Risks and rewards

Risk and Reward
By Reed Sawyer

Every transaction involves risk and reward. If you sign up for a new cellphone, you are taking the risk that: A) the cell phone will work. B) The network will be reliable, and C) that your information won’t be stolen by someone else because the network is insecure. Why do you buy? Because you believe that the risks are outweighed by the rewards. If you didn’t believe that, you would never buy a product.
Since the fear of pain is always greater than the desire for gain, eliminating risks or minimizing risks is a more effective sales tool than emphasizing rewards. In other words, you must acknowledge the risks, address them, and minimize them before you tell about the benefits.
How do we do that?
1) Realize that there are always subconscious fears that lurk underneath the surface in a sales presentation. If you can bring those out, and eliminate them by giving information and asking questions, you can remove the risks.
a) You can’t tell someone that there are no risks. Instead, bring out the most commonly perceived risks and ask questions to impart information and the client will remove those risks. (If I tell you something, it might be a lie. If you tell me, it is always the truth, according to you. Let them be the truth teller here and have them eliminate the risks by answering your questions.)

Here is an example: By using a vacation club membership, you can save multiple thousands of dollars over the course of your membership. What are the perceived risks? It might be out of business in a year. State that it has had the same address and phone number for the last 30 years, and ask the client if they feel comfortable with a business that has kept the same phone number and address for 30 years? Is that an indication that they are stable? Does that indicate that they will be around for a long time, if they have been around for a long time already?

By giving a factual statement, and then asking the client to interpret that, you are having them validate the truth. If they say that they feel very comfortable with the fact that it has had the same address and phone number for 30 years, you have eliminated that nagging doubt. After all, they said it, so it must be true.

2) Ask if there are any other concerns? If you do this in a sympathetic manner, they will not feel that you are using high pressure tactics, but that you are trying to help them be an informed consumer. If there are no other concerns, try a trial close. “Are there any other concerns that would stop you from taking action today?” Then…shut up and listen. If you keep talking they will use your talking to stall. If you shut up, they will answer, hopefully with another objection. If they don’t have any objections, you will then need to discern if they are ready to proceed, or if your benefits are large enough to overcome their buying process objection (no one wants to be sold, but everyone wants to buy.)
3) If they raise an objection, simply do the backtrack, conditional close technique. Use their exact words of their objection, (“the price is too high”) and phrase it in the form of a question, “So, the price is too high? Assuming we can deal with that, are there any other objections?” Since most people have a processorial objection to any closing, they might have just thrown out an objection without thinking of it. By using their exact words, in the form of a question, they are hearing their own voice raise the objection. If it sounds silly to them, you can just go past it and move on. You haven’t lowered the price, you have handled the objection. If price really is the objection, raise the benefits, do not lower the price. This is a conditional close opportunity, and you can move forward with it.

By getting the risks taken care of first, you eliminate that fear, and allow the benefits to be larger than the costs. If you don’t manage the risks, they will be unsettling and cause a lost sale.

Risk reversal:
Risk reversal is taking the risk out of the equation for the buyer, so that there is NO risk to him, and all of the risk is assumed by you.

Example: "You must experience 100% satisfaction with this mattress, or we will give you back your money, and give you $20 for your trouble."

Why would you do a risk reversal, (Get Jay Abraham's book, "Getting Everything you can out of all you've got" for more information)? To completely remove the risk from the buyer so that there is no reason for them to not purchase.

Are there other risk reversal techniques?

What about: "If you are not satisfied within the first two weeks, return this item to the store for a full refund."

"You will experience a 20% improvement in your sex life after trying these pills, or you can return the unused portion and get all of your money back."

"This will be the best listening experience you have ever had in a portable sound system, or you can return it within 30 days and get a complete refund."

What you are doing is letting the buyer know that they don't have anything to lose. They have no risk. Now, if you have a great product, you will always have some people that return it, no matter how great the product is; however, since your volume will be increased so much, it is worth it for the small returns that you will have.

If you have a terrible product, and you know that it will make people unhappy, a risk reversal technique is a terrible idea, because people will demand their money back, and/or put you out of business.

Risks and rewards

Risk and Reward
By Reed Sawyer
Every transaction involves risk and reward. If you sign up for a new cellphone, you are taking the risk that: A) the cell phone will work. B) The network will be reliable, and C) that your information won’t be stolen by someone else because the network is insecure. Why do you buy? Because you believe that the risks are outweighed by the rewards. If you didn’t believe that, you would never buy a product.
Since the fear of pain is always greater than the desire for gain, eliminating risks or minimizing risks is a more effective sales tool than emphasizing rewards. In other words, you must acknowledge the risks, address them, and minimize them before you tell about the benefits.
How do we do that?
1) Realize that there are always subconscious fears that lurk underneath the surface in a sales presentation. If you can bring those out, and eliminate them by giving information and asking questions, you can remove the risks.
a) You can’t tell someone that there are no risks. Instead, bring out the most commonly perceived risks and ask questions to impart information and the client will remove those risks. (If I tell you something, it might be a lie. If you tell me, it is always the truth, according to you. Let them be the truth teller here and have them eliminate the risks by answering your questions.)

