Franchising Your Service Business; Building Growth Now and an Exit Strategy Later

Figuring out how to squeeze more value form your service business is not necessarily as hard as you might think. I mean, you spend years developing a reproducible process to simplify your own work efforts, why not consider extending the model to be implemented by others? That would mean franchising your business.

Before you think this is ridiculous, just think about it for a few minutes. Selling a franchise is no different than selling your business model. You already know more about your business model than almost anything else. In the end, you probably can’t service more than your immediate market anyway. So by franchising your business and selling the model in other markets you find a way to extend your own company’s reach while simultaneously strengthening your brand.

Document your business model – Your business model is your biggest asset. Every service provider finds a way to differentiate him or herself from the competition. Making sure that you have a document that describes your model, its advantages and its weaknesses tucked away is the beginning of productizing your service model for a franchise.

Research the market to see what else is out there – In some cases you may think initially that your idea is totally unique and then upon a little research you find out that it is not. Should that scare you away? Not necessarily. The fact that another business is out there offering the same thing can mean that your model is valid. Yes, it also means competition, but every business has to deal with that. Truly unique service models are very unusual.

Build a viable brand – Your brand is everything. You do not have to be a huge company to have a compelling brand. You can trademark your brand for $250.00 with the U.S. Patent and Trademark Office. Registering your brand gives you instant credibility. Your brand and your value proposition will be what you leverage to attract future franchisees.

Test the market – Because your brand is so important, you may want to test the market in a limited fashion with a “throw away” concept. This will validate your business model in the real world without putting your brand at risk. You can do this by creating a hyper-focused business that serves a very local market. Build a website to market the product and find some local advertising channels or launch a local ad campaign via Google Ads. This will enable you to test your market and business model (not to mention some advertising approaches). Once you’ve validated all you need to you can sunset the original business by retargeting the old website to the new one. This can be done for a few hundred dollars in hosting costs, website development, ads, etc. You can control how much to invest in this endeavor and it does not have to be very much; just enough to feel comfortable that your concept is working in the real world.

Research filing requirements - Each state has different laws regarding the registration of a franchise. Some, like Massachusetts, have none at all. Some states consider selling a franchise the same thing as offering an investment vehicle, such as a stock or bond. That means that you must file with the state that you are marketing to and in some case produce an offering circular in addition to other materials. The Federal Trade commission also has very specific requirements for information that they mandate be included in Franchise Disclosure Documents (formerly UFOCs). This is to protect consumers, which is their mandate. So you have to spend some time getting your house in order and building proper documentation before you start to sell your franchise openly. Information about Franchise Disclosure Document rules can be found at http://www.ftc.gov/.

Begin marketing your new franchise – Now that you are a franchise operator, you need to find some time in your day to market your opportunity. My advice would be to start slowly with targeted ads via online bulletin boards such as Craigslist. There are also a variety of companies that specialize in marketing franchises for you. These include sites like Franchise.com and others. You will have to attract pretty decent volumes of interest before you get your first franchise. Make sure you are prepared to provide adequate support or your venture will not last long.

In the end, this approach will enable you to continue to provide your services in your home market while soliciting recurring revenue from outside your range. This approach not only represents a new source of revenue for your business, but helps build lasting value as well.
Contact us today at http://www.jlroy.com/ to learn more about implementing this approach.

Pro-Actively Market Your Small Business Online and On a Budget

Internet marketing can be mysterious if you don’t know what you are doing. Should you buy advertising? Should you utilize social networking sites? What role can your website play in your marketing program? In the end, we should try to think about internet marketing in the same way as we do any other form of marketing.

Marketing is really the art of generating interest in your product or service. Internet marketing is all about generating interest in your product or service. Note the similarity? So why is there all this mystery? The mystery for many people comes from the sheer scale of the internet combined with the vast array tools available to the marketer. These factors can make it difficult to determine where you should start and which tools are best for your business, assuming you don’t have tens of thousands of dollars to pay an expert to help you figure it out.

First of all, as with any good marketing program, the internet marketer should identify a specific objective that they are trying to realize with their campaign. For most business, that always seems to be “generating traffic” for their website. That reason is terrible by itself because it assumes that all traffic will naturally and magically turn into real sales. This is incorrect. Although generating website traffic may create interest in your product and can be the first step in generating a lead, the real challenge is converting simple traffic into actual sales.

One simple way to generate traffic and convert some percentage of that traffic to sales is to create a “White Paper Campaign,” or better yet, a series of campaigns. So what is a white paper campaign? A white paper campaign is a simple yet highly targeted marketing campaign built around a single piece of unique and original content. The components of this campaign include:

Creating a White Paper or Special Report

The biggest challenge in creating this piece of original content is doing it in a neutral way. In other words, generate this material without selling your business. White papers need to teach or inform the reader in order to be considered valuable. Creating this content is all about ensuring that your business is perceived as a thought leader. So resist the urge to sell. Make sure you actually provide something valuable in this document. Stating the obvious will not earn you any points.

Building a Place for People to Access Your Content

Once your white paper has been created, you could just post it on your website and hope people read it; but that will not generally amount to much. An easy and inexpensive thing to do is build a special landing page for the white paper. Here you can post the white paper and any other interesting materials including past articles and even fact sheets about your business. Just be sure to allow readers to download the white paper without having to provide you with their personal information. Part of this exercise is convincing people that you know what you are talking about, so you have to give away a little knowledge. Trust me, if they are interested they will contact you. If not, then you don’t have to waste your time following up with them.

Publicize Your Original Content

Once your white paper has been posted on your landing page, you need to let people know that it is there. The best way to do that is with a quick press release. Without getting into how to write a press release, you can get your information out to a broader audience by submitting it through BusinessWire, Enhanced Online News or PR Web. For a modest fee (usually $80 to about $360), these companies will distribute your press release through various channels, including mainstream media outlets. Put a link to your landing page directly in this document. That will help you sell your white paper and get more downloads. This in turn will generate traffic for your site. These services all offer ways to track how much traffic comes to your website and how many people downloaded your white paper so you can gauge the success of your campaign. With this information you can make adjustments for the next campaign to increase success rates.

