Considering a Groupon? 5 Pitfalls You Must Avoid
A friend lives in a townhouse and it’s about time to pressure wash the exteriors. The homeowner association got a few bids, but one owner spied a Groupon deal, which would have been significantly less expensive. He tried, unsuccessfully, to talk all the other owners into jumping on the Groupon deal. Had he been successful imagine what the owner of the pressure washing business would have been thinking. First he’d be elated that so many people snagged his Groupon, but when he started to do the work and realized he was going from neighbor to neighbor in this one townhouse complex, he probably would have been steamed. Chances are the homeowners would have all scheduled their cleanings at different times so his crews would have been driving to, setting up, and breaking down at the same location multiple times. It would have been extremely inefficient. Groupon, and similar discount systems, have worked out well for many small business owners, but often the story is exactly the opposite. You need to understand some of the pitfalls of using deep discounts for customer acquisition and have a clearly defined rationale for choosing Groupon or one of the other “daily deal” type of promotions. Here are five questions to ask and points to consider. Are you making a single sale or starting a relationship? How often does a homeowner hire a pressure washing service? Answer: not often. The owner of that small business couldn’t reasonably expect consistent follow-on business from the customers he served via the Groupon deal. A restaurant, on the other hand, if it impresses a Groupon customer, might expect to gain a “regular.” Have you done the math? If you’re selling a product, be sure you know exactly what your costs will be if your Groupon offer maxes out. Will you lose money on every sale and can you afford that, especially if almost all of the demand crashes down on you at once? This leads us to the next point. Groupon buyers are often procrastinators. I’ve heard from some small businesses that have posted Groupon deals that the people who take their offers tend to wait until just before the expiration date to cash in their Groupons. Typically, the business generated by these kinds of deals doesn’t spread out nicely over its given period of time. This can be especially disastrous if your Groupon deal expires around the Christmas shopping season. You’ll find yourself deluged with orders from Groupon customers and regular customers. You may struggle to meet demand and end up with some unhappy Christmas shoppers. Groupon buyers are often low-end shoppers. Some people look for “deals” more than they look for specific products and services. They get their emotional satisfaction from thinking that they got a “steal” rather than from the inherent value of the product or service that they are buying. Rather than stick with your small business and buy more of what you offer, they just start looking for the next insanely discounted thing to buy. Deep discounts can hurt your brand. Ultimately, if you’re trying to differentiate your small business in the marketplace, you need to do it with something other than a low price. You don’t have Walmart resources that allow you to operate on razor-thin margins. Further, when your full-price customers or...
read moreHow to Make Big Money on YouTube…Or Not
A friend who’s an avid fly fisherman occasionally posts videos of his exploits on YouTube. He’ll never forget two things about his little hobby: The time a fellow fisherman recognized him out on the stream because he had seen his videos (it happened just once), and When Google deposited $100 to his bank account that he earned through the ads that run at the beginning of his videos (this also happened only once, in about three years). Granted, the YouTube audience of middle-aged men who while away their spare time watching fly fishing videos online is rather small when compared to other YouTube demographics, but few of us are going to make any significant change through Google’s AdSense program on YouTube. So the question becomes: What piece of the puzzle does a YouTube channel provide in the success of a small business? In a small way (a very small way) I think my fisherman friend’s first point above gives us an indication of how useful YouTube can be to a small business owner. Even without trying, he achieved a measure of branding success. He was recognized. For him, fly fishing is just a hobby. However, if he decided to become a fishing guide, for example, he could post a significant number of videos on YouTube and probably do a good job getting his name out to his most valuable prospects. If establishing your authority has any place in your marketing strategy, creating a good YouTube channel with fairly deep content is a great idea. Jason Calacanis, whose videos are very popular on YouTube recently put it this way in a New York Times article: “YouTube is an awesome place to build a brand, but it is a horrible place to build a business.” In fact, you might want to steer clear of even joining Google’s AdSense program and running ads on your videos. According to those who have been working hard at generating revenue via ads, the odds are heavily stacked against you. First, Google takes a big cut out of the ad revenue; some estimate it at 45 percent. Second, the downward pressure on ad rates is enormous, and finally, so many content creators are competing for eyeballs that it’s almost impossible to get enough views to generate real money. With all of this negativity as a back drop, why would you want to bother cheapening your small business’ videos by running ads that aren’t going to impact your bottom line anyway? Of course, using your YouTube videos to sell your own products and services is a different story. Discovering the right blend of informative content to promotional content within a video can pay big dividends for your small business. Further, as I said above, establishing your position as an industry or product authority is always to your benefit. (By the way, Google won’t deposit money you’ve earned from YouTube ads until the balance due hits $100. That’s why it took my friend a few years to reap his handsome profit. He tells me his current balance is $27 and he’s praying that he lives long enough to see it hit the magic $100 mark again! His views have been falling...
