Category: Business

Double Down on Marketing

Double Down on MarketingIf you want to compete in the world of high growth startups, you better know how to play the marketing game. Marketing has become a big stakes game where companies are betting fortunes on the success of their products. Nowadays if you can’t play the big marketing game you may not even get the attention of the customers you need to grow your business.

So how do you compete if you don’t have the cash to run with the big dogs? The answer lies in growing your marketing budget by doubling up on your marketing investments quickly. Chances are the capital you need to compete in this game is right under your nose, you just need to know where to look for it.

Make marketing an investment

The first step to growing your marketing budget is thinking about it differently. People used to think of their marketing budget as a line item expense that they wrote checks for throughout the year. It was almost like rent – a normal cost of doing business. The mistake these startups made was that they treated marketing like an expense. It’s time to start thinking of your marketing as an investment that you expect to yield a return.

Like any investment you would make in the stock market, your marketing investment should generate a specific monetary return in an expected period of time. For our purposes, we’re looking for short term investments that will produce enough working capital to re-invest quickly to grow our marketing.

Grow marketing, grow customers

We all know that marketing attracts the customers we need to generate more sales. For this reason, if we want to grow our position in the market we’re going to need to grow our marketing budget as fast as possible to grow our customer base. The key to growing the budget lies in generating cash flow from the returns on our marketing investment.

Short Term Returns

People used to take the long view of their marketing budgets – planning them a year out. This “set it and forget it” approach may work well for Ron Popeil, but smart marketers throw that line of thinking out the window. Instead, we budget our marketing based on months, or quarters at the longest. By looking for marketing opportunities that provide short term returns we create opportunities to increase our marketing budget rapidly with the additional capital we’ve generated.

The faster we can provide a return on our marketing the faster we can put that money to work in the next cycle. The faster we put that money to work, the more money we generate from additional customers. The math is straightforward, but getting there can be a little tricky.

Finding the winning hand

It would be easy if we already knew what marketing strategies returned quickly and could just double up our bets on those efforts. Unfortunately we don’t know what works until we try it, which costs money and time. Finding this winning hand to double down on can become a job unto itself.

A popular way to test different messages and reach your target population quickly is Internet advertising. Unlike TV, radio or print, Internet-based campaigns are relatively cheap and highly trackable. Use the Internet to test out different messages, advertise on different Web sites, and gather feedback quickly from customers about what works. You can then apply your findings toward riskier (and more expensive) media.

Your goal here is to find the campaigns that will give you the opportunity to invest significantly more dollars with a nice short term return. If it’s the right campaign, you will be able to spend incrementally more every month, constantly rolling last month’s proceeds into next month’s increased marketing budget.

Don’t shotgun

The last thing you want to do is try a “shotgun” approach toward marketing where you try everything at once and wait to see what happens. This can get very confusing because you often don’t know what’s working and what isn’t. Instead, focus on a few strategies at once, measure them completely, and then try a few more.

Double down

Once you’ve found some strategies that work now it’s time to put your money down. Invest heavily in those campaigns and keep plowing the returns back into the same winning hand. This is how you scale your marketing to create the types of campaigns that move markets and win customers.

Fast growth companies are always looking for ways to exponentially increase their marketing spend, but only on campaigns that have a demonstrated track record for success. Next time when you come to the table with the big boys, look for that winning hand, double down on your bet and clear out the competition!

How Good is Your Big Idea

How Good is Your Big IdeaQ: I want to start my own business. I have tons of business ideas that all sound great to me, but my husband is not so sure. He says that we need to figure out a way to test my ideas to pick the one that has the best chance of succeeding. I’m ready to just pick one and go for it. What is the best way to determine if a business idea really is as good as it sounds?
— Hannah C.

A: Heather, I know you probably don’t want to hear this, but your husband is right (first time for everything, huh): before you just pick a business idea and go for it you should test the feasibility of your ideas to make sure they really are as good as you think they are.

Every business idea, no matter how good it sounds while bouncing around inside your head, should be put to the test before you invest time and money into its execution. Success lies not in what you think of your idea, but what the buying public will think. Many entrepreneurs find out too late that the public’s opinion of their idea differs greatly from their own. Wasted time and money aside, the last thing you want to do is hear “I told you so!” from your husband, so take a deep breath, slow down, and let’s look at the ways you can test the feasibility of your idea.

