9

Do I Really Have to Do a Business Plan?

In 1994, while I was still an employee of a financial services firm, I took a class at the University of California at Berkeley about the business of training and development. My assignment was to imagine my dream business and write a business plan based on the Dr. Seuss book If I Ran the Circus.

My detailed plan was:

• Live in a cool Victorian house in San Francisco

• Sit on the back porch and sip lemonade in the summer and lattes in the winter

• Take a month off each year to travel to exotic parts of the world

• Work in the field of training and development

• Make money

I named my fictitious business Ganas Inc. Ganas is a word I learned in Mexico which means “the intense desire to do something, inner motivation, exuberance and drive.” That was how I wanted to feel about my work, and how I wanted my clients to feel as a result of having worked with me.

Two years later when I went out on my own as a consultant, I needed to get a business license and a business name. I vaguely remembered my “business plan,” so I pulled it out of the drawer and dusted it off. Wow, I thought, Ganas—that’s a great name! So that’s what I called my company. The bullet points in my “business plan” looked good, so I opened my door for business. And never looked back.

With this flimsy structure, I should have been doomed to failure and chased back into life as an employee within a month.

Ironically, my business thrived for over a decade.

I lived in a Victorian in San Francisco, drank lemonade in the summer and lattes in the winter. I led month-long tours to Brazil each year. I worked with large companies all throughout the United States and Europe in the field of training and development. I made money.

I lucked out—I had highly marketable skills in a ripe, juicy part of the world: Silicon Valley in 1996. And I was not afraid of networking and marketing, having run a highly successful nonprofit organization on a volunteer basis for ten years. I was very good at what I did, and used that to build a referral-only business.

Is a Business Plan Really Necessary?

After hearing stories like mine, many people ask: Is a business plan really necessary? Short answer: Absolutely not.

What they should ask is: Is business planning really necessary? Short answer: Absolutely.

Think of it in terms of this metaphor: you decide to build your own home.

Option A: You are not sure which materials to order, so you grab what you have available. You don’t know any architects or professional builders, so you just wing it and build it the way that feels good. You don’t worry about electrical codes or plumbing standards, since wading through lots of dense manuals feels overwhelming.

Option B: Working with trusted advisers, you put together the design of a house that matches your aesthetics and will withstand your local climate and soil composition. You don’t worry about doing everything yourself, you focus on what you are good at and hire out the rest. At each stage of the project, you bring in the city inspectors and make sure your house is up to code.

Which house would you rather sleep in during a heat wave? A wind-storm? A flood? An earthquake? Business planning expert Tim Berry says: “Planning isn’t about writing some ponderous homework assignment or dull business memo; it’s about envisioning the business that you want to create. It should be fascinating to you. What do people want, how are you going to get it to them, how are you different and what do you do better than anyone else?”¹

The goal of planning is not to impress your old college professor. It is to bring your vague, optimistic, dreamy ideas into the land of the living.

Is There Any “There” There?

In earlier chapters, you worked hard to identify the kind of business that would be energizing and meaningful. You may have a few different ideas that you want to start to examine closely and see if there is any “there” there.

When you start to do this concrete planning and examination of your business idea, you will end up with one of two emotions:

• Growing excitement that your idea does indeed have merit in the real world

• Growing dread that your big idea is destined to be an expensive hobby

Either feeling is exactly what you want to get out of the experience of business planning. If you find once you run specific numbers that you would make a minuscule profit on your product, or that your market is so small that it would not be able to sustain an ongoing business, or that implementing your grand vision would take more money than you could shake down your relatives for, you will be able to gently put the idea to rest.

But sometimes we still resist.

I was talking with a client the other day and asked her to move forward and do some planning so she could understand if her idea would make any money. I could feel her hesitation.

“What are you afraid of ?” I asked.

“I am afraid that once I see real numbers I will realize that I will not be able to make any money with this idea, and this breaks my heart since I love it so much.”

I was obliged to bring out my often-used dating metaphor, even though both of us are happily married.