Here is an example: By using a vacation club membership, you can save multiple thousands of dollars over the course of your membership. What are the perceived risks? It might be out of business in a year. State that it has had the same address and phone number for the last 30 years, and ask the client if they feel comfortable with a business that has kept the same phone number and address for 30 years? Is that an indication that they are stable? Does that indicate that they will be around for a long time, if they have been around for a long time already?

By giving a factual statement, and then asking the client to interpret that, you are having them validate the truth. If they say that they feel very comfortable with the fact that it has had the same address and phone number for 30 years, you have eliminated that nagging doubt. After all, they said it, so it must be true.

2) Ask if there are any other concerns? If you do this in a sympathetic manner, they will not feel that you are using high pressure tactics, but that you are trying to help them be an informed consumer. If there are no other concerns, try a trial close. “Are there any other concerns that would stop you from taking action today?” Then…shut up and listen. If you keep talking they will use your talking to stall. If you shut up, they will answer, hopefully with another objection. If they don’t have any objections, you will then need to discern if they are ready to proceed, or if your benefits are large enough to overcome their buying process objection (no one wants to be sold, but everyone wants to buy.)
3) If they raise an objection, simply do the backtrack, conditional close technique. Use their exact words of their objection, (“the price is too high”) and phrase it in the form of a question, “So, the price is too high? Assuming we can deal with that, are there any other objections?” Since most people have a processorial objection to any closing, they might have just thrown out an objection without thinking of it. By using their exact words, in the form of a question, they are hearing their own voice raise the objection. If it sounds silly to them, you can just go past it and move on. You haven’t lowered the price, you have handled the objection. If price really is the objection, raise the benefits, do not lower the price. This is a conditional close opportunity, and you can move forward with it.

By getting the risks taken care of first, you eliminate that fear, and allow the benefits to be larger than the costs. If you don’t manage the risks, they will be unsettling and cause a lost sale.

How do you price your business for sale?

A lot of business owners have no idea what their business is worth. As a former business broker, I ran into the gamut of people that were ignorant of their business value.

The answer, of course, is that a business is worth what a willing and able buyer will pay a willing and able seller.

However, there are some objective factors to consider. If you are a small business (under $1 million in sales per year) the typical way to consider pricing is using Sellers Discretionary Earnings (SDE). SDE is defined as your net profit PLUS your salary. The value is between 1 to 3 times SDE.

Why the variation? If you have an established business with a large number of buyers that use your services or products regularly, you have a fairly stable business. If you have a company that has a limited number of customers, and your product is based on ever changing technology...you could be obsolete in a month.

Larger businesses, up to $30,000,000 in annual sales, use a different method. They look at Earning before interest, taxes, depreciation and amortization, or EBITDA. In those cases, the selling price is typically three to five times EBITDA.

There is also the issue of owner expertise. If you have a unique skill set or knowledge base that takes years to acquire, your business is limited to buyers that have your same knowledge and skills. You can train a key employee to learn your skills, and have them be included in the purchase. The downside, of course, is that if they acquire the skills, and they are entrepreneurial, they might decide to open their own business, or take the skills that you paid to teach them, and go to a competitor.

These are options for selling your business if it is profitable. What if your company is NOT profitable?

If you have assets, you can do an asset sale. You can sell the assets for pennies on the dollar. If you are purchasing assets, you can purchase the assets in an equity purchase, for pennies on the dollar, and do a firesale of the assets that you don't want, and keep the ones that you do want. It was done in the 80's for corporations and acquired a bad reputation, but it is a perfectly valid manner of increasing your wealth.

If your company has business assets, can you "partner" with another company that is having financial difficulty, to save your business, and theirs?

Example: If you collect your customers name and phone numbers, and have a good relationship with them, can you send a mailer to them offering bundled discounts on your business, as well as the services of another business? Can you sell your mailing list to another company? Can you do a Point of sale referral to other businesses so that every purchase includes a coupon to another company? Can you sell these services to another company to increase your volume and/or keep your company afloat? (It must be a compatible business.)

If your company has unused assets, can they be sold for cash, trade, or services to cut your expenses and raise revenue? (Do you own an empty warehouse that you are not using, or need in the near future?) Can you sell it, or lease it to another business?

Don't trust their books! As a business broker, I discovered that some sellers were lying cheats. They had one set of books for the IRS, one set of books for themselves, and another set of books for their partners. Obviously, I would not trust a thing that these people said. If you are selling a business, you should have accurate and honest records. It is too great of a liability for you to fudge the books. I always told my sellers that I don't care WHAT they actually made, the only books that we would use would be the ones that they shared with the IRS.

If you are thinking of selling your business in the near future, proper record keeping and honest accounting are a pre-requisite, and your accounting system must be easily accessible to potential buyers (after they have signed a non-disclosure agreement).

In summary; if you are wanting to sell, you must show profits, or be prepared to take a huge loss. The more open and transparent your accounting system, the more money you will receive, and the more transferable your business, the easier it will be to sell.

Selling your business

Selling your business By Reed Sawyer If you are trying to sell your business, the first question to ask is; "Why?" If you have a profitable business, you are not selling it because it is not making money, so you must be selling it for another reason. Why?

If your time is so limited that you feel that you are going crazy, let me offer a different alternative. Hire an employee that can take care of some of the things that you do, so that you can spend some quality time doing something else.