Make an Offer

This is really where the rubber meets the road. As mentioned earlier, traffic is nice but does not make any money. What you need are people who become interested in your services because of the expertise outlined in your white paper. It can be very helpful to make an offer on your landing page. This can be a free subscription to a newsletter, a free assessment (if you are a consultant) or a discounted subscription to your product. It doesn’t matter. The point is that the offer will incent an interested party to take the next step and give you or your product a try. Once they sign up, they become warm leads for your business.

Obviously, a complete internet marketing campaign should also include Google ads, blogging, a well managed presence on certain key social networking sites, relevant community participation, etc. But this is an easy and inexpensive way to start your internet campaign. It is also very satisfying as you can control the entire process yourself.

How Many Ways Can You Make Money With A Potato?

A truck shows up outside your restaurant with 400 pounds of potatoes? What are you going to do? You can’t let them go to waste. You already have mashed and baked on the menu. What do you do? If you owned a restaurant, you would be kept up nights solving this problem.

Ok, so you’re not a restaurateur, you’re a business owner. You have the same problem. You have a truckload of talent and experience and you need to find as many ways as you can to sell your experience. There are a number of things that you can do to get your experience out there in the public. My favorite thing to suggest here is to “productize”. This provides you with options. I’ve already written about that in previous posts. Of course, what if you have already productized?

This is the case with Praura. My partner and I own a project outsourcing firm called IFConnect, which means we know how to manage projects. One of the greatest challenges in project management is sharing information, data and documents with your clients and stakeholders. So we developed a product called Praura. Praura is a software product that helps teams share documents, tasks and schedules, etc. So I practiced what I preach and created a product. Great. Now what?

Finding new ways to sell what you already have is what makes a good business a great business. In the case of Praura, what are we doing? Well we are selling a lot of types of potatoes. First, we are selling subscriptions to the product. We’ve selected a number of markets and are focusing our sales and marketing efforts on those markets. This involves creating a pricing strategy by analyzing different products already in the market that have a similar business model. This will enable us to generate base revenue on an ongoing basis via online sales. This is an obvious thing to do.

Second, we’ve already successfully sold a license to a company that has a pre-existing customer base in a market we were already targeting. We’ve struck a deal where we will stay out of that space for three years and in exchange we will receive a percent of revenue. Even though this market niche is one we planned on targeting, the fact that they already had a customer base means that it is a shorter road to revenues and our cost of sales dropped to zero.

Third, we are developing a strategy where we will utilize the same software to deliver services to different markets. The services will ultimately be delivered by third parties, but we will offer up Praura as infrastructure for a percentage of each contract. This is a creative approach that allows us to be out own customer to generate revenues from channels that otherwise would not be available to us.

Mashed, baked, twice baked, scalloped. The more ways you sell the same product or service the more opportunities you are creating for your company. Every business owner should look down every once in a while and take an inventory of what they are selling and what they could be selling. A down market when things are slower is an optimal time to do this.

Why Productizing Your Expertise Is Worth the Extra Effort

I’ve written about productization before. I’ve held workshops and done speaking engagements on the subject. I’ve even written a white paper on how consultants and other service providers can productize their experience (see http://www.jlroy.com/JLROY_LearningCenter.htm for more information). The main premise behind productizing your expertise is that it makes something that is inherently intangible into a more tangible object, which is much easier to sell. By converting your expertise and experience into a concrete set of deliverables and/or work products, your prospects can arrive at their purchase decisions quicker, which will help you grow your practice faster.

But there is another reason – building lasting value for yourself by monetizing your “intangible” assets. Most owners of service businesses, such as consulting companies, struggle with how to develop an exit strategy. At some point in their career most people would like to exit the consulting business and take a little value with them in the form of cold hard cash. This may seem impossible since consultants generally have no hard assets to sell, but there are steps that can be taken to help.

You can start by making your business bigger than yourself. In the end, your ability to make money as a consultant is generally limited by the number of billable hours in a year. In many cases, the small consulting business never gets sold. It simply closes its doors when the partners retire, give up or get hired by a client. This is not an exit strategy - it is capitulation. If you can expand your business through productization, then others can deliver services based on your expertise and proven processes. If successful, you may eventually be able to sell that as an asset.
By providing value to your client over an extended period of time, your client will start to view you and your team as an extension of their own firm. At some point, it may become more cost effective to “buy” your team and their experience as opposed to continuing an expensive consulting relationship. If done properly, this can be an opportunity for you to take value out of your company in the form of a cash buyout or annuity.

As an example, my project outsourcing business (see www.ifconnect.com) recently did just that. My partner and I sold a project team and their respective hard assets, such as PCs, to a long term client. This asset transfer left the business intact, but allowed us to monetize the expertise we developed while working with this client over the years. As a result, we were able to take a profit on our investment of time while we continue work for our other clients. This also freed us up to complete the development of some products we had been working on for a while.

The client in this case, was willing to pay a premium to maintain the corporate memory and experience of the team they had been paying as contractors. In the end, the team itself is expendable to the consulting business. If the price is right, selling the team simply provides you with cash while simultaneously lowering your operating costs. In the end, our project outsourcing company became smaller for sure, but it also became more profitable during the payoff period and allowed us to do more of the kind of work we wanted. And as I always say, I would rather have a small business with fat margins than a large business with thinner margins any day.

In the end, we all need to provide value to our clients to stay in business. If you can productize your expertise in such a way that your business can expand by allowing others to deliver services on your behalf based on your program, you may just find a way to extract value from your business by monetizing these service assets. And that is worth the effort.

Information Management Practices for the Future Economy

Going forward, all businesses will need to ensure that they adequately account for each of the “four cornerstones” of business information management in their planning and strategy. By building a strategy that satisfies these broad business requirements, a company will be effectively managing business information while also mitigating risk and controlling internal costs. These cornerstones include: protecting business information; delivering data and documents in a secure manner; collaborating with a distributed workforce and client base; and controlling access to critical business information.

Protect Business Information

Protecting business information can take many forms. One of the most critical forms of protection that is often overlooked by small and medium sized businesses is “business continuity.” Business continuity can be as simple as making sure workers always have access to key documents and data files. Sound practices will include keeping copies in a secure offsite location. Often overlooked as well is the need to take humans out of the mix. People often have the best intentions when it comes to backing up data files but have the worse habits. The result is the potential loss of months or years of information because an individual did not take the time to manually save files to an external drive or move them to a central file server regularly.

