Forums: Discussions for entrepreneurs and small business.

We`ve just launched `10 Steps to Grow Your Business` and want to hear what you think of it.

We`re offering these 10 Steps to help you build and expand your business. It`s a practical guide for entrepreneurs that steps through everything you need to take your startup to the next level.

Give us your feedback so we can continue to provide you with the best possible stuff!

I just finished reading the 10 steps. This is a great piece of work!

Here are some personal experiences that reinforce much of what is recommended in the report that I hope will be helpful to the members.

We started our online customer relationship management (CRM) software business in early 2004. We cater to the small business owner. My partners and I were all former Enterprise software developers and sales and marketing guys with experience at both big companies like IBM and Oracle, and start up niche players with names no one would recognize. Not having been involved in the small business market prior to starting the company, we started with a premise rather than a solid business plan.

The basic premise was, and remains, that small business people have the same basic requirements as Fortune 500 companies when it comes to establishing and maintaining long lasting and profitable business relationships with their customers. However, the cost and complexity of the software products available to automate the customer relationship management process put small business owners at an unfair disadvantage. Most small businesses simply cannot afford the license fees and lack the internal IT resources to install, implement and maintain the essential software tools required. We believed, and are being proven correct, that there is a huge opportunity in the small business market for a vendor providing a high value solution at an affordable price. We believe there is absolutely no justification for the prices being charged by online CRM vendors. Nor is there any reason the solutions offered need to be so complex and difficult to use.  

Even though we were late to market, we knew that low cost technology and modern application development methods would enable us to create a robust product with minimum up front capital that would enable us to meet our goals. We also knew that we were entering a very crowded market, we would need high volume, and it would take a long time to ramp up before reaching critical mass and profitability.

Nonetheless, we made it our mission to develop and market the world`s most functional and cost effective online CRM solution. We designed it with the small business person in mind. Specifically, this means a) the product had to be very easy to use since most small business people are not technologists by trade, b) the price had to be in line with the budget of the typical small business, and c) being Internet based, the service had to be extremely reliable and secure.

Here’s what we have learned so far relative to the 10 Steps:

1. Measure and Analyze Current Status

Being steeped in the Enterprise software market as were, we started out using messaging that was well suited for that space, and was being utilized heavily by our competition. But, as it turned out, it made no sense at all to the small business person. For example, some of the big buzz words in the Enterprise software market today are ‘On Demand’ and ‘Software-as-a-Service’. Our initial messaging was peppered with these terms assuming our customers would be just as hyped up about the terms as the software industry is. Our first home page banner read ‘On Demand Applications and Services’ in big bold text, with a sub-title that had something to do with ‘Software-as-a-Service’. Most of our customers had no idea what these terms meant and couldn’t care less. On the other hand, most of them do know what ‘hosted by the vendor’ means.

Even the term CRM itself is not as well understood as we assumed it would be. To our surprise we discovered that ‘online database’ was one of the most common keywords used by our prospects when searching for an online CRM application. We were not even using that keyword in our PPC advertising campaigns and had to quickly adjust to the market. We discovered much about our messaging by using customer surveys (we use Survey Monkey extensively, but will soon be adding our own customer survey module to our product). We have revisited our initial assumptions many times since then and are constantly tuning our messaging. We still have a long to go, but we are making progress.

2. Get Efficient through Technology

Being technologist, we always knew this was going to be a critical success factor, especially in a low cost, Internet based business like ours. We set out from the beginning to be sure everything that could be automated was automated. Our entire order taking and ongoing subscription revenue collection process is automated through a combination of our own technology (home grown shopping cart) and PayPal (for monthly recurring subscription billing and payment collection).

We started out using expensive accountants to do what is really basic bookkeeping work.  We quickly switched to QuickBooks online for our accounting needs. Now I manage the books myself, which was a new, and initially painful experience at first. But once you get familiar with the product, it is not that difficult to use. As mentioned above we also use the free service of Survey Monkey. And, of course we use our own system all day, every day for documenting interaction with our customers.

3. Enhance the Customer Experience

This is an exceptionally critical aspect of our business, which we initially underestimated. Although we knew the product had to be very use and the order taking process fully automated, we made some mistakes on our web site as described above, and we also made the mistake of believing in the ‘If you build it, they will come’ adage. Expecting we would not be able to manage a proactive approach to the customer experience 9due to high volume), we started out with a completely reactive sales and support philosophy. After several months of much better than expected sales, we were shocked by a rash of cancellations. After detailed follow up with the customers who left us we discovered that many of them tried to use the product and had only moderate success. We also learned that most were not aware of, and/or were not taking full advantage of the features and functions available. This was primarily due to lack of experience with a product like ours, and the fact that we had not trained anyone (assuming the product was so easy to use that they could figure it out on their own).