read moreWhat You Absolutely Should NEVER Outsource in your Small Business
It’s so easy to outsource projects and tasks in your small business today that the possibilities seem endless. In fact, your small business can economically accomplish a lot of things that yesterday could only have been achieved by a much larger company with significant resources. However, it’s wrong to think of your global outsourcing ability as some kind of panacea to all of your operational and growth problems. Yes, the solutions are probably out there, but a bad outsourcing decision can be more costly than not outsourcing. Let me give you a simple guideline to internalize before you go crazy with outsourcing: Never outsource what you don’t understand. Maybe right now you have a thought kicking around inside your head like one of these examples: I need a WordPress website. I need a shopping cart. I need social media marketing. I need public relations. I need customer relationship management. I could go on and on with the list and you can probably add several of your own small business needs to it right now. Most of the items on my short list can be accomplished by outsourcing, whether it means hiring a freelancer or an agency, or signing up with some kind of cloud-based Software as a Service (SaaS). However, if you don’t really understand how these things work specifically in relationship to what you need – today and in the future – you can spend a lot of money on something that you’ll end up replacing very soon. For example, you don’t need to know how to program an online shopping cart yourself, but you need to know if you want one that connects to your inventory, has APIs that allow it to connect to a fulfillment service, allows for coupons, can be easily modified, etc. In other words, you need to understand shopping carts from an operational point of view. If you think you can find an experienced shopping cart coder and just hand off the entire project, you won’t get what you need. After the shopping cart is installed, you’ll spend the next weeks and months on a costly and frustrating adventure of discovering what you should have asked for the first time. If you scan my list above, you’ll see that some are technical items and others are more closely related to small business sales and marketing. If you’re a technical person, there’s a good chance you don’t have the best understanding or feel for marketing so you’ll want to outsource some of those tasks. The converse is true if your background and passions are in marketing. Many of today’s most successful startups are founded by partnerships where technical wizards join forces with sales and marketing pros. These types of Yin-and-Yang founding teams are often necessary in today’s startup environment where technical and sales success are equally important in order to achieve marketplace viability. When small business owners are about to go into a hiring mode, I tell them to make sure they have job descriptions in place. This forces them to understand what it is that they really need to have accomplished by the new hires. The same principle applies to outsourcing. Be sure you understand your needs and what can actually be accomplished before you dump a project into the lap of a contractor...
