Posts Tagged ‘Growth’


Nextiva Tuesday Tip: How to Measure and Use Net Promoter Scores

2-17 promoter score smallHow loyal are customers to your business? How likely are they to recommend your products and services to others? Doing a Net Promoter Score survey (NPS) can help you get the answers to these questions quickly and take action to build more customer loyalty.

The Net Promoter Score survey was developed by Bain & Company and works like this: You ask customers one simple question: How likely are you to recommend our company/product/service to a friend or colleague? and have users answer on a scale of 0 to 10 (where 0 means not at all likely and 10 means definitely likely.

The test is scored this way:

  • Promoters” are loyal customers who keep buying from a company and urge friends to do the same (scores of 9 and 10)
  • “Passives” (scores of 7 and 8) are satisfied customers, but are also at risk of being wooed away by your competitors.
  • “Detractors” (scores of 6 or under) are dissatisfied and at risk of spreading negative word-of-mouth about your company.

To find your Net Promoter Score, subtract the percentage of Detractors from the percentage of Promoters. The resulting percentage is your score. For instance, a company with 40 percent Promoters and 10 percent Detractors has an NPS of 30 percent.  Any NPS over zero is good; an NPS of 50 percent or more is considered excellent.

In order to make your Net Promoter Score survey effective:

Deliver the survey at the right time. It needs to taken sent soon enough after the customer experience that customers remember it, but not so soon that they haven’t gotten to use the product or service yet.

Include room for open-ended follow-up. After the single question, include an optional section on your survey for additional comments:

  • Please tell us what you like or don’t like about our company.
  • Would you like to be contacted to discuss this?
  • Name/Phone Number/Email

This gives customers who are unhappy with you space to “vent” about what they didn’t like, as well as to be heard.

Take action on both Detractors and Promoters. Promoters are much more likely to be loyal to your business, buy more from your business and prove more profitable to your business. Use tactics such as:

  • Offering them loyalty rewards
  • Offering rewards for referring a new customer
  • Upselling additional related products and services

Detractors, meanwhile, are likely to badmouth your business, so do your best to change what they’re unhappy about. If a Detractor asks to be contacted, do so immediately! Positive outreach can turn Detractors into Promoters.

Share results with your team. Let your staff know your business’s NPS as well as any specific praise or criticism that customers share in the survey. By doing so, you can help them improve customer service and overall performance.


Mondays with Mike: 6 Steps to Building Better Proposals

2-16 business proposal smallWhether you do it many times a day or only occasionally, we all use written proposals from time to time in order to land new clients.  As important as generating revenue is, I’m consistently surprised by how little time many entrepreneurs spend on perfecting these opportunities to shine.  Here are six concrete ways you can make your proposal stand out from the crowd.

  1. Put your pricing options in the right order.  Your best bet is to start with your highest priced option and descend from there.  Why?  Your prospective clients know how much they’re willing to spend, and you want them making comparisons against your high figure first.  That way, every other option looks like a comparative bargain.
  2. Offer three options.  More than three choices can give your prospect analysis paralysis – an inability to decide when faced with an overload of information.  Fewer than three options can make a prospect feel forced into a decision.  Three is the perfect number.  It lets your clients select one option that’s the best fit and discard the options that don’t suit their needs as well.
  3. Include a partially completed contract.  In short, you want to make it as easy as possible for a prospect to say yes.  Doing as much of the paperwork as you can in advance not only makes it easy, but it also gives them a sense of progress toward a goal – in this case, the completed contract.  We’re much more likely to finish a task if we feel like we’re getting somewhere.  Don’t overwhelm your client with a mountain of blank pages to fill out.
  4. Use the power of font size.  I am not suggesting you hide important details in fine print.  What I am suggesting is that tiny modifications of font size can influence the way your prospects read a proposal.  Making the font just one point larger when you mention their name or their company’s name or highlight a key benefit makes the appealing stuff just slightly more apparent.  Reducing the font size one point for discussion of price – the less fun stuff – can minimize the impact of the cost.
  5. Personalize your proposal.  Odds are good that your prospect is receiving proposals from other businesses, and one sure way to make your stand out is by customizing it to reflect unique details just for your client.  If you send off boilerplate wording, it’s going to be less compelling.  If you use your client’s name and refer to specific attributes or benefits for their particular situation, you’re making a connection between your company and the client that’s hard to ignore.
  6.  Use good quality paper.  So many proposals are delivered electronically that seizing the opportunity to present a polished hard copy on heavy, substantial paper will always make you stand out among the other contenders.  You’re showing the client how important their business is to you, and you’re demonstrating your willingness to go above and beyond to ensure high quality results.