I used to own a dry cleaner. I worked half days (from 7am until 7pm). I hired a part time employee to run the store for a few hours each day, and found that the extra time gave me a lot of stress relief. Can you train your employees so that you can take off early one or two days a week?

The second question is always; Is it profitable?

Profit is having more money than expenses. One of the ways to increase profits is by cutting expenses. If you have a 20% profit margin; (For every dollar that you bring in, you keep 20 cents, after all expenses), then for every dollar that you save, you have achieved the same effect as increasing revenue five fold. Since your selling price is based upon a multiple of your profit (or your gross revenues) a $1 savings in expenses could be worth up to $100 in sales price. Is that enough incentive to be a cost cutter?

How can you cut costs as a small business owner?

1) Printing costs: You need to print things, but your corporate culture should explain to your employees that they should think twice before printing, and that excessive printing cuts profits, and you are monitoring their printing. Any flagrant misuse of the printer for non-business functions will not be tolerated.
2) Vastly reduce printing costs. If you are using inkjet printers, research Continuous Ink Supply systems. For less than $100 you can get a CIS system that will allow you to reduce your color photo printing costs greatly. Instead of spending $50 for a thimbleful of ink, you can spend $8 for a large bottle. It takes a little more work, but it is definitely worth it. (I reduced my costs for large photos from about a dollar a page, to less than 2 cents.) Sometimes you have to invest to greatly reduce savings.
3) Coffee costs. It is possible to cut or eliminate coffee costs. How? By removing the coffee maker and/or having people pay for their own coffee by donating a couple of bucks a day for gourmet coffee. (Again, this is an area that is grossly abused in most companies. I don't provide coffee. If they want it, they can buy their own.
4) Smokers: Do you really want them? One of the biggest productivity wasters is having smokers wander off of their job for five minutes an hour for a smoking break. It is unhealthy, it is unproductive, and they are demonstrating that they make poor choices. If you institute a policy of no smokers, you will greatly increase your profitability. It is NOT discrimination to discriminate against smoking. Also, your health insurance costs will go down immensely.
5) Cell phone use. If your employees are on your payroll, they are NOT paid to answer their cell phones. If they answer their phones on company time, they are stealing from you. If they answer their phones while they are talking to a customer, and make that customer angry enough to leave, they are sabotaging your business. Insist that cell phone use be eliminated at work, and that a ringing cell phone is grounds for a disciplinary action, and that answering one, without express approval for medical emergencies, is grounds for termination. You aren't running a club, you are running a business.
6) Productivity: Prune your payroll regularly of the people that waste your time and money. If they don't contribute enough each and every day to double the cost of their salary, expenses, and benefits, you have to analyze if you want to pay for their services.
7) Outsource: If you have a need for specific services on a regular basis, but not a full time basis...consider outsourcing. You don't need to have a graphics department if you are a regular business, you just need to be able to hire a company that does graphics at a great price. Outsourcing will seem expensive, at first, but a close analysis will probably reveal that it is more profitable to hire the best at reasonable prices, than to have low skill people that are accountable to you. (Also, if you are working with a company, you can give them specs, and have them fill it.)
8) Come in from the monorails: When I was putting myself through school at Disney World, they had the trainers do an exercise that was so simple that it was brilliant. Come in from the monorails. This meant that our training supervisor had us look at things the same way that our guests did. We drove out to the monorails, and came in as a regular guest did. We discovered, by looking with fresh eyes, that we saw things that we didn't see each day.
Take the time to put on your fresh eyes and see things as a new customer does. Is your sign clean and spelled correctly? (You would be amazed at how many times a million dollar business has incorrect spelling on their marquee.) Is your entry area clean? Does it look professional? Can you see yourself, as a customer, being impressed? If not, why not? What can you do to improve for free or cheaply to make it look professional.

In summary, the easiest way to get a business ready to sell is by increasing profitability by decreasing expenses. It is going to be hard, but if every dollar saved increases your sales price by up to $100, it is worth it to cut costs vigorously.

Micro expressions: Your face doesn't lie.

In the recent television series, "Lie to me", Dr. Cal Lightman uses the reading of "micro expressions" to determine if a person is telling the truth, or lying.

The expression for "disgust" is: The nose is wrinkling, and the upper lip is raised.

The theory is that micro expressions are universal, and, once you learn them, you can determine the emotion that a person is feeling, at that moment. A micro expression will appear on a persons face for a fraction of a second, and, if you are watching closely, you can observe that expression and know exactly what that person is feeling at that moment.

What does this mean to you? If you become adept at reading micro expressions, you will KNOW what a person is feeling, and you can use this information to help them in a sales transaction, win a poker game, or avoid a fight.

The expression for sadness is: Drooping upper eyelids, losing focus in eyes, and a slight pulling down of lip corners.

The expression for happiness is: Crows feet wrinkles, pushed up cheeks, and movement from muscle that orbits the eye.

The expression for fear is: Eyebrows raised and pulled together, raised upper eyelids, tensed lower eyelids, and lips slightly stretched horizontally, back to their ears.

The expression for surprise is: Eyebrows raised, mouth open, and eyes widened.

The expression for Anger is: Eyebrows down and together, eyes glare, and a narrowing of the lips.