Protecting information can also take the form of a “corporate library.” Our public libraries are the keepers of information in our society. The sheer number of companies that don’t have a solid, chronologically managed corporate record of their activities is astounding. This type of corporate library will serve as a collective corporate memory since employees come and go. The libraries’ existence can ensure an easy transition to new management teams from the executive to the departmental level. Corporate libraries must have robust search and retrieval mechanisms and should be easily accessible from remote locations.

Delivering Data and Documents Securely

The need to deliver corporate information in a secure manner has always been important, but it is becoming a legal necessity in many industries. This is especially true in those industries where the management of personal data is involved. The ability to create secure sites on-the-fly so that workers can deliver information securely when they need to is paramount. More importantly, the ability to seamlessly create a virtual work environment that includes different types of people (employees, supervisors, clients, vendors, etc.) will increase command and control through improved transparency while keeping infrastructure costs under control.

Collaborate with a Distributed Workforce

The social networking phenomenon has turned the way businesses market themselves to the public upside down. As social networks such as Facebook have become more popular, businesses see these open networks as channel opportunities to build their brands and sell their products. This networking practice can be easily applied to business applications outside of the marketing departments as well.

Unlike typical “open” social networks, a “closed” business network will apply the same technology to a more limited group of users in a more targeted way. In other words, businesses can create a social network in order to interact for a purpose other than networking. This takes collaboration to the next level. There are many collaboration tools today that will support document sharing or task management. But very few that allow a user group to create a closed network designed specifically to move a business initiative forward. Project management software comes closest in that they all have robust task management, the ability to link documents to project initiatives, calendaring, etc. However, all the features are really designed for IT project managers, resource managers or for building reports for stakeholders. These are not truly collaborative systems in the way that a closed social network could be for business.

Key features of a closed social network would include: calendaring functions that integrate with desktop applications; the ability to invite and disinvite members quickly as necessary to share information and roles change; the ability to integrate with outside content or link to other business applications; the ability to control access to key information and distribute information quickly to a widely distributed group simultaneously, etc.

Controlling Access to Critical Information

Controlling access to information is all important and can either take the form of broadcasting information to a desired audience or preventing a subset of an audience from gaining access to information. Ensuring that gatekeepers have adequate command and control of documents and data will become even more important than it is today. For those businesses that do not have a business intelligence program in place already, implementing technology that offers command and control features will offer an opportunity to decide who gets to have access to what competitive information and can go a long way towards simplifying the dissemination of critical information to clients and workers alike.

Increased Government Oversight to Affect Business Information Management Requirements

Anyone who has been paying attention will be aware that there are bold changes afoot in the way government relates to industry. Whether you approve of the changes or not does not really matter. The changes will affect all businesses either way. Those who do not recognize this will be left behind.

Increased government oversight will take many forms. In some cases it will require businesses to maintain higher standards of transparency. This is especially true of banks and insurance companies. In order for these institutions to satisfy their new requirements, they will be forced to impose new requirements on their customers. So any business that insures itself or its key employees or that borrows money in any form will be affected by these changes directly.

Government oversight may also take the form of increased regulation. In the past, legislation that impacted corporate America generally provided guidelines for behavior and was aimed principally at protecting consumers or maintaining fair trade practices. This paradigm has begun to shift to the government dictating how businesses must operate. This will certainly be true of financial institutions that have accepted TARP money or other government assistance. Because these institutions include some of the nation’s largest, the government will begin to make demands of its customers in order to maintain control over policy implementation and protect taxpayers. We’ve already started to see the government (rightly or wrongly) starting to determine executive pay. This will certainly trickle down to other industries directly or indirectly and will impact competitiveness as key players flee to foreign institutions.

Additionally, a trend that can be clearly seen in today’s headlines is increased government involvement in the boardroom. It is highly likely that new laws will be passed that hold corporate boards directly responsible for what could be perceived as taking unnecessary risks. Maintaining a consistent track record of all decisions and how they were arrived at will be paramount to limiting this risk.

Protecting personal data will also most likely remain center stage. Already, many states have enacted rules and regulations that require industries that deal with personal data to perform their duties in specific ways. An example would be the impending changes in the accounting industry that require all documents with personal information to be encrypted or otherwise protected by 2010. This will in many cases, especially with smaller firms, require a change in workflow or an investment in technology in order to comply. Many firms simply don’t have the knowledge or skills to implement the right kind of plan for their business to stay in compliance.
Businesses need to be prepared to operate in this more challenging environment. Those businesses that are successful will have solid plans for the following:

• Protecting client information, personal or otherwise.
• Maintaining a detailed corporate library of key internal documents and any changes over time.
• Implementing transparent corporate governance protocols.

There are plenty of solutions out there to help companies manage their business information. Some simple subscription based services, such as Praura (see www.praura.com) will go a long way towards helping these smaller firms manage their information intelligently without breaking the bank.

Can You Help Your Client Grow Their Business For Free? Then Do It!

Your clients are an incredibly important asset. If you’ve managed to establish a solid working relationship with a client over an extended period, then this relationship and the goodwill it represents is one of the most important assets your business owns. This is especially true for service providers. For most service providers, they can count on the fact that a large percentage of their future revenue is going to be directly connected to their existing clients.

One of the ways to make sure that your clients remain your clients is to provide value above and beyond what they are paying you for. This seems like common sense, but you’d be surprised how many consultants and accountants (for example) nickel and dime their customers. Over time, this will make your clients less likely to call you with a problem or include your in their planning process, which is a lost opportunity. So how do you make sure that your clients view you as an important resource?

One of the best things you can do is include planning for your clients in your everyday workweek. It may seem like unproductive and un-billable time to sit at your desk and think of things your customers could do to improve their business. But a better way to think of this is as an investment in your business’ future. As implied earlier, making a proactive investment in developing goodwill is a surefire way to actually developing it. Goodwill doesn’t just happen.

As CEO of my own project outsourcing company I often have to decide the best course of action for my business. I also have to think about ways to position the company for growth based on macro-economic trends and current competitive pressures. Sometimes I get ideas from reading articles, sometimes from meetings with my own vendors and other clients. It does not really matter where a good idea comes from. The bottom line is that if I come up with something that will help me grow my business, I usually try to think of how these ideas could be leveraged by my clients. Not every client can leverage every idea, but I can usually find one or two that can.