Dating Before Marriage

Imagine that your business idea is like the “perfect guy” that you had a mad crush on in seventh grade. You know the one, who always looked so cool in his tight jeans and T-shirt, headband and long hair (hey, I grew up in the seventies).

Flash forward twenty years and you see him sitting in a coffee shop. You are still single, and he appears to be as well, since you can’t see a ring on his finger. He still has that slight rebel look, but updated with a nice watch and freshly pressed shirt. You are intrigued.

What is the best thing to do at this point? Walk up and talk to him and see if he indeed is the man of your dreams, or scurry off like an insecure teenager, fantasizing about the imaginary children you would have together?

Some people like to stay in fantasyland for a long time, imagining all the great things that will happen once they start a business. But they never look any closer, afraid to lose their dream.

This perspective will really slow you down and keep you from the adventure of pursuing a real and fruitful business opportunity.

So go ahead and date. Find out all you can about the business idea—is it interesting? Important? Useful? Practical? Dependable? Is it going to run off with your best friend after stealing your credit cards? If it isn’t more than eye candy, let the fantasy go and move on.

Conversation with Business Planning Guru Tim Berry

Tim Berry is the founder of Palo Alto Software, regular columnist for entrepreneur blogs, and the author of many books about business planning, most recently The Plan as You Go Business Plan.

 

In the many decades you have worked with people trying to write business plans, what are some of the main reasons that people give for not doing them?

What people normally say is “Yes, I’m going to tomorrow,” or “next month,” or “six months from now.” And then there’s the variant on that, “Yes, I really agree it’s stupid that we don’t have a business plan and so-and-so has been promising to write it for years.” So they pass the buck. The perception we fight is that writing a business plan is like writing a PhD dissertation. I don’t blame people for thinking, “No, I’m too busy. I don’t have time for that. I’ve got to run my business.”

What should a business plan be for somebody who has never done one before?

I want to resist the temptation to say: “It starts with . . .” since I don’t like the idea that a business plan has to be sequential. The core business plan is how you’re different, what you’re doing for the people who spend money with you. It’s strategy related to target market focus and product focus and generally understanding what you’re doing and what you’re not doing. And I mean “strategy” with a small s not a big s. It’s not academic, it’s What meaning do we make for our customers? As our customers are walking down the street, far away from us, talking with each other, what are they going to say about us? That’s the core of the business plan, what I call the “heart.”

Then the flesh and the bones of the plan are a collection of what’s going to happen, when, who’s going to do it, how much is it going to cost, how much is it going to generate.

 

For corporate employees pondering a business, where do you suggest they start with the business plan?

My first suggestion would be that they choose a place to start that suits them. People are different. I’ve seen people get going by starting with a mission or a mantra. But I’ve also known people who have done a beautiful job of planning starting with the numbers. I’ve seen people start a business plan with a sales forecast. The key here is to find what suits you and get going.

Let’s say someone had two different business ideas: one that has a pretty good chance of making money quickly and one that was a little bit harder to sell but that inspires them greatly. How would you counsel them as to which idea they should start with?

I would ask them to look into it, pulling apart the uncertainties and seeing how they can make that second business that they believe in work better than the first. I think there are fatal flaws probably in the comparison of the two businesses and they really ought to go back to the drawing board and refocus, find another angle. If the one they love is brokering mortgages and we’re in a subprime housing crisis, then maybe they can find a way to help people who are about to be foreclosed and find a different but related continuous closed market.

If they stay with what they know and what they like, that’s going to give a better long-term chance of success. Sometimes you need to step away from it so you can see how you might be missing something that people really want and need a little bit more.

When people are starting a new business, often they feel uncomfortable limiting their market because they feel they are shutting down opportunities. What is your perspective on that?

There’s that common reaction of “No, no, no, but everybody wants this.” Well, yes, but you can’t do business based on everybody. I try to talk about displacement. In small business, displacement is a critical principle that I think is poorly understood. And what that means is that everything you do rules out something else that you can’t do. So you’re stuck with trying to focus on what’s most important and the narrower the market, the easier it is to get there. You want to really know your target customer.