We have since made a 180 degree course correction. We now make proactive phone calls to every new subscriber just to introduce ourselves on a personal level. We offer a 30 free trial with full access to all the features of the service, and we proactively promote free training for all new subscribers – even if they are still in the 30 day free trial period. Since making this adjustment, we have seen the cancellation rate drop dramatically, and, more importantly, we have quickly established an extremely enthusiastic base of loyal customers who consistently refer us to their friends, family and colleagues. On a daily basis we hear comments like; “I am really impressed that you called me.” and “Wow, I can’t believe you actually offer free training.” and “It is so refreshing to see a company that has such a passion for the success of their customers.” I can say without hesitation that the proactive approach has helped us to grow our business much faster than we ever imagined we could. Much of this success is based on word-of-mouth referrals from elated customers. We also collect testimonials from customers who rave about our personalized service and support and we post them to our web site. This helps to reinforce our messaging about being passionate about customer service and support.  

4. Cozy up to Vendors

Although we do not deal with a lot of external vendors in our business, it is important as a start up to maximize your exposure in the communities that surround your target audience. We participate in as many small business forums as possible and utilize social networking sites like this one extensively. We have found these to be very good no-cost methods of increasing our exposure and establishing creditability. But it does take time and you should not expect immediate results in terms of sales revenue.

5. Maximize your Niche

Over the past 15 years prior to starting this business I was managing sales operations for start up software companies in Silicon Valley. My mantra (addressing the CEO and CTO) has always been; “Figure what it is you do best and for whom, and then drive a truck through that hole.” Over the years I learned that one of the main reasons start up software companies fail is that they never figure out who they are or what they really do. Often the technology is viewed as a greatest thing since sliced bread by the original author and is positioned as a panacea for all that ails anyone who comes in contact with it by the marketing department. Unfortunately, it is impossible to build a sales strategy around this kind of product positioning. I cannot stress enough the importance of selecting a niche and focusing like a laser on the needs and desires of those in the target. In my opinion, the initial objective of any start up (especially in the software business) should be to gain the maximum share of the customer’s attention, rather than the maximum share of the market. If you can’t solve any particular problem extremely well, you end up being a Swiss army knife. The Swiss army knife is a great concept, but have you ever been really hungry and tried to open a can of beans with one?

6. Develop new channels

I would caution against developing new channels too soon. As mentioned above, I recommend you first establish yourself in your niche and maximize the current channels of distribution before expanding to new ones. This will help to keep your business streamlined and reduce unnecessary risk of spreading yourself too thin. For example, we initially envisioned a global distribution channel comprised of resellers and independent sales agents. However, given the low margin available to these channels, we quickly abandoned that idea and now take an almost exclusively direct approach to the market (with the exception of referral partners who post a link to our registration page from their web sites). I have also worked in organizations that assumed a global market for their software product and spent a lot of time developing multi-lingual support in anticipation of same. In most cases, it turned out that the English speaking countries were the most accepting of products developed in the US. We do have customers in many parts of the world, but 95% or more of our business comes from the US, Canada, the UK and Australia, and we have no resellers in any of the foreign countries.

7. Acquire Growth Capital

Having managed sales operations for several software start ups who took venture funding, I would be very careful about seeking growth capital too soon. There is an obvious attraction to venture capital but there are also a lot of unanticipated negative consequences that those who have not been through this ringer may not be aware of. The biggest risk is losing your equity in the business. Take it from my business partner who started a business as the only the employee, spent seven years developing it into a $5M a year operation, took a couple million of venture capital along the way, and was left with a very small percentage of the business when it was finally sold. To this day, he regrets his decision to take the money. We have agreed that we will not accept any angel or venture funding and we will maintain sole ownership the business for as long as we can, if not forever.

Most venture capitalist work under the expectation that they will extract a 10x return on every dollar invested. In practice, this means that taking $1M in venture money puts you $10M in the equity hole. If you can live with that kind of pressure and risk, go for it.

