig Ziglar

Jamie Glass, Founder, President and CMO of Artful Thinkers

Additional Sales Related Posts by Artful Thinkers

http://www.artfulthinkers.com/prepare-to-hire-a-sales-person

http://www.artfulthinkers.com/questions-sales-candidates-ask-that-should-stop-the-interview

http://www.artfulthinkers.com/a-bad-sales-hire-can-crush-a-small-business

http://www.artfulthinkers.com/5-essential-topics-for-a-winning-sales-proposal

Prepare for a Happy Business New Year

There are only a few weeks left that will define how your business performed this year. Are you happy with the anticipated results?  If the answer is yes, are you prepared to deliver the same performance next year or go to the next level?  If the answer is no, are you prepared to deal with the obstacles and challenges that prevented you from achieving your goals?

There may be little time to change the results of 2012. There is plenty of time to prepare for changes in 2013, if you start now.  Pivoting from your current trajectory requires strong leadership and preparing a detailed plan to execute starting the first day of the new year.

Reviewing the past several months, is your business foundation strong enough to build the next phase of your expansion?  Your foundation needs to be durable, providing the necessary support to accelerate current business practices that will generate more revenues and improve overall performance.  A business that is built from repeatable practices for product development, sales, operations, marketing and service, is a business that is ready for sustainable growth.

In your evaluation of the past year, you are not convinced your business is running at current capacity or operating efficiently, it is well advised to spend the final weeks of the year to identify the primary obstacles and demands your business require to get on track for better performance in the coming year.  It is time to invest in your business to get it on track for growth.  Do you need to invest in people, products or infrastructure?  What will it require in time and finances to build a strong foundation for future growth?

One of the biggest challenges for small business owners is to look outside the day-to-day operations to see the threats and opportunities for growth.  If you do not have an advisor, seek help from peers who can give you an objective assessment.  You want to have a comprehensive plan with orientation toward your business goals and tactics that can be executed upon by your committed team members at the start of the year.  Your plan needs to be opportunistic and realistic.

Now is the time to plan for the coming year.  How much do you need to invest?  Will you need to pivot from plans that have not provided expected results in the prior months?  Your team is waiting for your defined plan.  They want to know where they are headed so they can meet your expectations.  Take the steps necessary to get ready for the best possible outcomes in the coming new year.  The action you take today, will impact where end up next year.

“If you don’t know where you are going, you’ll end up someplace else.” ― Yogi Berra

By Jamie Glass, contributing editor at Project Eve, focused on startups, marketing, sales and leadership.  CMO & President of Artful Thinkers and Managing Director of Sales & Marketing Practice at CKS Advisors.

Return on Marketing Requires an Investment

One of the most important decisions a business owner or CEO will make is establishing a budget for marketing. Like talent, product and infrastructure, marketing must be viewed as a necessity in business.  Marketing expenditures are essential investments for growth.

An average SMB (small-to-medium size business) will typically set a marketing budget at 4% to 6% of sales revenues.  There are several factors that can impact this budget.  As an example, a well-funded startup may invest 20% of revenues for aggressive consumer acquisition programs and advertising.  Notice, the “well-funded” qualifier.  Likewise, there is always difficulty in setting a budget for a pre-revenue company. Entrepreneurs will often spend most of their investments in product and then struggle to bring in sales. Startup costs must include marketing.  For every dollar invested in product, people and infrastructure, an equal dollar should be set aside for investment in sales and marketing.

Here are three simplified phases for marketing investment planning:

1.  Brand Awareness:  Your marketing investment should start with focus in reach and awareness including brand identity, a website, company advertising and direct and social marketing.

2.  Engagement: The second phase invests in additional marketing programs that support your sales efforts including lead generation, publicity, web marketing (SEO and SEM), market validation, events, advertising, presentations and customer case studies.

3.  Nurture:  Finally, maximize your marketing investments with customer communications, CRM services, loyalty initiatives and nurturing programs to maintain the valuable potential and existing customer relationships.  Once you have them engaged, use your marketing spend wisely to develop and grow your relationship.

After your marketing budget is defined, you will want to establish how you will measure the success of your investment.  ROMI is the acronym for Return on Marketing Investment.  The calculation is total revenue divided by marketing spend.  ROMI = Revenue ($) / Marketing Spend ($).

Some marketing activities such as branding, advertising, PR and social media are harder to track impact and influence. As a rule of thumb, the simple ROMI equation gives you a thumbnail sketch of your return on your marketing investment.  ROMI is a good KPI (key performance indicator) for leaders to use in the business dashboard.