The expression of contempt is: the lip corner is tightened, and raised on only one side of the face.

Do you need to know all of these micro expressions to become a good salesperson? Absolutely not, but they are another tool in your toolbelt that will help you determine a person's true feelings, because if you are trying to help solve a clients needs, one of the first things that you have to do is get beyond the facade and discover the problem.

Lying by a client is one of the first methods used to mask their hidden emotions, because they don't trust you. Once you start to ask questions, and discover their concerns the facade will come tumbling down, and, if you are truly concerned with their well being, you can help the client achieve their desired results more quickly.

This is not a "hard science", and results vary, but micro expressions are a window to the soul that most people have not learned to conceal, and it could greatly assist you in your quest to solve their problems.

Using criteria words to establish rapport

People like people...like themselves. One of the ways to establish rapport, almost instantly, with buyers is to be just like them. Since it is impossible to metamorphasize into that person physically, we can't be "just like them"...or can we?

If you use criteria words, you will sound just like the buyer, which is as close as we can get without plastic surgery.

What are criteria words? A criteria word is a unique word that the subject uses periodically, that "define" them. They might use it often, or seldom, but when they do, it is a unique word or usage of words that is part of their internal vocabulary.

For instance, a jock might use the word, "blitz" in their conversation. They are using it to describe an all out pass rush, or a promotion that goes all out. If they use that word, you can use it too, in the same context that they use it, and the buyers will have a physiological reaction. They will think, "You are just like me!" Their eyes will dilate, they will nod, their cheeks might flush...and they will accept you as an equal.

When this happens, you will have lowered the pyschological self defense barriers, for about 20 seconds. You can impart a message, or statement during this time and there will be no filtering...it will be viewed as a factual statement.

How does this help you?

While you are talking to the client, you want to be listening, intently, for their criteria words. When you hear one, memorize it. (Unfortunately, unless you are on the phone, you can't jot this down on a note.) Once you have three or four criteria words memorized, you can start making statements that will be accepted as factual.

Example: Criteria words are: Hip, crazy.
Buyer example: We went to this really hip little place in the valley that had crazy art on the wall.

You follow with: This restaurant is a hip place that has crazy good food. You will enjoy it.

Analysis: They used "hip" as an adjective for good. They used "crazy" in the same manner. By using both criteria words in the same context, you have just used THEIR words to make a positive statement, and they will believe it.

If you start small, and start building towards larger statements of fact they will "own" the statement, and it will be true. After all, if they "said it" it must be true. Right?

Caution: Practice makes perfect, and never use this technique for evil, only for good purposes, and to make a sale.

Don't be a commodity

What exactly is a commodity business? A commodity is a fungible product that can be bought or sold, and is done so at the lowest possible price.

In a perfect market (such as the stock market), a commodity is bought and sold daily, and it makes no difference who provides that commodity, they are all deemed to be equally valuable. (Think crude oil, orange juice, pork bellies, corn, etc...)

Isn't that what you want? To have your goods and services sold? Yes, but the second part of that equation is what kills you; at the lowest possible price.

How do you avoid being a commodity? One of the ways to avoid being a commodity is to be unique. Upscale romantic restaurants offer fine dining, at prices that are multiples of a basic fast food experience. Why? Because they have created a unique ambience, experience, and culture that allows diners to know that they are getting more than a hamburger and fries...they are getting an experience. When the romantic restaurant rose above being just a food purveyor, and became an entertainment/experience purveyor...they stopped being a commodity.

Vangie Berry used to say, "The best are always free. The value of their service more than pays for their fee." If you want to NOT be a commodity, one of the options is to be the best at your profession.

Think of attorneys. There are thousands of attorneys that are scrambling to pay their bills, and then there are attorneys that have people lining up to hire them, at exorbitant fees. Why? Because, in law, second place means that you lost. They can afford to charge huge fees because their clients reasonably expect them to win. In law, winning is everything. So they can charge the fees that they want, while other attorneys are giving away their services.

What are some ways that you can "de-commoditize" your business? One technique, that has been shown to be profitable, is to offer excellent client service. One of the ways to do that is to find out EXACTLY what the client needs, by asking them open ended and closed ended questions to probe and discover needs that the client might not have realized. I have included a link to a video that explains this in detail. http://www.youtube.com/watch?v=HX-ePkaFTOg

Years ago, at the height of the mortgage refinance boom, I was working for a lender in Colorado. I complained to my boss that we had too much competition. He rebuked me and stated, "If you give the client service that is better than anyone else, you have no competition".

How do you do that? By asking a series of open ended, and closed ended questions to discover exactly what the client needs, and giving them a unique solution. When you do that, they will refuse to go to anyone else.

In summary, if you want to avoid being a commodity, be special, be unique, and give such great service that the client will refuse to go anywhere else.

Performance

Dr. Pete Lorins stated that Performance = Motivation X Ability X Opportunity.
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Here is a link to his article. In it he describes the best ways to maximize performance. http://brainstormcapital.blogspot.com/2011/05/performance-motivation-x-ability-x.html

It is not just enough to have ability. The world is full of failed geniuses. It is not just enough to have motivation. There are millions of people that are starving right now, but have no idea how to take their motivation and make millions from it.

The biggest challenge is the opportunity.

