How to do Business

And so, at last, we come back to finance. Business link research has always shown that access to finance comes after Sales and Marketing and regulatory compliance in the concerns of small businesses. Everything else comes nowhere.

So where do we get our money from. Do we bootstrap and max out our credit cards, do we borrow from family and friends. Do we find an angel, do we go to venture, do we hit the bank?

The answer as always depends on where you are, what you are trying to do and where do you want to go.

If you are setting up as a consultant, your needs are different from that of an inventor who’s got a revolutionary idea for a consumer product. (Most are going to get nowhere but occasionally you get James Dyson)

We’ve done 4 business start-ups to date.

The first one we each put in £3k but we relied on our business partner who had £20k in the bank (this was 1981)

The second one we had 2 second hand computers, a mailing list and the clothes we stood up in. (What does that tell you?)

The third was a management buy-out from a government project funded by an Angel – let’s call him Uncle Zak (not his real name). I was demoted from entrepreneur to Guru on account of my great age and wisdom which is why I’m writing this now.

The fourth time we walked out after an uncongenial merger and did another cold start. Although we were reasonably well off by then. We’re now in our 5^th year of trading with a turnover of half a million.

Fundamentally you have to establish where you are in the overall scheme of things and whether you are running a 1 man band, a life style business or a growth business bent on dominating some global niche. One of the luminaries on Ecademy set up a club dealing with global finance. This diagram was developed to encapsulate what I learned from there and to summarise the overall process. 

This tells us that there are several stages in getting finance. First of all you need to establish that you have got a business model that is going to work. If you just want a life-style business that earns a nice little profit employing up to about 10 people then Friends, fools and family will do nicely. If you are looking to try an invention this is where you should be looking. VC’s won’t touch you. They are only interested in funding things that they know are going to work. That’s why they are entrepreneurs.

There’s a lot of nonsense talked about entrepreneurs and risk. Actually you try and minimise the risk – don’t bet serious money until you know it’s likely to work and try and get an unfair advantage. Our unfair advantage in the current business is that my business partner was able to write the e-commerce engine herself – she’d been writing database apps for 25 years by then with about 8 years experience of putting them inside browsers. It saved us a really risky bet of about £30k on an unproven business model since all that was at stake was her time.

Next time I’ll talk a bit about Angels – and our experiences with them.

Our recent research project tells us that small business owners typically spend 12 hours a week promoting their company.

That’s all you’ve got to cover face to face sales and networking, conventional marketing and whatever you choose to do online – whether using Google ad-words, making use of social media or dipping your toe into the ocean that is twitter.

How should you spend your time? Our current research tells us that lead generation is the number one concern of the small business owner.  In this strange 21st century we don’t have time to prospect the way we did in the ’80s. Back then we did a lot of exhibitions, paper newsletters and cold calling on the phone.  We know that people don’t do that now – for example, only 14% of our sample uses telemarketing in any systematic way.

We found that most companies rely on networking for referrals and introductions. They also use workshops, PR and online advertising too but the focus is on face to face networking and social media..

We compared companies with local businesses (80% of their orders come within a 50 mile radius) and global/national ones – and checked whether the business is scalable or not.  A mail-order plants business is scalable since we can source more product if if we have more demand while a local organic vegetable business whose produce depends on its certification is not scalable.. The limiting factor is production because once the produce is sold – it sold. These businesses need different marketing strategies..

It turns out that the difference is local vs national business. For a local business networking locally will provide the leads you need. For a national business you need the extra reach and randomness that online working gives you.  Twice as many national businesses used linked in and twitter as did local businesses. (42% vs 18% for linked-in).

And the same rules for building trust apply online and offline.
•    Be clear about what you do
•    Do what you say you will
•    Be easy to work with
•    Get back to people quickly

If you need help developing a strategic plan, are wondering about how to tell your story better and how to construct an effective marketing mix we have some new products to help you as well as plain old consultancy.

“12 hours a Week”  workshop

Based on our research findings this 3 hour workshop helps you work out the right balance between face to face and online networking and conventional marketing for your business. Includes new 80 page workbook and BrainMap tool. Arora Hotel Gatwick   17th July £85+VAT . You can book here.
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I’ve been working quite hard on some new materials over the last month or so. A new web copywriting course and a workshop on how to support groups using social media.

However what’s been my real focus is a marketing workshop based on the findings of the last research project. This threw up some really interesting findings about under what circumstances it makes sense to use online media instead of focusing on face to face networking.

The survey itself revealed that the average small business owner spends 12 hours a week on promotion – sales, networking, online activity, conventional marketing. Everything you do has to fit into that envelope – so what to do?

Are you better off focusing on your local BNI branch and getting to know really well the 20-30 individuals who you hope will refer you the business that you need – or are you better off focusing on building an internet presence which will randomly connect you to people all over the world? Or a bit of each?

The last bit of analysis we did suggested that your strategy is going to depend on whether your business is local and whether it is scalable. We ended up by dividing our responders according to those criteria and this is the pattern we found.

It turns out that the strategy to follow very much depends on which group you find yourself in.

