Niche Marketing Matters

“Every leader should routinely keep a substantial portion of his or her time—I would say as much as 50 percent—unscheduled. … Only when you have substantial unscheduled time will you have the space to reflect on what you are doing, learn from experience, and recover from your inevitable mistakes. Leaders without such free time end up tackling issues only when there is an immediate or visible problem. Managers’ typical response to my argument about free time is, ‘That’s all well and good, but there are things I have to do.’ Yet we waste so much time in unproductive activity—it takes an enormous effort on the part of the leader to keep free time for the truly important things.”

– Dov Frohman

The above quote is very powerful. Entrepreneurs, in particular, get so involved in “the chase” that they seldom take time to access things. The things that don’t get addressed include long term strategy, relationships, personal health & well being, and employee development. The consequences are obvious.

My long time friend Jim Kelton of Altius Technologies blocks out every Friday afternoon to plan, think, and dream of what he might do better for his business and for himself. He takes that time off-site from his work so that he can be uninterrupted.

How about you? Isn’t it time to schedule some free time?

John Bradley Jackson
© Copyright 2009 All rights reserved.

Just be yourself—-I imagine that you have heard that advice all your life from friends, family, and co-workers. And it is true.

This weekend I watched 12 student teams from my New Venture Creation class at CSUF present their business plan concepts to an executive panel made up angel investors, bankers, and entrepreneurs. The small student teams each had 15 minutes to pitch their business ideas.

The teams were all prepared and were quick to describe the merits of their business ideas including value proposition, strong return on investment, and competitive advantage. Yes, they presented exactly as I had coached them to do.

But, guess what factor meant the most to this panel? Interestingly enough it was the authenticity of the presenters. The panel responded most positively to the students that were the most passionate and genuine about their ideas—this heartfelt enthusiasm trumped the ornately prepared spreadsheets and the overly scripted delivery by the more academically inclined students.

In reality, the panel responded to eye contact, smiles, and passion of real people who were just being themselves.

Another lesson leaned by Professor JJ.

John Bradley Jackson
© Copyright 2009 All rights reserved.

These clever words are attributed to Secretary of State Hillary Clinton. I think I understand what she means.

It often takes a crisis to get people to take action. People hate to change, but will willingly do so if they have to (but not a day before). You know what I mean. The heart attack victim gets the bypass and then takes up running and eating right. The city decides to put a streetlight on a busy street after a major automobile accident. And so it goes.

This economic crisis has challenged many of us take a hard look at our spending and to evaluate what is important. Companies have slimmed down with layoffs and cost cutting. I read today that GM is considering dropping the Pontiac brand after 50 years. In reality the brand has been dead for more than a decade, but they had held on to it with the hopes of reviving the brand for a new generation.

Yes, a crisis can motivate you to change. But, I prefer the advice from former GE CEO Jack Welch. Welch said, “Change before you have to”. I guess that is more like crisis planning—it just makes more sense to me.

John Bradley Jackson
© Copyright 2009 All rights reserved.

The executive summary is a summary of the business plan (including operations, sales and marketing, and finance), but it is also a selling document. This means that you must answer your readers’ questions if you want to sell your business concept.

Here is a short list of questions you must answer in your executive summary:

1. Does the executive summary include a description of your business (this should appear in the first or second paragraph)?
2. Does the executive summary identify the product or service along with a clear customer need for the product or service?
3. Does the executive summary identify the target market and market opportunity?
4. Does the executive summary identify the value proposition?
5. Does the executive summary identify the competitive advantage and the competitive environment?
6. Does the executive summary show that the business idea fits the owner’s distinctive competencies?
7. Does the executive summary identify how the product or service will be made or delivered?
8. Does the executive summary identify a proof of concept (not all plans have this)?
9. Does the executive summary identify describe the basic financial opportunity (this includes revenue and profit expectations)?
10. Does the executive summary describe how the company will make money with the business or revenue model?
11. Does the executive summary identify the type and amount of funding required and the ROI?

John Bradley Jackson
© Copyright 2009 All rights reserved.

