Guess what? You're in Sales!

At some point in every business’ growth cycle the leaders lose sight of their real job – sales. They get hung up on staffing issues, quality improvement, planning or new product development and completely forget that if no one is buying what they’re selling they have a huge problem.

In order to grow your company, you must remember that your business is sales. Your business is not the product you manufacture. Your business is not the service you provide. Your real business is marketing and building the internal capacity to successfully sell and deliver your products and services to a multitude of consumers.

Most business owners don’t initially launch their company because they are a great manager or a born marketer. They start their particular business because they possess technical skill in a certain area of expertise such as making glass vases, roofing houses, fixing computer systems or teaching people how to ski. So, when it comes to marketing, small business owners are often fish out of water.

That’s a colossal drawback in today’s competitive business climate, because you can make the most beautiful vases in the world, or be a whiz at troubleshooting computer glitches, and if no one knows you exist you’ll be bankrupt in no time. Or if you design a product that no one likes except you, you’ll have no market for what you are selling. You simply can’t generate revenue without mastering the process of bringing in and retaining customers!

Truly great marketing is an art form - and the strongest companies are willing to invest in professional help to do it right. But every business owner should know their customer base, understand the basic appeal of their products and services, and think like a marketer.

At its most basic, marketing is a three step process:

1. Understand consumer desire. You can’t sell to people you don’t understand, so get intimate with your ideal customers right away. Think about every transaction from their perspective. Learn what they like and don’t like, where they hang out, who they respect… their age, race, gender and income range. Nothing is too small to pay attention to. This process let’s you create a profile of who your best customers are, and will arm you with the data to find them, speak to them, and tailor your business model around issues that are important in their world.

2. Develop an offering that fits your target customers. If you’re selling diamond rings for $10,000, and your target customers are middle-class suburban teenagers who like ‘bling’, it’s not going to work. They can’t afford what you’re selling. Armed with information about your target audience you can make sure that your products and services meet their needs and fit their budget. Maybe in this instance you could create a flashy line of costume jewelry that would suit your target customers better? Or maybe you could re-engineer your products and promotions to appeal to a better target market - upper class professional women.

3. Connect consumers to the products and services they need through a sale. This step represents the most obvious stage of the marketing process – reach a customer and close a sale. You have to know where to reach your target audience, what to say that will peak their interest, and how to remove barriers to buying. Whether you are advertising on TV, writing an editorial column in the local paper, hosting a networking event or making a speech – you have to keep your focus on penetrating your target market and convincing them to make a purchase from you.

There is another key element to the marketing process that is critical and frequently overlooked… What comes after a successful sale? Businesses tend to focus on obtaining new customers to the exclusion of following through on their brand promises and retaining the customers they already have. You need to have a system in place to follow up with customers, encourage repeat purchases, invite referrals and ensure satisfaction.

As you grow your business, I urge you to examine every level of your company from your customer’s perspective. Successful entrepreneurs know that each sale has to be mutually beneficial and consumer-focused to move them a step closer to their ultimate dream of running a large, thriving organization. By thinking like a marketer and acknowledging your never-ending role as the chief salesperson on your team, you too can set yourself up to succeed down the road.

Small businesses fighting to survive

This is a great article I read this morning on MSNBC. It just goes to show that business owners have to be proactive and rise above the crowd to make it in tight economic times.

Enjoy!

PITTSBURGH - Small business is risky business these days.

Costs are rising, profits are shrinking and the ability of the big guys to keep prices relatively lower is drawing away customers.

Things are so bad that many small enterprises, which account for about 99 percent of the country’s businesses, say they are hanging by a thread that may soon snap.

“We are basically losing money every month, about $1,000 a month. It’s been about two, three months now,” said Tom Weisbecker.

Weisbecker owns Isaly’s in western Pennsylvania where patrons sit on green barstools at a Formica countertop and gobble the legendary Slammer, a sandwich stuffed with a half-pound of chipped ham and smothered in onions and cheese. Prices for many of those ingredients have skyrocketed in the past year.

“We know our customers are already feeling the pinch with the gas prices and when they go to the grocery store. We’re trying to hold out, but we can’t go on much longer,” said Weisbecker.

In barely a year, the cost of pork has jumped by 50 cents a pound, while beef is up 20 percent; a five-gallon jug of canola oil that used to cost $15 is at $40; a 50-pound bag of flour jumped from $7 to between $20 and $25.

And then there are fuel surcharges of between $5 and $9 that have been added to nearly all deliveries during the past six months.

In the meantime, wages haven’t grown and the job market is tepid, at best. On Friday, the Labor Department said the nation’s unemployment rate jumped to 5.5 percent in May — the biggest monthly rise since 1986 — as wary employers cut 49,000 jobs. Average hourly earnings for jobholders rose to $17.94 in May, up 0.3 percent from the previous month.