Why are assumptions an important part of a business plan?

Well, one of the worst myths in business planning is that there’s some value in following a plan just because you’re following a plan. In fact, there’s huge value in planning even though there’s constant change and planning is frequently being corrected and reviewed and revised. So assumptions, then, are the foundation of a process of reviewing and revising. Assumptions are what you use to manage the difficult paradox that sometimes you have to stick with the plan because it’s taking more time and the plan is fundamentally sound; sometimes you have to have the vision to abandon what you thought you were going to do because it isn’t working and there’s no algorithm, there’s nothing they teach in business schools to tell you which time is which.²

The Parts of a Business Plan

Here is my summary of the key parts of a business plan. The important thing is to dig in and get more information about the viability of your idea.

Save Yourself from the Tyranny of Sequence

As Tim described in his interview, and also in The Plan as You Go Business Plan, it is less overwhelming to view a business plan in “blocks.” He says: “The blocks idea also saves you from the tyranny of sequence. You don’t have to start at the beginning and work through to the end. You can jump in and start wherever you want.”

• Mission statement maybe? Define for yourself what your company will do for its customers, for its employees, and for its owners. Mission statements are a bit last-century, perhaps doomed forever to Dilbert-related derision, but that’s still where some people start.

• Maybe you’re a numbers person. That’s okay, don’t apologize—business planning needs that too. I was a literature major in college but I still like to start my business planning with a sales forecast. Then I’ll do some conceptual work, then go back to costs and expenses, classic budgeting work, then back to basics.

• Business plans have hearts, like artichokes. Their hearts are their core, the best part. I thought of this analogy when somebody I know and respect suggested that the heart of a business plan is the marketing plan, meaning its identity, positioning, differentiation, the sense of what business you’re in and why people will buy from you. That’s a great place to start.

• Some plans start with a product or prototype. Maybe your first block is a bill of materials for manufacturing the new thing. That’s okay too; that’s a block, you can jump in there.

• There are lots more blocks. The mantra. The vision. A market analysis. A market forecast. Personnel strategy. Financial strategy. Some people like to build an equity plan first, defining how many shares exist, how many the founders get and how many the investors get.³

The Heart of Your Plan

The Flesh and Bones

The Body

Many people get stuck when thinking about how to document the business planning process. Here are some guidelines:

• Make it easy. If you are a PowerPoint wizard, stick with that format and build your plan on slides. If Word or Excel are more your style, use those applications. They key is to use tools that are familiar and comfortable.

• Use blank templates if that speeds things up. Business planning software or books may have some templates that you can use to organize your thoughts.

• Make it yours. If you are more of a creative type, you may be interested in a totally different business planning format created by Laura West called The Joyful Business Guide™.

The important thing is that you start to plan, and capture your thoughts in an easy-to-understand and easy-to-update format.

Your Market

As a coach, I probably spend 50 percent of my time working with my clients on defining their target market. This is so exceptionally important since it is the area that most people get wrong when starting a business.

• They are deathly afraid of turning away anyone, so they cling desperately to the notion that their product or service would be good for anyone with a credit card and a pulse.

• They feel resistant to lock into a specific market since they enjoy working with all kinds of people on all kinds of projects.

• By trying to market to everyone, they water down their message, and in their attempt to reach everyone, end up appealing to no one.

I am not heavy-handed in most of my coaching and advice. But on this topic of choosing a niche, I draw a line in the sand. Just do it.

An Inch Wide and a Mile Deep

Branding expert Suzanne Falter-Barns once told me that you want to choose a niche an inch wide and a mile deep. I understood the general concept, but it wasn’t until I stumbled upon a book one day that I saw the power of what she was talking about.

 

KNITTING HUMOR

 

A blog reader told me in a comment on one of my posts on marketing that there is a whole group of people out there that are interested in knitting humor. I had to read the term twice to make sure I wasn’t misunderstanding it.

