Business Owners Toolbox Blog Discussions and articles to help the small business owner solve the challenges they face as they grow their business.

April 3, 2012

Can you stop a former staffer from poaching your clients?

From question on Quora. Several attorneys addressed the legal side of this question, then I added my 2¢.

MVH. The bigger question is, from now on, how do you get your clients to identify with your company rather than with a particular employee. Do clients work only with one of your staffers, or do they draw on the team?

Some can be drawn away by the promise of lower fees, but a client who leaves solely on price may not be a very good client anyway.

This is a good time to ask your clients how you could serve them better. Give them a call; put in some face time. If they’re already grumbling about you, then they’re ripe to be picked off by a competitor, including your ex. In that sense, this event could be an important wake up call for you.

Sometimes clients come back after a time, because the newly independent guy cannot provide the level of service they are used to. Keep in touch.

And finally, sometimes you’ve just got to let it be. After all, how many of us started our businesses with a few customers from our former employer? It’s the chain of business continuity. Look at it as a form of giving back.

Then go out and beat this guy in the market place with your superior service!

December 12, 2011

The Best Marketing is Keeping Your Current Customers

Filed under: Marketing — Tags: , , — Mike Van Horn @ 3:33 pm

“Your monthly invoices are so high, I think we need to switch to somebody else.” “We liked our old rep. We don’t like this new girl.” “Maybe we’ll bring this in-house. I think my brother-in-law could do this for us.”

Bookkeepers, graphic designers, marketing advisers, etc., all hear this from clients sometimes. And you know they’ll go to so-and-so, who won’t give nearly as good customer service.

Customers come to take you for granted. You do your job so well that you become invisible to them. They lose sight of the value you provide. What to do?

You need to find a way to remind your clients of the value you provide. Re-sell your services without sounding salesy. What sets you apart from the others in the market? What are the special things you’ve done for them over the last month or so? Perhaps note this in your invoice to them.

When’s the last time you talked with them—face to face or by phone—about what other things they may need to have done, things you see that would help them, how they think your service might be improved? What else could you do for them that would be seen as special?

We often come to take our best clients for granted, also. Then we’re shocked when one leaves because they don’t feel their needs are being attended to.

As owner, this customer contact is a key part of your job. But your customer contact people must also do this. You need to motivate and train your people to do this, which they may neglect. I recommend devoting a staff meeting to this issue. Get a discussion going by asking questions like these:

“How can we reinforce our message and our value to our customers?”

“How are we taking clients for granted?”

“What little things would mean a lot to clients? Let’s share some examples of what you’ve done.”

“What do they ask for? How do you respond? Are there things we say ‘no’ to that we should be doing?”

Just having this discussion will energize your committed people. (And why would you keep those who aren’t committed and energized?) They know what you provide is valuable. They know that keeping customers happy keeps your business healthy, and their jobs secure and well-paid.

Reinforce this during subsequent staff meetings. Ask your people to talk about special things they’ve done for customers. One of my clients tracked these reports on a wall chart using “customer happy faces.”

Don’t take this all on yourself (unless you’re a one-person business). It’s essential to involve all your people in demonstrating, by word and deed, your value to customers.

And ask these happy, well-treated customers for referrals to others like themselves.

Would a Free Marketing Plan Help Your Business?

Filed under: Marketing,Planning — Tags: , — Mike Van Horn @ 2:28 pm

My answer to a LinkedIn question by Travis Holt

Whenever I see a “free” offer of something I know is costly, I suspect it’s just an introductory come-on to lead me to purchase something later on. Nothing wrong with that, UNLESS I know it’s something that is too good to be free. Like a marketing plan. I also offer people a free marketing plan*, but it’s something they complete for themselves. If they need my help to complete it, and to come up with a useful guide to their own activities, that’s too much for me to give away.

I think people know this. They want “free” but if you offer too much for free, they are suspicious.