Sometimes I can help a client with execution, sometimes not. It doesn’t really matter. The fact is that my clients will now view me and my company as an important component of their planning process. As a vendor, it will be less likely that clients will cut us loose because we provide value beyond what they are paying for. This helps us serve as an extension of our clients’ businesses, which is good for our clients and good for us.

The bottom line is that you need to provide value beyond the services you are offering in order to be perceived as a true partner by your clients. You have to work at this and actually provide your clients with that extra value too, so it not easy. By proactively thinking this way your client relationships should be as close to bullet-proof as they can be and you will be more likely to receive future contracts references, which is how you can translate all that goodwill into revenue.

Dear Congressman....Help Small Businesses First!

I am a firm believer that you must participate in everything that affects your life if you want to control your life. Otherwise, you are a bystander in your own life and have no right to complain. With that said I believe the American people are spending too much time complaining about what congress is doing with the bailout and not putting forward good ideas. We have a responsibility to help our government, which is a way of helping ourselves.

With that said, here is the letter that I have sent to Rep. Edward Markey of the 7th District of Massachusetts discussing a few ways that congress could help small businesses quickly:

The Honorable Edward J. Markey
2108 Rayburn House Office Building
Washington, DC 20515

Dear Representative Markey,

The American people are currently witnessing good people at all levels of government doing their absolute best to turn things around. I do not agree with everything being done by Congress, but I respect our leadership for doing what I am sure to be their best in a difficult situation.

I think all Americans should look beyond the politics of whether or not bailing out large corporations and banks is a good thing. For now, it is a certainty and it is a waste of calories to get upset about it. With that said, I would like to mention something that seems to be missing (at least in media reports if not in reality). What is the federal government doing for small businesses?

Small businesses in this country account for 60% of the labor force and 78% of all new job creation. A fraction of the money being spent on GM, Citigroup or AIG would create more jobs in a more diverse set of industries than all the money being spent on keeping these behemoths afloat will save. I believe that congress should develop a “grass roots” spending program that would result in a more competitive and stable economy for our children and grandchildren. This means spending at the bottom to build the economy, not trying to save poorly run businesses at the top of the economy and hope it trickles down.

Here are a few ideas that I would like to put forward for your consideration:

Create an interest free factoring program for small businesses – Small businesses are being hurt right now by a cash flow crunch created by the protective policies of much larger businesses. These larger businesses are often our clients and vendors. The result is that little family-owned businesses that are responsible for so much of the jobs across the U.S. are laying people off to save money or to pay their suppliers, which is understandable and sound business practice. If the government could step in as a factor and provide interest free loans to small businesses so that they may maintain cash flow and keep people working while they wait for larger firms to pay their bills, that would save millions of jobs today. When payments on invoices are finally received from a client, the business owners can make an immediate repayment back to the government via EFTPS, which is the same mechanism that we all use to pay our payroll and other taxes to the federal government.

The benefit of this approach is the ability for the government to directly support business activity without having to build the deficit further. Small businesses will happily pay the loan back if it allows them to keep growing their business. The U.S. government can utilize existing technologies for collecting revenues from small businesses through EFTPS and therefore would only have to make a minor investment in technology to adjust the current system to account for and track payments related to these interest free cash flow loans. More importantly, this approach would not change the workflow of any American business.

Create a micro loan program for existing businesses working to create new products – Micro loans are widely used in the developing world as a way to help individuals and families in impoverished nations build revenue streams to improve their lifestyles. These loans typically range from only a few dollars up to a few thousand dollars, at most.

New products that are currently being developed by our nation’s small businesses will create the majority of the high paying jobs of the future. The government can provide low interest short term loans (at LIBOR +0%) for qualified businesses that need just a little bit of help to push a new idea forward. These loans could be managed by asking local banks to spend a percentage of their bailout dollars on the program. This way the government will not have to increase its own spending to manage the loan program. Small businesses can use these dollars to improve existing products by hiring outside help (creating jobs) or to develop new products without the need to shed jobs in order to save money or sacrifice current revenues from an existing client base. This approach represents a direct investment by the government into the economy of the future as an alternative to focusing on bailing out the economy of the past.

Give a tax credit for each job created – Small businesses will need an incentive to begin hiring as the economy begins to stabilize and recover. Most companies that survive this period will be running very lean and will be reluctant to build overhead again through increased payroll. The government needs to incentivize small companies to hire again.

For businesses that make under $10 million per year, the government should give a tax credit of up to 100% of the wages of the person hired. This seems really aggressive on the surface, but there are a number of real benefits. The amount of taxes lost by the government will be more than made up for by adding another working individual to the economy. That newly hired person will soon be spending money locally and will stay out of debt. This will help strengthen the banking system and support a local housing recovery as well as bring increased dollars to the states through increased property and sales tax receipts. This will help reduce the federal government’s need to directly support states that cannot find a way to reduce their own budgets. In the long term, the increased national payroll will increase the government’s revenues in years to come by significantly more than it will give up in the short term. Small businesses can use the additional bandwidth to grow their businesses and create more jobs, creating a positive economic snowball effect.

I appreciate how busy you must be and that these are challenging times. I hope the mention of these ideas provides you with something to think about when the next piece of legislation comes across your desk. I believe it is our responsibility to support our legislators and I hope you receive this letter in the constructive manner in which it is intended.

Respectfully,

Jeffrey Roy
CEO
Implementation Factory, Inc.
Framingham, MA 01701

Tap Your Personal Network to Move Your Business Forward

We can’t do it alone. We never could. Although it is interesting to think that the average American has this inherent independence. It is part of our culture. However, it is a rare thing for someone to be able to move their business forward without the assistance of others. Maybe it’s the support of a spouse. Maybe it’s some friends providing you with advice. Maybe it is something else entirely. It doesn’t matter. The fact is that one of the most valuable tools we have in our toolbox for building our business is our own personal network.

The problem is that many people view their network as a means to find other clients and generate revenue directly. If you put your ego on the shelf from time to time you might realize that there are people around you that can provide good, solid advice that will help move your business forward. The time to do this doesn’t really matter. If you’re just starting out it is a good time because you may get the benefit of the experience of others. If you’ve been in business for a few years it is a good time because you may get some fresh ideas. There are a number of ways to seek assistance from your network. Here are just a few:

Launch an advisory board – An advisory board is what it is; a loose association of people who can and will provide advice for the purpose of moving a business forward. It is important to stack your board with people that bring specific skills to the table and not just friends. It is also important that you bring specific challenges to the board for them to help resolve and that you take some of that advice. Not following through on the advice of your board will make them feel that they are wasting their time working with you, and that is a bad thing. Make sure the advisory board’s role is well defined and that they work with you to solve specific business challenges.

