5 Ideas That Really Make New Businesses Work

5 Ideas That Really Make New Businesses Work

Starting a business is an exciting rollercoaster ride filled with new opportunity and wild imagination, but once the honeymoon phase wears off you have to make it work. In a time when everyone and their brother are creating startups, most won’t get past the first two years. So what can you really do?

Know Your Customers

During my time as president of Startup Connection, I learned a lot about branding and marketing. You might be surprised to learn that customer service, research, and pricing can be more important than your traditional understanding of “branding.”

Business

As it turns out, listening to your customers, developing relationships with them, and knowing them well enough to give them what they want is the best form of branding there is.

They know you and your values and can trust you to deliver. No amount of advertising or logo design can buy that.

Know Your Competition

This is something that’s easy to forget, and we often do it on purpose.

We either get so wrapped up on what we’re doing, that we don’t have a clue about our competition. Or worse, we’ve taken the idea of “not listening to our detractors” to a dangerous level. The simple truth is that if you ignore your competitors, you’ll be blindsided by them.

Use Google and Amazon regularly to scope out what competes with you – directly and indirectly. Direct competition is pretty easy to spot and compare: What’s their quality? What’s their price? Does it solve problems that my product doesn’t?

Google Amazon Logos

Indirect competition is harder to spot but equally important. For example, Dominos competes against Papa John’s, but they also compete against other delivery services out there, and they compete against any products that make it easier to stay in and cook.

Be Honest With Yourself

Too often we build up a fantasy that rationalizes our business failings and those ingrained issues that hold us back. Take a hard look in the mirror. The only way to truly fix your problems is to identify them.

Sometimes that means changing your method, or even your attitude, and other times it means making hard decisions like letting people go or pivoting to a more sustainable business model. Don’t let pride come before the fall and don’t fool yourself.

Identify your strengths too. Without reflection you won’t be able to recreate past successes. Plus, it feels empowering to know what you truly have under control.

By running a simple profit model, you can learn invaluable information about the structure and mechanics of your business. Some businesses are set up in a way that makes it very, very difficult to them to succeed. The sooner you can find that information out, the better off you’ll be.

Be Bold

Armed with knowledge, self-awareness, and exposure, you must be BOLD.

Presentation graphics, videos, packaging, and incentives are all keys to stand out. Early on, the money-back guarantee was a great way to get someone to try your product because it takes the risk out of the transaction. It still is a great idea, but you see some companies going even further and offering 200% money-back guarantee, meaning that you would get a refund plus the value of the product.

While you might think that it’s a crazy idea, there’s no question that it’s bold. It gets your attention.

When starting a business, you invariably get a ton of advice. Some things work, and some things don’t. Focusing on your customers, your competition, your results, and presenting it all in a bold, memorable way? Those principles never go out of style.

Dr. Bert Shlensky, president of www.startupconnection.net, offers experience and skills and a team devoted to developing and executing winning strategies for businesses of all kinds.  This combination has been the key to client success.  His books for the business entrepreneur: Marketing Plan for Startups & Small Business and Passion & Reality for Small Business Success, are available at www.startupconnection.net.

Operations And Logistics Are The New Brand Differentiators … Here’s Why

Operations And Logistics Are The New Brand Differentiators … Here’s Why

Operations and logistics are frequently viewed as secondary functions that can be handled by someone else. But here’s the thing: With data so richly available, using it to help reinvent operations and logistics can help you stand out just as much as the next electric car or purple cow.

Just take a look at some of the world leaders in business.
Uber
Amazon, Uber, Airbnb, and other sharing sites are turning their industries around with structural and operational changes that challenge old paradigms. It’s not the products or services that stand out but the operations, logistics, and method of delivery.

For example, Amazon does not just succeed on lower prices or by offering different products than their competitors. They have revolutionized, simplified, and automated ordering, customer service, distribution, and warehousing.

The results have been staggering. It’s estimated that in 2016, they represent about 30-40% of internet retail sales and 8-10% of total retail sales.

Operations Innovation Isn’t Just For The Big Businesses

You might be thinking, “But that’s for the big businesses. How can that help my small business?”

Changing operational paradigms is for small businesses, too! Take a look at GrubHub. They are a publicly traded company, but think of whom they help: restaurants, big and small. They’ve helped thousands of restaurants expand their sales by providing seamless delivery.

Outsourcing key activities like web design, social media, cloud services, CRM, and even distribution have become both less complicated and more affordable.

No matter the size of your business, you can streamline or maximize your operations to take your sales and profits to a whole new level. The key is maximizing forecasting, inventory control, and distribution to maximize service, investment return, sales, and profitability.