Also, in my experience, people who always want “free” don’t make good customers. I would prefer somebody who said, “You know, I tried to use that free marketing plan, but it just didn’t do it for me. I realize I need to hire somebody to help me think this through. After all, this is the future of my business I’m working on!”

But here’s a fundamental rule, and this may be what you are doing:
“Tell ’em how to do it for themselves, so that they will hire you to do it for ’em.”

*Mine is called “Shortcut to Cash Flow Marketing Plan.” Two pages, 11 questions. Ask me for it, with your name, company name, and email.


November 29, 2011

How to market on a tight budget

Filed under: Marketing,Not yet categorized — Tags: , — Mike Van Horn @ 9:16 pm

My answer to a LinkedIn question from Leanne Smith

Short on money? Substitute time. For most  of us small-biz types, marketing is time intensive. So you’d better have a time budget plus a money budget.

Where do you get the biggest bang for your buck? or for your hour? List all the things you do for marketing down one column. Ads, press releases, networking lunches, social media, taking a prospect for coffee, etc. Whatever you spend money or time on related to marketing.
In other columns, list for each of these things:
— How much money you spend on this in a year
— How much time you spend on this in a year (Multiply by what an hour of your time is worth.)
— What results you’ve gotten: contacts, prospects, customers, nibbles, “laters”, etc.
— How much revenue this has brought in over the past year

Now you rate all these things you do, and compare them. What’s paying off? What isn’t? How could you improve the payback from any of these?

I hereby give you permission to STOP DOING THE THINGS THAT DON’T WORK! Networking groups? Yellow page ads? Online directories? Feh.

Do more of what works, and tweak it so it works better.

If your marketing pays off, brings in customers, and boosts your revenue and profit, then you won’t be on such a tight budget.

But beware! Marketing is like a yacht. If you’re around boats, you’ve probably heard people say, “A yacht is a hole in the water that you throw money into!” Marketing is the same way. There’s no end of ways you can spend money on marketing, and most of them don’t pay off.

November 6, 2009

Delegate till it hurts!

When it comes to delegating, business owners can be their own worst enemies. (from my post to the Bay Area Consultants Network LinkedIn group)

“Delegate till it hurts!” is the advice I give my small business owner clients, who are overworked yet reluctant to hand off tasks to employees they’re paying good money to.

Yesterday I met with a client who owns a 10-person company. She hired a numbers person to free her up to do the creative stuff that brings in the money. Yet she still holds on to estimating “because it’s complicated and it has to get done right.” This takes so much of her time that she neglects business development. So we discussed how to hand off estimating to her numbers person.

Of course she neglects business development because marketing calls scare the bejeebers out of her. She holds onto estimating–call it “comfortable drudgery”–so she won’t have time to do the marketing.

What is it about marketing that scares her? She says every call seems like a cold call. Her unspoken attitude is, “You wouldn’t want to buy anything from me, would you?” So then how has her business been so successful? “I’m good at building relationships,” she says.

So I tell her, “Stop marketing. Instead, go build relationships–with allies and people who respect you. Tell them how much you admire their work, and that they are the kind of person you’d like to work with.”

This suggestion seems to take a load off her shoulders. Then she says, “I dislike making the calls to set up these visits. Hmmm, maybe I could hand this off to ‘numbers lady’ also.”

So. Two major delegations to free her up to focus on the two things she loves about her business (and that make the cash roll in) — creative stuff and building relationships. And delegating to a person who’s already on payroll. Note that we got there by addressing her fears and resistance and old habits. Otherwise she would remain the bottleneck to effective delegating.

She left with a new spring in her step.

This is why I love my work!


