2.1 SmartLogger
2.1.3 Aspecto
service? How has your customer bought similar products or services in the past? What is your customer's buying strategy? How does your customer go about making a buying decision for your product?
Imagine placing an ad in the newspaper for your perfect customer. How would you describe your perfect customer? What prospective customers are the most likely to buy your product or service immediately? What are the most important qualities that your ideal customer would have?
Your ability to clearly define and determine the very best customer for your product or service will determine your success in business. How could you find more perfect customers for your product? How could you create new customers for your product? Define your unique selling proposition and communicate this key benefit in every customer contact.
Most entrepreneurs aren't clear about their ideal customer. For this reason, they waste a lot of time and money trying to sell their product to people who aren't good potential customers.
Your ability to clearly define and focus in on the customers who can most rapidly buy your product or service will be essential to your business success.
How to Describe Your Business Plan’s Ideal Customer
Every customer is important to your business plan, but the truth is that some are more important than others, and a precious few are most important of all. Knowing the difference if key.
The difference between good and great customers is huge. If you’re already in business, you know that some customers are more profitable, more pleasant, more apt to buy frequently, and most likely to spread good words about your business. Those customers are the ones you want to focus on and increase in number.
Make sure you know which customers are most valuable to your business so you can then focus your attention on strengthening relationships with them — and reaching more just like them.
Your best customers
Ask you to do things you do well.
Appreciate what you do and willingly pay the price that you ask.
Make reasonable requests that lead to improvement and expansion of your skills and services.
Inspire your business to move in new and profitable directions.
Great customers inspire and deserve utmost attention. Heap on the special services, pile on the
appreciation, and do what you can to keep them loyal to your business. You’ll be doubly rewarded with repeat purchases and invaluable word of mouth.
Good customers appreciate your offerings, buy your products, and pay your bills on time and with
courtesy. But they can be transitory — here today, and gone tomorrow. And what often lures them away is a better offer. They may never become loyal patrons because they value special deals more than they value long-term business relationships.
Yo ur most troublesome customers are likely simply mismatched to your offerings. They’re excessively negative, unreasonably demanding, and maybe even abusive to your staff and your business systems. Watch for these indicators to flag customers you’re better off not having in your clientele:
They consume considerable time and attention yet buy very little.
They demand unreasonable concessions on pricing, service, or product alterations, and, if you consented, these concessions would harm your business.
They demoralize your staff.
They refuse to pay your fair price for your offering or refuse to comply with your billing and service standards.
They act dissatisfied no matter what you do for them.
Great, good, and troublesome customers affect your business in very different but predictable ways, following the 80/20 rule, which is also called the Pareto Principle or the law of maldistribution. In most businesses, roughly 20 percent of customers account for 80 percent of the customer service efforts.
But keep in mind that the same 80/20 rule applies to your profits as well: 20 percent of customers will account for 80 percent of your profits. By identifying which customers fit into which group, you can spend more time with your best customers to greatly increase your profits.
Investing time and money
Am I prepared to spend the time and money to make my business successful?
Perhaps the single biggest reason that businesses fail is because the business owner(s) is not prepared or willing to spend the time and money that it takes to make a business successful. Before you start your debt collection business, be sure that you are willing to invest the time and money it takes to make your business successful. How much money will you need and how much time will you need to spend? Both questions are very pertinent and vary in their answers.
How much money will I need to spend? – This one is not as cut and dried as one would think. Will
you be working out of your home or from an office? Typical expenses that you should consider before you even open your door are the following:
1. Office space and cost
2. Office equipment (phones, desks, chairs, internet, computers, servers, etc) 3. Business licenses
4. Employee wages
5. Software (skip tracing, auto dialer, merchant account, letter fulfillment services, debt collection software)
6. Postage
7. Bank accounts
8. Legal council (for establishing contracts, business agreements, etc) 9. Taxes
10. Website and advertising
Statistically, the reason for business failure comes from living outside your business means, or having insufficient capital. Most business owners want the freedom and prestige of owning their own business, but overlook the fact that it still requires money to run a business. This means you may have to go without some things in order for your business to succeed.
How much time will I need to invest? The easiest answer to this question is … “AS MUCH AS IT
TAKES!” There will be nights that you come home late, days you go in early, weekends that you will spend running reports, hiring new collectors, and meeting with clients. While there is light at the end of the tunnel and not every day will have your nose to the grindstone, you need to be willing to invest your time into the business to begin with.
