Monty Henderson

“Shotgun Marketing” occurs when a business really has no idea of who they are targeting when they spend their advertising budget. They just pick up a tool and use it hoping they hit a potential customer. Usually they miss because they don’t know who they are targeting and the effort is a failure.

“No Marketing” happens after a series of volleys of shotgun marketing occurs. The owner realizes he has wasted his money and just stops marketing, thus handicapping the future of his business.

“Cheap Pricing” happens because an entrepreneur knows that their customers like good deals and this will bring them in. The error in this case is the fact these entrepreneurs often don’t know their costs and so there are no profits forthcoming from the discounted sales.

“Stuck in a Rut Syndrome” is observed primarily in established businesses that get comfortable running their business the same way over a long period of time. Eventually their sales decline because their customers and the marketplace have changed while the business has not. Meanwhile the competition has adjusted and is attractive to the consumers in the marketplace.

“Multiple Owners” often translate into “Multiple Decision Makers” which leads to “Poor Decision Making.” Partnerships without defined roles and salary parameters are on a path to failure. This I have witnessed many times. Suffice it to say that there can be only One CEO and this One must be foremost capable of leading the business. These roles must be agreed to in advance and their authority must be recognized by the other partners.

“No Web Presence” is an error that amazes me, yet we learn that a huge number of businesses do nothing to participate in one of the most exciting, cutting edge, and affordable marketing opportunities ever known in the business world. There are hordes of prospective customers searching on the web for solutions to their problems and yet these businesses choose not to engage them.

“It’s MY Business” owners sometimes berate, scold, and / or expose their customers to negative connotations about their business. They may also overlook that their customers are looking for an experience that the entrepreneur should provide – but doesn’t.

“No Money” is why businesses close. Usually it is a result of poor planning, budgeting and funding and shows its head when it’s already an established virus running rampant through the business. This is often the summary result of the other named errors listed above.

These classic errors are a sure way to put a business into the back of the pack and they may even cause it to crash and burn!

Monty Henderson is in his sixth year as a Hoosier Heartland ISBDC business advisor, and in his thirty-second year as an independent businessman. Working from the Kokomo office, Monty has assisted hundreds of entrepreneurs.  ISBDC Business Advisors have tools and resources specifically supplied to them to aid business growth. All counseling is by appointment without fee. You may contact him at mhenderson@isbdc.org and follow him on Twitter @montysmemos.

Tom Steiner – Thousands of articles have been written on this subject, seminars held everywhere, the internet wants you to purchase online books about it, consultants want you to spend a lot of money for their expertise about it, and they all tell you the same thing differently. There are as many ways to learn about your customers as there are recipes for chocolate chip cookies. However, in the end, it is your business that is more like chocolate chip cookies. Your customers have choices and if they don’t like your cookies, they will find a recipe they like.

As a side note, Google found 5,190,000 results in .17 seconds for chocolate chip cookie recipes.

So, if your cookies are not what the customer is looking for, how do you find the customers that do want your cookies?

As a Business Advisor, I have talked with many clients about their customers. The conversation usually goes like this:

BA: What kind of business are you starting?

Client: I am going to sell a UFO detector. For $94.95, you can have this UFO Detector on your desk. It monitors the area for any “magnetic and electromagnetic anomalies” and, if it does detect said anomalies, it goes off like crazy. Because that means aliens are approaching.

BA: And who are your customers?

Client: Everybody.

BA: Everybody? What about those that do not believe in UFOs or those that think the product is a hoax? My wife would not let me buy one.

Client: Ah, I was thinking of producing an infomercial…

The question is, “How do you begin to understand and find your clients?”

Customers are defined in many different ways. Most people define their customer profile at the top levels. They are gender, age, geographical location, income, education, race, and marital status. All of this information can be found on the US census website. It is always a good place to start. It is a bad place to stop. This top level information is only the beginning. You need more.