September 24, 2009

Marketing vs. Selling

Filed under: Marketing — Tags: , , — Mike Van Horn @ 4:22 pm

Q. What’s the difference between marketing and selling? I often hear these words used interchangeably.
(Asked during Business Group meeting)

A. Marketing and sales are often confused because “sales person” is seen as much less prestigious than “marketing associate,” so everything gets lumped into marketing.
Marketing is everything you do to prepare for sales. Selling is closing sales that make you money. Thus, you could say . . .
— Marketing is money OUT the door.
— Selling is money IN the door.
For small business owners, marketing is usually time intensive. We spend at least as many hours as we do dollars on marketing.
People who are good at marketing are often not good at selling and vice versa. These take different personalities and mindsets. Seldom will you find one person who is good at both. That goes for us entrepreneurs as well. We’re usually much better at one than the other, but we are forced into both roles, one of which we do poorly.

WHAT’S INCLUDED IN MARKETING? Remember, marketing is everything that leads up to selling. Here are some marketing activities:
– Handling incoming inquiries
– Asking your current customers for referrals for more business
– Networking and building relationships
– Advertising and public relations. Direct mail and e-newsletters
– Special promotional events
– Merchandising and merchandise selection
– Holding sales, offering preferred customer bonuses
– Getting articles published. Blogging
– Doing cold calls to set appointments
– Market research, customer surveys
– Branding, creating your sales message
– Design and creation of collateral materials
– Building and maintaining your web site, blog, Facebook page, Twitter
– Market planning and strategizing

Marketing includes doing good work so that your customers come back, and tell others about you. It includes hiring employees who are good at customer service, and giving them the training so that they can keep your customers happy.

Marketing includes pricing–finding the price level that will attract the customers you most want to do business with (and will make you a profit).

Marketing includes product design and development and packaging.

All these things lead up to selling.

. . . presenting, answering questions, making suggestions, doing proposals or estimates, addressing concerns, negotiating. And most important, asking for the sale. Then completing the sales agreement, etc.

Your sales people clearly do some marketing. Networking, responding to inquiries, making public presentations, doing cold calling, calling old customers. The marketing that sales people do best is just one or two steps away from selling.

Selling is harder than marketing, and this is why good sales people get paid a lot of money. As business owner, your aim should be that your sales people get filthy rich, because in the process, they make you even richer.

Because selling is hard for many people (including sales people), those who are hired to do both often spend too much time on marketing activities and not enough on selling. (This goes for us as business owners as well.)

Salespeople are motivated by performance incentives, aka commissions. In my experience, sales people on an hourly rate or salary are less effective. If there’s a mix between salary and commission, it should be weighted toward the latter. Their performance is very easy to measure: signed orders, cash in the door. Not hours worked, nor contacts made, but sales closed.

The marketing and selling funnel. This funnel shows the different stages of marketing as it proceeds toward a sale. It’s wide at the top and narrow at the bottom. This represents that your marketing must reach a lot of people in order to make a few sales.

I’ll send this to you for free. Just subscribe to my list, then email me and ask for it. I’ll send it as a pdf. (You’ll also receive my Success Tips from Small Business Owners, just for subscribing.)

July 28, 2009

Solopreneurs and Marketing Budgets

Q: I’m curious if anyone has a rule of thumb on what should be spent annually by solopreneurs on marketing. Would anyone care to share their own marketing expenses? Or percent of revenue?

A: Maria
I’ll bet that not 1 out of 20 of us knows how much we spend on marketing. Three reasons:

1. Our biggest marketing cost is the value of our own time we spend on marketing, and we don’t track that, let alone assign an hourly value, or check the results for the hours we spend.

2. We don’t collect all our marketing expenses under one account called “Marketing.” Instead, we have line items for Professional Services (web design, podcasts, etc.), Advertising (display ads, google ad words), Memberships, Business Meetings, Travel, etc.

3. We don’t create marketing budgets, then track how much money and time we spend, compare budget to actual, and compare effectiveness of different marketing activities (“bang for your buck”).

“A yacht is a hole in the water you throw money into,” we’ve heard people say. I think this is the way most entrepreneurs treat marketing. “If I’ve got some money, spend it on marketing. A free evening? Go to another networking meeting.”

