MVP- Do You Understand It?

Empower Me! Corporation CEO Adrienne Graham clears up some misconceptions about “minimum viable product” syndrome and how entrepreneurs need to continuously work to improve or expand their product.

 

 

Til Next Time,
Adrienne Graham

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Adrienne Graham is the Founder & CEO of Empower Me! Corporation (www.empowerme.org), a Growth Strategies consultancy with brand extensions in media, publishing and small business & entrepreneurial education. She provides Strategic Business Growth consulting services to companies with high growth potential to assist clients in creating processes and strategies to effectively run, grow and position their business for success. Check out her radio show Views From the Top on Blog Talk Radio & iTunes. Adrienne is also an avid techie dedicated to promoting diversity in the tech community. She is steadily building her empire one company at a time. Through her project ‘Red Shoe Careers’ she helps companies recruit & retain talented women in technology & engineering, and helps talented women in technology & engineering grow their careers. And her new company CurvyGirlCloset.com helps turn closets into commerce for the plus-sized fashionista. She is also a Mentor for the Straight Shot Accelerator in Omaha, NE, which helps guide startups to successfully launched ventures, and Tampa Bay WaVE in Tampa, FL.

Why an Accountability Buddy Is Your Secret Weapon for Faster Growth

Two years ago entrepreneur Nika Stewart of Freehold, N.J. set a goal for herself: double the sales of her business, Laptop Mom, an information-product consulting firm. She had set lofty goals before, but hadn’t achieved the kind of success she wanted.This time one thing was different: she had an accountability partner who was watching over her.

An accountability partner is a business peer who helps you grow your company by offering guidance and by holding you to your commitments. While it’s similar to a mentor relationship, both partners work on bettering their businesses with the feedback and support of each other.

“Through her input, challenges and encouragement, I ended up taking asmall piece of my old business and turning it into new business – Ghost Tweeting, a social media service for small businesses,” she says. “Within four months, I was earning multiple six figures — quadrupling my income.”

Linda Galindo, author of The 85% Solution: How Personal Accountability Guarantees Success (Jossey-Bass, 2009), says accountability partners are an entrepreneur’s secret weapon for quick growth. “Working with a partner prevents the ready-fire-aim approach that a lot of entrepreneurs use,”she says.

While being nimble is a small-business owner’s advantage,important decisions, such as launching a new service or product, are best made by vetting ideas and thinking things through. An accountability partner can help you identify weaknesses in your business, make plans to overcome them and hold you accountable for action.

Galindo says finding the right partner is the key to your success. She offers four tips for finding a good match and making the most of the relationship:

1. Look outside of your industry.
Galindo suggests choosing a businessperson who lives in your community — in-person meetings can strengthen your relationship. Look for potential partners at events such as Chamber of Commerce or Rotary Club meetings, or through networking groups. It can be helpful to find someone outside your field because they will provide fresh thoughts about your industry.

Stewart found her accountability partner through Savor the Success, a New York-based group for women entrepreneurs.

2. Choose someone who will be (brutally) honest with you.
The most important quality in an accountability partner is that they’re straightforward, says Galindo. “You’re not looking for someone who will rescue, fix or save you,” she says. “You want someone who will hold you accountable.”

It’s also important to know your strengths and weaknesses when entering an accountability partnership. “You’re looking for someone who has the qualities you lack,”Galindo says.

A partnership means you’ll be giving back. Identify your strengths that might be helpful to your partner, and make sure you’re willing to provide constructive feedback even when it’s uncomfortable to share.

Related: How to Successfully Turn (Almost) Anyone into Your Mentor

3. Be clear about your expectations.
Before you get started, be clear about parameters. There are times you want input and times you just need someone to listen; spell this out in the beginning.To ensure your arrangement is mutually beneficial, allot an equal amount of time to spend brainstorming and discussing each partner’s business. Decide how often you will connect and whether it will be in person, over the phone or by email. Plan how many projects and commitments you’re willing to discuss at a time. And be clear that whether or not you take your partner’s advice, each person is 100% responsiblefor their choices.

Stewart and her partner each set one goal for the year and broke it down into weekly steps. They kept in touch via email and phone three times a week: once to set a goal for the week, another time to check in and a final time to report on their results.