Bring specific issues to outside experts and ask for advice – There is nothing more powerful than the ego. Feeding someone’s ego by asking them for specific advice and counsel will make them want to go above and beyond to help you because their ability to help once they’ve been challenged is the best way to validate the image of them that you have presented – that of an expert. You can do this by inviting someone to a casual coffee or lunch to request feedback or guidance on a specific subject (pick up the check). It is important to be specific with your questions or request. You don’t want to waste anyone’s time and you may have only an hour or so to get the advice you seek. You’ll be surprised who will meet with you. When I was first starting out I was able to get established CEO’s to buy me coffee and provide advice simply by sending emails and asking for it. Many of these contacts have come in handy later simply by staying in touch. As my business has grown, these people have formed the basis of a peer network which I can tap from time to time.

Identify people that you know who can serve as delivery partners and share the growth – No matter how complete you believe your offering is, there are people who offer something so complementary that your combined efforts will help grow both businesses. At the very least, working with an outside company can increase both of your deal flows. Create a list of the people that you trust (not just people that you know) and take a long and hard look at their business. How can your business compliment theirs and vice versa. Be creative. This kind of loose partnership can serve to increase deal flow and potentially open up a previously untapped market for both of you. In many cases, just the act of brainstorming with someone can bring fresh ideas to bear and invigorate an otherwise flat business cycle.

In the end we all have to do what we can to keep things moving. Sometimes we get caught up in the details of running our business and we need a jolt to get things moving again. Tapping your network in an intelligent manner can provide the boost your business needs. Be open and check your ego at the door. This doesn’t work if you challenge your network by always explaining why you can’t do what they suggest. These people are trying to provide meaningful advice, take it for what it is worth, but appreciate the help that you do receive. Many times the conversation itself is enough to help you work through a business challenge.

Idle Assets Are Still Assets, Regardless of the Economy – Use Them Well

Consulting and professional services companies spend most of their time trying to ensure that their human capital is fully engaged and working at all times. As long as your staff is serving a client, you are making money after all. Sometimes, these assets are idled by circumstance. This can be related to normal business cycles, or a down economy. Either way the effect is the same; talented and valuable people are sitting idle at their desks and they are not generating revenue.

If your company is on the edge and the down time becomes extended for any reason, then there is not much you can do but consider layoffs to sustain cash flow and protect the business as a whole. But what if your business is not on the edge? How do you leverage these assets now so that your future can be just a little bit brighter? If your business can sustain a long period with reduced cash flow, then you might want to take a longer term view of your client relationships.

Many service companies enjoy healthy margins. This allows the ownership to hire more people and move into new markets. If you are willing to give up the margins for a while then you might be able to “invest” in your clients by allowing them to do more despite the down economy. This might entail billing your clients less or not at all in some cases. Another option might be accepting deferred payments or straight-lining your billing so they can plan their expenditures better. This allows your clients to move forward with their initiatives while ensuring some future revenues for your business.

The benefits of this could be quite tangible. For one thing, your client will appreciate the budgetary relief. Instead of being forced to put an initiative that might help them competitively on the shelf, they can keep things moving forward. This is the kind of goodwill you can usually take to the bank later. Deferred payments might come in handy later if an economic downturn becomes extensive. This will protect your cash flow, even if at a reduced level, so that your business can ride out the storm.

Another option would be using these assets to invest in your own business. Think hard about how you can utilize your talent pool to grow your own business or position the company better for when the turnaround comes along. Can you develop a new service? Can you spend resources productizing your services so that you have a more diverse offering later on?

In the end, an asset is an asset until you decide it is not. Management’s responsibility is to manage human capital just as effectively as you would manage any other asset, including cash. You wouldn’t tuck your excess cash flow under a mattress when you could earn short term interest, so why would you leave a consultant sitting at his or her desk doing nothing? Find a way to engage your people and yourself in the business and work with your people to find creative ways to help your clients ride out the storm so that both they and your own firm are better positioned in the future.

Setting Intelligent Prices that Create Future Growth

There are lots of ways to grow a business, but really only two categories. “Organic” growth typically involves growing the business from the “inside out.” This generally means achieving growth through increased sales. Larger companies sometimes strive for additional market share though “inorganic” growth. Inorganic growth typically involves growing from the “outside in.” Often that means growth through acquisitions and/or other corporate transactions. If you own a smaller business, organic growth is often the only option available for you. One of the best ways to allow your present day sales to support your future growth is through a good intelligent pricing model.

A good pricing strategy can mean the difference between selling a product or service or not, obviously. Without getting too preachy, if you over-price your services you may have a few high margin projects, but over time even the most free-wheeling company will eventually want to cut costs. Under-pricing carries additional risk, not the least of which being that if you are overly inexpensive then your clients will find ways to abuse the relationship and you might find it difficult to make a living and grow your business as all of your time will be spent servicing a smaller number of clients. With the understanding that under special circumstances you may need to under-price or overprice (more on these in later postings), striking a balanced pricing model with the future in mind can make all the difference.

So what is a balanced pricing model? A balanced pricing model is one that provides your product or service to your customers today at a price that delivers enough value to justify the price paid. This is very subjective, but in the end what it means is that nobody feels that they are being ripped off. With that said, there are two ways to achieve organic growth through pricing. The first is through new sales to new clients and the second is through additional revenues earned from your existing client base. This is where intelligent pricing comes in.

Assuming that you have made a sale and nobody is upset, then you can assume that your client is generally happy or at least satisfied with the value being provided. As a matter of principal, I try to set prices that ensure that the purchasing party is receiving a greater value than what they are paying for. As a general rule, this makes for a pretty healthy client relationship while simultaneously making it difficult to be unseated by competitors. This is a slight under-pricing of services to be sure, but not so much as to make me feel that I am getting used. This allows me to offer additional services or features in a sort of a la carte manner to achieve additional growth.

