It is critically important to do primary market research in ALL phases of a startup (pre, during, and post). When you are at the ‘idea stage’, this should one of the first things on your ‘to do’ list (even before the business plan). By primary market research, I mean actually going out and talking to people who work in the same industry you are hoping to enter (competitors, suppliers, distributors, etc.). This may sound a little bizarre. After all, why would a company want to give advice to a potential competitor? However, you would be surprised at how open people are to discussing their industry with you. You absolutely need to get concrete feedback on an idea in order to create something tangible out of it. There is also a fear among new entrepreneurs that people might ‘steal their idea’. Consequently, they elect to keep quiet about their idea unless absolutely necessary. As my small business professor once told me, for an idea to transform into something real, you have to discuss it with as many people as possible. That’s the only way to find out if the idea is viable or not. Naturally, you have to be willing to accept the truth, even if it hurts. It will save you bigger headaches in the long run.Besides, you need more than just a great idea to build a successful business. If it was that simple, every person with a great idea would be a successful entrepreneur.
Primary market research could also mean going out and talking to consumers. What are their likes and dislikes about a particular product or service? This will help establish if there is a particular need in the market that is presently not being met. It can also give you ideas for new features you can add to your product or service. This type of research can be done through surveys, focus groups, random interviews, or even cold calling.
Whether it’s talking to industry participants or actual customers, a business owner always needs to stay connected on a grassroots level. The business environment is constantly changing and you need to stay on top of the latest trends. If your business is not constantly evolving, you are losing ground to those who are.
Last week, I talked about the principles of time management covered in an excellent book: “The 7 habits of highly effective people” by Stephen Covey. I went over the four quadrants in which we can place any and all of our activities and how leadership is focused on Quadrant 2 activities (those that are important but not urgent). The book also talks about how we should identify the different roles we have in our lives (e.g. entrepreneur, father, husband/partner, etc.) in order to establish our priorities. We can then identify a few key quadrant 2 activities for each role that we hope to accomplish over the course of following week.
This week, I will summarize the point of view of another great author on the subject of personal productivity. In his book, “The 4-hour Workweek”, Tim Ferris uses an interesting title for his chapter on time management: “The end of time management” (how can anyone resist after reading such a title?). He makes an interesting distinction between ‘being effective’ and ‘being efficient’. Continue reading
Time management is a skill that most of us have yet to master. No matter how many things we do during the day, there always seems to be a long list of unchecked ‘to do’ items. This is something that I’ve struggled with as of late. Starting a business on your own can become overwhelming very fast. The volume of things to do sometimes reaches a point where all you feel like doing is stashing them in a big bag and hiding it somewhere for a few days. But that only compounds the problem.
I decided to go through the titles in my bookshelf and take a look at what the experts had to say on the matter. The two that were most useful were “The 7 habits of highly effective people” by Stephen Covey and “The 4 hour workweek” by Tim Ferris. In part 1 of 2 of this blog posting, I will go over what Stephen Covey has to say on time management and in part 2, I will do the same for Tim Ferris. Continue reading
‘Performance Plus‘ is a great financial tool available to small businesses. I used it extensively when creating financial statements for my business plan. It allows you to access industry averages for income statement and balance sheet items, financial ratios, and profitability information for small and medium sized businesses. You can search by industry code (NAICS) and see the financial averages of companies in various categories. You can perform a search on a national (all of Canada) or provincial basis. The data is very dependable since it comes from a sample of actual Revenue Canada tax returns of incorporated and unincorporated businesses.
When you are applying for a grant, loan, etc., you will be required to provide financial statements (income statement, balance sheet, cash flow). An area that can be problematic is providing expense data (since the business is not yet off the ground). Performance Plus provides you with an accurate cost structure of similar businesses in your industry. You can also analyze expenses based on different revenue levels and thus project how your cost structure may change as your business grows. Existing companies have the option of entering their business data (revenue, expenses, assets, liabilities, etc.) which can then be used to benchmark their company against industry averages. This can help them identify areas in which their business deviates from the industry (e.g. not spending enough on advertising).
Another powerful free tool that should not be overlooked!
I had an experience recently that brought to light the importance of taking ‘long shots’ every once in a while. What’s a long shot? In the world of entrepreneurship, I would define a long shot as an initiative that has very little chance of success. You might wonder why anyone sane would bother with a course of action that is bound to fail. Put simply, the potential for gain is huge and the potential for loss, aside from rejection, is non-existent. Allow me to illustrate. A few months ago, I was reading an article in the National Post about the Canada Youth Business Foundation (www.cybf.ca). It’s an organization that helps young entrepreneurs launch businesses. In addition to providing financing through the Business Development Bank, they use a very hands-on approach by matching the entrepreneur with a qualified mentor for a period of two years. The article was about a young entrepreneur in Montreal who started a retail store that sells products related to skateboarding. He has having difficulties in the area of human resources. A mentor from the Business Development Bank helped him deal with these issues by crafting a new HR and management strategy.