Here are a few things to keep in mind:

  1. Many operations experts say that 80% of sales are with 20% of your products. It’s often true, yet suppliers continue to proliferate styles, colors, sizes, models, and features to presumably serve more customers and provide more features. By keeping it simple, you help yourself and your customers.
  2. Pursue profit and not volume. Businesses frequently fail by adding too many stores, products, and marketing. In contrast, focusing on competitiveness, bestsellers, reducing costs, and reducing structure can have huge payoffs.
  3. Conduct a simple “SWOT” analysis (Strengths, Weaknesses, Opportunities, and Threats) to get a perspective on your business. The surprising aspect of this exercise is that we frequently take our strengths and opportunities for granted rather than maximizing them. For example, approaching key and repeat customers usually presents the greatest opportunity, lowest cost, and most profitable source of additional sales.
  4. Encourage testing new ideas and scrapping ones that don’t work. You will make mistakes. Focus on solving them rather than blaming someone. Consider using the process of develop, test, measure, and adapt. The measure step is, by the way, the most frequently forgotten.

It’s easy to get seduced by design, marketing, or the next flashy idea. Plenty of businesses innovate in these areas. Don’t forget, though, that just as frequently, success comes from innovation in operation and logistics.

This piece originally appeared on Alignable and was published with permission.

Dr. Bert Shlensky, president of www.startupconnection.net, offers experience and skills and a team devoted to developing and executing winning strategies for businesses of all kinds.  This combination has been the key to client success.  His books for the business entrepreneur: Marketing Plan for Startups & Small Business and Passion & Reality for Small Business Success, are available at www.startupconnection.net.

Hints to Make Sense of Current Business Trends

Hints to Make Sense of Current Business Trends

Between 2006-2008, the iPhone, Facebook. Google, Amazon, Salesforce, and several other technology companies started to explode. We are still trying to help management catch up with those opportunities.

On one hand, diverse fields like sports, medicine, budgeting, etc. are all using more analysis to make better decisions. The three-point play has dramatically increased in basketball (statistically shown to lead to higher scoring even if you shoot at a lower percentage), and even restaurants are using new analysis to improve sales and profits.

On the other hand, we also focus on innovation and the exceptional, which is outside the norm of everyday analysis.

While there is better analysis available, there are also more opportunities for mistakes and misuse. There are numerous potential contradictions to analysis. For example, bias, background, history, and fear can affect our analysis and beliefs. We see all the data – but only the way we want to see it. Therefore, it can be used to confirm pre-existing beliefs we may hold.

Our decisions and processes are also affected by the pace and complexity of change. Traditional organizations like brick and mortar retailers are dying while the iPhone alone is stimulating the explosion of new companies and industries. Global diversity and involvement is requiring more collaboration and complexity.

There are numerous free resources available on this topic. Some key suggestions to deal with these issues are as follows:

Write things down and don’t be afraid of numbers.

Many organizations I work with are afraid of writing and numbers and thus fail to understand their efforts or potential viability. Their excuses are that they are working on it, it takes too long, or they have no information.

However, as Yogi Berra once said, “If you don’t know where you are going, you will wind up somewhere else.”

The solution? Complete a simple elevator speech or mission statement and a quick budget. Do it for yourself and not for an investor or customer. Accept that it won’t be perfect, and try taking only one hour on each. It could save you days of going down the wrong path. As you go along you can modify, add details, and make it more useful.

Don’t ignore change and technology as critical requirements.

For example, businesses have multiple goals and realities. Many entrepreneurs are so excited with the idea of becoming the next Mark Zuckerberg that they completely ignore the need to make a profit and execute.

There are many factors that businesses have to contend with besides their overall profit margin – things like skills, success, and the financial planning of the business must be considered. Also, factors like the environment, safety, and social trends are areas where business owners need to consider.

Watch out and monitor BIAS.

Important issues like bias, prejudice, and, yes, even ignorance are also complexities that must be addressed. Business decisions are made by the accumulation of data, by measurements, and by analysis. How it is used, or ignored, can be devastating to a business. Here are some reasons how:

  • Seeking information that supports our favored hypothesis and avoids information that contradicts it.
  • Giving preference to positive information and ignoring details. For example, we frequently develop huge general market estimates that ignore the specifics of our target.
  • Looking for winners, especially in describing startup success stories, and ignoring the failures.
  • Ignoring negative evidence. In particular, the more invested we are in a project or product, the less we are willing to abandon it.

Startups tend to focus on universal answers and simple solutions. However, we know that issues are more complicated, and each business needs its own customization. One-size-fits-all solutions are easier to understand and technologically easier to execute. However, if you realize some of the complexities of these solutions, then it can be easy to adapt them to individual situations.
Dr. Bert Shlensky, president of www.startupconnection.net, offers experience and skills and a team devoted to developing and executing winning strategies for businesses of all kinds. This combination has been the key to client success. His book, “Passion and Reality for Small Business Success,” is available for free download at https://startupconnection.net.