There are a number of pricing models for subscription-based products or ongoing services that typify the varying pricing strategies employed by many firms. They are:

Zero Dollars for the First Seat with Limited Functionality – In the end, there is no free lunch. This is a very common way to build a customer base. Essentially, you are giving your product away with the hope that the people using the product or service will love it and will either pay for it once you start charging for the service or will buy additional services later. Sometimes, this involves offering “basic” services that in reality only satisfies a very small percentage of the market but give a taste of the full blown product or service. In all cases, clients eventually feel they are being “baited.” The reality is that they are correct. This is never a good way to build a long lasting client relationship. Although for many firms seeking outside funding this is a good (if not temporary) way of building a subscriber-base for investors.

Full Service with Relatively High Prices – Commonly referred to as “all-you-can-eat,” this is the common approach of companies seeking to serve the high end of the market. In the end, they intentionally leave money on the table from smaller firms in order to avoid the cost of servicing them, thereby freeing up staff to focus exclusively on larger clients providing better margins to the company. This strategy seems to work best in growing economies as the larger firms tend to spend more to get ahead. The problem is that in a slower economy or a down economy these firms also tend to cut costs more drastically and it usually takes a while for them to bounce back. This leaves the provider scrambling to replace lost revenues in order to survive.

Low Introductory Prices with Per Feature or Low Per Seat Pricing – If done correctly, this is by far the fairest pricing model. Basically, you allow clients to pay a reasonable fee to realize all the benefits of your product or service. It is important to make sure that they receive all of the benefits that they are promised, even the implied benefits. If they are happy with the offering, you can add additional modules or services that are complimentary at a later date to increase revenues organically. By limiting features or services, you are essentially baiting them. This is to be avoided at all cost. Otherwise your future growth will have to come from adding clients, and some percentage of that will actually be replacing revenue leakage through lost clients. In the end, you might seem like you have higher margins but in reality your cost of sales is much higher. You’ve just hidden your costs and added pressure to your sales team unnecessarily.

In the latter model, the client benefits from the relationship. You benefit as well, but you leave the door open for future growth by maintaining a good relationship and having a thorough understanding of your market. Basically, you are giving up some current revenues in order to ensure future growth.

If, for example, you price a product a $100.00 per seat, your clients will expect superior functionality and service. More importantly, they will be resistant to additional fees for added features or any price increases at all. Chances are, you will sell more one and two seat accounts than anything else. A price of say, $25.00 per seat and $2.50 per additional seat, will allow you to sell more product to more companies. If you can get a percentage of these clients to accept new features or add even one seat, you will exponentially increase revenues with the same client base. These firms will more likely add more seats earlier due to the favorable pricing and will continue to add seats in the future. Once your product becomes ingrained in their operating culture, your revenue will stabilize and you can focus on adding clients.

This is simple math. I would rather have 100 clients paying $25 each than one client paying $2,500. The cost of servicing the 100 clients can be controlled with technology and smart operating procedures. When the 100 clients all add just one seat, you have organically grown your business by 10% with near zero cost of sales. As an added bonus, your business risk is lower because you have developing a larger more diversified client base. In order to achieve the same growth from a $2,500 account, at the very least you will have to wait a year to raise prices. Because that company will likely buy fewer seats, there is more business risk associated with that revenue stream as well and the loss of just one client will be felt more acutely.

In the end, your pricing model should be created while considering both risks and rewards. By offering a solid product at a great price (as opposed to a “fair price”) your clients will be more satisfied and more likely to spend more with you in the future. Yes, you might have to manage support costs more closely initially. But if your product is solid, chances are your long term growth will far outstrip the costs associated with achieving it. That is pricing nirvana.

Develop A Diverse Sales Model to Guide Your Business Development Activities

Sales can be difficult. Some people thrive in a sales environment; they enjoy the art of the deal. But many entrepreneurs and business owners just want to do what they love. They want to build their concept or perform the service they enjoy. They view sales as a necessary evil, to be sure. One of the best ways to bring yourself into a sales mode is to develop a model that works best for you and your business.

A sales model is simply a framework which will guide your selling activities. Usually, this involves identifying all the ways that clients currently find out about your product or service and blending them with all the other ways you might employ to generate new business. I like to think of a basic model that includes three main components: sales generated through events (in person or online); sales generated through proactive means (i.e. cold calling); and sales generated through passive means (such as through ads). If you start with this basic model, you can expand it to include those channels that might work for your specific business.

If you have a sales team, you can divide specific functions according to the skills of the individual team members. If you are part of a small company with no dedicated sales team, you might want to focus on certain types of activities on particular days. Either way, the idea is to create a model that will support a robust sales process on an ongoing basis.

Focusing on just one aspect of the model (i.e. online ads) will carry additional opportunity costs and increase business risk. You might end up leaving money on the table or leave an opening for competitors. Creating a diverse and complete model should help you determine all the various channels that are available to you and allow you to put forth a broad based business development effort. This will help prop up your sales numbers in the long run by allowing you to capitalize on as many opportunities as you can.

Implementing a diverse sales program during a down economy will be as competitive as you can be and will ensure you are better positioned when the market begins to turnaround.

Be Specific When Selling Services, Or Risk Losing Current AND Future Opportunities

You really do only have one chance at creating a first impression; otherwise it wouldn’t be called a “first” impression. At no other time is a first impression more important than when you are selling services. The product you are selling is already intangible enough; it is expertise, experience or know-how after all. Being specific about what you are selling and the value that you bring to the table is paramount to moving key relationships forward.

Timing is everything. If you know your value proposition, then why hide it? Throw it out there right away so that your prospect understands immediately how you can help his or her business. Many sales people like to ask questions so that they can tailor their pitch. Ultimately though, this handicaps their pitch. How many people do you have working on that? What is your current process? Have you had trouble with this, that or the other thing? Although I am a big fan of question based selling (see http://www.qbsresearch.com/), once you have secured the meeting to discuss your services specifically, you owe it to yourself and to the prospect to be as clear and concise about what you can do for them as possible. It is the only way to get engaged in a constructive conversation about a specific initiative, which is where you get to explain the details of your services.