There are many ways to test an idea’s feasibility, though some ways are not nearly as effective or accurate than others. Most people start out by asking everyone they know what they think of their big idea. This is a good way to start the wheels turning because you may get feedback that you have not considered before, but be warned: this is NOT the best way to test the true feasibility of an idea. Never start a business simply based on what your friends and family think.

There are two things that will happen here. First, your mother will tell you what you want to hear and your best friends will be equally kind. No one who really cares for you will want to rain on your parade no matter how insane your parade might be, so take the wisdom you gain here with a hug and a grain of salt.

On the flip side, your coworkers and casual acquaintances will probably tell you the opposite of what they really think. If they think your idea stinks they’ll tell you it’s great and if they think your idea is great they’ll tell you it stinks. Please don’t preach to me about human kindness. Human kindness is often bested by human nature and we humans, by nature, are an envious lot. We hate to see anyone doing better than we are doing and we hate to see anyone who has the potential to leave us behind. Go watch the movie “Envy” and consider this: why would someone who is broke or stuck in dead-end job with no other prospects want to see you succeed? They wouldn’t. End of story.

Instead of conferring with friends and family you should run your idea past a number of neutral third parties who are knowledgeable about business and will give you an honest opinion. Contact the local Small Business Administration (SBA) or The Service Corps of Retired Executives (SCORE) offices and ask to speak with someone knowledgeable who has time to listen to your idea (don’t run it past the receptionist). Or speak with the small business liaison at the Chamber of Commerce. Or seek out a successful entrepreneur who is willing to listen and give you an honest opinion about your idea. Just remember, opinions are like belly buttons: everybody has one and they are all different.

A more accurate way to judge the feasibility of an idea is to create a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis will not only help you gauge the feasibility of your idea, but also help you build on your idea’s strengths, identify and correct the weaknesses, and spot ways to take advantage of potential opportunities while avoiding potential threats.

Here’s how to perform a simple SWOT Analysis. On a piece of paper draw a vertical line down the center of the page. Then draw a horizontal line through the center of the vertical line. The paper is now divided into four quadrants. Label the upper left quadrant “Strengths.” Label the upper right quadrant “Weaknesses.” Label the lower left quadrant “Opportunities” and the lower right quadrant “Threats.”

Now fill in each quadrant based on what you see as the strengths, weaknesses, opportunities and threats of your business idea. You should repeat this process for every idea you have and each quadrant should have something written in. If you can think of no strengths, weaknesses, opportunities, and threats for a particular idea, that means that you do not have enough information to complete the SWOT analysis, which means you also do not have enough information to effectively execute that idea.

Strengths are those things that make your idea a strong one. Strengths can be personal or product-oriented and may include: prior business experience and success; sufficient funding to start the business; having a customer in hand; having a unique product or service to offer; having an established market; etc.

Next list all of the weaknesses of your idea. It is important that you are honest with yourself and list as many weaknesses as you can. Don’t pretend that your idea doesn’t have any weaknesses because every idea does. You will hurt no one but yourself if you pretend that your idea is bulletproof. Weaknesses might include: lack of capital to start the business; lack of business or management experience; a crowded market place; large competitors; etc.

Opportunities are those things that you can tap into that might fast track your business idea. We’ve talked about opportunities before and how smart entrepreneurs seek out new opportunities rather than waiting for opportunities to come to them. Opportunities might include: a potential partnership with someone who sells products in the same market; a prime storefront location that is coming available; a competitor going out of business, leaving a hole in the market that may be right for you; etc.

Threats are those things that threaten the success of your business idea. Threats might include: uncertain marketplace conditions; strong competitors in the market with lower prices; possible laws or taxes that may impact your idea; etc. Like weaknesses, it is vital that you are honest when it comes to identifying threats.

Once you have filled in all four quadrants, you should have enough information to begin testing the feasibility of your idea. Do the strengths of your idea outweigh the weaknesses or do the weaknesses outweigh the strengths? Are the opportunities available to you ample or nonexistent? Are the threats many or few?

With this information in hand, you can move on to the most accurate method of testing your idea and that is the creation of a detailed feasibility plan, which we will discuss next time.

Here’s to your success!

An Entrepreneur and a Life to Be Remembered

An Entrepreneur and a Life to Be RememberedI was reminded of my own mortality today. I guess you can say I had a near death experience, though the death I experienced was not my own.

