Lots of things. Mostly they put too much emphasis on the outcome and not enough on the process. I’m not a big fan. Yes, I know you need them if you’re going to ask for money. And yes planning is a good idea. But planning is a verb not a noun. You should engage in planning on a regular basis. And you should compare your thoughts when planning to what actually happens. Then you should learn how to plan better.

It will be helpful to have some documents to do this. But a typical business plan is not usually the right document. The right ones capture what you thought would happen, and more importantly, why you thought it would happen that way. Then they make it easy to compare what did happen and why to what you were thinking at the time.

Here’s an example. In the marketing section, most business plans cover who the market is, how fast it’s growing etc. They often get this information from generic research reports that talk about market segments. But market segments are irrelevant to a small company (and all start-ups begin as small companies). Then the business plan makes some guess at what percentage of that market they can capture. The guess seems to be based on what number will look like they can make a lot of money, while not make investors think they are smoking crack.

But this evades the more important questions about your market: how you’re going to find them, educate them about your product and ultimately sell to them. And how much time this will all take, and how much it will cost?

Here are some better things to document about your market:

Rank your market in order of the cheapest / easiest to sell to. For each group estimate the following:

• What it would cost to sell to a customer in that group?
• How long it would take?
• What’s the average size of a purchase?
• What’s the average life-time value of a customer in that group?
• How many people there are in this group?
• Give examples of what you base this information on?

Never forget that a customer is a person. It’s not a company, a family, a household, or a demographic. It’s the person (or people) in that organization who actually decides to pay the money. Say you want to open a family restaurant. Yes, you need to know how many families live within a certain distance from your place. But don’t stop there. The time and cost of marketing a meal to a kid (think Chuck E. Cheese or McDonald’s happy meal) is different from marketing a meal to an overworked Mom or to a grandparent. Who is going to decide to spend money at your place and what will it cost to get them to do so?

Document your thoughts on that. Then you can regularly compare what your actual sales are, and what it actually costs to make a sale to what you were thinking. If you’ve been open a month you have enough data to start the process. The actuals won’t match up (trust me on this) but the point is to get better at projecting so that by month 6 you’re doing a better job and by month 18 you’re doing a good enough job to know if you should stay in business, close the doors or raise more funds. And if you do need to raise funds, that kind of detail will convince investors yours is a business not just a product.

Takeaway:

• The purpose of planning is not the plan – it’s to get better at predicting what the future will bring and how to be in the best position when it happens.

[tags] small business, entrepreneur, business plan, planning , CEO Skills [/tags]

My natural inclination is to believe the facts but disbelieve the story. That is, I usually think there are explanations (perhaps luck, perhaps existing trends) that people don’t give enough credit to. Instead they tend to assume that everything good that happened was caused by something that they did.

Even with that caveat, Hugh MacLeod’s explanation is impressive.

Note: The picture is from the Stormhoek Blog

Takeaways:

• Know the market you’re in (see Hugh’s #10).
• Marketing can become a conversation not a lecture. The implications of that are huge.
• The differences can appear subtle yet have amazing impact.
• How it applies to you and your market will probably be very different from how it applies to anyone else (even your competitors).
• That means you kind of have to make it up. But you have to get the subtlety / amazing impact connection to do it well.
• Granted these are not just takeaways from that one post but from a lot of what I’ve been reading on Hugh’s blog and Seth Godin’s.

[Update: The hyperbole is mine not Hugh's. I knew that. Check out Hugh's comment here]
[tags] entrepreneur, marketing, web 2.0, blogging, small business [/tags]

Seth Godin has Top 10 Secrets of The Marketing Process. Great stuff!!

I have just two nits to pick. The first is #1 Don’t run out of money.

Yes but … especially for start ups, spend each marketing dollar like it’s your last. There are times when not having enough money makes you watch each dollar so closely you stop doing stuff that doesn’t work a lot quicker than folks with a big budget.

The second is #5. If it makes you nervous, it’s probably a good idea. If you’re sure you’re right, you probably aren’t.

The last part is true. The first is not. Good ideas will make you nervous. But not everything that makes you nervous is a good idea.

