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By Mr. Marketing™ / Stephen L. Bainton Starting a business in a downturn is never easy. Just ask Wally Amos, who founded the “Famous Amos” cookie brand during the recession in the mid ‘70s. Though difficult, he managed to pull it off with a superior product, and one that was, quite frankly, an affordable luxury. Nonetheless, you can’t ignore the present circumstances. The credit markets are tight, especially for small business. Venture capitalists are fleeing to more established businesses with proven business models and positive cash flow. And the once standby start-up method—of using credit cards—to fund an initial venture has gone by the wayside, given the tight credit card restrictions now in place. So what’s an entrepreneur to do? Get Creative! First, this is the moment to get creative. You need to have the guts to approach family and friends, and, if they can’t help, then at least get them to give you referrals to others who may. For example, most people have a lawyer and an accountant; they are excellent sources for finding angel investors, as they deal on a daily basis with people with money, and you should use them as a network to build a base of other attorneys and accountants as well. Also, you need to attend your local Chamber of Commerce meetings and network accordingly. Bootstrap! Second, you need to bootstrap. Forget about getting stuck in the minutiae of setting up the perfect office with the perfect chair, etc. You can literally set up office at your local library—with free internet—with a decent laptop and a cell phone. When the library’s closed, go to Fedex Kinkos™, and pay the $6 an hour, if you need internet access…many are open 24/7. Or simply setup your business at home, with a laptop and cell phone. (For great bootstrapping tips, pick up Kimberly Stansell’s classic book, “Bootstrapper’s Success Secrets: 151 Tactics for Building Your Business on a Shoestring Budget.”) Start Small! Third, start small. That means you may have to keep your day job to keep the cash flowing. You don’t want to bet the farm just yet. You need to test your business model, to see if it can actually generate positive cash flow within a short period of time. Hopefully, you’ve drawn up a business plan (doesn’t need to be fancy), and this “start small” mindset will allow you to tweak your plan, and will help you to determine where the real nuggets of cash are to be found. A great article written several years ago pointed to a man who would start his venture before even incorporating. With an idea (and he was in the technology services arena), he would simply pick up the phone and start calling prospective customers to see if they had a real need for his proposed services. If he found enough customers, then he would incorporate and begin his venture. Talk about a brilliant way to save time, money and effort. Revisit Your Business Model! Fourth, take a hard look at your business model. Is it one that’s appropriate for a down economy? Are you riding unstoppable trends like the boom in health care and wellness (due to the retiring Baby Boomers), or the surge in “green”—from organic foods to the development and implementation of alternative fuel sources, or the growth of the Hispanic market to the desire for affordable luxuries and experiences. Remember, you want to build you business model on a sustainable platform or 'wave'—and the above-mentioned trends will be viable for at least the next 25 years. Consider a Franchise! Lastly, if you want to start a business but have no clue as to what kind, then you may want to consider a proven franchise…and pay the upfront fee and set-up costs to become a franchisee. The benefits include (for established franchises) a proven business model, proper training, and positive cash flow—especially if you chose the right location (critical for food establishments). Three franchises I like right now—given our economic situation—include Subway™, Jamba Juice™, and a growing chain that has great (but affordable) Mexican food, Tijuana Flats™. (If it's healthy, tastes good, then you might have a winner--which is why Subway™ is now the number one franchise in America now, recently beating out McDonald's™.) Regardless of the venture, here are some key points to remember: - Sales is everything; without growing sales, you have nothing, and most businesses fail for this very reason.
- Gross margins are critical. For example, the cosmetics industry has huge gross margins compared to manufacturing. Translation: Go into a business with big margins, as tight margins can kill you even if you make just one mistake. Great gross margins should result in excellent Cash Flow (the lifeblood of any business). If you cannot pay your monthly bills, it's over.
- Know your numbers thoroughly; know your gross and net margins, net profit per product or service, and don’t hesitate to dump those products and services that take up a lot of time but deliver little to the bottom line. (Focus all of your efforts on that area of the business that is driving 70-80% of your sales.)
- Hire carefully; you want to bring on people who complement your talents, not replicate them. If you’re a natural salesperson, you should consider bringing on a good operations person, and focus your energies solely on what you do best—sales!
- Know your market and do the research. For a client I actually spent an entire day at a location counting cars. And here’s a hint: follow the big boys like McDonalds™, as they spend a ton of money researching locations.
- Provide unbeatable customer service; the key is to under-promise and over-deliver. In this way, you will remain most memorable in the customer’s mind.
The Bottom Line: We are definitely in a down market. However, believe it or not, now’s the time to start a business. In Florida, for instance, the commercial real estate market is hurting badly. With a good broker and lawyer, you can negotiate amazing deals. There are always opportunities for success--even with all of these doom-and-gloom predictions. Even if your first attempts fail, keep trying. Eventually, you'll tap into a real need and succeed. For most of us, entrepreneurship is the only true path to a secure, worry-free retirement, through down markets and up markets. MOST IMPORTANT: You MUST have a burning passion for the business you are entering. Without it, you will either fail or, worse, linger in a constant state of frustration. |
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 There is no doubt that Lady Gaga is a marketing genius. With over 15.4 million tracks sold in 2009 alone, coupled with a strong focus on touring, merchandising, and fashion--with over 1,000 wardrobe changes, apparently--she is, without question, on a major roll, literally transforming an industry that is struggling to say the least. She has found that 'lightning in a bottle,' and is milking it to the max.