So I’ll be very interested to see if anyone can give a meaningful answer to your question. I hope you can prove me wrong!

July 22, 2009

Pay Sales Commissions for What?

Filed under: Marketing — Tags: , , , , — Mike Van Horn @ 6:23 pm

Question: I am close to hiring a marketing rep—part base and part commission–and have questions about the commission structure. For new business she brings in, she would get 5% of the gross revenue for 24 months. No commissions on referrals from existing clients or already-established referral sources. But she would get commissions on referrals from new lead sources, even if we introduce her to them.
Any comments or questions on this?
Kim, owner, professional services firm

Kim, here are some questions you should resolve up front:

What does it mean, “new business she brings in”? Does she have to close the deal? What if she turns over to you a strong, interested, qualified candidate, but then you (or someone else) actually closes the deal?

Here are some other “What ifs?” you should think through before coming to a final agreement with her:

Will she get a commission if she . . .
— sells added services to an existing client?
— resurrects a former client?
I would say yes.

What will you say if . . .

•• She asks for 5% on ALL sales (except for specified excluded names)? This often comes up. She will say, “After awhile, we don’t really know where the lead came from. It could have been mine.”
I would counter by saying that this goes both ways: she will benefit by selling work aided by others–such as you. You will specify in the beginning where a prospective client comes from, as soon as a prospect enters the pipeline.

•• A client she brings in then refers you to another, who just calls the office and says, “Sign me up!”
I would say she gets the commission. When you ask for the “source,” they’ll refer you to a client she brought you. But, how long is this chain? Does it extend to the referral of a referral of a referral? Yes, if she’s involved in the contact and sale.

•• A referral source she brings in (a CPA, wealth manager, banker, etc.) sends you a steady stream of prospects, without further input from your rep.
I would say yes, but condition it upon her staying in contact with these ref sources in a defined way.

•• She makes a presentation to an organization, then some time later you get a client through that connection that doesn’t remember how they learned about you.
You need to get sources for every prospect: “How’d you learn of us? Did you meet/work through so-and-so?

•• She works awhile, then departs. Does she still get the bonus on business she has brought in for the rest of the 24 months?
Spell out in your agreement if she must continue employment with you to continue earning extended commission.

In your agreement with her, spell out when will you pay these commissions, e.g.,
— as fees are paid, not when billed, so that you don’t pay commission on accounts in arrears.
— with the next paycheck after the receipt of the client’s payment

Let me know if any other issues come up.

June 29, 2009

Most bang for your marketing buck — right now!

“As a small business in the current economy, how have you modified the advertising portion of your marketing budget this year? How has it been working for your company so far this year?” (Question on LinkedIn)


Hopefully, nobody says, “Business is down, money is tight, so let’s cut advertising.” But you SHOULD ask, “Where do we get the most bang for our scarce marketing buck?” Then examine advertising along with your other options.

Ads or promo? Direct mail or email? Internet outreach?  Networking or public speaking? Asking for referrals? Cross-selling current customers?

And not just about advertising in general, but for each type of ad placement.

To figure this out, I would create a grid: Down the left column, write every every type of advertising, and every other marketing activity that attracts business for you. Then across the top, head columns by the most important criteria for you, such as:
– How much you’ve spent on this, in both dollars and time (Put a dollar value on an hour of your time.)
– Size of customers or sales this brings you
– Number of customers per time period
– Desirability of the customers
– Lead time till you get the customers
– Its potential to bring you more in the long run
– (add your own)

Then rate each marketing activity by each criterion. Add up the totals and see what gets high and low scores. This is an eye-opening exercise.

This approach is over-simplified. It ignores interactions among types of marketing, and ignores strategic marketing with a long lead time. But it gives enlightening answers to the question, “What marketing gives me the shortest route to cash flow now?”

August 14, 2008

My Top 10 Rules for Small Business Marketing

Q: What are the marketing needs for the average small business? Do you consider working with marketing consultants and, if so, what would you go to one for? 