8. Create a Culture

You must be passionate about what you are doing otherwise you probably wouldn’t be starting your own business. But if you are planning on hiring people it will be very difficult to find anyone who shares your level of commitment. Yes, you can develop best practices and offer incentives and rewards for success. But the reality is that someone who has never run a business of their own, or taken the risk to pursue a dream, will ever have the level of emotional attachment to the business that you do. Culture is a very difficult thing to develop. In the beginning, I suggest you try to find people who have walked a few miles in your shoes. Try to find people who know how to help other people perform better rather then the rainmaker who works as a lone wolf. At the end of the day, culture is created by leadership. If you are not a natural leader, find someone who is, and stay focused on what you, personally, do best.  

9. Ramp up Awareness

Since we went online we have offered a Free Edition of our product. For the first 18 months we didn’t take a single order - intentionally. We were still developing the product but we wanted to get our name in front of as many people as we could as fast as we could. When we were finally ready to begin offering a paid subscription, we had a healthy pipeline of eager prospects all lined up and ready to pay.

Look for low cost methods to develop awareness. Traditional marketing techniques (print, direct mail, email) can be extremely expensive and deliver very little results. We made the mistake of investing a lot of money into multiple different Internet marketing programs only to find we had no effective way of measuring their success. Be sure you have the right tools in place to measure the effectiveness of your marketing spend. Otherwise you may as well throw the money out the window.

10. Improve Sales Techniques

As mentioned above, in our market, switching to a proactive sales model has been the single biggest contributor to our recent growth and customer loyalty. But, the key to improving sales techniques is to know where to focus. Before you adjust your techniques, talk to your customers. Play dumb. Ask for their help. Find out what they liked and didn’t like about your approach to them. Don’t be afraid to ask them hard questions. You cannot be afraid to expose your weaknesses. It will endear you to the customer. After all, everyone wants to feel as if their opinion is important, and in this case, it really, really is.

More importantly, try to talk to as many people who were prospects but who didn’t buy your product. Although some people do not like to be critical of others and will give you ‘soft’ feedback to avoid hurting your feelings, if you press them they will probably give you something actionable sooner or later. The best people to talk to are those who bought from someone else instead. They will probably give you the most useful information about how you can improve your tactics and will probably spill the beans about your competitor as well.

 

Kregg,

Wow. That was a huge and incredibly detailed account of your approach to the 10 steps! ............wow. I`m speechless.

I`ll just add that I think it`s a great tool, Joel and perfect as a mental checklist of items that should be addressed. I know that I`ll be using it to clarify and organize our approach.  Thanks!

-------------------------

~Eric
JE Design Group, LLC
If all you do is what you`ve done, then all you`ll get is what you`ve got.
www.jedesigngroup.com

I agree...this is a great piece of work. Nice job!

I guess the one thing I thought was a little lite was the area of leadership. I was suprised it didn`t have its own category......guess that would have made 11 areas and that does not sound as good as 10 :).

Leadership is certainly assumed in each of the categories (esp culture) but we know that strong leadership is the single most important aspect to growing a small business...or any business for that matter.

We also know that in small businesses the leadership goes through significant change as the business grows. From "Entrepreneur to CEO" as the experts say. Skills that were needed to start the business in many cases are not those needed to grow it. 

The skills and disclipline required to navigate growth do not happen by accident. Leaders of small businesses must ask themselves what skills are needed to achieve the next level of growth, do I have them, how can acquire them and how can I make sure I am making progress.

Anyway my two cents worth. Hope that helps and was the kind of input you were looking for.

Steve

-------------------------

Peersight, the Nation`s first e-enabled CEO Membership organization for Small Business. http://www.peersightonline.com None of us is as smart as all of us. Come watch us grow at http://blog.peersightonline.com

I thought of another important step that was left out (unless i`m totally blind..i am still only half awake) ....

Give back.  Sometimes all it really takes to make it over that hurdle is to give back to the community or give back to your customers.  Make them feel as special and important as they are. 

-------------------------

Jen Walter
Creative Director
JW Design Center
www.jwdesigncenter.com

Keep those customers coming. First and foremost without our leads/community/friends/CUSTOMERS we are without a business. I found this out the hard way with a retail business and have recently moved into the internet business. Referrals are King. I think the 10 steps is a good outline and has provided me with a positive approach and the proper techniques to learn from my mistakes.

Good luck

-------------------------

NEVER PAY FOR TRAFFIC AGAIN!!! See what I do at my site and/or blog. http://www.payitforward4profits.com/glenwalls http://www.3stepsecret.com/glenwalls http://www.cashgoal.blogspot.com/