Read this partial description of famed writer (in knitting humor circles at least) Stephanie Pearl-McPhee’s latest book, Knitting Rules: The Yarn Harlot’s Bag of Knitting Tricks:

The best-selling author of At Knit’s End: Meditations for Women Who Knit Too Much and celebrated blogger and humorist of the knitting world, is back! Funnier than ever, Pearl-McPhee continues her running dialogue with her knitting compatriots—cheering them on to ever-greater heights in the climb to make knitting universally recognized as THE peak life experience.

In chapters on everything from yarn needles, gauge, and knitting bag essentials to hats, socks, shawls, and sweaters, Pearl-McPhee unravels the mysteries of what it is that makes knitting click, from the inside out. She dares to question longstanding rules and uncover the true essence of what makes a hat a hat, a sock a sock, and so on. Insights into why certain techniques work encourage knitters to take control and knit in the way that works best for them. As she says, “There are no knitting police.”

Wow, I never thought to question what makes a hat a hat or a sock a sock. Nor did I think of knitting as THE peak life experience. Apparently, about 300,000 people would disagree with me. I guess they like to be in stitches. (See? Knitting humor!)

Do you see now how absurd your concern would be about narrowing your market to just “women” or even “crafty women”? In the massive market of crafty women, there are probably a thousand subniches like vegan weavers who love too much.

I even found a subversive crafters’ market: The Anti-Scrapbooking Moms Online Magazine.

Craft wars, knitting humor, subversive moms online. Who knew there was so much depth to a niche?

Slice and Dice

To find your particular piece of the market, you need to start narrowing down the people you want to work with.

You can call this group whatever you want. Some prefer “target market,” others “my people” or “my niche.” You can call them your peeps, your homies, or your crew. The term doesn’t matter; defining its characteristics does.

Here are some ideas:

• Life situation (first job, retiring, changing career, surviving breast cancer, losing weight, etc.)

• Demographic (African American females, residents of New York City, gay former firefighters turned circus acrobats, etc.)

• Psychographic (optimistic, sassy, resilient, motivated)

• Common interest, affiliation (raging liberals, Ann Coulter conservatives, tree huggers, salsa dancing enthusiasts, etc.)

• Income level (low, middle, or high income)

• Challenge or issue (hopeless procrastinator, arrogant bastard, parents of ADD child, etc.)

• Which problems do they face?

Want to start a business but don’t know how and are afraid (sound familiar?)

Need help raising out-of-control teenager

Can’t seem to get financial life together and have raging debt

Let’s look at an example:

Broad market segment: Men

Niche: Divorced African American male entrepreneurs aged fifty to fifty-five who graduated summa cum laude from a top ten college, make more than $250,000/year, and live in the greater New York area.

The more specific you get with your niche, the better chance you have to reach them with your marketing efforts. And you can further define your niche by asking the following question: Who would I really enjoy working with who would find my product or service extremely valuable and have the means to pay for it?

The benefits of defining a specific niche are many:

• You can immediately think of publications that write for this market, and target your PR efforts.

• You can identify which associations might cater to this market (in my example, you could explore alumni associations of top ten colleges or entrepreneur associations that target African American professionals) and try to get speaking gigs.

• You can identify Web sites or blogs that target this market and post ads or write valuable comments on blogs.

• You can be very specific in your marketing materials about the type of problems your product or service addresses. And if you do it right, people will say things like “I read your Web site and felt like you were talking directly to me!”

Basically, if you need to start getting some clients, would you rather stare at your phone and try to figure out how you will reach “women,” or how you can reach the Association of Retired Disgruntled Postmasters in Glendale, Arizona?

Planning Tricks and Tips

You can be committed to the planning process, but still struggle when it comes to defining specific products or services to add to your business model. It can also be hard to figure out the right mix of services that will match both your income expectations and your lifestyle requirements. These tips will help you with this part of the planning process.

Trick #1: The Money Game

As a new business owner, it can be kind of overwhelming to figure out how to meet your annual revenue targets.

In the midst of pages and pages of notes, research, business plan drafts, and product ideas, you can get very stuck.