Whether you own a construction company that regularly writes high dollar proposals, or you’re a catering company who sends out occasional quotes, making sure you get your proposals right makes a big difference in your bottom line.


6 Steps to Systemizing Your Business

2-13 business systems smallWhether you recognize it or not, your business already has a system. But when tasks take too long, cost too much or create substandard results, your system needs anything from a little Botox to a full face lift. Here are six-steps to help you see what you’ve got, identify where it’s going wrong and fix your system to get your business humming.

Step 1: Document Your Current System

Without documentation, you can’t get a clear picture of what you’re doing now, much less how to make it better. Don’t assume that you know what each employee does. Talk to them before you write down every step, identifying who is responsible for performing each task and the flow of work from one employee to the next.

Many employees will have opinions regarding what tasks need to change (or go away entirely). Encourage them to voice their thoughts so that you can note down that information, too. You are now armed with a playbook that you can review before moving to the next step.

Step 2: Eliminate Unnecessary Tasks

Scan your documentation for clearly unnecessary or redundant tasks (including those exposed during employee feedback), and get rid of them. If your employees are performing ten steps when five steps would do the job without loss of quality, they are wasting valuable time. And the extra steps may even make their work less accurate.

This is not a do-it-yourself process. Before eliminating tasks, talk again to the people who perform them, as well as everyone connected with the process. If Joe recommends eliminating two quality checks in his process, but Mary says she spends too much time correcting Joe’s errors, you need to figure out why Joe is so error-prone, and then fix it.

Make sure that you enter these and other changes into your documentation. You’re going to need it later (and forever).

Step 3: Automate

Your employees can become more effective when you judiciously introduce some automation to the process. With technology costs coming down and becoming easily accessible through the cloud, this is now more viable than ever.  Sometimes, you can also automate with a simple tweak. A tool as simple as setting up an auto-responder provides amazing value by buying extra time for responding to email requests.

Step 4: Monitor Results

Until you try out your new system, you cannot be sure of its success. After implementation, keep a sharp eye on the results. Are operations moving along more efficiently in the hands of happier employees? Or is the process hitting bottlenecks while your employees have become numb with boredom? If the latter, work may slow down, leaving you with a system that looks good on paper, but requires further adjustment.

Step 5: Make Tweaks

If you expect to get everything right the first time, think again. This is typically an iterative process involving testing, tweaking and documenting. You probably will see improvements on your first attempt, but no system is perfect. A tweak made to one task may create issues in a later step.

After tweaking problem areas, change the documentation so that your employees will know the steps that they need to perform, and monitor the results again. Rinse and repeat until the system works well.

Step 6: Update Documentation

Once you are satisfied with your new system, it’s time to formalize the documentation. Your employees will need to follow a procedures manual until they know all of the steps. And, when you hire new employees, you can reduce training time while increasing accuracy when they have a step-by-step manual at their fingertips.

Of course, no system is forever. As your business changes, additional changes to the process are almost inevitable. And, let’s face it: busy business owners don’t have the free time to change documentation on the fly — or even think about it, so put a periodic review on your calendar.

Your review may uncover missing information or, more importantly, the need for system enhancements. A semi-annual or annual review requires only a small effort (sort of like regularly straightening your closets, rather than waiting for a major mess). This effort ensures that your information is accurate, while alerting you if it’s time to go back to Step 2.