I’m looking to get thoughts from those who are in/ run a small business (i.e., sole-proprietorship to a place with fewer than 20 employees)

 (Linked In posting, Aug 14, 08)

A: My Top 10 rules for Small Business Marketing? At least some good guidelines:

First, you asked about the marketing needs of the “average small business.” There’s no “average business.” Very different marketing/selling needs for a retailer, personal services, business services, and manufacturer/distributor.

• Marketing is essential, and it is expensive. You know what they say about owning a yacht? “It’s a hole in the water you throw money into.” Marketing can be the same way.

For a small company on a shoestring budget, the question is, how can you get the most from every marketing dollar you spend? And for every hour you spend on marketing and selling?

• Separate marketing and selling in your thinking. People who lump selling in with marketing often have lousy sales.

• Do you have more time, or more money? For the shoestringers, it’s time. So you need a time-centered marketing strategy.

• But then you must balance bringing in the work with doing the work. This leads to the eternal entrepreneur’s dilemma: You get a project; you stop marketing. The project ends; you have no work because you stopped marketing.

• Look at your marketing/selling at 3 different levels, and have a plan and budget for each:

1. Shortest route to cash flow. What sales can you bring in within 30 days?

2. Business development. How can you cultivate relationships that turn into sales within, say, 6 months?

3. Strategic development. How can you take advantage of big opportunities over the next 2 years or so?

• The “Goldilocks principle.” What size jobs/customers are just right for you?

1. Boulders. Big, lots of competition (thus lower margin), dominates your time if you get it, devastating if you lose it. They may view you as a contract employee.

2. Rocks. Solid, profitable, appreciative, no single job is more than 20% of your revenue

3. Pebbles. Tiny. Takes as much time to get as a larger job, low margin, demanding, slow pay

Aim your marketing at your “rocks.” If other good ones fall into your lap, take them.

• What works for you? Do more of what works, and stop doing the rest. To find out: List everything you already do (or might do) for marketing. For each one, estimate

…How much time you spend on it (per month, say)

…How much money you spend on it, per month

…What results you’ve produced so far: number of customers, size of jobs, type of work, desirability of prospects, etc.

…Lead time, sales cycle. How long does it take to pay off?

Ideally, you’d like to compare this ratio for each:

         Gross profit from the sales produced, divided by . . .

         Marketing/selling cost (including time)

When I do this for myself (I sell small business services) here’s what I learn:

…DOESN’T PAY OFF. Networking groups (wrong kind of prospects), display ads, yellow pages, PR campaigns, direct mailings or cold call campaigns

…PAYS OFF. Referrals from clients (remember to ask for them!), mutual referral sources, public speaking, writing books, writing articles (like this one), getting interviewed, professional organizations

…SHOULD PAY OFF BETTER. Website (search engine optimization)

Your list may be exactly the opposite of this.

• Get your face out there. Esp. for service businesses, people buy you. “80% of selling is just showing up!”

• Stick to it. The other 80% of selling is consistency and follow up. Have a regimen for marketing and selling, and get a coach to help you stay on it. Your coach is your de facto sales manager.

• Get needed help. Are you a great marketer/seller? Then hire someone to do the work for you. Are you best at doing the work? Then hire a marketer AND a sales person. (Rarely are these two skills combined in one head.)

Should you hire a consultant? For a shoestringer, be wary! Remember the yacht!

…Hire specific expertise: web designer, graphic designer, copywriter.

…Hiring someone to do a marketing plan for you is a waste of money. Find a FREE marketing advisor, e.g., through SCORE or your local Small Business Development Center. I could email you a page of questions, and if you answer them, you have a marketing plan.

…Hire someone to sell for you, and pay them mainly on results ($$$$) produced. Good sales people are rare and expensive. Ask one: “I’d like to pay you obscene amounts of money. How much is that for you? Now give me a plan of how you’re going to produce it.”

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