No, I was never in any danger, nor was my life ever threatened. In fact, I was sitting in the air conditioned comfort of my home office sipping a nice cup of coffee and watching the dogs run around the yard when the moment came.

The sun was shining. The birds were chirping. Life was going along just fine.

Death was the furthest thing from my mind.

Then the news came that Corey Rudl had been killed in a high speed crash at a race track in California. At the moment of his death at the young age of 34, Corey was a passenger in a Porsche that hit a retaining wall at over 100 miles per hour, killing him instantly and the driver shortly thereafter. The track had been rented by a local car club so that Corey and his buddies could take their expensive, powerful cars to the track to see how fast they could go.

Corey died doing what he loved. Those closest to him say he would not have had it any other way.

Corey Rudl was not a professional race car driver. He was an entrepreneur, and one of the best of his breed.

Most of you who read this column probably have no idea who Corey Rudl was or what he accomplished during his short life, and that’s OK. You also have no idea of the imprint he made on me and millions of others who make our living (at least in part) as online marketers. Again, that’s OK. For all his accomplishments, those who knew him well have said that Corey was more concerned about building his businesses than being a public figure. By those accounts, Corey never really cared about being in the public limelight, even though he was probably the most visible and successful entrepreneur in his field.

Perhaps that’s why Corey Rudl was so successful. He knew what was really important when it came to building a business. The limelight came easy to him, but his focus always seemed to be on making his business stronger, serving his customers better. He also knew that there was life beyond business, and he pursued that life with a passion and energy that most of us can only imagine.

Corey Rudl’s story is the classic entrepreneur’s tale. He started his business from his kitchen table just a few short years ago selling a homemade booklet he had written on how to get the best deal on a new car. From that modest start Corey built an internet marketing empire that has generated $40 million dollars in revenue in just a few years.

Corey was the definitive internet marketing guru. He was young, energetic, and highly passionate about his business and his industry. He wrote and spoke frequently on the topics of internet marketing and business success and that’s where he and I briefly crossed paths. We were both expert columnists for Entrepreneur.com and exchanged several polite emails, nothing really personal, mind you, mostly swapping compliments of each others work.

Much of Corey’s time in recent years was spent teaching others how to do what he had done: build a successful online business from scratch. For a man of just 34 years, he packed in decades of expertise and knowledge and he shared it with anyone who would listen, including yours truly.

I never personally spoke or shook hands with Corey Rudl, but I was his customer, his student, and ultimately an admirer. I can attribute much of the success of my own online business to Corey’s teachings and principles. He was one of those rare birds that you didn’t have to meet to feel like you were on a first-name basis with him. Everyone in my little circle of internet marketing friends simply referred to him as “Corey” and we spoke of him warmly, as a friend and mentor. He set the bar for all of us. We wanted to achieve his level of success. We wanted to hit his heights. We wanted to be the entrepreneur that he was.

Corey had just recently married the girl of his dreams. He was a millionaire many times over. He had a big house and fancy cars and a future so bright he had to wear shades. His business was thriving. Life was perfect. Corey Rudl truly had the world by the tail and there was no chance he’d ever let go. I imagine he was holding on tight until the very end.

The lessons we learn from the death of Corey Rudl are the same lessons we always learn when someone so young and vibrant is suddenly taken from us. As entrepreneurs we should take those lessons and apply them not only to our own lives, but to our businesses, as well.

Lesson One: live everyday as if it is your last, because it just might be. As entrepreneurs we often think that our businesses have to come first on our list of priorities. It’s not until a tragedy reminds us that life is too short that we think about making time for the things in life that are really important. Get out from behind your desk. Go play with your kids. Hug your wife. Call your mother.

Lesson Two: be passionate about business, but never let it eclipse your passion for life. Corey was a true entrepreneur whose passion for business was unparalleled, but by all accounts he also knew that a life devoted strictly to business was a life not lived to its fullest. Corey died doing what he loved. Some will argue that his passion killed him and in a way that’s true, but I have to believe that before he knew he was in danger Corey had a smile on his face a mile wide. He would not have lived his life any other way.

As I finish this column my oldest daughter has come in to ask if I’d like the honor of taking her out to Sunday brunch. She’s seventeen now. She has a job, a car, and a life that is very much her own. Chances to be graced with her presence grow rarer with each passing week. Still, any other day I might have weighed her invitation against the eight million business-related things that need my attention.

Today, however, the decision is easy.