4. Agree on consequences.
Finally, Galindo says accountability partners need to hold each other to consequences if commitments go uncompleted.Whether there is a financial risk — you owe me $500 if you don’t complete your goal, for example — or simply having to admit that you fell short, consequences keep you motivated and engaged, says Galindo.

“It helps if you have an accountability partner who is a go-getter because you hold yourself to a new standard,” says Stewart. “I didn’t want to disappoint her.”

“We all can find a million excuses to not do what you say you’re going to do,” says Galindo. “An accountability partner keeps you on track and helps you move your business forward.”

7 Simple Numbers That Can Grow Your Business

One of my main business mantras is “Know Your Numbers,” and because numbers are the language of business, it is numbers that will ultimately determine your success.

Business is literally a numbers game, but what numbers should you know?

Here are seven metrics that will give you predictive results you can measure and manage for more sales and bigger profits:

1. The lifetime value of each customer. While there are more complicated formulas to determine this value, this simple version will give you a start:

If your average customer spends $20 per purchase, buys three times a year and stays with your business for five years, the customer’s lifetime value to your business is $300.

$20 x 3 sales = $60

$60 x 5 years = $300

Now you have a working understanding of the worth of each customer and the types of resources you need to acquire and retain them.

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2. How much it costs to acquire a new customer. I call this your Cost Per Acquisition, or CPA, and it can help determine how much you spend on any marketing or ad campaign.

Let’s say you’ve placed an ad in your local paper for $200. You get 20 responses and 10 sales. The acquisition cost for each customer is $20 ($200/ 10 = $20).

If your offer results in at least $20 in profits on every sale, you’ve run a successful campaign. But if your CPA is $20 and you have little or no profit, or are acquiring customers at a loss, it’s time to re-evaluate your marketing.

3. Conversion rates. Let’s say you hand out flyers to people on the street. The campaign generates 1000 leads over a two-week period, and 100 of those leads buy. Your conversion rate is 10 percent (1000 leads / 100 new customers = 10 percent conversion rate).

Too low? Nowhere to go but up. Tweak flaws in your sales process, increase customer service, narrow your target or create a better offer.

Knowing where you are is half the battle in getting to where you need to be.

Related: The 5 Rules for Silicon Valley Businesses That Can Work Anywhere

4. Your average dollar sale. The value of each sale is important if you are looking to generate repeat business or up-sell — in other words, the “Would you like fries with that?” strategy.

Simple “add-ons” can add-up quickly. For example, a deli offering premium sides and bottled drinks increased average sale from $5.42 to $13.11 with a simple “up sell” script that increased overall revenue 144 percent within a few weeks’ time.

5. Response rates. Conventional direct mail response rates will vary from 1 percent — generated by using lists from a list broker — to up to 5 percent — generated by using what I call a “warm” list of current or past customers.

Online email response rates are generally around .1 percent. That means, to get 50 responses to a conventional direct mailing, you’ll need to mail to a minimum of 5000 names with a great offer.

To get 50 responses from an email campaign, you’ll need at least 50,000 names, knowing not every response will end in a sale.

6. Lead-to-sale-ratio. If you’re in a business-to-business, professional services category or have a long-term sales cycle, your lead-to-sale ratio will give you an idea of the audience you’ll need to target to actually close a sale.

Say your startup insurance business needs 10 prospects to generate five meetings to produce one client. To get 1000 clients, you’ll need to prospect 10,000 people.

If your conversion rate is 20 percent, you can add value, guarantees or other ways of reducing real or perceived risks to increase your conversion rates to a 5:2 or 5:3 ratio.

Related: Lessons From a Diplomat on How to Build Business Relationships

7. Touches to sale. How many contacts or touches does your prospect need before they buy? The general rule of thumb in sales is that:

  • Two percent of sales are made on the first contact/touch
  • Three percent of sales are made on the second contact
  • Five percent of sales are made on the third contact
  • 10 percent of sales are made on the fourth contact
  • 80 percent of sales are made on the fifth contact

It’s generally accepted that on average, you need at least four to seven touches for a sale. So when should you stop touching? When you’re asked — otherwise, you never know when the timing is finally right for a sale.

Knowing your numbers and what numbers to know in the first place greatly empowers your decision making, and helps you better predict how your business will fare.

If you do your numbers and discover you need a 10,000 person database to get 1000 customers, your marketing plan is pretty simple: Get a list and an offer, then track and convert your results.