A Good System Does Not Stifle Creativity

Remember: a great system for your business does not equate to a mindless factory assembly line. Remove unnecessary, confusing or redundant tasks, and you free minds to develop new ideas. Everyone, from yourself on down, can add meaningful contributions to your business.


How to Hire an Attorney for Your Small Business

Lawyer handing over legal document at  a meeting in a cafeEvery business needs the services of an attorney. Having access to one can help you navigate complex areas like patents, trademarks, copyrights, and contracts. They can also help you choose the best business structure for your company and create employment contracts and nondisclosure agreements, if you need them. Some attorneys specialize in helping small businesses and can be reasonably priced, even for the smallest budget.

Start by Identifying What You Need

Beyond identifying the areas you need legal expertise in, you’ll also need to determine what type of lawyer you need. Some can help with general small business tasks, while others specialize in trademarks, patents, and copyrights. If there’s a specialist for what you need, seek him out. You wouldn’t go to a general practitioner if you had orthopedic issues.

If you have no need for copyrights or any complex legal advice, you can probably get by taking care of your needs on your legal questions with a general small business attorney. If, on the other hand, you want to patent your intellectual property or need several different complex contracts drafted, you’re better off hiring a professional with that expertise.

Ask Your Network for Referrals

Before you do an internet search for an attorney, see if anyone you know is acquainted with a small business lawyer. A referral can go a long way toward helping you find the right person for the job, and it will cut down on the time you spend vetting different options.

If no one you know can refer a lawyer, check with your local SCORE or Small Business Development Center to see what leads they can offer. You might even find one that partners with the local bar association to offer pro bono advice to startups!

Do Some Research

Once you’ve got your shortlist of possible attorneys to work with, dig into their qualifications online. You can review each one’s credentials on your state bar’s website or here. You want to ensure that your attorney is licensed and admitted to practice before the courts in your state. It may also be helpful to see if he has ever been reprimanded or involved in illegal activities (red flag).

Interview Your Top Three Choices

Starting a relationship with a lawyer is something you want to do carefully, because the right fit could make for a long and fruitful relationship. Always ask for business references (and check them), as well as questions like these:

  • Do I need to provide a large retainer to get started
  • What is your fee schedule for routine and non-routine services?
  • Will you provide itemized bills?
  • What is your typical response time?
  • What is the best way to reach you?
  • Have you worked with any businesses in my industry?
  • Can you give me an example of how you have helped clients secure business opportunities?
  • Can I call you on any legal problem?

Not only should the right lawyer give you satisfactory answers to these questions, but you should get a good feeling from her. You need to be able to trust your attorney with your business, so it’s important you listen to your gut in the interview.


Mondays with Mike: 7 Habits Entrepreneurs Should Eradicate

2-9 bad entrep habits  smallI’ve started, run, grown, and sold businesses long enough to know how much we can learn from the unsuccessful habits of entrepreneurs who don’t make it.  By seeing the recipe for failure, we learn much about success.  Here are seven destructive entrepreneurial habits you should watch out for.