Ideas to Mitigate the Challenges in Developing a Successful Team

Ideas to Mitigate the Challenges in Developing a Successful Team

Are you part of a successful team? As the saying goes, “There’s no I in TEAM.” However, the team also needs to give its stars the opportunity to flourish. Great entertainment groups sports teams and scientific groups are examples of excellence. In addition, teams need to encourage diversity, expertise, and disagreement to encourage new ideas and solutions.

More on that in a minute. First, let’s look at what every great team needs to even have a chance of being bold.

Successful Team

Traditional Bosses Are Obsolete In Most Cases

The complexity, size, and diversity of many organizations have changed the role of leadership. In particular, top-down styles are being replaced by coordination, expertise, delegation and collaboration. In particular efforts like systems. outsourcing, operations, big data, measurement, and automation are adding complexity and coordination to leadership roles.

Goals Are Becoming More Diverse But Still Need To Be Clear.

Growth, excellence, innovation profits, social welfare, etc. are all present as goals to various degrees in most organizations. However, they still need to be understood and clarified. For example, many organizations fail to change when their markets become saturated and they need to focus on profits rather than growth. Similar, research and development teams need more freedom to encourage their creativity.

I learned this early in life when I asked a fashion designer if she really needed to go to Europe for ideas. Her response was I can’t just sit in this office (it was really an awful office without even windows) and develop ideas without the stimulus and the time to brainstorm with my team. By the way, design teams should also visit operations to understand the complete impact of their designs. For example, how many colors do you really need?

Having common goals isn’t just pointing everyone in the same direction either. It’s about everyone helping each other get there. Truly successful teams see themselves as the collective whole and the individuals within.

Multiple Perspectives

So, you’re well on your way to success, getting everyone on the same page, maybe even hiring like-minded individuals to make that part easy. This is where homogeneity backfires.

The most successful teams are diverse. They bring different things, ideas, skill sets, and perspectives to the table. Things that you might not have even considered. Even the best leader won’t have a solution for every problem; they shouldn’t take all that responsibility either.

Trust & Respect On A Successful Team

The team can only work together towards that common goal if they trust each other to do so. When you have a diverse team, you especially need to build trust and respect with empathy and understanding for all those different viewpoints.

Successful Team

Good teamwork means camaraderie, brotherhood, and kinship. It’s a much sought-after feeling by managers, directors, coaches, and others in the leadership position. It means your team has a glue that holds them together. This is often seen as the ultimate end-goal to good group dynamics, but you’re not out of the woods yet.

Trust is key if your team members are going to feel able to express themselves. If you build your group up to speak their minds, though, you all better be able to listen too. Social informal interaction and activities are great for most groups. They can range from interesting dinners to group baseball games where everyone plays.

This can sometimes conflict with the elephants in the room that no one wants to discuss for mostly good reasons. Things like politics, sex, age, ethnic background, education, intelligence all affect the interaction of the group. On one hand, we need to understand these issues and encourage the diversity. On the other hand, we to ensure best practices even if it is not obvious. For example, it has been shown that in most cases test scores and background are better determinants than interviews in things like selection or college admissions efforts because of the underlying biases.

Positive Criticism

Feedback drives growth and everything is realistically vulnerable to criticism. There can be no precious ideas if those ideas aren’t the best for success. Ideas are morphed and molded by criticism and disagreement. For example, many cases of entrepreneurship as noted by Walter Jacobson in his book “Innovators” and others have witnessed wild conflicts between the principal parties. In many cases, one the parties even left after a few years.

This brings us back to that original point: Disagreement, conflict, and diversity are an inevitable part of growth. Bold decisions are only bold because they go against the grain; if everyone always agrees, there can be no bold decisions. The best teams are already capable of dealing with disagreement at this point because they have a clear common goal, a diversity of voices in the mix, and a respect for one another’s ideas.

So, it turns out that while there isn’t an I in TEAM, there’s a whole lot more than just T-E-A-M. A really great team brings out the best in all the I’s without sacrificing the total effort. When you find success within your team, only then do you stand a chance of finding success with it.

Dr. Bert Shlensky, president of www.startupconnection.net, offers experience and skills and a team devoted to developing and executing winning strategies for businesses of all kinds.  This combination has been the key to client success.  His books for the business entrepreneur: Marketing Plan for Startups & Small Business and Passion & Reality for Small Business Success, are available at www.startupconnection.net.