The feeble employment market may be making consumers less willing to spend. Also, paychecks aren’t going as far as they did before food and fuel costs rose.

“In a good economy, you can makes mistakes. But in a bad economy ... you can’t afford to make a mistake,” said Larry Lagattuta.

“I am three very bad decisions away from bankruptcy at any given time,” said Lagattuta, who has been running Enrico Biscotti Co. on the Pittsburgh Strip for 15 years.

Over Christmas, he made hundreds of shipments; 2007 was his best year ever.

The last quarter was his worst.

A National Small Business Association survey of 500 small business owners in February found that sales and profits had dropped and job growth was at the lowest point in 15 years, problems that could have a significant impact on an already shaky U.S. economy.

The survey also found that 71 percent of business owners have a “negative outlook” on the economy compared to 43 percent a year ago; confidence in their business’ success dropped from a high of 81 percent a year ago to 70 percent now.

A separate survey done by the National Federation of Independent Business found that for the first time in 25 years, small business owners cited inflation as their single biggest concern, rising from 4 percent a year ago to 14 percent in April.

The survey of more than 1,765 businesses showed that for the first time in a decade, skyrocketing insurance costs were not the No. 1 concern.

As gas and food prices climb, consumers are bypassing small businesses and seeking out bargains in places like Costco Wholesale Corp., which reported a 32 percent jump in its fiscal third-quarter profit, surpassing Wall Street expectations.

“The bad thing that’s happening to us, is the economy is driving people to shop at the big-box stores ... They can buy their staples and pick other things up so they don’t have to use gasoline,” said Cindy Baker, who has been a gift shop owner for 20 years, half at her current location, Collage, in Pittsburgh’s bustling Strip District.

“This is the first time, even taking 9/11 into consideration, I can say I’ve really seen a pinch in my business,” she said.

Just like airlines and car companies, some small business owners are shrinking and letting people go to survive the squeeze.

Last month, the Oklahoma City gas station owned for 22 years by brothers Harley and Hadley Hintergardt shut its doors for good because of rising gas prices. Harley Hintergardt said the station suffered because unlike big chain gas stations, they didn’t have a convenience store or full-service auto shop to fall back on.

“We were the victim of high gas prices,” Hintergardt said. “Everybody thinks that we were making the money selling at the pump at the gas station. And trust me, we were not.”

Small businesses, measured by the U.S. Small Business Administration as those with fewer than 500 workers, employ some 58.6 million people, more than half of the total U.S. labor force. In the past decade, they have generated between 60 percent to 80 percent of new jobs, and in 2004 all the new jobs.

While no data is available on how many small businesses have gone under in the past six months, federal officials are reporting a decline in the number of loans they guarantee, a consequence of both lower demand and tighter standards.

Experts say the shrinking demand indicates businesses are reluctant to take on debt and expand. Many would-be entrepreneurs are hesitant to open new businesses.

Eric Bradlow, a marketing professor at the University of Pennsylvania’s Wharton School of Business, said that historical data suggest that 90 percent of new small businesses shut down in the first year. Meanwhile, a Small Business Administration study found that one-third of new small businesses close within two years and only 44 percent survive four.

“Anecdotally, you hear that this is a very difficult period because of higher gas prices and higher component prices ... definitely in the past 10 to 15 years,” says Bradlow, who is also a director in Wharton’s Small Business Development Center.

It’s an environment that also makes it difficult for small businesses to raise prices to cover their costs.

The Pittsburgh Popcorn Company is feeling that pain. It opened on March 1, since then, the price of packaging tins has tripled. Other food costs have risen between 5 percent and 30 percent, the hardest hit being canola oil and chocolate.

The company’s owners, Janelle and Rob Day, are reluctant to raise prices, though. The enterprise is new and they are afraid of driving away patrons.

“I want to attract customers, that’s my primary goal,” Rob Day said.

Only when it is certain people will keep buying, will Day raise prices. “Whether that’s a month, or two months or three months, I don’t know,” he says.

Not all small businesses are feeling the pinch, however. Those that cater to the wealthy or have niche products may be having a less hard time right now than food or apparel stores.

“Business has actually been steady for us. We haven’t seen a large drop-off,” said Bradley Bodart, who owns Daly’s Pen Shop in Milwaukee. “Our customers tend to be more well-to-do, people who don’t shy away from a $600 pen, so they’re not too affected by gas prices.”

Bodart understands that people are surprised by his success.

“I see people walk by the store and they whisper, ’How does that place stay in business?”’ he said. “It’s because it’s a niche business. There aren’t too many people about to start up a pen shop.”

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.