read moreThis Week in Small Business: Improve open rates, build a great small business team, and more
The Interweb has been bursting with great articles from experienced business owners on marketing topics lately. I’ve pulled out what I – and my Twitter followers – think are the best of the best. There are also some powerful insights into leadership, entrepreneurism and management. Marketing and sales The word “video” in email subject lines boosts opens by 19 percent, so why wouldn’t you be using video in your small business digital marketing? And if you need additional email help, here are seven more tips to get people to open your digital missives. I know that a lot of you have WordPress sites for your small business. Here’s an excellent article on common WordPress SEO problems. Are your social media marketing efforts falling flat? These could be some of the reasons. Understanding your customers is step one in sales and marketing. Here are the four personality types of your customers. If you’re like most of us, you’re always hunting down inspiration for blog topics. These seven ideas will definitely help. LinkedIn and Hootsuite recently did a webinar on how marketing and sales can work together for social selling. They came up with seven ways. Social media is sometimes elevated to a cure-all for every sales and marketing woe. It’s time to separate social media fact from fiction. Handle word-of-mouth advertising properly and you’ll get more of it. Micro-entrepreneurs and others participating in the sharing economy will create a huge demand for marketing, says Steve Olenski writing for Forbes. Leadership, management and productivity Teams that stay together over the long haul win championships. It’s the same in your small business. for creating world-class employee loyalty. Small businesses are the mainstay of the country’s economy, but small business owners are dropping the ball when it comes to saving for retirement. See if you relate to these obstacles. Entrepreneurs and business leaders in Memphis tell their stories and emphasize the importance of researching, networking and having cash. We all can agree on that last point, right? Social software isn’t just for marketing. You can use it in your small business to boost employee engagement. Small business owners and startup founders have to make decisions all the time. Here’s a guide to what, when and how to decide. Is your small business anywhere near a hurricane zone? If so, you’ll want these preparedness tips. Entrepreneurship, startups and innovation The jargon around startup and small business financing sometimes seems more like alphabet soup than anything related to the English language (as if English wasn’t already difficult enough). Get the lowdown on the terminology here. Check out this Periscope replay where I take a question from a caller about turning a part-time business into a full-time empire. And while you’re in the mood for video, don’t miss these 12 must-watch TED talks for entrepreneurs. Politics, government and the economy Red State, Blue State, Republican, Democrat or Independent, it doesn’t seem to matter – everyone agrees that regulation chokes small...
read moreDiscover this Creative Way to to Improve Your Small Business
Did you know that September 14 was National Boss/Employee Exchange Day? Did you do it? Did you trade places with any of your employees for a day so you could each experience the challenges the other faces? It may be one of the more impractical work-related days on the special day calendar and that could be the reason why its origins are rather clouded – no one wants to be held responsible. However, the concept behind the day is a good one, especially when you it’s applied properly. You see, there’s no way employees can step in and take over many of the most difficult tasks the boss faces – like hiring and firing. (Although a lot of employees might want to do these things…especially the firing!) Stay grounded From the perspective of the “boss” or the small business owner, it’s very important that they understand the challenges line-level employees face every day. Even if you’ve done those tasks yourself, it’s good to go back every so often and touch bases with the daily routines. In the military they have something that they call “mission creep.” Over time, more and more objectives or responsibilities will get added to a military campaign. These add up and make the successful completion of the campaign impossible. This phenomenon happens in non-military organizations as well and could easily be occurring in your small business. Employees get straddled with additional duties and no one ever tells them what they can drop in order to have time to take on the new tasks. When this is allowed to happen, eventually things get ignored or done in a slipshod manner. If you’ve been away from line-level responsibilities for some time, you may not appreciate the impact “mission creep” is having on your employees, so use the yearly National Boss/Employee Exchange Day as a way to re-ground yourself in the reality of what happens “in the trenches.” Small business cross training Let’s take this in a slightly different direction. I’m a proponent of cross training in the workplace. For example, when I go into a home improvement store I really appreciate it when one employee can help me find the paint I need as well as the landscaping items that I need. I hate it when I get passed from employee to employee just because the next thing I need is in a different department. This concept applies in virtually every business setting. The Japanese achieved superiority in auto production techniques in part because they were the first to cross train assembly line workers. When they did this it revealed upstream processes that were causing problems for workers further down the assembly line. Having cross-trained employees also makes scheduling easier and helps your operation run more smoothly when people are absent. So even though September 14 has been here and gone, plan some ways that everyone on your team can experience different tasks and responsibilities, including yourself! (By the way, for future reference, this special day is always the Monday after Labor Day, so mark your...
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