There are times when a full business plan is not needed. Time may not allow for the creation of a full length plan or the reader might just want a shorter version. In this case, a dehydrated business plan is often chosen.

This type of plan is a very brief version of the traditional business plan. It is also referred to as a skeleton plan or business brief. Amazingly, the process of writing the dehydrated business plan can be very effective since the entrepreneur is challenged to condense the idea into only 5-10 pages. This condensation eliminates the fluff often seen in full length plans.

The end product ends up reading more like a long executive summary with a few financial tables. The plan often includes the customers’ pain, the solution, the competitive advantage, and the value proposition. Most importantly it must communicate the business model—it must describe how the business will make money. Add a forecast, some basic costs, and the capital required. The plan is complete.

While this type of plan can be completed in much a shorter time, the sophisticated investor will want to know more. In this case, the entrepreneur typically scrambles to come up with the missing details. Generally, a dehydrated business plan is not designed for the process of raising capital. Maybe the best application is within a large corporate environment when the basic idea is enough to get the approval to go forward.

John Bradley Jackson
© Copyright 2009 All rights reserved.

To get money from an Angel investor or from a banker will often require entrepreneurs to demonstrate a proof of concept. This begs the question, “what exactly is a proof of concept?”

While the term is kind of fuzzy, a proof concept is evidence that the company, product, or service is financially viable—the business model works. Normally, a proof of concept includes research or testing or testimonial.

A simple proof of concept might include the use of qualitative research methods such as focus groups or interviews with prospective customers. A more definitive proof of concept could include orders for a new product or letters of intent from customers. Alternatively, a manufacturer might develop a working prototype of a new product for demonstration purposes.

Essentially, the business or revenue model is justified by a proof of concept. Ultimately, this reduces the amount of uncertainty involved with a new product or service and this evidence gives the financier comfort that the money is well spent.

John Bradley Jackson
© Copyright 2009 All rights reserved.

When a small business or start up approaches a bank for a loan, you need to be able to answer the following eight questions:

1. How much money do you want?
2. Why do you want the money?
3. How will the money be used?
4. How will you repay the loan?
5. What is the main source of funds for repayment?
6. What is the back up source of funds for repayment (such as liquidating equipment or inventory?
7. How will the loan be secured (collateral)?
8. Who will guarantee the loan?

Also, remember the goal is to establish a relationship with the bank, so start the dialog in advance of your need.

John Bradley Jackson
© Copyright 2009 All rights reserved.

I normally avoid including myself or my personal travails in my blog, since my blog is not about me. Rather, my blog content is about what matters to you. But, I had a concussion a few weeks ago and it really shook things up—literally.

OK. Here is the story. I was in the local mountains for the holidays and slipped on the ice and bounced my head on the sidewalk. In a split second things changed for me: whiplash, bloody head, dizziness, blurred vision, ringing in my ears, and a major league headache. Ouch!

A “Good Samaritan” rushed to my side and asked, “Are you all right?” I responded, “Nope”. Later, my doctor determined that I had no significant brain damage, which was little comfort—I did like the painkillers, but I digress. Three and half weeks later I am on the mend although my ears still ring.

The point is that my little world changed dramatically in an instant and the same might happen to you or your business. Will you be prepared to manage the crisis?

Does your firm carry adequate liability insurance, key executive coverage, long term disability insurance?

What about contingency plans for earthquakes or other natural disasters? Do your IT systems have built in redundancy? Do you have a disaster recovery plan?

How about your personal computer—do you routinely back up your files? This is always on my “to do” list, but never seems to get done.

What will happen if your partner dies or wants out? Do you have a succession plan? How about an exit strategy and a buy/sell agreement? Are you prepared for a hostile acquisition?

What if your biggest customer declares bankruptcy? Or, what if a new competitor enters your market? What if the Feds change the law and injure the market? What if the price of oil races to $5.00 a gallon?

My recommendation is to plan for an occasional disaster. Disaster planning and a periodic review sound in order to me. Things may be fine now, but you may bump your head now and then.

John Bradley Jackson
© Copyright 2009 All rights reserved.