So set aside your MBA and PhD-trained minds for a minute, and play along with a game of math. If you laugh mockingly in a Dr. Evil kind of way at the simplicity of the concept, I can only share the following nugget:

Common sense is rarely common practice.

My favorite coaching mentor, Andrea Lee, describes a very simple process for figuring out revenue targets in her book Multiple Streams of Coaching Income. This book is built on the premise that thriving coaches (and consultants, or any service-based business) need to develop multiple streams of revenue besides their hourly consulting time. These additional streams can be things like group coaching programs, electronic books (e-books), teleclasses, membership Web sites, and a whole variety of other things.

Her process is called “The Money Game.” You will need the following things:

a pad of paper

a pencil

or, if you are fancy, a spreadsheet

Now take the following steps:

1. Write your annual income goal at the top of the page. It doesn’t matter if it is $10,000 or $100,000 this year. There is no right or wrong answer.

2. Create three columns on your page.

3. In column 1, list your products or services.

4. In column 2, list the cost of each product or service.

5. In column 3, list how many units you think you can sell of each product or service.

The game comes into play as you begin to juggle around the mixture of what you want to offer. So in example one, you imagine one mix of services and products.

After review, you may feel like it is wildly optimistic to sell one hundred e-books a month, so you revise your estimates downward to a more reasonable number. You may also want to increase your monthly consulting hours, as you think it will be easier to sell consulting than products at first. Then you might decrease the number of new members to your paid membership site, but increase the monthly fee.

Thinking some more, you choose to add two new programs to the mix: a once-a-year live retreat for your clients, and a group telephone-coaching program held twice a year. Knowing it will take time to develop and promote these programs, you decrease your consulting hours.

The possibilities are endless. The key is to keep juggling the numbers around until you reach a mix of products and services that feels comfortable and feasible for you to accomplish.

You can play the Money Game as you launch your business, and revisit it every month or quarter. You may decide to add or remove products. You may decide to launch a new program. The key is to break your large annual financial goal into realistic pieces.

The more concrete you are, the more likely it is that you will reach your goals.

Trick #2: Tips on Pricing

How do you know what to charge for your professional services?

By professional services I mean things like coaching, consulting, financial advising, writing, and Web design. Basically, any gig where you sell your knowledge for a fee.

Why is pricing so tricky?

Pricing your services is tricky because there is no magic formula or “correct” answer. I see four distinct parts of the pricing equation: psychological demons, practical needs, external market, and financial results.

PART ONE: PSYCHOLOGICAL DEMONS

 

To be able to charge decent rates for your services, you have to feel confident about your skills and talents. Herein lies the rub for new entrepreneurs, since you are either offering your services on a freelance basis for the first time, or doing something totally new. Suggestion: Fortify your self-esteem. However you need to, validate that you are indeed good enough, smart enough, and people like you.

• Ask trusted colleagues to give you objective feedback about your skills and past business results.

• Repeat affirmations such as “My relationship advice will create harmony in thousands of homes across the world” or “I am meant to help people overcome their shame over poor financial management” or whatever saying rings true for you. Far from just being fodder for comedians like Al Franken with his character Stuart Smalley, affirmations can truly heal a fractured self-image.

• Invest in training and advice for yourself at the same rate you plan on charging clients. This is really important! By doing so, you will feel in your bones what it is like to spend some of your hard-earned cash on professional advice. If you are not willing to invest in your own growth and development, how can you expect your clients to?

PART TWO: PRACTICAL NEEDS

 

A common error made by new entrepreneurs is not to take into consideration all of the expenses related to working for themselves when setting hourly rates. Most people take their annual salary and divide it into hourly increments. What this approach misses is:

• Your annual salary as an employee is based on working full-time. Unless you have excellent luck and get full-time contract work immediately, chances are you won’t be working full-time your first year as an entrepreneur. Nor may you want to work full-time, as billable consulting hours tend to be much more draining than the “padded hours” you get as a salaried employee. I never worked more than two-thirds time as a consultant, since I had to spend the rest of the time catching up on administration, marketing, and relaxing.