5 Tools to Make Forecasting Better, Easier and Simpler

5 Tools to Make Forecasting Better, Easier and Simpler

targetIn helping hundreds of small businesses and startups at Startup Connection (www.startupconnection.net ), I have learned that improving forecasting is frequently your best path to success. This includes financial, sales, marketing, operational, internet, human resources and other forecasts (which include models, plans and budgets) that help understand and improve business. A few fairly simple recommendations can make the process much more effective:

 

Commit to the process

You need to commit to the process of forecasting and not be limited by the natural fears and frustrations that can occur. Even if you never forecasted before, there are lots aids. Here are two:

First, just take a peek behind the curtain and see forecasting for what it really is. It’s a process like anything else, and simply participating in this process and understanding the mechanics of it are often just as important as the actual numbers. Frankly, the numbers always change and require constant development, testing, measurement and adaptation.

Secondly, follow Nike’s advice: JUST DO IT! I have developed hundreds of forecasts, and the more clients take charge, understand the variables and suggest changes, the better the forecasting is. For example, last week we helped a client allocate their inventory to better stock their shelves and improve productivity. In this case, simply having to add a fixed inventory goal at 100 percent made noticeable improvements.

 

Dynamic forecasts: or the art of understanding that life changes

Many forecasts are based on simple relationships, a few variables and one point in time. In reality, truly helpful forecasts require integration, change and have interaction among factors. For example, pricing, marketing and sales all affect one another rather than being separate. None exists in a vacuum. That may seem obvious, but most off-the-shelf models do not deal with them together. Similarly, forecasts that simply grow future sales by a percentage can be less effective because sales, marketing and costs do not all vary simply by volume.

Many planning programs put financial plans at the end of the process. Startup Connection helps client’s starts as early as possible with a forecast and then revises as programs develop and relationships change. For example, companies need to determine sales, growth, profit, and cost parameters and interaction while they are developing programs.

The plans that ignore financial and performance realities end up with the proverbial “hockey stick” graph of explosive revenue growth. Entrepreneurs frequently detail initial programs and assumptions they will then assume 20-50 percent growth rates (the hockey stick with little analysis of assumptions, resources or programs). It may look nice on paper, but it usually gets pretty ugly in real life.

 

Simplify wherever possible so you do lose sight of the forest for the trees

forest

How do you make forecasts simple and still be dynamic and integrated? Focus on what’s important. Follow the 80-20 rule where 80 percent of your sales will almost always be represented by 20 percent of your offerings or customers.

We have helped saved clients over $2 million in the last two years by simply reducing slow-selling items and conversely being in stock and focusing on the most effective marketing programs. How many times have you been to a grocery store sale where the basic items are out of stock in a few hours and the weird stuff is there forever?

Simple also relates to the characteristics of your forecasts. Focus on factors that really affect your business so you can understand them and estimate factors that are not as significant. For example, look at aggregate costs and administrative expenses rather than trying to forecast small items like telephone, utility, and insurance costs on a monthly basis. Also, forecast on a quarterly or annual basis and then break down months only if necessary.

 

Bias: Whether we admit it or not, we all have biases

The biggest problem with forecasting is bias. Analysists love to discuss mathematical formulas and measurement in affecting bias; however, most bias especially in small businesses, is simply human. Your assumptions, analysis and data can all unknowingly affect results. Variances in political polls are the obvious example but there are many others. For example, analysis of different age groups like millennials and baby-boomers can vary simply by using different starting and ending birth years.

Because we love to be right, we frequently will go to extraordinary lengths to make sure that we’re proven correct. Many times we don’t even realize we are doing it. A simple suggestion is to develop failing, realistic and optimistic forecasts and examine the reality and probability of the differences.

 

Keep the goal in sight: improving your decision-making

The goal of forecasting is to improve decision-making and identify great alternatives. Focusing on satisfying investors, suppliers, employees, etc. is simply an invitation to long-term problems. Similarly, you need to understand the goals, timeframe and precision in your forecasts. Are you simply trying to make a living in a short time or build a giant business that you know will lose money in the first few years?

One of the crucial aspects of decision-making is risk and outcomes, which are greatly affected by probability and information. Predicting results where there are significant and consistent historical data can be fairly simple; however, predicting results for new programs or with little or inconsistent data requires developing educated estimates.

Just remember that it is a process, and you will make mistakes. The goal is to learn from them and continue to improve. In summary, more consideration of the some of the issues above will lead to better forecasting. In general, I also believe we are overly concerned with the consequences of mistakes than the potential of risk. Thus, don’t be afraid to test new ideas and adapt to their results. This approach is well stated by Sheryl Sandberg in her comment, “What would you do if you weren’t afraid?”

Dr. Bert Shlensky (Bshlensky@startupconnection.net ) and Startup Connection (www.startupconnection.net) help entrepreneurs and small business owners maximize their capabilities and opportunities. We empower clients to understand and balance the risks of failure and the rewards of success.

We provide entrepreneurs with tools and recommendations to facilitate operating a business. Our focus is on understanding and analyzing the dilemmas and challenges to help entrepreneurs have better results, avoid mistakes, have greater efficiency and become profitable in less time.