Recently, my sales team and I were in a conference call with a large multinational about a service that we provide. My sales director, who normally takes the lead in setting up conversations such as this, immediately started asking questions. Right away I could sense that the guy on the other end of the line wanted to know what we were selling and how we were relevant to his business. Previous information exchanges were via email with his superior, who asked that he meet with us. He even came right out and told us that he was not sure why we were meeting. That was generous. As he politely answered all my sales director’s questions, I could sense the growing frustration (“How to I extricate myself from this call, I have work to do.”). At that point, I stepped in and simply stated our value proposition with confidence that he was either going to be interested, or not. Either way was fine with me. I’d rather not spend one extra minute on the phone selling unless I thought we had a real chance of moving a project forward. Heck, I have better things to do too! In this case, as soon as he understood the value proposition he put us on hold to pull other people in to the meeting. Next thing you know we are part of their planning process for the next busy season and we were able to move the opportunity forward.

In another sales meeting recently, I was meeting with the president and chairman of a company that we had been referred to as a good resource for companies that needed project bandwidth. This meeting lasted five minutes. As soon as I understood their business better, I simply stated that we offered a different kind of solution and might not be appropriate for them. I didn’t waste their time or mine. But I know they appreciated the honesty and I might be able to call on them in the future. This relationship got off on the right foot even though no deal was done. Either way, they know that we are straight-shooters and the kind of firm they ultimately would like to work with.

In the end, I believe that people want to work with honest, straight-forward people. More importantly, everyone has limited time to deal with sales meetings. They want to know if you can help them right away or not and how you are going to do it. Why not give them what they need? In the end, if the prospect is not a good match for your services then you are wasting your time too. Better to find that out before you are engaged than after your client has started to spend money.

Solidify Your Client Relationships - Let Your Clients Have a Peek Behind the Curtain

Now more than ever professional services firms need to find a way to solidify their relationships with clients. One of the best ways to do that is make them feel that your team is truly acting as an extension of their company. This makes them understand how much you value their business. Many firms will write reports and make sure clients are getting deliverables and meeting notes in a timely manner. But that is still delivering work product to clients instead of actually letting them in. So how do you do you build a more solid relationship with your clients?

One of the best ways to let your clients in is to truly operate transparently. I don’t mean that you necessarily work onsite all the time or send daily updates (that can be expensive and cumbersome). But you can use collaboration tools to manage your own work on behalf of clients and then provide them with unfettered access. Giving your clients the ability to see what you are doing when you do it will certainly make them feel better about the work that they are paying for and will go a long way towards building trust. It will also help you manage their expectations better and eliminate any doubt about your workload, especially if you operate on a time-and-materials basis. If all your work products are delivered to clients via email over time, they never have the opportunity to truly appreciate the effort that goes into their project as they never get to see all the work in one place.

There are tons of inexpensive tools out there to help even the smallest firm or sole practitioner collaborate with clients. Any collaboration tool that you consider should have a few basic features. They include: the ability to upload multiple documents simultaneously; full text searching across all documents loaded in the library; the ability to integrate calendars and similar tools with MS Outlook, or whatever scheduling application that you use; storing links to key project assets can be useful; managing tasks, including the assignment of tasks to project team members and tracking progress against assignments; plus the ability to post messages or announcements to keep all stakeholders informed of key events and happenings.

This approach will provide clients with complete transparency into your activities on their behalf. If you think about it, they are paying for your time; they might as well know how their money is being spent.

Once you pull back the curtain and show your clients all aspects of your activities, you may find that your own tracking tools are lacking. Naturally, there are all kinds of project tools that you can use, and I won’t get into the best ones here, but it is important to make sure that you are consistent in how you manage your tasks. I have found that the old maxim “A picture is worth a thousand words” is truly correct. As such, I always try to include a graphical representation of our activities instead of just coughing up spreadsheets or pages and pages of prose explaining activities. Clients seem to appreciate the effort made to help them visualize the final solution and nothing keeps us on the same page better than something that I can point to later if some confusion arises.

When things are difficult for your clients you need to make yourself invaluable. The best way to do that is to help them understand how much you already do for them. This will make it easier for them to appreciate your current and past work and will hopefully prevent you from being cut from their budget as they look for creative ways to reduce costs.

To Campaign or Not to Campaign; Product Marketing and Public Relations on a Shoestring Budget

Small and mid-sized companies that have been working on new product initiatives for the past year are now trying to figure out how to get the word out about their new stuff while keeping a wary eye on their marketing budget. The challenge for companies that are reluctant to spend tens of thousands of dollars on a big marketing or public relations campaign is to figure out how far they can get with self-promotion alone.

The fact is that sometimes you need to hire an expert. With that said prudence dictates that in leaner times you should see just how far you can get on a limited budget before you seek outside help. There are enough tools out there nowadays that savvy businesses should make considerable progress simply by taking time to execute.

Here are a number of ideas that could help get your homespun PR campaign off the ground.

Create a press release through Enhanced Online News (EON) – Enhanced Online News is a service of Business Wire. This innovative service is definitely geared for the do-it-yourselfer. EON helps you turn your basic press release into an interactive web page that is optimized for key words and phrases. Your press release will be indexed and served up to all major search engines. Each release costs $295 with additional fees tacked on for including media and image files. These fees range from $50 to $100 per release. A single release with a logo or graphic embedded will run you about $395. Not too bad if you only plan on issuing a release once in a while. Visit http://eon.businesswire.com/portal/site/eon/home/ for more information.

Create a product page in Facebook – A Facebook page can be used by a business to post information about a product or service. The customer community can support your business by adding themselves as a fan or by leaving comments on your wall. At the very least, you will learn what people think about your product. You can engage your community directly by making special offers to fans, uploading videos, product reviews, etc. For more information visit http://www.facebook.com/business/?pages.

Find reporters seeking experts via HARO and contribute – HARO, or “Help A Reporter Out” is a unique site where reporters can post requests for assistance from the community at large. You may peruse the HARO site and find that some reporter is working on an article that is in your field. By providing assistance to that reporter you might get quoted or your company mentioned. Being quoted as an expert can help generate interest in your firm. Visit www.helpareporter.com for more information about this free service.

Submit your product to the blogosphere for comment – Bloggers are always looking for things to expound on. Most bloggers can pull off their blogs because they actually know what they are talking about. The trick of course, is finding the right blogger and inviting him or her to look at your product to provide a review. You can search the blogger directory at Technorati to find the right blogger to approach. This directory lists blogs by subject and provides rankings so you can select the most popular blogs to approach. Visit www.technorati.com for more information.