Regardless of whether you like or hate her--and sentiments run strong on both sides--she is a veritable marketing machine, and may launch (hopefully not) a million imitators who are focused solely on imitating the savvy marketing techniques without capturing the essence of what it means (and takes) to really break through the clutter of noise out there in the marketplace. In a poignant January 29th Wall Street Journal article, written by John Jurgensen, entitled "The Lessons of Lady Gaga," the author accurately points out that Lady Gaga is "a product of a new kind of recording contract which goes beyond just selling records to encompass everything from touring, merchandise--even her make-up deal." Talk about the art of knowing how to monetize every element of a brand (even a make-up deal). Underlying the success of Lady Gaga, however, is not only her talent, as she can sing, but the marketing power of her label--in this case, Universal's Interscope Records. Using what is now called a 360-degree deal--in which the label puts more marketing money up front for a percentage of all back-end profits, touring, merchandising, etc.--the few remaining powerful labels are doing what the movie studios have done for quite some time...betting on the big hits. It was Spielberg's hit move, "Jaws," that really launched this "big hit" mentality in filmmaking. In regard to the music industry's woes, Jurgensen points out, ""The business needs more Gagas. The upheaval of the last decade has forced the major record companies to cut their work force by 60%." But do we really want more Gagas? As her main producer, RedOne said about the choice of her songs, "The songs have to be lyrically simple and easy to sing along to, even for people in the world who don't speak English." The key here is that Lady Gaga represents, in my view, that rare breed of artist--someone who had the right goods at the right time, a "perfect storm," if you will. Her Madonna-like transitions, which are numbing, will be tested over the next few years, and tested in the light of a stream of imitators no doubt. Sadly, her producer's comments about the simplicity of her songs may reflect the demands of the marketplace for some time. As labels strive to create more Gaga-like artists, however, they will most likely find that 'lightning in a bottle' is hard to replicate. In fact, let's face it: artists, like brands, must stand for something unique, and there's no substitute for an original. Just ask Coke. |
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Remember Lee Iacocca, the man who rescued Chrysler Corporation from its death throes? He's now 82 years old and has a new book, Where Have All The Leaders Gone?
Lee Iacocca Says:
'Am I the only guy in this country who's fed up with what's happening? Where the hell is our outrage? We should be screaming bloody murder! We've got a gang of clueless bozos steering our ship of state right over a cliff ; we've got corporate gangsters stealing us blind, and we can't even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, 'Stay the course..'
Stay the course? You've got to be kidding! This is America , not the damned 'Titanic'. I'll give you a sound bite: 'Throw all the bums out!'
You might think I'm getting senile, that I've gone off my rocker, and maybe I have. But someone has to speak up. I hardly recognize this country anymore..
The most famous business leaders are not the innovators but the guys in handcuffs.. While we're fiddling in Iraq , the Middle East is burning and nobody seems to know what to do. And the press is waving 'pom-poms' instead of asking hard questions.. That's not the promise of the ' America ' my parents and yours traveled across the ocean for. I've had enough. How about you?
I'll go a step further. You can't call yourself a patriot if you're not outraged. This is a fight I'm ready and willing to have. The Biggest 'C' is Crisis! (Iacocca elaborates on nine C's of leadership, with crisis being the first.)
Leaders are made, not born. Leadership is forged in times of crisis. It's easy to sit there with your feet up on the desk and talk theory. Or send someone else's kids off to war when you've never seen a battlefield yourself. It's another thing to lead when your world comes tumbling down.
On September 11, 2001, we needed a strong leader more than any other time in our history. We needed a steady hand to guide us out of the ashes. A hell of a mess, so here's where we stand.
We're immersed in a bloody war with no plan for winning and no plan for leaving.
We're running the biggest deficit in the history of the country.
We're losing the manufacturing edge to Asia , while our once-great companies are getting slaughtered by health care costs.
Gas prices are skyrocketing, and nobody in power has a coherent energy policy. Our schools are in trouble.
Our borders are like sieves.
The middle class is being squeezed every which way.
These are times that cry out for leadership.
But when you look around, you've got to ask: 'Where have all the leaders gone?' Where are the curious, creative communicators? Where are the people of character, courage, conviction, omnipotence, and common sense? I may be a sucker for alliteration, but I think you get the point.
Name me a leader who has a better idea for homeland security than making us take off our shoes in airports and throw away our shampoo?
We've spent billions of dollars building a huge new bureaucracy, and all we know how to do is react to things that have already happened.
Name me one leader who emerged from the crisis of Hurricane Katrina. Congress has yet to spend a single day evaluating the response to the hurricane or demanding accountability for the decisions that were made in the crucial hours after the storm.