A good example where this information falls short is the income category. Ask yourself, “Where does the income come from?” Income can come from a variety of sources. Two people may make $35,000 a year but one may have a college education and work in an office while the other never went to college and is a plumber. Both make the same amount but may have entirely different spending habits. Now ask yourself, “is my customer a plumber or an office worker?”

Drill down.

If you understand your product and the needs it fills, you may have a pretty good idea as to who your customers are. You just need more information about them. The ISBDC has resources that will help you develop a definition of your customers beyond what the census can provide for you. With regards to knowing and finding your customers, here is a small list of the information that is available to you:

• Household Budget Expenditures
• Medical Expenditures
• Recreation Expenditures
• Pets and Products Market Potential
• Disposable Income Profile
• Retail Goods and Services Expenditures
• And lots more

In addition the ISBDC can also help determine the geographical area your customers live in as well as give you an accurate personality of the potential customer.

By drilling down you can start to see a more complete picture of the customer and this will help bring them to your business and sell to them. By understanding their background, you learn several things. You learn if your customer lives in your geographical area. If they do, how many actually purchase from you as well as how many could be purchasing from you. Knowing this helps you develop strong financial projections, marketing analysis and strategy.

By learning as much as you can, you will know what to say to your potential customers, where they are and how to reach them. This is called target marketing and it takes less time, money and effort to reach your customers. Every marketing expert agrees that you need to do target marketing and not take the shotgun approach.

So, you have taken my sage advice, done your homework and have determined who your customer is, how to reach them, and what to say to them. Are you done? Of course not. Once they are in the door, customer service, product quality, environment all help to enhance the customer experience. But are they buying? Here is where you need to do more detective work and it can only be done while the customer is in your store.

What can you learn about your customer once they are in the store? Here are some customer personalities that you can only experience firsthand:

The Child believes everything you tell them. They are trusting and open because they are looking for someone to tell them what they need and want.

The Judge walks in suspicious of everyone. He believes that all salespeople are evil and will say anything to make a sale. They judge you by their value system. They prefer you listen while they talk.

The Negotiator will try to beat you down on price no matter what. However, one thing in your favor is that they will ask a lot of questions and listen to your answers before ever discussing the price.

The Bargain Hunter is very much like the Negotiator in that they are motivated by price. The difference between the two is that the Bargain Hunter is more likely to make impulsive decisions.

Is that it? Nope.

After being in business awhile you will discover trends or types of customers that visit you. After a while you will be able to recognize these types of customer and develop sales strategies to increase your chances of them making a purchase.

Loyal Customers are about 20% of you customer base. They may make up more than 50% of your sales. Let them know how much they are valued. Get to know them personally and make them feel that you appreciate their business.

Discount Customers shop a lot but are only looking for mark downs, sales, or the cheapest price. They can contribute to your bottom line because it usually means product turnover.

Need Based Customers are looking for a specific thing. They look for what they want, purchase it and leave. Sometimes they are looking for the lowest price. Needs Based Customers can be converted to Loyal Customers with customer service that respects their purchasing style.

Wandering Customers are just looking for a place to visit. They may or may not have a purchase in mind. In fact, they may be there just to browse. Be aware, even though they may not purchase anything, Wandering Customers are more likely to talk about their experience in your business.  There is such a thing as minimal great customer service.

Is that it? Nope. Learning about your customers is an ongoing process. Keep in touch with the customers. Look for changes in spending behaviors, and be interactive with your customers. People change and you need to keep up with what is going on with your customers. After all, it is your job to make sure you meet your customers’ needs, wants and desires.

Tom Steiner is a Business Advisor for the East Central ISBDC. Tom can be reached at tsteiner@isbdc.org.