Let's define opportunity. Opportunity is having a great idea, and the capacity to transform that idea into reality. It is the second part of that equation that stops most people.

What would happen if you could take your motivation, ability, and opportunity and combine them in a manner to make your baby idea grow into a profitable business? You would have success.

Brainstorm Capital Group is dedicated to helping entrepreneurs, and potential entrepreneurs turn dreams into reality.

How do we do that?

A business needs several things to get started and succeed.

It needs Capital. Without capital, no business has the money to begin operations, let alone create the product necessary to sell. Fortunately, in this internet age, it is possible to sell products/services with little money by making use of the available resources and maximizing their effect. (This takes expertise).

It needs Expertise. I used to work for a business process outsource provider that had the knowledge and skill sets to take other people's ideas, maximize them, and create a new business model. It benefited all parties, because it used expertise to take a raw idea and monetize it. Expertise is needed to start a business, structure it, create products, and market them. Most individuals do not have this expertise, which is where an operation like Brainstorm Capital Group is needed.

It needs a venture. If you have a vague idea, but no firm grasp on how you will produce the product/service, or market it, you have a dream, not a venture.

Brainstorm Capital Group is the bridge builder to put the inventor, investor, and the expertise together to create a new business, or help an existing business thrive.

If you are interested, listen in to one of our new telinars/teleconferences coming soon. Please contact Dr. Pete Lorins at (407) 272-0873 for more information.

Bin-:Laden's death

A lot of good people are conflicted with the news of Osama Bin-Laden's death. They rejoice that no more innocent people will be killed, but they do not rejoice at the death of anyone.

Each of us has a social contract with the rest of the world.

1) Do unto others as you would have them do unto you.
2) Protect women and children.
3) Don't lie, cheat, or steal.
4) Love others with no conditions.
5) Make the world a better place.

There are sick people that delight in inflicting pain on others. They are outside the standard deviation of normal behavior, and are called deviants. Some of these sick and twisted people do not like to think of themselves as cancers, so they attempt to justify their deviant behavior. Osama Bin-Laden not only despised civilization, he also despised his own people, and would kill anyone that didn't agree with him completely, or show "proper" respect to him. (He would kill Muslims with equal vigor as Christians and apostates.)

By killing innocent women and children, and recruiting others to kill innocents, he removed himself from the social contract and became, in effect, a pirate; a terrorist, and a cancer. There is no possibility of rehabilitation, remorse, or contrition. He had to go.

When a person that has removed himself from the social contract is killed, their death should not be treated with dignity, but should be a warning to those that might follow him. "This is your end, if you follow this path."

In the old days, pirates would be beheaded, and have their heads put on a pike, left at the city gates, to act as a warning to prevent further piracy.

The British, at the turn of the 20th Century in Palestine, would dip their bullets in pigs blood, and bury terrorists in pig carcasses, and ADVERTISE that fact, to act as a deterrent to potential terrorists that they would not be treated as martyrs, but would be banished from paradise forever.

Let's use every psychological weapon that we have to stop the spread of terrorism, and prevent innocent women and children from being killed by these madmen.

What are some of the ways to do that?

1) Use an aggressive education program to transmit native language information about Islam to affected countries. The truth shall set the ignorant free.
2) Use an aggressive education program to let foreign governments know that we take a stand against terrorism, and that "they are either with us...or against us."
3) Treat all terrorists with contempt, and use bullets dipped in pig fat, and bury dead terrorists in pig carcasses, and ADVERTISE that fact, to discourage other muslims from committing acts of terrorism.
4) If we are in a war with Islamofascists, treat it as a war, and suspend "racial profiling" protection in airports, bus stops, and any public gathering. If they are Muslim, they are suspects.
5) Do not give terrorists/pirates the privilege of a civil trial. Try them in a military tribunal, behead them, put their head on a pike, and place it at the city gates. It will serve as an advertisement to prevent other terrorists from becoming terrorists.

If a person chooses to violate the social contract, they lose their rights to be treated as a human being.

I wish that we didn't have to do this, but we must protect women and children from being killed.

The NFL lockout

The NFL is in a lockout with the players. The most contentious issue seems to be that the owners want to increase the number of games to 18, while the players oppose this idea.

What are the advantages, and disadvantages, to the football audience of 18 games?

Advantages: There would be two more games of football.

If this starts earlier in the year (August) then there will be Southern teams that will have an advantage with the summer heat. There is also the issue of player safety. (Yes, players have died in practice in the heat.)

If the games roll into January/February, then we will have Northern teams that will have an advantage with the cold weather. Also, there is nothing fun about watching a game played in freezing weather, snow, and mud. Unless the games are going to be played indoors, it appears that there is no discernible advantage to the fan of playing an extra two games.

Disadvantages: There would be two more games of football.

Football is a violent game, and after a lengthy season, the human body breaks down, and runs out of gas. If we had two more games, the skill players would be so beat up that injuries would limit their contributions, and we would be playing with backup players. This would not just be for the guys that touch the ball, we would also have backup players that would have to step in for the offensive and defensive linemen. In other words, everyone would be hurting and need to have lesser skilled players that could step in.

This means that we would have a lesser quality product to cheer. (Yes, there are always injuries, but why devise a system that guarantees a worse product?)