• Your salary doesn’t include your benefits like health insurance, retirement investments, vacations, and sick time. An extremely crude general estimate for these things in the United States is 30 percent of your salary.

Suggestions:

• Review your summary of the value of employee benefits.

• Create a spreadsheet to account for all of your expenses as a self-employed person. To get ideas for what to include, look at FreelanceSwitch.com’s handy Rates Calculator.

PART THREE: EXTERNAL MARKET

 

Knowing what you need to make to cover your living expenses is only part of the equation. You also have to know the competitive range for similar services.

Early in my career, I was negotiating the salary for a new position. I asked a very seasoned female mentor for her advice. “What are you thinking of asking for an annual salary?” she said. “All I need is about $50,000 a year,” I replied. She said, “The most common mistake I see females make in negotiating salary is just thinking about their basic needs and no more. You must charge what the market will bear, especially on par with your male counterparts. If you don’t, they will lose respect for you.”

I grimaced a little bit and said, “I don’t want to become one of those greedy businesspeople who only thinks about money. I don’t just work for the paycheck, I also do it to contribute something meaningful to the world.”

“Here is the key,” she said. “You must charge the market rate or more, but you can give it all away.”

This floored me. I was raised to live modestly and to reduce, reuse, and recycle. I had the idea that anyone who made a lot of money was automatically greedy and selfish. Suddenly, I realized that the more money I made, the more I had at my disposal to invest in the community, pursue artistic passions, travel, and help others in need. It totally changed how I viewed money.

Suggestions:

• Survey your competitors to get a range of fees for similar services.

• Ask a couple of trusted colleagues about their pricing strategy. When I recently had to put together a proposal for a blogging project, I e-mailed two of the smartest bloggers I knew and asked about their pricing. Hearing both what they charged and what the fees included was extremely helpful.

PART FOUR: FINANCIAL RESULTS

 

I saved this for last, but it is by far the most important part of the pricing equation. People don’t pay you for your time or process, they pay you for the results of your work. These results are translated into value, which can be money or time saved or earned, brand value increased or risk reduced. My friend Skip Miller summed it up well: “When clients give you money, guess what? They want it back!”

It is your job to identify and quantify metrics. This is not simply to justify your fees, it is also to make sure that what you provide is useful and will have a positive impact on your client. Here is value pricing in action:

I had a friend who did a presentation for 250 sales representatives from a large computer company. He charged $30,000 for two hours of his time. After wondering how he was able to hypnotize his client before signing the contract, I asked him how he justified such a fee. “Easy,” he said. “Each rep has a minimum of $300,000 worth of business in their annual sales funnel. I have proven that by using my techniques, you can close a minimum of 10 percent more deals. So if one of the 250 participants does what I tell him, they will recoup their money. If 25 percent of them do, they will make nearly two million dollars. In reality, I charged too little.”

Can you see how solely relying on your practical financial needs and the norms of the market can skew your pricing model? By focusing on results and value, you will not only be able to charge more, you will do better work because you will be defining and measuring the right things.

Suggestions:

• As you are discussing the project with your client, define success metrics. Ask them, “How will you know that our work together was effective?” They should say things like “I will get more clients” or “I will deliver better presentations” or “I will improve my credit score” or “I will capture more names on my mailing list from my Web site visitors.”

• From these broad results, dig deeper and ask, “And what would that mean to you in terms of money, time, or risk?” You should hear things like “If I deliver more effective presentations, I will get more referrals which will increase my income by X percent,” or “If I improve my credit score, I will qualify for a loan which will allow me to start my business and make $5,000 a month.” You must dig until you get some tangible metrics.

Once you have a good baseline for your prices that takes into account these four factors, you can create some standard pricing that will act as a starting point for new contracts.

Trick #3: Plotting Milestones for the Year

What activities are you going to do when? When is a product going to ship or a service launch?

An easy way to create a general timeline is to make a grid with four squares, one for each quarter of the year. You can use a piece of paper that is flipchart size and use Post-it notes to mark major milestones.

Plot the milestones in each quarter. Then step back, do some rearranging, and create your final plan.