  1. Playing the victim, rather than the victor.  If you’re constantly whining “why me?” and focusing on all the bad things that are out of your control, you’re unlikely to be the sort of take-charge, positive person who flourishes as an entrepreneur.  You question should instead be “why not me?”
  2. Favoring ideas over action.  You’re far better off having a mediocre idea and putting in hard work to see it through than you are with a brilliant idea and no work ethic.  Inspiration is the spark, but perspiration is the day-to-day practice of putting your nose to the grindstone and getting things done.  You can’t feed your family on your brilliant ideas alone.  You have to be willing to work.
  3. Raising money, rather than making money.  Many small businesses need occasional infusions of cash, whether it’s for expansion or improvements.  The danger, though, is in spending more of your time chasing down investors than you spend wooing customers.  Revenue is the lifeblood of a company.  Focus on increasing your sales, and you’ll need less investor support.
  4. Relying on your backup plan.  It’s very seldom that you see great things achieved without risk.  If you’re constantly hedging your bets, tinkering with your arrangements in case your new venture flops, then you’re not really all in.  Commit to making your business succeed, rather than spending your energy planning for your failure.
  5. Hiring quickly and firing slowly.  Good employees are worth their weight in gold, and bad employees can cost you far more than you’d ever imagined.  If I could impress entrepreneurs with one single tip in terms of recruiting talent, it would be to slow the process down.  Take your time, hire staff that’s a good fit your company’s climate and values, and if an employee turns out to be a poor fit, then cut that employee out.  You can’t afford to let bad apples spoil a good bunch of employees.
  6. Failing to identify your target market.  If you don’t know who you’re selling to, your efforts in marketing, collecting feedback, and making changes will be seriously inhibited.  Successful entrepreneurs can clearly articulate who their ideal users are, and they frequently cater to a particular niche in a market.
  7. Doing minimum wage work.  I can’t tell you how often I see brilliant entrepreneurs doing unskilled work in their companies.  If you’re spending your time doing work you could hire someone to knock out for $10 an hour, you’re not doing your business any favors.  Your time and your talent are more valuable than that.  Put your energy toward the stuff you can’t hire people to do for you.  Grow your business.  Attract new clients.  Leave the simple tasks for someone else.

Some of the smartest entrepreneurs I know are the ones who see and avoid the obstacles that have tripped up their colleagues.  Success isn’t just about learning what to do; it’s also about learning what you should avoid.


What You Can Learn from the Businesses in Mumbai’s Dharavi Slum

2-5 Dharavi Mumbai smallIn January, I had the opportunity to visit India. One of the most eye opening parts of the trip was the half day I spent at the Dharavi slum that was made famous by the movie, “Slumdog Millionaire”. It sits in the middle of Mumbai, the financial capital of India and is the second largest slum in Asia. Dharavi is only one square mile, but is home to over 1M people. The density of the slum grew over the last 100 years because of the expulsion of factories and residents from Mumbai and the rural poor migrating to the city. 

This slum is big business. Dharavi has an active economy with approximately 10,000 household enterprises that mainly employ residents. Being so densely populated, many of them sleep and work in the same place. Dharavi exports buffalo leather, fabric and pottery products around the world. The total “reported” annual revenue of all the small businesses in the slum is estimated at over $665M per year. Most people I talked to believe it is actually over a billion dollars per year.

There is a lot that American entrepreneurs can learn from these business owners. They include:

  1. Find a niche by doing what others won’t. A lot of the work done in the slum is what others in the rest of Mumbai do not want to do. There is a big business of recycling all types of plastics and metals. These need to be sorted by hand which is labor intensive. Many materials also need to be dried manually in the sun afterward. Lesson: What can your business do that customers need, but other people don’t want to do? Go do that at a profit.
  2. Always be testing (ABT). There are no long term business plans written here. People simply find a job that needs to be done and start doing it. Alternatively, they set up shop outside their home or the one restroom that serves 1,000 people daily and see what people buy. If their product or service does not sell well, they adjust the next day. Lesson: Prototyping and testing are an important part of growing any business until you find want your customer will buy over a long period of time.
  3. The highest price is what people actually pay. There is a tremendous amount of competition in Dharavi since there are so many people. They still focus on the value a product or service brings. For example, there is always a “tourist” price which is the highest since they are willing to pay more than anyone living inside the slum. Lesson: Find customers that value your products the most so you can sell at a top price for maximum profit.
  4. Relationships still matter. It’s not only about price, but who you know and have trusted to work with in the past. In Dharavi, historical ties, religion and geographic location within the slum play an important role in the supplier and customer relationships. Lesson: Everywhere in the world, people do business with who they know, like, and trust. Think about the actual basis of your relationships with your suppliers and customers. If it’s not based on trust, then it is more fragile than you think.

What have you learned about business traveling outside the U.S.?