In summary:

I love football, but quality football games require quality players, and a longer season means that injuries would force teams to use more replacement players, and we would end up with a less exciting game.

Let's not do this, please.

Direct response advertising

Are you a business owner? Do you have direct response advertising? If not...why not?

What is "Direct response advertising"? It is taking action right now, in direct response to your advertisement/pitch.

When you are making your pitch, you are asking for a buying response...right then. If they want to think about it, inquire about the objections (if you are doing this in person), and close. A "think about it" translates to "no".

If you are running an advertisement, you must ask for a response right now, create urgency, or they won't buy. (Use "Free widgets for the first 10 callers", "Today only", or "While supplies last" to create a sense of urgency and get those phones ringing.)

The alternative is to place "awareness" ads. These ads create an awareness of your company that might help to build credibility, but they don't generate sales by themselves. You must use alternative sales methods to generate sales when you are using "awareness ads". (Examples of these would be having a sales staff, or retail location.)

An example of a bad advertisement strategy is to follow the "Coke Zero" approach, which shows their bumbling brand managers that can't tell the difference between Coke and Coke Zero. Not only does this not create a sense of urgency, it also leaves the impression that there is no discernible difference in taste between Coke and imitations.

Be careful on how you spend your advertising dollars. Always ask for a response...right now.

Branding your business

In the days of the old west, cattle were branded with a red hot piece of iron to let other ranchers know which cattle belonged to which ranch. A seasoned rancher could, at a glance, read the brand.

We have now become more sophisticated, and less excited about brand awareness, but it is still important. If a customer sees your meme/logo, and hears your product name 7 times, they are more likely to buy.

However, this is just a door opener. Your ads MUST seek action NOW. If you are trying to build brand awareness, it doesn't always translate into sales.

A good example and a bad example. Coca Cola used to produce magical ads, in days gone by. "Have a Coke and a smile" is an example of a great tagline. You instantly associate drinking a Coke with smiling. Since everyone wants to smile, everyone should want to buy a Coke.

However, they have now started to try to advertise to idiots with their "Coke Zero" ads. These advertisements use two bumbling idiots, that are supposed to be brand managers that are so stupid that they can't tell the difference between Coke and Coke Zero. What is the message? Coke is for idiots.

When you create an ad, do a mockup, and ask ten people, "What does this mean to you?" If their answer doesn't involve some method of "I want to buy that...NOW!" then it's not a good ad.

You want to create urgency, value, and a solution within each ad, so that the buyer will want to buy now, and buy your product.

Do not ask an employee (that is dependent upon their livelihood on not upsetting you) to give you an objective opinion. Instead, ask random people their opinion, and make it simple to do so.

"Just doing a marketing test...what does this ad say to you?"

Keep it simple, make it fun, and make it imperative that they buy now, and your ad will be successful. (Track it, and make sure that it pulls results.)

Force of will

An entrepreneur must have the "Force of Will" to succeed. That means doing what other people won't, waking up when others are sleeping, working when others are partying, and treading that fine line between having the customer like us...and asking for the sale.

When you do what others won't, you will get the rewards that others don't.

I am reminded of the scene in "The Usual Suspects" when Kevin Spacey is talking about Keyser Soze. He was talking about when Soze's enemies invaded his home, and held his wife and kids captive. They thought that they could force Keyser to bow to their wishes. But they didn't understand "Force of Will". Keyser killed his wife, kids, and all but one of the invaders, leaving one to go back and tell his boss that they must leave or he would hunt them down and kill them, their families, their neighbors, and everyone that knew them back to three generations. http://www.youtube.com/watch?v=BgkBpWc8ngI

I'm not saying that is a correct methodology for conflict resolution, but our "Force of Will" should be as strong (if not as violent), as this.

Are you tired? Keep on working. Are you discouraged? Keep on selling? Would it be easier to stop? Don't. Never give up. Never stop. Never take the easy way out, if the hard way is the only way to accomplish your task.

When you do that, you will begin to realize that being an entrepreneur is more than just opening a store...it is changing your life into something totally different.

Are you ready for the challenge?

BE LIMITLESS! :-)
In life you can only ever be scared, when you believe in limits.

You can only ever feel lonely, when you stop doing things.

...You can only ever become bored, when you no longer follow your heart.

And you can only ever get overwhelmed, when you think the illusions are real.

Whew! Who knew it could be so easy to get back on track?
~The Universe

What exactly IS a Brainstorm Capital Group teleconference? It is a chance for a Subject Matter Expert (S.M.E.) to share their expertise with entrepreneurs and business owners.

Why is this better than just sitting down with your accountant or lawyer? Because there will be other business owners there, they will have questions that you might not think of, and the answers might just relate to you. Also, because you are having a teleconference with other entrepreneurs, the energy will be pulsing, and you will learn things that you could not possibly learn in a one on one with your information professional. (Also, it's free, did I mention that before?)

If you are a Subject Matter Expert, why wouldn't you want to shine in front of a group of high powered entrepreneurs. You might just pick up new clients, and the experience will boost your resume and credibility.

So, if you are a business owner, this is a great opportunity to pick someone elses' brain and learn from the best.

If you are a Subject Matter Expert (S.M.E.), this is a great opportunity to take your profession to the next level.