If you are a startup or pre-revenue, the marketing spend will be set as your budget for purposes of forecasting. Some may argue that there should be other factors added or subtracted, such as attributable revenues; however, most businesses have a difficult time tracking every dollar spent on activities such as advertising. Start with the broadest “buckets” and as you increase your marketing reporting and tracking sophistication, you can scrutinize spending with finer analysis.

Marketing is an investment.  Success in ROMI requires budgeting, reporting and analysis in order to fully actualize the benefits.

In lean times, business owners have a tendency to cut marketing spend. Lost time and lack of investment, even during challenging periods, impacts long-term growth. The result may not be felt right away. It is an illusion. Prolonged periods of reduced marketing spend can dramatically reduce sales opportunities. The fewer dollars you put into a marketing budget the greater the exponential impact on future revenues.

Similar to an investment savings account, the more you put into your “growth” marketing account, the higher potential return on your investment. The more dollars spent on high risk marketing activities, the greater risk to returns. Any sound investment advisor, marketing or financial, will counsel a business owner and CEO to invest based on the organization’s risk tolerance.  Marketing investments should be treated like any financial investment.  Know your risk tolerance, invest accordingly.  If the business has low tolerance for risk, eliminate marketing spend in expensive tactics that are difficult to measure. Always diversify your investment to mitigate risk.

In order to qualify for a return, it requires an investment.  Failing to set aside funds to market is failing to invest in business sustainability.  Expectations of sales without an adequate marketing budget is a business built on luck. Though we would all like to be lucky, if you plan to sell something, invest in marketing to create the sale.

“I have a problem with too much money. I can’t reinvest it fast enough, and because I reinvest it, more money comes in. Yes, the rich do get richer.” -Robert Kiyosaki

By Jamie Glass, CMO & President of Artful Thinkers and Managing Director of Sales & Marketing Practice at CKS Advisors.

Vision Statements are Worthless without Disciplined Focus

Entrepreneurs can spend countless hours crafting their vision and mission statements. It is often assigned to every leader as a required task in strategic planning. Business investors and advisors will ask you, what is your vision? Imagine answering, “I don’t know!”

Do you have a vision? A mission? Business values? Often guilt rises in those that have not defined their vision when questioned by those that “know”. Thus the ritual begins. The business owner starts to define the grand vision: What do I want to be? What is our ideal universe? What is our big hairy audacious goal (BHAG) as a company? What motivates us?

Tah-Dah! The task is complete. Yes, you have a company vision. Check the box. Your purpose for existence as a business, which is now articulated in a small paragraph, makes it’s debut on websites, in business plans and sales presentations and supported in company marketing communications. What is the value of this exercise? Can you translate it to revenue? There are businesses that have you memorize the vision. Vision testing. They are driven by the belief that if everyone is united by a common vision, they will achieve more.

Granted, there is no argument that you need a strategy to win. If your vision consists of words to satisfy the strategic planning process, your vision is worthless. A vision must be supported by disciplined focus to accomplish your business goals. It is what differentiates the good from great. Why? It is the ability to look beyond the visionary clouds and execute on your strategy. Disciplined focus delivers results.

Vision is unlimited. Vision gives you big picture, inspiration and motivation. Focus influences your capability to execute on what is most important. Real power to deliver on a vision comes when you narrow your focus, allowing you to concentrate and build confidence. Disciplined focus enables you to positively face challenges and create sustainability in your business. It is the foundation for growth. “My success, part of it certainly, is that I have focused in on a few things.” — Bill Gates

Have you ever watched a 3 year-old in a grocery store walking along side their adult companion. They seem to lack much interest in the whole shopping experience. Suddenly, they set their sights on what is intentionally positioned at their eye-level to grab their attention. They make their escape with remarkable strength. Bolting in a straight beeline, with determination, to the prize! They have disciplined focus on the outcome. They grab and go! Vision. Focus. Results.

If you have a vision or are thinking you need to craft a vision statement, take a few minutes to define the expected outcomes from your declaration. How does the vision help you focus on what is most important for your business? How do you use your vision as motivation? How will the vision help employees be better in their roles? How will the vision drive the business forward? Once you know the desired results, you can apply the disciplined focus to execute your strategy and accomplish your business goals.

“A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.” — Brian Tracy

By Jamie Glass, contributing editor at Project Eve, focused on startups, marketing, sales and leadership.  CMO & President of Artful Thinkers and Managing Director of Sales & Marketing Practice at CKS Advisors.

Entrepreneurial Spirit or Stress

High energy and optimism drive entrepreneurs to overcome the daily challenges of starting and running a business. It is drawn from the spirit of achievement. A belief in winning. The achiever reflects on the vision supplanted in the back of their mind that reminds them they can do it. Entrepreneurial spirit motivates. Unfortunately, entrepreneurial stress can be harmful. 