This post from John Dodds is directed at geeks trying to market software products. Just knowing that makes it easy to see how much of it applies to the rest of us. (In case you don’t know, when he gets to #6, RTFM means Read The F*&%ing Manual)

I was asked by the owner of a Micro-ISV (that a very small independent software vendor) how exactly should he spend his time marketing and selling. He knew he should devote more time to it, but he didn’t know what specifically to do.

[UPDATE:  The question came from Neville Franks, who produces Surfulator a great program for capturing and storing web pages]
This is a very common situation with people who are great at building products. The reason it’s common with software products, is that you (and by you I mean some very talented people) can build things nights and weekends without quitting your day job and without investing a whole lot of money. Products that take real funds, often require sales or other interaction with customer earlier in the process. But I digress.

Here’s what I told him.

The question you’re asking [what do I do with my time when I'm marketing and sellling] is like asking “What do I do to get a date?” The answer depends a lot on who you are, who you want to date, and what in fact you mean by a date. A 45 year old, suburban, divorced father of two who wants to develop a relationship with a woman that may lead to marriage will do different things than a 22 year old, single, goth lesbian whose idea of a date is a short, sexual encounter.

Dating is actually a good analogy for business. This is an over simplification but:

A market is a bunch of people who value your product more than they value their money.

Marketing is communicating with them (in every way – from the interface of your product to web sites, ads, etc) so that they become convinced of the value of your product. The result of good marketing is that they will contact you or at least be receptive when you contact them.

What’s important about marketing is knowing that what you do and say and communicate tells a story – whether you like it or not. To be effective it has to be a consistent story (would you buy a Tiffany’s diamond bracelet from a Sam’s club warehouse?) and it has to be consistent with what your market already believes. Some people will never be convinced to buy an American car, and some will never be convinced to buy a foreign one. For more on this, read Seth Godin’s blog for a while.

Sales is contacting them or responding to their contacts with you. The result of sales is actually getting them to exchange money for your product NOW.

So you have to spend time getting to know the people who could benefit from your product. Learn why THEY think it might help them and learn what convinces them of your value.

Just because you had a couple clients pay you to develop something doesn’t mean others in the same demographic would also be willing to pay for it. It’s logical that it would equate, but business, like dating, is not always logical. So get to know these people and learn.

You could start by talking to your current clients about why they felt the value was worth the money. See if they know colleagues or others who you might talk to. Use phone calls, visits as well as blogs and web sites.

Be open to seeing patterns that you didn’t expect. You might find people who “Should” love your stuff don’t. And people you never thought would, actually love it but for all kinds of reasons you never imagined.

When you find a vein, go with it. Make it easy for these people to find you and buy from you.

Sorry to be so vague, but without knowing more details it’s hard to give specifics.

Actually the vagueness, while not a help to him, makes this post useful to a more general audience.

Takeaways:

• Marketing is everything you do (from design to ads) that communicates to your market. The result of good marketing is that the right ones will contact you or at least be receptive when you contact them. And that the people who are not your market won’t.
• Sales is contacting them or responding to their contacts with you. The result of sales is actually getting them to exchange money for your product NOW.
• You have to spend time getting to know the people who could benefit from your product. Learn why THEY think it might help them and learn what convinces them of your value.
• You can’t ask the these questions directly because A) they don’t know and B) until you’ve gotten them to trust you, the won’t tell you the truth. This is what makes the whole process like dating.

“The former helps you get visibility for your product, the latter defines how you will actually make money. ” So says  Dharmesh Shah of  OnStartups.com

His post is about the software business and his main point is a the bottom. But I think it applies to may other companies as well.  Not knowing your business model is a huge impediment to business growth.

A trade show display has to do one thing in about half a second:

Allow passers by to decide if they should stop at your booth. That’s it.

To do that, it should be visually striking, and informative. The information should be in bold, short, jargon-free words. As someone is walking by, without slowing down, they should be able to turn their head and read:

• Who you are
• What you do
• Why they should (or should not) stop

The should not’s are just as important as the shoulds. You don’t want to waste your time on the wrong folks – or worse, have the so booth crowded with the wrong visitors that you don’t have time to spend with the right ones.

The display type I’m showing you does this (if you design it well). It also has the benefits of being:

• Cheap – less than $300 to produce (exclusive of design costs)
• Fast to set up. Because anyone can do it in 5 min – no need to pay union wages for help you don’t need, or pay for shipping and storage costs at inflated prices, or fly in the night before to set up.
• Easy to transport. We carry ours in a surf-board bag. It has straps like a back pack. We can check in on an airplane, and walk it right into the show.
• Looks great. It’s not huge and overwhelming like those WALL O’ VELCRO displays, but it does look professional. And most of those wall displays have so much jargon and fluff in them they don’t do what they’re supposed to anyway.