If you manage your business correctly, put in the time and money, and have a knowledge and passion for debt collecting, you are well on your way to being successful.
Chapter 9
Differentiate business ideas from competitors.
Ways to differentiate
Let's look at a number of tried and true ways to claim a unique point of difference.
Product - Can you offer a product that is so unique or even trendy that your business is associated
with that offering? Or, can you extend a product and offer a valuable service to make the product more useful to the customer.
Service - Same goes for a service. Many times this can be the packaging of a service as a product.
Consulting is often delivered on an hourly basis. Packaging a consulting engagement based on an outcome, with defined deliverables and fixed package price is a very effective way to differentiate a service offering. Don't forget to give the service a powerful name!
Quality of process: Here is where many businesses miss the mark. They offer a great product or
service, do it in a customer-focused way, but make the process of doing business with them a burden. Consider the policies and procedures in place at your bakery. Are they making it harder or easier for your customers to do business with you? For example: What is your refund policy? Satisfaction guarantee? How do you manage long lines? Do you take credit cards on even small purchases?
Market Niche - Carve out an industry or two and become the most dominant player serving that
industry. A really nice bonus to this approach is you can usually raise your prices dramatically when you specialize in this manner.
Offer - Can you become known by an offer you make? example: accountant that offer his tax
preparation clients a 100% refund on their preparation fee when they refer four new clients. They are the 100% refund tax guys.
Solve a Problem - Is there something that prospects in your market fear or seem to believe is
universal for what you do? If so, focus on communicating how you have the answer. Painless dentistry for example. Another example a remodeling contractor who found that what his clients appreciated the most was the way his crews cleaned up at the end of the day. Promote the fact that he owned more
ShopVacs then any other remodeling contractor on the planet.
Message of Value- Many times there are things that you do that don't get communicated. Extra that
you provide or services you think should be included. Your positioning might just rest in more effectively communicating what you do.Exampe an office furniture dealer that has adopted the message - We Make Your Business More Valuable - to communicate all the things they bring to the party. Now, everything they do is focused on delivering on that statement. Everyone else in the industry sells furniture.
Unique habit -Example a financial planner who has his client's car detailed right out in his parking
lot when they come in for their annual review. They can't help but rave to their friends about this unique touch.
Guarantee - Can you offer a guarantee so strong that no one else in your industry would dream of
doing it. This one frightens some people but, you probably guarantee your work anyway, you just don't say so. Come out and boldly announce that you guarantee results and watch what happens!
Customer Service - Everyone knows the story of over the top customer service provided by
Nordstrom's Create your own over the top customer response system and word of mouth advertising will flow liberally. One of the greatest ways to kick this off is to over deliver on your first customer contact. Give them something more than you promised, give them a gift, give them a related service for free.
Against the competition - Many times you can create your category niche by looking for holes in the
offerings of your competitors. If every one in industry fails to address a certain problem, boldly grab on to solving that problem and use your competition as the point of difference.
Clues to uncovering your difference Look at your current clients. What common elements exist
among your best clients? Interview your clients. See if they can tell you why they chose to work with, why they stay, why they refer? Study your competitors more closely. What do they do that you could do better, what don't they offer they you could, how do they position themselves?
Communicate the difference Once you find your chosen strategy or combination of strategies to
differentiate your business, all of your advertising and promotion should be centered around shouting about that difference.
Chapter 10
employees needed
How many employees will I need?
Observe your employee thresholds. At each of these thresholds a company must more strongly embrace their old principles and process or invent new ones to meet the needs of a larger staff. Many companies stall or die at one of these thresholds, unable to adapt and evolve into the next phase of existence.
This first is obviously the first 5 or 6 people.
The next is around 25 people. This is often the point where companies can't depend mainly on their internal staff to recruit people in everyday roles.
The next is somewhere between 50-75 (depends on the type of business) This is when companies seems to star slotting people into specific "roles". Everyone stops doing everything in the company. Early stars are established and the company fleshes out the culture that will carry it for the next few thresholds.
“The number of people you have in your company at any time is a very important part of getting the company building process right,” explains prominent VC blogger Fred Wilson. “Too many and you will slow things down, burn through too much cash, and increase management overhead for no real benefit. Too few and you will be resource-constrained and unable to grow as fast as you’d like.” In many cases, figuring out the perfect number of employees is easier said than done. So how many employees do you need, and when should you hire them? Let’s take a look.
