8 Essential Tips for Busy Entrepreneurs
As a serial entrepreneur, I know running a small business is hard work, but there are lots of things you can do to make your life a little easier and increase your chances of success. Here are eight that have helped me, and will help you, too.
1. Know how to attract the media. Advertising is expensive; media coverage is mostly free. A press release announcing that you’ve hired a general manger won’t attract attention, but a stunt can.
My vintage biplane “flightseeing” business was naturally photogenic. One Valentine’s Day we offered free rides to anyone over 80 years old and invited the media. We had roses and heart shaped cookies, took pictures of everyone next to our aircraft and asked folks to share memories and photos from the early days of aviation.
The day of the event, camera crews and reporters showed up, and the evening news ran our B-roll video. The next day all the papers ran our story with pictures of those wonderful “seasoned citizens.”
We all shared heartfelt fun and the media coverage was worth thousands of dollars in future business at a cost far less than a single newspaper ad.
2. Understand how your customers decide. Consumers used to funnel product decisions through a process that went from awareness to interest to desire to action. Not anymore.
Overwhelmed with choices and relentless attempts to get their attention, consumer decision-making today is more a tunnel than a funnel. They decide what they want, often based on social media (e.g., Yelp) or customer ratings, and—right or wrong—they base their decision on that.
Make sure you know where people look for you and be sure you’re easy to find. Hint: it's not the Yellow Pages.
3. Make it simple and easy to buy from you. Amazon Prime's “free” 2-day shipments often are delivered in less than 24 hours. Zappos pays for returns. These companies delight customers because they make it easy to do business with them.
Our biplane business was ostensibly about sightseeing, but we knew we really were selling fun. So even our phone messages were entertaining and informative. “We’re busier than a one-armed wingwalker with a wedgie,” we told them as we explained our flights, “But hang on and we’ll be with you just as soon as we get our feet on the ground.” Everyone hates phone menus, but we made it fun and helpful—some people would even complain when we answered their call.
4. Track which ads work best. When you spend money on advertising, use different 800 numbers on everything so you know what works. They’re cheap ($10 per month), and you can download phone bills as spreadsheets. Analyze the details and you’ll learn where your customers are from and which ads, brochures, locations or rack cards pull best.
Our business is near San Diego. We were amazed when our analysis showed that about half of our customers came from L.A., twice as far away. We weren’t so pleased to discover that a “cheap” $1,500 remnant ad produced zero phone calls.
5. Know how to compute key ratios. A compass, airspeed indicator and altimeter tell pilots where they are and where they’re going. Business owners need a way to gauge how they’re doing, too. If you track Cash Coverage Ratio, Gross Profit Margin, and Accounts Receivable Turnover you’ll have the essentials. (For more information, check out this piece on how to manage your small business financials.)
6. Use contractors for simple tasks. Freelancers can handle short, definable tasks very inexpensively. Companies such as vWorker, Elance and oDesk are matchmakers that insure you get what you pay for. Administrative support, business services, design and art, technology, writing translation—if you have a job there’s someone out there eager to do it, and you can spend your time on more valuable tasks.
7. Don’t be a banker. The sooner you have your customer's money, the sooner you can use it. If you're selling to people who aren't paying you when they promised, or not paying you at all, you might as well start a bank because you're financing their cash flow problems.
8. Negotiate well, but only when necessary. Before you enter into a negotiation, decide what your best alternative is if you can’t make a deal. That’ll put the process in context. Then anchor it with an aggressive first offer (“He who talks first loses” isn’t necessarily true). Counter no matter what, even if the first offer is acceptable, so your counterpart doesn’t have regrets and start to demand concessions. If you have to make concessions, ask for some in return. (The Harvard Business Review has some great articles on how to improve your negotiating skills.)
Sometimes, though, you can avoid negotiating altogether. When the Chrysler PT Cruiser came out we thought it would match our vintage biplane style, but dealers were charging a premium and there were waiting lists. So to find the best deal we sent a letter to all the dealers within 200 miles telling them we were looking for bids and would finalize the deal by the end of the week. We had 11 replies including one that was $2,000 below MSRP and $6,000 below the highest bid. And the car was available immediately.
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