Often times I see business owners who fight gallantly and passionately to get their businesses off the ground. Overcoming every obstacle with stamina and vigor. Then the really hard work begins, as if the launch wasn’t difficult enough. Selling. Operating. Scaling. Funding. HR, PR and avoiding the ER. 

Days begin at 5AM and end around midnight. Sleep is sacrificed in place of getting more done. Family and friends watch on the sidelines as the entrepreneur climbs to the top. They are the cheerleaders, sounding boards and allies. They see the competitiveness to win, so they encourage you more. You’ve got spirit! You can do it, yes you can! 

Our colleagues and advisors rarely say stop or slow down. Why? They don’t want to crush the dream. They want to keep the spirit alive. Businesses are built with emotions of positive thinking, ambition and heart thumping enthusiasm. They are also built with blood, sweat and tears. We chant faster, better, more. We ignore slower, take a breath, and reminders to enjoy the journey. We convince ourselves we work better under pressure and stress. 

As we are conditioned more than ever to reach for the stars, who is telling you to chill out? It seems counter intuitive to being an entrepreneur. Is it? Can you get more accomplished when you are relaxed and well rested? There are countless studies that prove stress is bad for your health. It increases heart disease, inflammation, chances of having a stroke, weight gain, and even increases odds of catching a cold. Relaxation studies show we can counterbalance many of the health risks. Yet, out of fear of failing, the entrepreneur presses on and tries to do more. 

I am reminded of a wise mentor who once said, do you want your epitaph to read “I Worked the Hardest”. Know anyone that has health issues from living stress-free or being well rested and relaxed? Know anyone with health issues from living in the hyper stress mode, working 18 hour days, not sleeping, and sacrificing all “me” time? 

Take this advice from a self-subscribed workaholic, it may be time to relax! Here are are few ideas on how to get back to the spirit and reduce the entrepreneurial stress. 

1. Remind yourself of the WHY. Why are you building a business? Why are you working so hard? Why are you driving yourself and probably your family crazy? Write down your why and review it daily. If it is for your retirement, for your security, for your family or for your employees, they will all tell you they would rather have a bit more of the relaxed you than a bit more stress. 

2. Turn off the electronics. We are more wired and connected today. Checking emails first thing in the morning can create stress before you even get started. Smartphones, laptops, computers, TVs, off! Set a schedule for when you will be connected and give yourself the freedom to be off the grid. 

3. Say hello! Reach out to past colleagues and mentors. Get together in real time, face to face. Perhaps they are in the same predicament of being overloaded and overworked and are looking for someone to help give them a reprieve. 

4. Read any good books lately? No one can argue that reading is good for the mind and soul. Take 20 minutes a day to refresh your mind. Give yourself time to escape, explore and grow. 

5. Prioritize. Do you have a list of priorities? Take your list and categorize the A list, all which have to be done by a committed deadline. Next is your B list, those items that are important but are less urgent. Finally, your C list that captures those tasks that would be nice when completed; however, do not endanger your well-being or put the business at risk. 

6. Escape. If your business can not survive without you for a weekend, a week or even two, you do not have a sustainable business. How would an investor perceive your business if it can not operate without you. In other words, the business is you. Do not believe you are helping your customers, your investors or employees by being the one that makes it all run. It is bad for business and bad for you. No one can sustain the pressure of being the sole enterprise. Delegate and escape. Force the business to run without you. 

If you get to the end of the road and the sign blazes with bright lights that you made it, congratulations. You did it. Now, look back and ask was it worth it? Did you enjoy the journey? If you are still on that journey, stop and breathe. Relish in the spirit of being an entrepreneur. Enjoy the growth in your business and your personal experience. Don’t miss out on life to get to the end. 

There is no recovery from lost time or relationships. Make sure it is really the entrepreneurial spirit that is motivating you, not the stress controlling you. Live Long. Be Happy. And Prosper.

About me:  I have been helping business owners and CEOs grow, market and expand for more than two decades.  My corporate experience comes from sitting at the table as a senior executive in public and private companies.  I am a ravenous information consumer.  I am passionate about selling, marketing, digital media, technology, social engagement, investing, leadership, growth, women in business, networking and entrepreneurship.  I started as a communications person out of college and now I use this art to ignite conversations on topics that relate to my passions.  My goal is to help others do better and do more.  I am a managing director at an investment banking firm and own my own sales and marketing consulting practice.  Carpe Diem! jamie@artfulthinkers.com @jglass8