Everyone who wants to start their own business has a list of reasons why they want to do it. According to Inc. Magazine, these are the top ten reasons to run your own business:

1. You Control Your Own Destiny
2. You Can Find Your Own Work/Life Balance
3. You Choose the People You Work With
4. You Take on the Risk – And Reap the Rewards
5. You Can Challenge Yourself
6. You Can Follow Your Passion
7. You Can Get Things Done – Faster
8. You Can Connect With Your Clients
9. You Can Give Back to Your Community
10. You Feel Pride in Building Something of Your Own

Though these are great and noble reasons to start a business, this list and just about every other list on the internet does not mention the number one reason why anybody should start a business. In fact most of the articles about starting a business never mention the biggest reason to go into business.

Tom’s Secret Number 1

The first reason anybody should go into business is to make money.

It is OK to make money. A noble heart can have all the good intentions in the world. However, they cannot go very far if they don’t have the resources to keep their business going. Without money, you cannot make your own schedule, give back to the community, connect with your clients, etc. All the good intentions in the world will not replace money when it comes to running your business.

Job one is to make your business sustainable. Once you are sustainable, that is have a positive cash flow and a strong net income, then you can think about the altruistic reasons you started your business. Simply put, you need to make money and enough of it.

Tom’s Secret Number 2

85% of running a business is common sense. The rest should be in your business plan.

From the moment you decide to start a business to the grand opening to the hiring and firing of employees and beyond, you will be faced with having to make decisions. Making the right decision is often hard to do. You are often faced with having to make decisions on the fly or at the most inopportune time. Under the best of circumstances, some decisions about your business are hard to make. Making a rash decision can have an impact that could affect your business for a long time, especially if it damages your reputation, image, or your credit.

When it comes to making decisions about your business you should stop and think about the following questions:

• Is this good for my business?
• What impact will this decision have on my overall business?
• What are the short and long term effects?
• How much will it cost?
• If it costs money, where will it come from?
• If there is not money in the budget, what will I give up that is in the budget and how will that affect my business?
• Does this decision fit in with my plans?
• Why am I doing this?

There are a lot more questions you might want to ask yourself about the decision you have to make. Making choices under pressure can lead to disaster. Not following your plan or being pressured to make a decision can also lead to disaster.

As a business person, you will meet people everyday that will want you to make one decision or another. Some of these people will try to pressure you into making an immediate decision with out time to think things through. If this is the case, just ask yourself, do I want to do business with a person like this? Anyone that does not respect your need for time to make a decision about the well being of your business really doesn’t deserve your business.

Common sense may even dictate that you seek outside help in the way of your accountant, lawyer, or other trusted person, like your regional ISBDC counselor, to make the proper decision. Take advantage of the experts in your corner. That is why you hired them. I have always felt that a good lawyer and accountant that are well versed in the needs of a small business are worth their fees in gold.

Tom’s Secret Number 3

Think of money is a tool. Take care of it.

Every industry has its set of tools. Every business has one tool in common, money. Taking care of your tools is an important part of running your business. A good example of this would be a carpenter. They use and rely on their tools being sharp, square, straight and properly set up. If their tools are not in good working order, it makes their job harder if not impossible. Using tools that are not in good working order, or using them improperly can cause damage, injury, and unprofessional results.

Neglecting the tools of the trade is probably one of the worse things that anyone can do. Imagine if the carpenter left his tools out in the rain and they rusted. How would he be able to effectively do his job with rusty tools? In your business you need to take care of one of your most important tools, money. If you don’t take care of it, no one else will.

So there you have it.

You need to make money to do the things you want to do and that is OK.

Common sense says that you should not rush into a decision and that you need to understand the ramifications of your decisions. Remember secret number 1 as one of the reasons for a decision.

Use your money wisely. Use secret number 2 to help you keep your tools in good shape and ready to work for you when you need it.

To bring it around full circle, common sense and using your money wisely will make the money you need so you can do the things you want to do.

Tom Steiner is a Business Advisor for the East Central ISBDC, an organization with the mission to create a positive and measurable impact on the formation, growth, and sustainability of Indiana’s small businesses by providing entrepreneurs expert guidance and a comprehensive network of resources. Tom can be reached at tsteiner@isbdc.org.

