This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in May 2012 and is posted here by their kind permission.
Getting a response from initial e-mails is a challenge
This entrepreneur started a company to market advertising for digital publications and mobiles. Like most start-ups he has a challenge in making initial sales, and he has identified a weakness in his initial e-mails to generate interest. For instance his e-mails promoting a new product for organisations sending electronic statements has produced no response. He asks what he should include in the e-mail.
This entrepreneur actually faces two challenges: He needs to attract attention from potential customers who do not know his business or his products. To do this he has tried using e-mail as an inexpensive way to communicate his offer, but has been unsuccessful. His second challenge is that he is promoting advertising in the digital world, so his digital communications have to be arresting and effective, he cannot use traditional media to market his products.
E-mail is incredibly efficient at sending messages but this has brought about the major problems of e-mail overload and spam. As a result defences against unwanted mail have been built. Many of this entrepreneur’s e-mails will never be read, victims of spam filters or the delete button. If they are read, it will be a quick scan, so messages which don’t immediately attract attention will be ignored. Continue reading
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in April 2012 and is posted here by their kind permission.
Start ups in small towns need excellent marketing strategies
This entrepreneur plans to start an event business that will offer wedding and party planning and a catering service offering African gourmet meals with a twist. He requests advice on marketing and penetrating the limited market in his small town. As an unknown young black entrepreneur he has concerns about succeeding in marketing to a predominantly white and older community.
The first step is market and competition evaluation, to determine if there is enough market, and whether his business could win against established competitors. If either of these are negative then the entrepreneur needs to answer totally different questions.
Assuming this has been done and the market is available, then there is a mix of good and scary news. The good is that he is thinking of how to be different. The idea of gourmet African meals is exactly the sort of unique selling proposition that great businesses are made of. The scary part is that any market is really hard to penetrate. What is usually in the target’s mind on first approach is something like:
Entrepreneurs are frequently great salespeople
It is rare to meet an entrepreneur who thinks they are a great salesperson or sales manager. Most times they will use language like “I just don’t have the gift of the gab” or ‘I know my products but…”. But usually at start up the entrepreneur has to be a salesperson – there is nobody else around!
It is also rare for entrepreneurs to take steps to develop selling or sales management skills, which is odd. They will frequently take financial courses, read marketing ‘how-to’ books and study HR and staff management. The business is totally dependent on sales being made, and yet it is the one art that entrepreneurs seem to shy away from.
Let’s back up a bit. At the time the business launches, the entrepreneur talks to prospective customers, defends the price, negotiates terms, enthuses about the qualities of the products or services and spends lots of effort to think of ways he can make initial sales. Contrary to the usually-expressed belief by entrepreneurs that they cannot sell, they are often really good salespeople. They work really hard and are determined to make sales because they have to. Their product knowledge is awesome; they have the ability to shave a price and the knowledge of when cutting further will hurt the business. They make very sure that what was promised gets delivered, and attend to any customer complaint with vigour and immediacy. Continue reading
A business with no sales needs to change or close
This entrepreneur started a model and artist management company and signed up models, planning to take a commission of their earnings. But there have been few castings and very little income. E-mails to potential clients go unanswered. She asks if she should change her way of finding clients.
This entrepreneur is faced with a three way choice right now. She can persevere, working hard to make a break through, she can quit, or she can change strategy and tactics. When potential buyers do not buy a product or service as expected businesspeople either become bewildered, as is this entrepreneur, or frustrated and angry at the buyers ‘illogical’ refusal to buy. This is naive; the buyer has no obligation to buy from the entrepreneur.
The key question to ask is ‘why would they buy from my business?’ Are the models more talented, or less expensive? Are my services superior to those of others? Users of models have an enormous choice, and will have their favourites. They know what to expect and the like the look of the models they use. If they want a fresh look there will be a large choice from their current agency. So why would they switch from the known and liked to an unknown agency and model? Continue reading
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in February 2012 and is posted here by their kind permission.
Having one large customer is wonderful – until something bad happens
This entrepreneur has printed training manuals for a large national company for 18 months. He purchased additional machinery for their work, although there was no contract in place. Recently the orders have dwindled and the new machinery stands idle. The buyer now places orders with a friend. The entrepreneur asks if there is any way he can complain about cronyism.
Most small businesses dream of having at least one really large company as a customer. Big orders mean rapid growth and the cost of sale is lower than dealing with many small businesses. But there are disadvantages – entrepreneurs entering deals with very large organisations should consider Porter’s ‘Five Forces’ model, where the power of customer is identified as a competitive force. Continue reading
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in October 2011 and is posted here by their kind permission.
The answer to insufficient sales may be more money invested, but there are other opportunities
By Ed Hatton
I have just started a college with a unique range of course offerings. Enrolment numbers are poor due to a low advertising budget. How do we get investors involved without having surety?
Existing entrepreneurs reading this will probably be smiling wryly. Cynics say the first two laws of start-ups are:
In this case the entrepreneur has assumed that the only way to increase enrolment is to put a lot of somebody else’s money into advertising. There are a couple of issues with this proposed solution.
Firstly investors put funds into businesses because they believe they will make a good return. So this entrepreneur will have to demonstrate that the project will make money, despite the fact that early enrolments are poor. Facts, figures and hard information are needed, not just self belief and enthusiasm. Continue reading
A new entrepreneur faces a steep learning curve with no mentoring
An entrepreneur started a website to provide youth with a free service for employment and small business opportunities. The income comes from web publishing and affiliate programs. He has no IT background and has to learn operations, marketing, finance and everything at once. He also doesn’t have anyone to bounce new ideas off.