Mondays with Mike: How To Fall In Love With Your Business All Over Again

Candy heartsIn a lot of ways running a business is like a marriage.  There are similar stages:  apprehension – when you’re not sure it’ll work out; infatuation – when you can’t get enough of the relationship; and resignation – when you realize that every business, just like every marriage requires hard work.  While there’s no avoiding the hard work, falling in love with your business again can help you sustain the energy that being a successful entrepreneur requires.  Here’s how to do it:

  1. Get back to your purpose.  Remember why you started your company in the first place.  Were you working to fulfill a need?   Did you see something you wanted to change in your industry?  Had you identified a way you could improve your community?  Let’s face it:  it’s easier to work for someone else and earn a consistent paycheck than it is to start your own business.  You did it for a reason, and you need to keep that reason in mind.
  2. Reconnect with your core values.  When we’re working in harmony with our core values, we feel good.  When we’re working against them, we feel tired, frustrated, and wrung out.  Simply making sure your company is working in support of the things that matter most to you can help you rededicate yourself to your business.  Identifying your core values can also help you ensure the staff you hire is in alignment with your mission.
  3. Focus on more than the money.  A Princeton University study has confirmed what we’ve been told our entire lives.  Money doesn’t buy happiness.  Specifically, the study found that once basic needs can be met – which they determined is at around the $75K income mark – additional money did not result in additional happiness, at least not in and of itself.  What did make people more happy was doing things they valued with that money.  Whether it’s charitable work or using funds to spend more time with your family, remember that your bank balance alone isn’t a measure of your happiness. 
  4. Make the world a better place.  One of the most rewarding aspects of entrepreneurship is the ability to effect change in your community.  When you have to slog through the hard work of running your business, knowing your work makes your community better can help sustain your efforts, help make it feel worthwhile.
  5. Realize your importance to your employees.  Not only does your company support your family and your community, but it also sustains the families of your staff.  Seeing the very real effects of the business you started and realizing how many people depend on your dream gives you concrete reasons to keep going.  We thrive on being needed, and entrepreneurs fuel our economy and support countless families.

Just like a marriage, running your own business doesn’t stop with the honeymoon.  It’s great to enjoy the first flush of starting a new project, but sooner or later, you must settle in and get down to the hard work of sustaining and growing that business.  Adjusting your perspective and getting back in touch with all the important reasons you had for striking out on your own can get you through the tough times.  


7 Keys to a Successful Barter Arrangement

1-30 Business Bartering smallCash flow is always an issue for entrepreneurs. It often seems to go out more quickly than it comes in.  So, how can you get creative with your finances?  Part of it boils down to using other currencies- aside from just money- to help you run and grow your business.  In fact, your products and services have great value that you can “spend” through barter arrangements.

Done correctly, you can use barter partnerships (shall we call them “barnterships”?) to meet your company’s needs without an excessive cash outlay, while building great relationships in the process. However, without proper preparation, you can also lose your shirt in a deal or even face unexpected tax bills.

Here are seven basics that you need to know before entering into your next barter agreement.

1. Pick the Right Partner

Make sure that your “bartner”- aka your barter partner- has a good reputation and shares your overall values. This means seeking out past business associates with whom you have a good relationship or seeking recommendations from others you trust. If you expect to barter regularly, consider joining a barter group that verifies or rates participants, or even a barter exchange that intervenes in negotiations.

2. Establish a Fair Exchange

Even in barter arrangements, the dollar remains the core standard of value, so both parties need to set (and agree to) a firm dollar value for the goods and services they’re exchanging.

Then, make sure that you establish an equal-value trade, such as a medical office entering into an agreement with a law firm: four free medical checkups in exchange for four free contract reviews, with a value of $1,000 for each party.

Think twice before entering into an arrangement that exchanges goods or services of dissimilar value or type. If your beauty salon tries to exchange free haircuts with a law firm, you may find yourself cutting the same head of hair until long after it turns grey in order for the exchange to equal out. 

Also, stay clear of lopsided arrangements that seem to benefit you. You don’t want the other party to do a lousy job or feel like they are being taken advantage of- that can impact the quality of the trade and the relationship.

3. Start Small

Successful marriages commonly begin with a first date over dinner before moving on to more … uh … interesting activities. Keep your first barter with a new partner like first date – small and low-risk.