Trick #4: Recommendations for Cash Flow Management

These tips come from Denise O’Berry, author of Small Business Cash Flow: Strategies for Making Your Business a Financial Success.

If you don’t have cash flow in your business, you don’t have a business. Yes, cash really is king for a small business. Here are five things you must do to manage the cash flow in your business.

1. Understand how cash works in your business. Know that profit does not equal cash flow because assets and liabilities play a big part in your bottom line.

2. Don’t sell yourself short. Make sure you charge the best price for what you offer. Consider value based pricing and packaged services to get what you deserve. Resist an hourly fee structure; it’s a dead end road. You should charge just the right price for what your target market will tolerate.

3. Remember, you are not a bank. Don’t let your invoices become idle or your accounts receivable grow. You must have money coming into your business to survive.

4. Save cash for a rainy day. It’s tempting to go out and make a big purchase when you collect a large amount of money that you worked so hard for. Don’t do it. Maintain a cash cushion in your business to help you through the valleys.

5. Prepare (and use) a Cash Flow Budget. A budget is the financial road map for your business and will help guide your business decision making. It should project out at least six months to give you time to plan, react to, and accommodate conditions that impact your business so you can adjust accordingly.⁴

Your Marketing System

Marketing is the fuel that powers your company. Many people tend to think about marketing as a series of isolated activities: you send an e-mail to announce a workshop, then you give a talk to your local Rotary Club, then you jump on Facebook and look up a few groups that share your interests.

Each of these approaches yields a few clients and you begin to generate some business. You relax your marketing, because you are so busy running around getting work done that you don’t have time for much else.

Until you finish your projects and your customers go away. So you quickly throw together another bunch of marketing activities to drum up clients.

If you approach marketing in this haphazard way, you will never get a predictable flow of clients or customers. Marketing must be structured, systematic, and consistent.

I lean on three small business marketing experts for advice, each of whom offers unique and valuable insights into small business marketing:

• John Jantsch, founder of Duct Tape Marketing and expert blogger—www.ducttapemarketing.com

• Robert Middleton, expert on independent service professional marketing—www.actionplan.com

• Michael Port, expert on “thinking big” and business marketing systems—www.michaelport.com

All of them have excellent, systematic approaches to marketing. Visit each site and see who fits your niche and needs best. Then move forward and do what they say.

I Don’t Have Time for Marketing

JOHN JANTSCH, DUCT TAPE MARKETING BLOG

 

 

The preposterous sounding title of this post is a direct quote from the lips of many a small business owner I have encountered. The root of this problem of course can be summed up nicely in something known as Parkinson’s Law.

Parkinson’s Law is the adage that “work expands so as to fill the time available for its completion.” It was first articulated by Cyril Northcote Parkinson, appearing as the first sentence of a humorous essay published in The Economist in 1955.

The Law is as alive and well in the small business as it may be in the halls of the largest bureaucracy on the planet. So, the key to effective marketing may simply be a matter of defining the right work to fill up the time available.

Marketing is and must become a habitual activity in your business. You must live by the marketing calendar or die by the lack of time available to complete the greasing of the squeaky wheel.

The only way to find time for marketing is to plan for it. Create a marketing theme for every month of the year and then build marketing activities on a daily and weekly basis around the theme.

You know you need to be sending out more press releases and building relationships with key journalists in your industry—make that September’s theme and do it. You know you need to build a network of strategic partners to make your referral leads really soar—make that October’s theme. You know you need a blog, you need to start blogging as a part of your Internet presence—make that November’s theme.

Create the biggest, most hard to ignore wall calendar you can find and post your year of marketing themes. Then break each month down into the action steps needed to make progress on the monthly theme. Finally, assign yourself or someone on your team daily action steps, appointments really, and then complete the daily marketing action before you pass Go or return another email.

That’s how you make time for marketing, that’s how you build marketing momentum and that’s how you make marketing expand to fill the time available for its completion.⁵

Obsession with the Competition is a Luxury of the Overfunded

Any business-minded consultant or entrepreneur will tell you that you need to know about your competition when you do your business plan. It is an important part of understanding your market and differentiating yourself from the rest of the herd.