Creativity

A lot of business owners are looking for an inspiration for a new product idea, marketing plan, or simply a new design. They just feel that they aren't creative, and don't know how to be inspired. Here are a few easy tips.

1) Know your schedule: If you are a morning person, and you feel most alive/inspired/awake early in the morning, this is your time. Try waking up a little earlier and writing down a few thoughts that are NOT what you would usually think about. Creativity is nothing more than thought paths that we haven't taken before, and noticing the journey.

2) Let your subconscious do the heavy lifting. Joe White, a serial entrepreneur in Colorado, used to write down the top ten things that he wanted to do the next day just before he would go to bed. Then, while he was sleeping, his subconscious would start working on the list. When he woke up, before he got out of bed, he would just start jotting down his thoughts and ideas. He was one of the most organized people I have ever known, and he did more before 9:00 than most people did all day.

3) Read things you have never read before. Go to www.stumbleupon.com, enter your interests, and stumble away viewing sites that are wildly eclectic and totally different from anything you have ever seen before. Some will make you think, others will make you quickly click on the "stumble" button, leading you to new adventures.

4) Make a planned attempt to be creative. Use the "reticular activator" section of your brain to help you find answers that you hadn't even thought of before. (Think back to the last time that you bought a car. What color? What make and model? When you did that, did you suddenly notice all of the other cars that were just like yours? That is the "reticular activator" noticing new things, and suddenly finding them everywhere. It is one of the brains most powerful...and under-appreciated tools that allows you to notice things and be creative.) In other words, write down what you are looking to achieve, and suddenly...you will find it. If you don't know what you are looking for, you will never even come close to finding it.

5) Don't cherry pick ideas. If you do this diligently, you will generate 50 ideas that are terrible, for every good one. However, that good one might be a million dollar idea. Write them down, expand them, go into different applications of the idea, expand on those, write down their different applications, and expand on those, and then set it aside for a few days. What you will find, when you come back to it, is that the first idea probably stunk, but the tangential ideas that came out of the first one were better, and became better with each tangential turn. Don't be afraid to take the bunny trails when you are brainstorming, but record the journey, and revisit. Use your subconscious and the reticular activator to really ramp up the process.

6) Write when you are asleep. I will suddenly wake up at 4:00 in the morning, have a brilliant thought, and before I fully wake, I will write it down...and then go back to bed. When I am fully awake, I can then explore this fresh new idea, that was unemcumbered by common sense and logic. It had the freshness of a dream. Use the tools above to flesh it out, and explore the possibilities.

7) Find an idea partner that you can bounce these off of. A good brainstorming session will create ideas that are better than what you can create by yourself, and will lead you to action. (Ideas without action are just dreams. Ideas with action...change the world.)

8) Once you have written out your ideas in full, ask yourself, "What need does it fill?" "Find a need...fill a need" (Robots). If your application doesn't fill a need, then it is useless as a business application. However, don't throw it away, find a need that it DOES fill. Some of the greatest inventions didn't fill existing needs, but created something so fresh that the need became apparent after it had been invented. (VCR's, DVD's, Personal computers, cars, railroads, fire....)

9) Articulate the idea into a sentence. If you can't articulate it into one sentence, rethink it. The greatest ideas can be shared easily and expressed simply.

10) If you have developed your idea into a complete business application, now you need to bring it to market. That is where you need the Capital and Expertise of Brainstorm Capital Group to help you take it to the next level.

Do you need a partner to get started?

A lot of entrepreneurs are confused about starting a business. They have a great idea, but they don't know the next step. They think that they need something, but they don't know what they need. In frustration, they bring in a partner. Typically, they bring in the wrong type of partner.

A business partnership should be like a potluck dinner. Only invite people that bring something to the table that you need.

1) Capital: If they have capital, they are always welcome. You need capital to start the business, get it running, and pay overhead while you are getting up to speed. You need to be very careful to make sure that you don't give up too much control. Consult a professional to make sure that you know the parameters of a proper venture capital arrangement. (I recommend Pete Lorins of Brainstorm Capital Group).

2) Expertise: If you have never started a business, you want to have someone that has some expertise to help you avoid the pitfalls. If you have never run a particular TYPE of business, make sure that you bring in someone that knows that industry, if that is what they are bringing to the table. If you bring in someone that doesn't know anything to help you run your business, you are setting yourself up for failure.

3) Integrity: Can you trust them? The best way to insure that you are protected is to have the legal documentation to protect you, your invention, or investment. If you think that you don't need to worry about such things, remember the fate of Nikola Tesla, the inventor of electricity generation, and the richest man in the world. Wait a second-he died penniless. Ooops, he didn't protect himself. Don't set yourself up for failure. Make sure that you have the legal documentation to not get ripped off. See the story of Nikola Tesla here:

4) Marketing: You could have a partner that has no money, no ideas, and no expertise in running the business...but they can sell. If you can sell, all of the little problems solve themselves. The best way to know if someone can sell is to see if they have sold in the past. Have they sold your type of product? Is it similar, and can they use the same techniques. (A person that sells on tv, might be terrible at selling via seminars, or directing a sales force.) Get the right marketing skill sets.

If you have a partner that has: Capital, Expertise, Integrity, and Marketing knowledge they can help you move your business from a vague idea...to reality. The reality can be exciting.