The workshop will help you achieve 3 things

1) Become absolutely clear about your story – the narrative that connects you to your customers on an emotional level. Our research shows that this is absolutely critical for credibility and referrals

2) Decide how much online activity you should include in your strategy – and what other marketing tools will work for you

3) Give you some pointers on effective networking and a clear understanding of how to build and maintain a strong online presence suitable for your business without spending your life at it.

First outing of the Workshop is in the Gatwick Area 17th July. More details here. 

So what are the tools of choice?

http://www.Skype.com, http://docs.google.com and Docs and BaseCamp are 3 that should be in the frame for any aspiring gang creators.

Skype includes VOIP, video conferencing 1 to 1 only, teleconferencing (up to 5) and chat (up to 50 in a chat). It’s free if both parties are on Skype. It effectively revolutionises how you do business because any gang can have its own permanent running Skype chat. This means that anyone can raise a topic and it sits there until one of the others has time to deal with it.

It has a much greater immediacy to it than e-mail and is almost entirely opt-in. Because it multi-tasks its possible to have ongoing conversations while engaging in writing complex documents – like this one.

This is what it looks like and here is an example of an ongoing chat. As you can see there are about 50 people in this with topics constantly coming and going.

It can be used in a much tighter way between 5 people delivering a project together, Check it out at www.skype.com

Google Docs is a powerful tool that allows documents resembling word, excel and PowerPoint to be hosted by Google and accessed by you and your team. The real benefit is that you can have a team of several people working collaboratively on a spreadsheet at the same time, each updating their own sections. You can have a look at http://docs.google.com

BaseCamp is a product of 37 signals that also do a chat product and a hosted CRM application. I have been using it to support my projects for the last 18 months. It essentially gives you some space to store the definitive project documents, allows people to comment allows you to enter and agree milestones and track progress.

I have a fairly modest subscription of about £6 per month which allows me to run 3 live projects plus as many archived ones as necessary. It’s real benefit is that it deals with version control, saves you having to be constantly emailing files to everyone and manages the audit trail of emails as commented threads.

Because its all properly backed up it means that your documents are more secure than sitting on your own server at home.

Uploading files is easy and I’ve now run 5 projects using it.

Costs range from $12 per month for 3 live projects and 1 Gb storage up to $149 per month for unlimited projects and 50 Gb. The more expensive versions also contain basic project planning tools and timer recording.

You can allow your clients access to the environment too so that you can add transparency of project management to the other benefits to the customer of dealing with your organisation.

BaseCamp, in its larger capacity offerings is a secure, encrypted environment. This can be very important to clients as would be need for secure encrypted environments for Video Conferencing and chat.

Skype is a free environment but there are other, equivalent, products which for a modest monthly fee will deliver an encrypted and more powerful service. Megameetings,  for instance will offer video conferencing for 5 at its entry level price and will also offer the facility for secure teleconferencing with recording and transcript facilities.

These tools facilitate the development of groups of consultants functioning as consortia which will enable them to bid more successfully for contracts and deliver them more effectively.

This obviously has an impact on the whole smarter working agenda which we’re going to look at next.

As we mentioned in the section on building trust, one of the main drivers that people have when they’re networking is that they are looking for people to collaborate with.

Many people find themselves setting up as one man bands (independent consultants) later in life after a lifetime in a corporate. While the corporate world has some real downsides, if you are an expert in your field it has a number of advantages that the small business owner doesn’t have.

These include

• People to do your admin for you
• People to do your IT for you
• People to do your selling for you
• People that your skills complement to make a complete offering.

However life as a 1 man band is different. You have to either pay someone out of your earnings to do all the above – or you have to do it yourself.

It’s a truism that if you are delivering services yourself you can’t sell when you’re delivering and you can’t deliver when you’re selling. So you might consider forming a little gang of like minded people whose skills complement yours and form a consortium.

This lets you share the load of bidding and spreads the cost and time of customer acquisition. The importance of this can be judged from the preliminary returns from the research project. The average organisation spent about 14 hours on marketing per week which is what you might expect given that most were selling business services, less than half turned over more than £100,000 and employed more than 2 people.

So if the ratio of promotion and admin to delivery is approaching 1 to 1 it makes a great deal of sense to form a collaborative gang which will allow you to deliver a more complete offer to your client as well as spread the load of tendering.

Once trust is developed and you are in a position to start collaborating, the current development of the internet has made life very easy for you. Most of the tools you need, both for online networking and for collaborative working are either free or comparatively inexpensive.

You can even share subscriptions to streams of leads. Many government tenders are notified on portals like http://www.sell2wales.co.uk and http://www.direct2.gov.uk while you can also subscribe to services like Skillfair which will direct particular types of contracts your way.

Apart from email, the main tools you need are a tool to deliver voice over IP (VOIP) which will let you hold conference calls and run chats plus a document repository where you can store documents, manage the email threads and generally work collaboratively. It’s only about 8 years since that was effectively beyond the resources of even a 20-50 person company. So the power of broadband has effectively changed the balance of power for the individual worker. Effectively all you need is a laptop with a wi-fi broadband connection and you can work anywhere. More to the point you can project manage from anywhere too.