*Photo via iStockphoto.com

Whether we like it or not, the use of Standard English grammar is important to the way customers, strategic partners,and lenders react to you and your business proposals. In a recent article titled I Won’t Hire People Who Use Poor Grammar. Here’s Why written by Kyle Wiens in the Harvard Business Review he comments that, “Good grammar is credibility, especially on the internet. In blog posts, on Facebook statuses, in e-mails, and on company websites, your words are all you have. They are a projection of you in your physical absence. And, for better or worse, people judge you if you can’t tell the difference between their, there, and they’re.”

Yes, language is always changing and some simple abbreviations might be tolerable in short messages, but, in the business world, what you write is who you are to the reader, especially if they don’t know you. Not taking the time to carefully craft your messages, no matter the format, is a detrimental business practice and one that can hurt you without you even realizing it.

So, next time you type a text, email, blog or proposal, take your time and write it as well as you possibly can. If you know your grammar isn’t the best, have someone else read your message before you hit “send” or “print.” Remember that your emails and text messages say a lot about you!

Joe Ubben is a Business Advisor for the Northwest Indiana Small Business Development Center, an organization with the mission to create a positive and measurable impact on the formation, growth, and sustainability of Indiana’s small businesses by providing entrepreneurs expert guidance and a comprehensive network of resources. Joe can be reached at jubben@isbdc.org.

*Photo via iStockphoto.com

Tom Steiner

Nope, not really, don’t count on it, better think twice about that.

For many, the romance of owning a business is what motivates their thoughts of being an entrepreneur. Like love is blind, the thought of owning a business and doing what you have a passion for is a powerful aphrodisiac and has lead many people down the road towards disaster.

Now, if you look all over the internet, probably the number one motivator to start a business is to do something you love. After three and a half years advising people who were passionate about starting a business because they loved what they are doing, I have come to offer the following advice:

Lay down and rest until the idea goes away. I have seen far more businesses succeed based on doing something other people will love than the other way around. Let me explain.

Love is blind

Love is an emotion that takes over and suppresses other parts of the human psyche like common sense and the ability to reason through thoughts and ideas. The euphoric feelings of being in love are the same as the dreams and images one has about being in business for themselves.

I know from personal experience. I used to live in a neighborhood that within a half mile strip had over 20 coffee shops. I know because I once counted. Every day while walking my dog I would walk past one coffee shop in particular. This coffee shop was at the far end of the strip and it always appealed to me because the owner would be out in front of his store sweeping the sidewalk and had the most content look on his face. The customers were regulars and they had made this coffee shop a piece of their lives. I soon became a regular and was engulfed in the warmth and comfort of the coffee shop.

Thoughts and dreams started to evolve into images of myself as that content coffee shop owner sweeping the walk and serving regulars great coffee in a great atmosphere. Life could not be any better.

The more I thought about it, the more I wanted to start my own coffee shop. The vision was astounding. Everything was thought of right down to the pictures on the walls and the name of the cat that would hang out in the front of the house. At least so I thought.
Love had blinded me of what I really needed to know about running a coffee shop. Romance overcame reason. Incidentally, 95% of those coffee shops closed when Starbucks moved into the neighborhood.

Love makes you overly optimistic

Romance makes you invincible. Your reasons for success are based on the images in your mind. You see thousands of people embracing your product, filling your seats and falling in love with you and your business. You can do no wrong and everything you do is better than the other guy.

You start to realize that you want to open a coffee shop. It is a calling; you are consumed with making this happen. Everything you do, say and think revolves around opening a coffee shop. You talk about it with your friends and family. Half of them are excited and their support for you is encouraging. The other half think you are nuts and question your sanity. You never seem to listen to the latter half.