It’s made of 3 posters. Each 24×36 inches mounted on sturdy plastic or foam core. Once your designer comes up with a PDF file, Kinko’s can print and mount them for about $80 each. Put a table across the back of the booth (a high table gives more visibility) and mount them on small easels. That’s it.

We use another table across the side of the booth to lay out literature. We try to get a corner booth so people can see it from two angles.

Takeaways:

• If the show is a buying show where people come to place orders then you probably want to highlight the merchandise, and a cheap display is not what you want.
• If it’s not a buying show, at least half the benefit comes from what you do after the show with the contacts you made there. If you don’t do that right you should evaluate whether to do the show at all.

Getting to “NO” is better than nothing.

Sure getting to YES is the best (if it’s a genuine yes) but the worst is a NO that people won’t tell you. Instead they string you along – ask for more info, tell you they need to check with their boss, or just don’t take your calls. If it’s really a NO you want to hear as soon as possible so you can focus your time and energy on others who are at a different place in the buying cycle.
My wife just found that people who won’t tell you no on the phone (or won’t return your calls) will tell you by email.

She was following up with people who had stopped by the Video Rental Services booth at a trade show and said they were interested! This is key. So when she called, she left a voice mail. In the voice mail she said she’d be sending an email with the same info if that was easier for them. Then she send an email mentioning that this was the one she referred to in the voicemail.

When she’s done this before without the accompanying email, no one called back to say they were no longer interested. But with the email several did.

Takeaways:

• Follow up a voicemail with an email (mention each in the other) – gives the customer more choice.
• If it’s going to be no, you want to hear it sooner rather than later.

UPDATE: In the continuing effort to provide my readers with the most accurate info (not to mention marital harmony) I asked my wife if this post was a good reflection of what she told me.  Her response:

Yes it is accurate. I find that more people respond to the email + voicemail than to just an email also. The combination seems to get the request some validity.

When I was in college in the early ’70s it was common for women not to shave their legs or wear make-up. We guys professed a liking for the “natural woman”. One day I noticed that my girlfriend looked remarkably striking. As I starred, I realized she’d put a touch of color to her eyes and lips, and added a bit of curl to her hair. I started to rethink my position.

When I first read Norm Brodsky’s piece saying marketing is a waste of money I agreed with him whole heartedly. But after reading his response to readers [not posted on their site yet - pg 63 March 2006 issue] I still agree, but I’m starting to refine my position.

Since college I’ve noticed many women whose makeup turns me off, and makes them less attractive than they could be. Marketing is the same way. It used to work (maybe heavy makeup did too). But now we’ve become more than immune to it, we resent being marketed to. It seems patronizing. And breeds distrust.

However, as any business owner knows, if you just build it they won’t come. You need to get the word out – but in the right way. A way that’s genuine and trustworthy. I see nothing wrong with presenting yourself in the best light possible. What’s ironic in marketing (and probably doesn’t work with makeup) is that acknowledging your faults and what you’re doing to improve them can actually present you in a better light than trying to hide them. Studies have shown [don't you just love that phrase?] that when you acknowledge a customer’s complaint and solve the problem right away – they become more loyal than customers who never had that complaint.

Marketing is Like Makeup Take-aways:

• Your company has to be instrinsically attractive to customers. Start with providing actual value (as your customer defines value). For many companies you can stop right there.
• Getting the word out in the right way – a touch of marketing – will enhance your natural beauty/value and can be a good thing. Never expect that this will make up for lack of value in your customer’s eyes.
• Too much or the wrong kind of marketing is actually worse than none at all.
• It decieves your customers and yes, this used to work. People are smarter now. They have tools like the internet and they aren’t afraid to use them.
• It hides and distorts your true value as fashion makeup can make someone appear uglier than they are. Lovers want to kiss the person, not the Maybeline.
• It distracts you from what you should be doing – providing value as your customers define it. This can waste a lot (A LOT) of money, and worse make you confuse the definition of success.
• And did I say it can waste a lot of money?