Lessons From Successful Entrepreneurs on How to Beat the Competition

Cliff Shaw had already founded and sold three companies in the genealogy space, all of which had to cope with the supersize competitor he confronted once again when he started Mocavo in 2011. Based in Boulder, Colo., his latest venture bills itself as “the world’s largest genealogy search engine.” But to get there, Shaw had to devise a business model and pricing scheme that would compete with Ancestry.com, whose 2 million subscribers and 11 billion historical records made it the reigning behemoth in the field.

What’s a startup to do? To distinguish his company from Ancestry’s subscription payment model and content supply, Shaw decided Mocavo would offer a basic service free of charge, with customers providing content. “We originally started as Google for genealogy,” Shaw says. “We’ve now evolved into a giant community of users who want to contribute content online for free.”

Zach Schau, Pure Fix Cycles

Mocavo customers have published newspaper articles, old wills, marriage certificates, even family bibles. Last December the company introduced a subscription service, Mocavo Plus, an enhanced version of its search engine. To solidify Mocavo’s share of the genealogy market, Shaw designed a business that doesn’t compete directly with Ancestry.com but provides complementary services. “To be honest, we don’t think about them very often,” he says, “because we’re pursuing an entirely different model.”

Of course, there’s no single formula for coping with competition. Some startups partner with direct competitors, such as the vineyards from California to New Jersey that have organized cooperative wine trails. Others choose to go toe-to-toe. Some all but ignore their competitors, and some get a leg up by collaborating with an established, noncompeting company. Here are five strategies you can employ to take on your rivals and carve out your niche in the competitive landscape.

Play Nice

In wine country, it’s common for vintners to compare botanical notes on pruning methods or canopy management in their mutual quest to grow a better grape.

“I think the wine industry is a really unique industry in that the more wineries that are in the area, the better,” says New Jersey winemaker Michael Beneduce Jr., who started Beneduce Vineyards five years ago. “It’s essential to be able to collaborate with each other, because that really elevates the quality of the whole region.”

Beneduce recently returned from a two-week trip to visit wineries in Austria, where the climate and soil are comparable to those of northwest New Jersey. Everywhere he went, Austrian winemakers were eager to show off their vineyards and answer his questions. “We don’t see our competitors as competitors,” Beneduce says. “We see them as collaborators.”

Be Bold

Zach Schau knew the bicycle marketplace was jampacked, dominated by global brands such as Trek, Bianchi and Fuji. No matter: In 2010 Schau, his younger brother Jordan and two friends founded Los Angeles-based Pure Fix Cycles, a colorful brand of fixed-gear bikes.

At first Schau figured Pure Fix would be an e-commerce company. But soon he set his sights on Sport Chalet, a 54-year-old sporting-goods chain with more than 50 stores from Utah to California.

Mocavo's Cliff ShawHow does a startup compete for floor space in a regional retail giant? With a lot of hustle, some bodacious innovating and, yes, a little luck. Such as the time Schau chatted with a Sport Chalet buyer at a Las Vegas trade show. The buyer introduced Schau to a “colleague” who had taken a liking to the Pure Fix bikes on display. That colleague turned out to be CEO Craig Levra; before long Sport Chalet was stocking Pure Fix bikes.

But Schau didn’t stop there. Pure Fix continued to rotate the palette of its bikes, which now come in more than 15 color combinations. The company produced a glow-in-the-dark bike and a smaller model for younger riders. And it priced its bikes to sell, ranging from $325 to $399.

Schau’s advice to startups striving to stand out in a fierce marketplace: “Be confident and take risks, because if you’re not going to, someone else is, and someone will beat you to it.”

Fight Back

For Arizona jewelry-maker Sarah Elliott, innovation has been key to dealing with the knockoff products that are ubiquitous in her field. Elliott tries to stay ahead of the competition by creating one-of-a-kind pieces from her signature materials–gemstones, freshwater pearls, copper, brass and sterling and nickel silver–then doing it again and again.

“I take it as a compliment,” Elliott says of knockoffs. “What can I do? I need to come up with something different, to incorporate different methods of making jewelry–that’s how I kind of combat it.”

Startups can take legal steps against knockoffs, says Harris A. Wolin, a New Jersey attorney specializing in intellectual property law. They can send a cease-and-desist order to an offending competitor. If the startup has a patent on a product that is attracting knockoffs from overseas, the startup can seek an exclusion order from the International Trade Commission that will authorize U.S. Customs to seize infringing knockoffs at the border.