At this point I was ready to jump in and open a coffee shop. I had the money to invest. I had the time to devote to the business and I had success written all over my face. However, in hindsight, I was really lucky to get married instead.

The Irrationality of love

My love affair with owning a coffee shop blinded me to the most important aspects of owning a business. Luckily, my love affair with my wife sidetracked me and my dreams were put on hold. I had been completely focused on the romantic coffee part of the business that I never even thought about running the business. By that I mean I never gave it a thought about how to run a coffee shop as a business.

About three years into our marriage, my wife and I were talking about our dreams and the subject of the coffee shop came up and I told her my story of the coffee shop owner in my old neighborhood and how my dreams were inspired by his business. The romance was still there until my wife asked me what it would take to open a coffee shop and my answer was a resounding “I have no idea, never got that far in the thought process.”

The idea was alive again. We went straight to the internet to research what it would take to open a coffee shop. After three hours of reading, surfing, and bookmarking sites I came away with the thought that I was really glad that the love for my wife was stronger than my love of coffee shops.

Love also means having passion.

What we learned in three hours of research astounded me. Probably the biggest thing I learned was that passion more than love is needed to own and operate a successful coffee shop.

Here is what else we learned in three hours:

• Coffee houses needs on average $30,000 in equipment and inventory to open the doors. This does not include the 2 employees needed for every 20 to 25 seats.
• Location is key and the need for a drive through, though not required, is an important consideration.
• Quality of product, menu choices, and employee selection and training all have to be taken into account when opening.
• Cost of goods and price can make or break a business. Unless you are really lucky, being able to undercut the competition because you think you can often leads to immanent disaster.
• Coffee houses are very cash intensive businesses. This means that you need to have a large amount of cash in the bank for operating expenses. Basically, you need to have at least three months of operating expenses in your checking account at all times.
• It takes time to build up your customer base and you can’t expect everyone to patronize your coffee house.

It took my wife and I almost three years to plan and open our coffee shop. It was time well spent and we learned something new about the coffee shop business every day. In the end, I still had the love of owning a coffee shop but it was augmented with the knowledge we needed to know about running a business. The combination of love, knowledge and passion is what made our business a success.

In retrospect, probably the most important thing I learned in those initial three hours was that Cupid may be an expert in love but he sure doesn’t know how to run a business.

Tom Steiner is a Business Advisor for the East Central Indiana Small Business Development Center, an organization with the mission of having a positive and measurable impact on the formation, growth, and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community. Tom can be reached at tsteiner@isbdc.org.

The Indiana Small Business Development Center’s mission is to have a positive and measurable impact on the formation, growth and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community. They Did It. Here’s How. supports that mission by sharing real success stories and insights from Indiana business leaders.

Download They Did It. Here’s How.

Starting a business is something that many people dream of, but turning a loose plan or grand idea into reality is never easy and shouldn’t be taken lightly.

A Sound and Proven Path Towards Launching Your Own Business will help you analyze your business idea and perform an initial business feasibility analysis. It will ask the tough questions — the ones you need to be able to answer before hanging out your sign.

This workbook will make you take a hard look at potential pitfalls, underestimated strengths, and more nuts and bolts of starting your own business. It will guide you through market, management and money considerations. It can help guide you toward the development of a sound business plan and the acquisition of financing.

To see sample pages from A Sound and Proven Path Towards Launching Your Own Business,download the free excerpt below. When you are ready to get serious about launching your own business, purchase the complete e-book for $25.

Download for free the excerpted From Idea to Plan: The Small Business Owner’s Guide to “A Sound and Proven Path Towards Launching Your Own Business.”

To purchase the entire “A Sound and Proven Path Towards Launching Your Own Business,” contact your local ISBDC office.

Everyone is talking about social media these days. Learn from the experts on how to use Facebook as a free marketing tool to learn about your customers and promote your business.

Download Likes, Fans and Being Social: The Small Business Owner’s Guide to Facebook

A printer friendly version of the guide can be found here.