We’ll review the tools that you can use next time.

Given that a successful business is going to have to hop growth curves to survive or grow, it turns out that your only sustainable source of competitive advantage is your ability to learn

You may remember this picture from earlier on. What it says is that you can’t stand still. If you’re good you catch the next wave early enough and grow on it. If you’re average you catch the next wave and let go of the old one. However it’s difficult to know much in advance what the next relevant one will be. One of the hallmarks of effective companies is that they are able to develop new products and services from a well established organic base.

To create these and implement them in a way that’s operationally sound you need to be able to take the team with you – you need to be able to learn how to find the new opportunity and implement it – in a way that’s not been done before. This means that you have to take your team up a learning curve. If you can do this faster and more effectively than the next company then you will work in the market place.

So how do you learn to learn? Most of us have the creativity driven out of us by the education system as it is lovingly tended by the Ministry for the Prevention of Learning. It tends to produce by numbers people who do things by the book, who can’t think things through from first principles and who are stuck in a low level “evidence based” view of the world. In extreme cases they regard their bodies as a way of getting their heads to meetings. (I wish I’d said that – actually it was Sir Ken Robinson in his talk at TED)

The real world is more messy than that – you need to try things. You need to carry out a Tango with the market place. Product creation and launch is a physical process. You can’t do it intellectually in a back room.

So we need to take note of what is known about learning to learn. The expert in this area is a man called Peter Senge. So the rest of this section is a summary of his main ideas – which I think is fundamental to business success in today’s market.

Senge’s ideas were published in a book called the 5^th Discipline which is well worth a read because as well as dealing with the characteristics of the learning organisation he has a nice little appendix describing some archetypal binds that organisations fall into.

Basically he says that creating a learning organisation needs you to build a culture that celebrates and practices 5 key skills. If any one is missing then you can’t create a learning organisation. They are

• Personal Mastery

• Mental Models
• Shared Vision
• Team learning
• Systems Thinking

What these mean in practice is that one of the tasks of leadership is to be continually evolving, growing and learning from the environment and to distil this experience into a model of the world that facilitates process for those around you.

To create a learning organisation, the leader must

· Do this consciously

· Demonstrate it to others

· Encourage them to do the same.

The interaction of a group of people working together on real projects that they all have a strong interest in achieving, creates a shared vision around a common purpose. If articulated and pictured this can become the brand. Internal branding in a service business is fundamentally about creating and propagating this shared vision throughout the organisation.

More about the “how” in the next post.

Most people who responded to the survey seemed not to have a systematic process of developing trust. A few wanted to work on a project with them first, but several relied on randomness and the “right feel”

To recommend someone they met networking, the more cautious souls would want to see their work before recommending. If the skills were rare or there was a good match between the buyer and the seller, the majority of respondents would mention them with a caveat that they had no personal experience.

However what was really interesting was that the same indicators of trust were found across the sample. However we sliced the sample, US vs Europe, Big vs Small, On-line junkies vs avoiders, the same characteristics and behaviours led to the growth of trust. Let’s list them.

As well as being crystal clear about what you do, doing what you say and knowing your subject, the key skills of networking and building trust were thought to be

• An attitude of Givers Gain
• Listening Skills
• Rapid follow up
• Enthusiastic can do attitude
• Trustworthy and sincere

Givers Gain (also sometimes called “paying it forward”) means doing favours and passing referrals on first and wait for the law of karma to work on your behalf later when you have enough good karma points in the bank. Thomas Power has even attempted to quantify this as 50 gives = 1 get. Spamming everyone with business cards and the “always be closing” approach seems not to work in this environment.

This is in line with Cialdini’s identification of the principle of reciprocation as one of the cornerstones of building strong human relationships. The other main ones are Commitment and Consistency, Social Proof, Liking, Authority and Scarcity. This is all summarised in his book “Influence – Science and Practice” which I would say is a must for anyone serious about building a successful business presence.

If you can build and maintain a good reputation for competence in a sought after area and are generally pleasant to deal with, networking is a great way of leveraging your ability to reach more customers.

It involves

• Looking good – all the research shows that the beautiful get more business. If you can’t look beautiful at least try and look symmetrical. It may not be PC – but that’s how our heads are wired.
• Being absolutely clear about what you do.
• Being consistent
• Being easy to talk to
• Listening a lot
• Finding helpful connections for the other person.

However above all you have to be clear about what you want out of it – be it collaborators, referrals, employees, introductions to finance. If you are helpful and you let other people know clearly what you do and what you want, consistently – then the magic will start to occur.

None of this is really new of course. Here are 2 quotes that sum it up

1) You have 2 ears and 1 mouth – use them in that proportion. From Every sales course you’ve ever been on.

2) Just tell them what they want to hear. But there’s a catch. You have to mean it. Dale Carnegie didn’t quite put it like that – but that’s the core message of “How to win friends and influence people” if you ask me.