I was very impressed with the mentor. He seemed very eager to help the young man succeed. I thought to myself that he is exactly the kind of person I am looking for in a mentor. I wondered if he would be willing to take on a similar mentoring role with me. I read the article again to see if it mentioned his contact information. It didn’t. All I had was his name and where he worked (BDC). I then went on the BDC website to search for his name. Nothing either. I could start calling each BDC branch one at a time, but it would be time consuming. Besides, I wouldn’t know what to say to him. Personally, I’m a big fan of email. I like getting a conversation going through email first before a face to face meeting. It allows the exchange of basic information. There is also less pressure on both sides and it is less intrusive (I find it annoying when I receive a call from someone, who wasn’t referred to me by somone I know, asking to meet me…it doesn’t seem natural). If the email exchange goes well, I then suggest a meeting in person.
The problem here was that I couldn’t find the gentleman’s email address anywhere. I then had a great idea…a real ‘long shot’. Continue reading
I previously mentioned a great book on small business marketing called Duct Tape Marketing by John Jantsch. In it, he introduces a great concept called the marketing hourglass. In marketing, we often hear about the marketing funnel. where businesses “attempt to generate leads on a broad scale and then funnel them toward becoming a client with increased contact and content”. Though useful, it leaves out a critical part, namely, what to do with clients once they have made a purchase.
What many new businesses don’t realize is that the majority of their growth will most likely come from: (1) selling premium products and services to existing clients and (2) the referrals generated by theses same clients. I was talking to my programmer recently and asked him about how he markets his business and generates leads. He told me he doesn’t do any marketing. All his business comes from word of mouth or referrals. I asked another friend of mine who operates a successful translation company with several employees. He told me the exact same thing. In both instances, I was expecting to hear about marketing strategies related to advertising, cold calling, B2B marketing, or today’s catch word, social networking. Continue reading
Operating a business in Quebec means sometimes having to write documents in both English and French. Since most people are usually native speakers in only one language (in my case, English), writing in their second language can sometimes be problematic. I usually have friends double check my French documents (e.g. emails) before sending them out. However, this whole review process can be time consuming.
Enter a new feature from Google Docs. At the click of a button, you can translate your text into your choice of 42 languages. All have to do is select the text in your Google document, click ‘Translate Document’ and then select your language.
I haven’t tried all 42 languages, but I can definitely vouch for the English to French and French to English translators. I remember how not too long ago, the quality of online translators was extremely poor, sometimes even comical. Since then, however, there has been some major improvements.
I still wouldn’t rely on this tool as my sole translator. In other words, it is still necessary for a native speaker to proofread the translation. However, it is much better than starting a translation from scratch. From my experience, It also reduces the time needed for proofreading by at least 50%.
A thumbs up once again to Google for thinking of another cool way to make our lives easier.
I had my first meeting with my mentor about a week ago and one of the first questions he asked me was: “What is your unique value proposition?” This was a new concept for me. I started talking about some of the great features of my product (language training): English for the professional setting, fast results, money back guarantee, etc. However, as my mentor explained, a value proposition is more than a description of features. It is a clear statement of the tangible results a customer gets from using your product or service. It answers the key question that every customer asks: “Why should I buy from you?” A strong value proposition will set you apart from the competition. In fact, your goal should be to communicate so much value that your prospect will no longer feel the need to go elsewhere.
Every company needs a strong UVP. Benefits include greater differentiation from competitors, an increase in the quantity and quality of leads, and greater market share. Once again, remember to include tangible results in your UVP. Statements like “the most technologically advanced system in the market” and “best in its class” don’t mean much in today’s world. Every other company uses a similar statement and there is no way of knowing who is telling the truth and who isn’t. Ask yourself: “What makes me different from everyone else?”, “What need am I satisfying for my target market that others have not addressed?” You can also ask your existing clients. Their perspectives on why they do business with you might point you in the right direction. The following is an example of a great value proposition:
“Our company is the exclusive provider of patent-pending project management software for paving contractors, saving U.S. contractors over $34M in 2005.”
The statement is specific. It sets the company apart (exclusive provider, patent-pending software) and it demonstrates tangible results ($34M in savings in 2005). It answers the questions who, what, and why all in one sentence. Here are a few other good ones:
“Tectronica offers solutions that will improve productivity by 22%.”
“Our clients are able to reduce staff by 18% and maintain productivity levels. In most cases, their productivity actually increases.”
“Our clients have experienced pay back periods of just nine months when investing in our technology.”
I attended a great workshop at YES Montreal a few months back on negotiation, an important skill for a small business owner. It’s a skill we can put it to use in many different situations from our dealings with suppliers and customers to exchanges with our employees.
A key part of the negotiation process is preparation and the side that is best prepared normally has the upper hand. This includes having a clear list of your objectives and the areas that you are willing to compromise. It also means researching your adversary, their objectives and the underlying rationale. The more information you have, the better. The icing on the cake is to anticipate potential areas of disagreement and having alternative solutions ready. Continue reading
I was at a networking event a few months back and while having dinner, I happened to be seated next to a bright young man who was completing his MBA. We talked about many things, one of them being entrepreneurship. He was interested in this topic since he planned one day to launch his own business. Outside of school, he was very passionate about tennis. In fact, he had been giving private lessons for several years and he was now interested in turning his hobby into a full fledged business. So what was holding him back? Continue reading