This entrepreneur, operating in a rural area, wanted to make a difference to young people and small businesses. The web site breaks even but he is frustrated at the slow growth and his own lack of knowledge. This is a near-universal problem with new businesses, the learning curve is both steep and multi-disciplined. Affordable advisors are hard to identify.
Learning and getting advice
Finding appropriate learning opportunities and information while running a new business is a challenge. There are many courses advertised and choosing the right one is crucial for entrepreneurs on tight budgets and with limited free time.
Start with the free information on the internet. Entrepreneur magazine’s website at www.entrepreurmag.co.za is a valuable resource, so is the SME Toolkit (www.southgafrica.smetoolkit.org) and many others. There are many great business blogs which starts ups can follow at no cost including my own at http://marketingstrategy.co.za. It takes time and patience to search for good information, but this is time very well spent.
Entrepreneurs should not be afraid to ask for advice, but only when they have done the basics. Many business people are happy to help but don’t expect them to come up with answers when the entrepreneur has been too lazy to investigate options. Start with a successful business nearby that is not in competition with yours and then ask the managers for assistance. This works well in the internet world, where free advice is a part of life. Coaches and mentors are available for a fee, but set the expectations and budget in advance. Continue reading
Starting a new business to supply an innovative solution needs lots of research
By Ed Hatton
I have been developing a product for the health and beauty industry for the past 2 years. How do I sell and market my product both nationally and internationally?
Many wonderful inventions never see commercial reality, let alone international success so the questioner is wise to ask for advice on the way forward. If the market does not see the value of a new creative concept it will not sell. The inventor may get excited about something that solves one of her own problems, but before launching a start up business she needs to be sure that the market has the same need and sees the value of her product in addressing that need. Continue reading
Moving a business to a new location can be like starting all over again. By Ed Hatton
An entrepreneur moved his event management and wedding planner business to a new province where no-one knows his business. He needs to attract clients but isn’t sure where to begin. He has been distributing pamphlets, but so far no-one has gotten back to him.
This entrepreneur had a thriving business doing wedding planning, parties and corporate event management and then he moved to a different province. When he started operations in his new location he realised just how much personal reputation and word of mouth had meant. In the new location he is unknown and potential clients are wary of entrusting important events to him.
The business must be started again in the new location. As before, he has to build a client base and a solid reputation to provide a platform for growth. He has the advantage of being experienced in running events and weddings, so he does not start quite as ‘cold’ as he did originally. Against this are a number of part-time wedding planners and event managers who are established and compete with him for business. Continue reading
Securing advertising income in a massively competitive environment requires smart strategy and good delivery – by Ed Hatton
An entrepreneur wants to approach businesses to advertise on his free business listing website. He has all the stats of how many visitors he has to his site but he doesn’t know what angles to use.
This entrepreneur has chosen the online sector for his new business. One of the key issues is the speed of development; new innovations change the landscape all the time. Another risk is the extent of the competition. There are thousands of directories, and hundreds of search engines, all trying to attract people searching for information or potential suppliers.
In this heated environment it is easy to focus on the measures that the industry uses – page impressions, unique visitors and click-throughs. But these are only measurements of traffic. The entrepreneur’s business must find and address a need profitably if it is to survive and prosper. All the visitors in the world mean nothing unless visitors use the information from the directory to buy or enquire about services. Similarly companies listing on his directory are there to source new enquiries which they can turn into business opportunities.
So now the question becomes ‘how can this directory generate business opportunities for the business listed?’ This must be done in a highly competitive environment with industry giants and thousands of small competitors trying to do the same. Continue reading
Your sales force has a major impact on the success of your advertising
Every business spends time and money on marketing promotions and advertising, even if it is only signage or business cards. The objective is to make customers and potential customers aware of your company and its products and services. Most advertising also has the objective of inviting prospective buyers to approach
your company and either enquire or buy items. When the advertising succeeds and a customer engages with one of your salespeople, you should get value for your money spent on advertising by making a sale – but it does not always work out that way.
Prospective customers may not buy if the salespeople ignore them, if the product is not in stock, or not at the price advertised. Sometimes making the sale will depend on the salespersons product knowledge or their ability to really to a customer’s requirements. Are they able to match specific products to address customer needs or are they restricted to reciting (or reading) specifications and prices?
A lost sale
Some time ago I looked for a new device to heat a room in my home. There were many types of heaters and airconditioners to choose from. I had seen an advert for a type of heater that seemed to satisfy my needs and I had been attracted to the special price, so I visited the store. There was a display of the heaters on promotion near the entrance to the appliance store, with several neatly uniformed salespeople poised. Continue reading
Responding to a need is a great way to start a business, but it is not as simple as it seems
An entrepreneur has recognised that government departments and some private companies often pay their suppliers very late, or make wrong payments. Together with her spouse who runs a human relations consulting firm which is fully accredited with ETDP-SETA, she has the knowledge and expertise to set up policies and train people to fix this problem and so improve service delivery. However she has not be able to form a strong sales and promotion strategy.
This woman dreams of becoming an entrepreneur while she runs the department which pays suppliers in a large company. She sees entrepreneurs struggling to get paid on time by government departments, local authorities and some large companies. She knows she could put the right policies, processes and training in place to turn the situation around. Her spouse could do the training and the combined service would enable departments to make payments on time. President Zuma, in his State of the Nation address suggested that this improvement in service delivery was vital, so the need for the service is there.
Who has the need?
This business opportunity looks like a textbook case of identifying an unmet need and having the capacity to fill that need. But, and this is a lesson for all entrepreneurs, first ask who has the need. For instance consider out of order traffic lights. The motorist desperately needs them fixed, but the duty pointsmen earn their living from them. The roads department is judged on performance but has harsh budget restrictions, so they may have mixed feelings. The point is that answering a need may have to include appropriate strategies if the party with the need is different to the party who will pay. Continue reading