But some business owners get so focused on every move a competitor makes that they completely lose focus on their own business. At the extreme, it is not only distracting, it is downright self-destructive.

I lived through an example of this working with a very talented artist and dance instructor in the 1990s. He was creatively brilliant and a gifted teacher. But he was completely obsessed with other instructors in the area and would fly into a rage if a student from his school left to join another school. At a certain point, he was as focused on studying, subverting, and badmouthing the competition as he was on creating new art and building his own school.

I learned a number of lessons from this experience, and many others like it, working with entrepreneurs:

• When you shift focus from understanding who your competitors are to spending half your time thinking about them, you have ceded your own power. In essence, you are choosing the role of follower and not leader. Focus on what is exciting, special, unique, and revolutionary about your own business.

• No matter how much expertise and experience you have, if your market is worth operating in, there will always be a worthy competitor. Rather than fight it, constantly look for ways that you can reshape and refine your business to match your greatest strengths and better serve your customers. If you find that there is nowhere to grow or innovate, maybe you are operating in an overripe market and should look for a new one to play in.

• No matter how secure you feel, a competitor will come along that pushes a personal button because they are smarter, younger, richer, better-looking, or more charismatic than you are. This is where you have a chance to put into practice what they say about the best lovers: they are most often not the suave and good-looking sports all-stars, they are the quiet, unassuming, average-looking people who develop their “skills” based on reading and responding to the needs of their object of affection. Don’t let your own insecurities run away from you and cloud your business judgment. Celebrate your unique strengths and know that you are perfect just the way you are.

• Coercing customers to stay with you based on badmouthing competitors will always backfire. People like to feel they are free to make a choice about where to spend their time and money. And like a first date with a man who spews venom about his ex-wife, they will wonder how long it will take before you start spewing your venom at them. The more open and secure you are about your own business, the more secure your customers will feel with you and the more likely they will stick around. Remember, if you truly want to serve your customers, you have to realize that at certain times your competitors may be a better fit. As Sting says, “When you love someone, set them free.”

• There will be times when a competitor does something that feels unethical or mean or just plain shifty. If it directly impacts your business or reputation, you must address the issue quickly and appropriately. But once it is handled, go back to focusing on the needs of your customers. If it involves legal matters, you must weigh carefully the return on investment of your time, energy, and money to resolve the issue in the courts. Play out the two scenarios: If you win, will it make your business stronger and better able to serve the needs of your customers? If you lose, will you have a business to salvage? I think we often engage in legal battles more to punish the offending person than to achieve a desired business outcome. Don’t worry about punishment . . . karma takes care of that for you.

• There is nothing wrong with competition—it is all how you react to it. A business-building reaction to a strong competitor would be thinking, “So you want to amp up this game? Bring it on, bucko, I can handle anything you throw my way.” A business-destroying reaction to a strong competitor would be: “No one does that to me and gets away with it. I will crush you and everyone who supports you to prove that I am the best.”

If you are Intel, you may have an army of lawyers and consultants to track and monitor every move AMD makes. If you operate in a niche desired by Larry Ellison, you should watch your back, as you never know when he will feel like flattening your business by landing on it with one of his noisy jets.

But if you are Jane the Dog Walker with a small practice in Boise, Idaho, or Matthew the Marketing Genius in Boston, Massachusetts, your real focus should be on studying and understanding the feelings, aspirations, problems, and desires of your target audience. When you do this, you will naturally grow your business in the right direction, and serve your people in a way that makes them feel truly special. And you will enjoy your life a whole lot more.

Make Sure There Is Water in the Pool Before You Jump

Spending time planning your business, defining your market, and setting up regular marketing activities is time very well spent.

As you will find out in chapter 11, you don’t need to have an extensive business plan in place before you can start testing ideas.

But getting in the habit of regular planning will give you a much clearer picture of the health of your potential business.

As my friend Skip Miller used to say to his sales training students:

“Make sure there is water in the pool before you jump!”