This is not the time to bet the farm. Even if you both have honorable intentions, things can go south, often due to different contract language interpretations or lack of follow through. Until you know that you can really work with and trust this partner, keep it small.  Start with a small exchange and build upon that over time if it works out.

4. Put it in Writing

The idea of bartering typically brings to mind a hand shake over the fence. A hand shake is technically a legal contract, but try proving it in court. A barter agreement is just as complex as a cash-based arrangement. You need to identify every possible detail, write it all down and sign on the dotted line.

Document every detail thoroughly. And if you create a product or service collaboratively (such as working together to create an email list), specify what happens at the end of your agreement. If your barter partner takes full ownership and you can no longer use it after a defined time period, perhaps you should agree to supply fewer names than your partner.

5. Establish Clear End Dates

Your agreement may last for a week, a month or longer, but not forever. It absolutely needs a defined end date. Even if you enter into the identical arrangement many times in the future, it’s best to create a new contract each time. If your first agreement worked well, creating the next one will be a simple matter. But, if you discovered that some provisions didn’t work as expected, you can tweak the next version the next time.

6. Communicate Frequently

Don’t wait until the final deadline date to find out how things are going. Define key milestones with your partner and check in on those dates to ensure that you’re both on track and maintaining appropriate quality levels.

Naturally, when unexpected issues arise, don’t wait for a milestone date to speak up. A setback on one side can affect the other side. Plus, an informed partner may have a solution to fix the issue.

7. Educate Yourself on Tax Consequences

As long as you trade goods or services with a cash value, the taxing bodies generally want their share. So, do not enter into a barter agreement before checking with your accountant.

At the very least, the IRS typically requires that you report barter arrangements on your tax forms. If you exchange like goods or services, however, you gain and lose valuable assets. So, you may not need to pay excessive (or any) additional taxes if you properly track both sides of equal-value exchanges. But, the IRS valuation rules can be complex. It’s worth repeating that the advice of a knowledgeable accountant is essential.

Using your know-how as a currency can be a big boost to your business, but take it one step at a time and do your homework upfront so that you reap the full benefits and minimize the risks.


Why No One Wants to Be Your Mentor

Small business owners frequently cite that having a mentor is one of their top keys to success. So why don’t you have one? It’s because you have misconceptions about what a mentor looks like and how they can help.

Here is why people don’t want to be your mentor:

  1. They don’t know you. You won’t find mentors by reaching out to strangers since they don’t know you and won’t invest time in helping. Instead, look around at the inspiring people you are already interact. Your mentor needs to be someone who believes you are worthy of helping. Ask who in your network already fits that profile.
  2. You ask for mentorship. “Will you be my mentor?” Sheryl Sandberg explains that, “If someone has to ask the question, the answer is probably no. When someone finds the right mentor, it is obvious.  The question becomes a statement. Chasing or forcing that connection rarely works.” When looking for a mentor, author Ryan Holiday says don’t even use the word. A mentor is a label that can only be applied to someone over time, and by the time that label can be applied, it is already very clear what that person’s role is. Just like any other relationship, it has to grow and transform into what you both want it to be. Let them develop slowly over a period of time.
  3. You take without giving. The “mentor-mentee” relationship needs to be a mutual exchange. While at first it may seem like you have nothing to bring to the table, this is not the case. Give your time by finding articles, links, or news that can benefit your mentors. Make connections for them to your network. Tweet their posts, comment on their blogs, and share their updates. Ask how you can be of service to them.
  4. You are a drag to mentor. Take a closer look at yourself. Are you somebody you yourself would like to mentor? Are you eager to listen, learn and committed to implementing the advice you receive? People don’t want to mentor those who are sensitive to criticism and stuck in their ways. Arguing with all feedback is a major red flag to a potential mentor that you aren’t worth their time. Excuses are also a barrier.

Be great at what you do. Work hard and be dependable. Go out and become that person that others would love to support and nurture in business.

1-22 Business mentor small




 
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