Outside of a legal remedy, startups can turn to creative marketing campaigns that highlight a product’s defining feature. When one of Wolin’s clients found itself threatened by an overseas knockoff, it promoted its product as being made in America and further differentiated itself through its service and warranty offerings. “That’s another way to go after a knockoff,” Wolin says. “The goal is to prevent somebody from coming after your business.”

Focus Inward

Steve Blank, outspoken Silicon Valley tech entrepreneur, author, blogger, business-school professor and early champion of the Lean Startup movement, says the only player the entrepreneur needs to be concerned with is the one staring back in the mirror.

“If you’re worried about competitors, you’re already out of business,” Blank says. “The only people who can put startups out of business in the first 18 months are themselves. Competitors really have nothing to do with that.”

However, Blank does not advise entrepreneurs to disregard their competition entirely, noting that while you shouldn’t let them have a major impact on the way you operate, you should keep an eye on what they’re up to. “I love to watch competitors,” he says, “because they typically have better ideas than I do.”

Entrepreneur Andrew Allison says Blank’s book The Four Steps to the Epiphany: Successful Strategies for Products That Win was “basically a bible” for him and business partner Matt Stuart when they founded Main Street Hub, a social media management firm based in Austin, Texas. “It’s a mistake if businesses let competition dictate their vision or their relationship to their customers,” Allison says. “Entrepreneurship is a 24/7 job. And every minute you’re spending agonizing over what your competition is doing is another minute you’re not spending working with your customers or understanding the data to see what next you have to do with your product.”

Hitch a Ride

Sometimes a startup needs to guard against competitors who have yet to show their faces. Lisa Lavin, co-founder and CEO of Anser Innovation in Minneapolis, was sure her company’s new product, a videophone that could enable people to interact with their pets remotely, was the first of its kind. Using a smartphone, tablet or computer, pet owners could even prompt the device, known as PetChatz, to feed their pet a treat.

But even with no direct competition in sight, Lavin wanted to break into the marketplace in a bold way and hold future competitors at bay. To do so, she needed a business plan that would enable PetChatz to gain a competitive advantage within the $53 billion U.S. pet industry. “As a small company, our reach is limited,” Lavin says. “We had to have an edge.”

So Anser formed a partnership with another Minnesota firm, Tuffy’s Pet Foods, founded in 1964. Tuffy’s devised a proprietary treat to be used only with PetChatz, and Anser is leveraging Tuffy’s brand name and distribution channels.

“Even if we don’t have competition today, we will have competition in the future–I can guarantee you,” Lavin says. “Even though we have patents on our products, we know somebody will try to infringe on our patents and come to market. The partnership with Tuffy’s gives us the speed and weight and resources we need to be successful.”

Can I Say That?

“Under the law, claims in advertisements must be truthful, cannot be deceptive or unfair and must be evidence-based. For some specialized products or services, additional rules may apply.”

If you’re planning an ad campaign that sets you apart from your competition, you’d be wise to heed those words, found on the website of the Federal Trade Commission’s Bureau of Consumer Protection Business Center.

There’s no restriction against naming a competitor in an advertisement or directly comparing your products, services or prices to theirs, says New York advertising attorney Andrew Lustigman of Olshan Frome Wolosky. Advertising law simply goes back to that sage counsel you used to hear from your mother: Tell the truth. And for good measure, be ready to back it up. “This is America,” Lustigman says. “You have a First Amendment right to truthful commercial speech.”

If you feel you’ve been unfairly maligned by a competitor’s ad, you could file a lawsuit. But more often these days, complaints over ads are heard by the National Advertising Division of the Council of Better Business Bureaus, which operates as a self-regulatory body ruling on competitive advertising challenges. The division’s stated mission is “to review national advertising for truthfulness and accuracy and foster public confidence in the credibility of advertising.”

Lustigman works with plenty of startups, and he says the biggest mistake he sees in advertising is making a claim without confirming its veracity. “I think there’s a real unawareness of the fact that you need to get your ducks in a row before you go to market,” he says. “If you’re making specific performance claims, you’ve got to make sure you have tests and studies that are reliable, that back up your claims.”

Which goes back to something else your mother used to tell you: Think before you speak.