Here is guest blog by Greg Jordan of www.gregjordandesign.com

Meetings are a necessity. The size, type and dynamics can vary. But unproductive meetings are annoying and can become an all-too-frequent waste of time. I hope this blog posting will challenge you to consider the types of meetings you conduct and maybe test a different tactic.

“I had breakfast today with a senior executive who estimates she spends more than 30% of her time in internal meetings.

My guess is that many marketers (who seem to go to more meetings than most people) might envy a number that low.

Despite the time spent, most people don’t seem particularly happy with the results the meetings create…” —Seth Godin

We’ve all suffered through them. The late-starting, meandering meeting with loose objectives and questionable outcomes. We’ve all witnessed the meeting that results in another meeting. Or the meeting that gets hijacked by someone with an ax to grind, and so on. Whether you’re a one-person company or at a large corporation you may be able to refine your meeting skills and enjoy a more productive result.

1. Set tangible expectations. Why are we having the meeting? What is the context of the meeting? What are we going to accomplish? Make sure you’re framing the meeting appropriately.

   » If the goal of the meeting is simply an internal status update consider foregoing the meeting and distributing an email or video instead.

   » If the meeting is a pitch or proposal presentation set expectations around what would benefit both of you as a next step.

2. Bring Food. Don’t underestimate the power of good snacks and coffee for motivating attendance!
3. Distribute a written agenda. Set a clear agenda and specific time line. Stick to it!

   » Request that people refrain from using their computers or BlackBerries.

   » If you anticipate the meeting requiring more than one hour, schedule bio breaks and allot break time for people to return phone calls and emails.

   » Specify exactly what time people need to return to reconvene. Ask one of the attendees to act as a facilitator to help keep you on track.

4. Who should be at the meeting? Schedule a staggered meeting if there’s no real need for everyone to all be there at the same time.

   » Schedule guest speakers at the beginning of the meeting. It can help the meeting start on time and is the respectful thing to do. Also, you can easily transition to the remainder of your agenda once the guest is finished speaking and leaves the room.

5. Stay on target. If any part of the meeting begins to wander, stop and recognize the importance of the issue. Summarize the issue and sideline it on the white board as something that warrants additional time.
6. Arrest hijackers. Don’t let anyone push the meeting off topic. Acknowledge the importance of their issues and ask them to meet with you and the appropriate people separately. Stress the need to keep to the agenda. Add their sideline points to the whiteboard.

What are some of the things you’ve done to make meetings more effective?

Related blog post: Telephone Conference Calls

Forecasting sales at a start-up requires in-depth research along with educated guess work. There is no substitute for knowing your customers and why they will buy your offering. Buyers will choose your product over the competition because it is different or better.

Presuming your offering is competitive and is desired by the target market, here are the basic steps in developing a sales forecast:

1. Develop a profile of your target market- Who are your customers and why do they need your offering?

2. Determine the trends in your industry- What is unique about the purchasing cycle in your space? Are there any anticipated future trends such as changes in government regulation, economic changes, or environmental changes?

3. Define the size or boundaries of your market- This market sizing could be by geography such as North America, by vertical such as healthcare, or by technology such as Apple users. You get the picture.

4. Identify your competitors- Who supply your customer today? At what sales volume? What channel of distribution?

5. Estimate an average sales price for your offering- This price should be conservative and may increase or decrease in years two or three. Note that discounting may be needed in year one.

6. Calculate monthly sales- Prepare sales estimates by month. Be sure to assess how seasonality may impact your sales cycle; this includes holidays, summer versus winter, or specific industry buying trends.

7. Compare your annual forecast to other similar companies- Consider using Risk Management Association (RMA) data to determine if your forecast is reasonable? If it varies from the industry norm, how will you explain this variance to investors or bankers?

8. Be prepared to change and modify this forecast- As you build your financial plan, it is normal for your forecast to change. Stay flexible.

Sales forecasting is a best guess, but if you know your customer it is an educated guess and you are the best one to do it.

John Bradley Jackson
© Copyright 2008 All rights reserved.