Everyone's hunkering down, fingers crossed, hoping it doesn't happen again. Now, that's just crazy. Storms happen. Deal with it. Make a plan. Figure out what you're going to do the next time.
Name me an industry leader who is thinking creatively about how we can restore our competitive edge in manufacturing. Who would have believed that there could ever be a time when 'The Big Three' referred to Japanese car companies? How did this happen, and more important, what are we going to do about it?
Name me a government leader who can articulate a plan for paying down the debt, or solving the energy crisis, or managing the health care problem. The silence is deafening. But these are the crises that are eating away at our country and milking the middle class dry.
I have news for the gang in Congress. We didn't elect you to sit on your asses and do nothing and remain silent while our democracy is being hijacked and our greatness being replaced with mediocrity. What is everybody so afraid of? That some bonehead on NBC news or CNN news will call them a name? Give me a break. Why don't you guys show some spine for a change?
Had Enough? Hey, I'm not trying to be the voice of gloom and doom here. I'm trying to light a fire. I'm speaking out because I have hope - I believe in America . In my lifetime, I've had the privilege of living through some of America 's greatest moments. I've also experienced some of our worst crises: The 'Great Depression,' 'World War II,' the 'Korean War,' the 'Kennedy Assassination,' the 'Vietnam War,' the 1970's oil crisis, and the struggles of recent years culminating with 9/11.
If I've learned one thing, it's this: 'You don't get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it's building a better car or building a better future for our children, we all have a role to play. That's the challenge I'm raising in this book. It's a "Call to Action" for people who, like me, believe in America '. It's not too late, but it's getting pretty close. So let's shake off the crap and go to work. Let's tell 'em all we've had 'enough.'
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In this prescient article in the LA Times you may get a terrible glimpse into the not-to-distant future, namely, if the commercial sector goes down, so will the stock market. Read this astonishing article: http://www.latimes.com/business/la-fi-hotels-foreclosure7-2009oct07,0,744154.story As you read this article, please reflect on the names of these resorts--these are big names, not mom-and-pop operations. Bond holders here are going to be decimated. Here iin South Florida, for instance, the number of commercial buildings with "For Sale/For Lease" signs is, quite frankly, astounding. Even in tony Boca Raton (if there's trouble here then look out), you can't pass a commercial building without such a sign; perhaps the signs should read: "Help! Our tenants are gone and we're going broke!" Unfortunately, this is no laughing matter. If the commercial sector crashes, don't expect the government to have any money left to bail out desperate banks. Obama's healthcare "bomb," which will really be put together quietly and secretly in the conference committee, merging the House and Senate versions, will cost us (the taxpayers) over a trillion, easy...making a difficult situation nearly impossible for the working family, as taxes on everyone will have to be raised to fund this utopian, Marxist move. (Quick note: my British aunt died in Britain as, even though diagnosed with a serious heart condition, she was placed on one of their horrific waiting lists...and this is not a "death panel" by proxy?) One wonders how the House's "lovely" Cap and Trade (Tax) Bill will further add to the misery of the average American family. On a positive note, it has been shown that you can survive longer on peanut butter, if the money runs really tight...so stock up. Perhaps the president should worry less about the Olympics and more about our fellow Americans who are losing their jobs and the ability to pay for even the most basic of necessiities. Or is this all planned? As his advisor "wisely" put it: "Never waste a good crisis." And now you wonder why even the Communist Chinese don't want to hold our dollars anymore... |
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First, feel free to check out my new article on StartupNation.com entitled, "Women Roar!" about the purchasing power of women in today's economy at: http://www.startupnation.com/articles/9480/1/women-roar-marketing-to-women.htm As I wrote to a friend recently, sometimes it makes sense to go against the grain, to not always follow the major trends that are driving so many business models. As was seen in the July 20th edition of Fortune Magazine, the cover article highlighting Marc Andreessen, noted founder of Netscape, features his insight and how he's wholly focused on the belief that everything will move to the Internet. My take on this: yes and no. The Net's biggest problem--as recently evidenced by the security breaches on sensitive U.S. databases, including our national grid, thanks to the Chinese, Russians, and North Koreans--is its security shortcomings. As I well know, companies go to great lengths to protect their trade secrets, those secrets which can encompass something like a formula (e.g. Coca-Cola) to even the management control reports on how to properly manage and monitor the running of a manufacturing plant. (I've seen these reports and, yes, they do comprise serious secrets that competitors would love to get their paws on.) Having said that, and relating back to the Fortune article, it sometimes makes sense for you to think a little "outside the box" and go counter-trend when dreaming up your next venture. Not every company has to be "green" oriented, and not every company has to have the tech glow that attracts the mind of a Marc Andreessen. The key, ALWAYS, is to focus on the customer's need: to create a business model that addresses a discernible, provable need. Technology is merely a tool for, possibly, a more seamless delivery of that solution. However, as I mentioned, especially as national and corporate espionage grows, the Net may prove to be less reliable due to security problems. One sure winner: create a superlative Internet security firm, as this is just the beginning |
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