Naturally, these aren’t the only things you can do to launch your own PR campaign. You can create product videos and post them on YouTube, for example. These same videos can also be used to guide new users on your help pages and generate product interest on your home page. In the end, you may need to hire a marketing or PR firm anyway to help you get the word out to a broader audience, but these things will get you started and allow you to spend your limited PR and marketing dollars in the areas where you need the most guidance.

Starting or Growing a Consulting Practice? Better Start Branding Now

Even with the economy in a shambles, now is as good a time to start a consulting practice as any. There are lots of reasons to start a consulting practice. They range from wrapping a security blanket around you as a way to insulate yourself from potential layoffs, to simply having the right kind of experience and expertise to help other companies work better. Either way, having a brand may be more important than you might think.

If you’ve read my stuff before you already know that I am a big fan of “productizing” experience and expertise as a way to build a consulting practice. You’ll also know that I am not a big fan of the standard sales practices of many consultants (i.e. selling on your resume or past accomplishments instead of on what you can do for clients specifically). One of the missing links for most consultants, even those that do a pretty good job of selling services, is a solid brand.

A brand can be a powerful tool. Every company has one; it’s just that some are more effective than others. Can the average person really tell the difference between a laptop with an Intel chip and one with a chip from AMD? I don’t think so. But Intel has developed a solid brand and that has translated into a following of sorts. If you don’t believe that then explain why Intel has revenues of around $38 billion and AMD closer to $6 billion (source: Hoover’s). That’s quite a difference when you consider that the average person can’t tell the difference between the products.

A consultant’s brand essentially symbolizes the value a consultant brings to his or her engagements. Quite a bit of thought needs to go into what a brand is. The challenge of course, is trying to “symbolize” something that is intangible and translate that into a tangible mnemonic or logo. For example: How should your clients feel when they think of you?

The branding process can be long and arduous. I’m not going to pretend to suggest that the steps below represent a complete outline of the branding process. But they might be an effective starting point for a new consultant or a consultant that is currently operating without a brand identity.

Develop your brand with your website – Everyone needs to review their website from time to time to keep it current. As part of your next review, think about how you would like your website to reflect your brand. List key words that you want to project to clients (i.e. “dependability”) and then find a color palette that will project that feeling. Think about images that you see and ask yourself how they make you feel. When you see an image of a bison do you think of “power”? Why does the elk in the insurance giant The Hartford make you think of reliability? List the colors and images that make you feel the way you want your clients to feel. Find a pattern or component of these images that you can repurpose for your brand and try to develop some thoughts and shapes that you like.

Hire a graphic designer – No matter how creative you are, you probably will not come up with an effective mnemonic or logo in the same manner a professional will. Take the ideas, thoughts, and concepts developed in the first step to a graphic designer and ask for help creating a logo.

Develop a tagline that reflects your value proposition – This seems obvious, but it is surprising how little effort consultants spend delivering that all important sound bite to potential clients. This is especially shocking when you realize that most consultants worth their salt should know that people spend very little time on a specific web page, even though they might spend hours online. The average American spends one minute and 2 seconds on a web page on average and visits 104 individual domains per day while at work (source: http://www.clickz.com/3410151). Without an effective tagline how can you expect someone to understand your value proposition in just over one second?

Try your ideas on for size – Once you’ve developed a logo and some sort of branding, try to build out a business document, such as a proposal, to send a new client. How professional does it look? Are you projecting the right image? How do you feel about the brand and image you’ve created? Talk to your existing clients and show them what you are thinking. Ask them how they feel about your brand. If they like it then you probably have gotten it right.

Branding is more than a logo or tagline, of course. In the end, you must deliver what you promise and what you deliver must be supported by your brand and vice versa. Otherwise your message will get lost. So spend some time thinking about how you would brand your expertise. Your clients will create and image in their own mind of you anyway. Don’t you want some say in what that image is?

A New Outlook for a New Year; Preparing For Later Now

Happy New Year! It’s a new year and we all have much to consider as we complete our plans for the 2009 fiscal year. In many ways the things we do (or don’t do) at the beginning of the year will set the tone for the entire year.

This is complicated in 2009 by a tough economic environment. The weak economy means that we have less room to make mistakes and more challenges to overcome to achieve the same growth. As business owners, we can take two distinct approaches to preparing for a new year. The first is to be defensive and try to prevent the weak economy from draining our limited resources. The second approach is to try to grow our businesses despite weakness in the economy.

The first approach appears on the surface to be the safer choice. However, this is basically a position of surrender. As a business owner, if you choose to take this approach you will be conceding ground to the competition. This is a certainty and it will leave your business vulnerable when things start to turn around.

The second approach seems more aggressive but can allow your business to grow when others are giving ground. During challenging times there is an opportunity for healthy businesses to grab market share that would otherwise be unachievable. This might appear like standing still, but when things turnaround you’ll notice a difference. Smart companies will watch their expenses in 2009 for sure, but they will also seek out new opportunities.

Here are a few things to consider for the New Year:

Act like an entrepreneur – Even established companies can learn from younger companies. Start ups have a knack for doing more with less. Try to find creative ways to execute your strategy while keeping your expenses under control. You may have to alter your strategy or stage your product releases, but this will ultimately leave you with more cash to manage your business and see your employees through the troubled times ahead.

Look for ways that your business can thrive in a down economy – Even the weakest economic conditions will hold some economic activity. The motivation behind purchasing decisions will change during these times. So the challenge is one of positioning and thinking about how your business can deliver products and services that are in-line with the purchasing motivation of your customers. Can you offer services to help your clients operate more effectively?

Prepare for the economic recovery now– The reality is that if you are not prepared for the current economic realities then your mistakes all took place six months ago. Your current plans should be focused on positioning your company for the environment that will exist six months from now. By then, the housing market should have bottomed out. The credit market will loosen up as banks will need to lend money at some point in order to make money again (and all the weaker players will have been acquired or otherwise re-sized themselves). The new administration will have been in office for a while eliminating some uncertainty and people will be receiving their tax refund checks. Start thinking about the summer now and how you want your company to be positioned for your clients’ next budget cycle in the Fall.

This New Year can be a rewarding year. Find help where you need it. Pay attention to how you are spending your resources and keep an eye on growth even as you watch current revenues shrink. Just remember that what you do now at the beginning of the year will affect how you finish your 2009 fiscal year.

Good luck and Happy New Year!