Understand your business needs
Hire people who are qualified to get specific jobs done. In order to do that, you need to understand what your startup requires to get your ideas off the ground. Do you need a software engineer? A graphic designer? Evaluate your needs and hire accordingly. Then, decide whether you want to hire temporary or part-time employees, or full-time employees. Depending on your needs, you may also want consider hiring consultants, contractors, or virtual resources.
Keep the team small at first
In general, it tends to be advantageous to keep your team smaller from the get go. The rule of thumb is to hire slowly and wisely to help keep costs down. But even if you can afford to hire more people, it may not be a good idea in the beginning. “Team dynamics are easier in a small group,” explains Wilson. “They get harder in a larger group. Things don't happen as quickly in larger groups. More management overhead is needed. All of these things work against you as a startup trying to get somewhere before someone else does.” The bottom line? Don’t rush to hire. Always take your time to
ensure you’re making the right choices.
Consider the future
When you do finally hire, you must do so with the future in mind. Where do you see your company in five years? What will it be doing? How large will it be? The answers to these questions will help you guide your hiring decisions.
Chapter 11
Money Needed To Get Started
Capital Expenditures
A reputable supplier can be a worthy ally to a startup, offering experience gathered from years of working with businesses similar to yours. Be prepared to make multiple calls and to ask a lot of questions. A vendor who is willing to take the time to help you understand your equipment needs may be just the person who deserves your business and your loyalty. If you are among the majority of
entrepreneurs watching every penny, consider whether gently used machinery, fixtures, furniture, or other equipment will serve your needs as well as gleaming new ones. Resellers who deal in used equipment for offices, restaurants, and other businesses may be able to put together a deal for you that will take a chunk off your startup costs.
Operating Expenses
If your sales skyrocket, you can deal with the happy problem of financing the supplies you need to fill a deluge of orders. However, it is often more helpful at the outset to make a pragmatic plan for the worst-case scenario. You need to know up front how you will weather a month -- or two or three -- with no sales. How much will it take to keep the doors open while you build your brand recognition? Document it all, including whether you will have employees and what kind of space you will need, down to the cost of ink and paper for your office printer.
A great way to research operating expenses is by talking to other business owners. You will probably be surprised by how much information people are willing to share. Everyone likes to be asked to share their experience and wisdom. If you can’t find a local mentor, SCORE may be able to connect you with a counselor in your field.
Professional Services
Small-business owners wear many hats: bookkeeper and sales rep, marketing manager and designer, CEO and janitor. How soon will you need or want to outsource some of these services? Professional help is an expense that has to be weighed against the boost it may give to your business. If you have funding to bring in a pro to help with marketing, for example, you may hasten the day when your enterprise turns a profit.
Personal Finances
Even if enough money comes in to sustain your business, you may choose to forgo paying yourself during the startup phase. A clear working knowledge of your personal finances is vital at this stage of the business. What are your monthly expenses? Are you prepared for large annual or semiannual expenses, such as school tuition, property taxes, or insurance premiums? Will you continue to work a side job or put all your efforts into your business? A rule of thumb for wage earners is to have three months of personal living expenses in savings. For self-employed people, the common wisdom is to keep six months of living expenses in reserve. This is particularly crucial when starting a new business -- and you may want to set aside as much as a year’s worth of cushion to give yourself a comfortable margin for your learning curve.
Persistence Pays Off
It's not uncommon for entrepreneurs to try more than one business idea before they achieve success. If you research your idea and create a solid financial plan, it will be that much easier to start over if your first stab at entrepreneurship doesn’t make it. Success simply means picking yourself up once more than the number of times you fall down.
Costing
If you try to get financing, before you have one customer, you're probably going to have to give away more equity than you have to, or it's going to cost you way too much to borrow the money that you think you need.
If you don't get traction when you try to borrow or raise money, you might be trying to bite off more than you have to. There can be huge benefit if you shrink a grandiose vision, and proceed with calculated baby steps, rather than try to go after too much on the first try.
But having an idea for a business is only a first step in the process. To turn the idea from a dream into a successful business venture, it requires time, energy, tenacity, and of course, money.
The million dollar question that most aspiring entrepreneurs want to know is: “How much money, exactly, do I need to start a business these days?”
The most basic answer to the “how much money do you need?” question is: You should have at least enough money to prove your concept and simultaneously or subsequently get your product or service up and running.
Here are some simple tips for calculating your start-up costs:
Understand your costs
Start-up costs are technically defined as the costs you’ll incur before you start making any income. It’s an important distinction to make because it will impact your tax return. These costs are broken