You pay for the rent, even when the store is closed.

A long time ago, I owned a dry cleaner. I was open from 8 AM until 6 PM. Monday through Friday. A friend told me a profound truth. I was paying for the rent even when I was closed. I had unused capacity because I wasn't using the store, or the equipment after operating hours.

I hired a man to wash restaurant linens while I was closed, and my profits soared. Why? Because my fixed costs were already covered. My costs of the equipment had already been paid, I was receiving Incremental revenue. (See my previous post about incremental revenue: http://power2negotiate.blogspot.com/2011/04/incremental-revenue.html)

What is your unused capacity? Do you have equipment that is not being used? Do your employees have downtime that you could use to generate revenue? Do you have a parking lot that you could use to host a promotion for your business? What do you have that you can use to generate additional revenue each month?

Make a list of your resources. This list does not have to be done immediately, only when you want to have additional massive profits. However, be thorough and list things that you might not "own" but are perceived as owning. (Maybe you license software and have access to use it for purposes other than your main business function? If you have designers, can you outsource design jobs to them so that they are constantly busy? If you have marketers that are knocking on doors, can you have them hand out fliers that promote your business AND couple that with a coupon of another business so that you create value for BOTH businesses? If you have people calling in, or visiting your web site, can you have banner ads on your web site that direct them to complimentary businesses? Or offer them links to coupons so that they can buy more products?

One of the best examples that I know of unused resources being tapped is the advertising space over urinals in sports bars. I wouldn't ordinarily think of the space over a urinal as where I would want my product to be placed...but you have the customers undivided attention.

If someone can sell advertising space over a urinal, what unused production capabilities do you have in YOUR business?

Here is a list of some ideas:
1) Advertisements on your phone while people are on hold. Make it fun, enjoyable, and offer savings.
2) Put high profit margin items near the cash register, so that as people are buying, they can add an impulse item without thinking of it. (Think crying kids and candy bars at all times.)
3) Can you run double shifts, or have extended hours and create more revenue? (Also be aware that you have to have an adult that is responsible to watch the store. You don't have to do it yourself, but you are always responsible.)
4) Can you do a promotion once a month, to bring new people into the store, and create return business?
5) Are you advertising over your urinals?

Every hour of the day is a potential revenue builder. Every square feet of space that you own/rent is a potential revenue source. If you don't have your items on display, can you rent advertising space to someone else.

In summary, think of what you have, and what you are perceived as having. Make a list, be crazy, and maximize returns.

Tie downs make the sale

A tie down is one of the most powerful tools that you can use in sales. What exactly IS a tie down. A tie down asks the client to agree to a statement, and say "yes". Here is an example.

"It's a gorgeous day, isn't it?"

Of course it's a beautiful day. They will nod their head, or say "yes", just to be social. While they are doing that, they have allowed you access to their decision making process. You are now in control. As soon as you have gotten them to say "yes" once, you can do it again. Continue the process, and after you have gotten them to say yes to the little things, they will soon say yes to your product.

Here are some examples of the progression of tie downs in a conversation.

"This is a beautiful car, Isn't it?"
"This car would get great gas mileage and save you money, wouldn't it?"
"If you are looking for the best value, saving money at the gas pump saves you money each day, doesn't it?"
"Saving money each day, is more important than the initial purchase price, isn't it?"
"You want to save money, don't you?"

What you have just done, is get the customer to agree that a car that has good gas mileage is more valuable than a car that gets bad gas mileage, and that they should look for the everyday savings. By having them agree, either verbally or non-verbally, to each statement, you are leading them down a path to the sale.

The tie down asks, explicitly, for agreement on each statement. This can sometimes be seen as aggressive. It might even stop the sale.

Another technique is the "Inverted tie down". The inverted tie down puts the tie down at the front of the question, and is much more conversational.

"Isn't it a beautiful car?" By establishing a non-threatening style with the inverted tie downs, it is much easier to convert over to tie downs to close the sale.

Practice them regularly to establish agreement. When you have mastered them among your family and friends, now use them on customers, and watch your sales soar.

Coupons are free money

A lot of businesses use coupons to lure guests to their stores, or to increase sales. Other businesses complain that they lose money with coupons. The business owners that complain aren't doing it correctly.

A coupon is an incentive for new customers to use your business. However, you never structure a coupon to get just a basic item. You use coupons to encourage multiple sales. (A "2 for 1" coupon where they buy one pizza, and get the second one free means that the customer just spent $20, instead of $10.) A coupon where you give away a free meal, just for showing up, might get people in the door, but it costs you money.

In a previous article, I wrote about incremental revenue. http://power2negotiate.blogspot.com/ In this post I want to talk about how to use coupons effectively.

1) A coupon should bring people to your store. If it doesn't accomplish that, it is a failure.
2) A coupon should bundle products and services so that you increase revenue. (Giving away a free taco is NOT a coupon, it is suicide.)
3) A coupon should demand immediate action. This is not an attempt to establish "awareness" but to buy. (I don't need to put expiration dates on a coupon. I need all coupons to be profit centers, every time, and for every occasion.)
4) A coupon should bundle high profit margin items with low profit margin items to increase revenue...and increase profit. ("Buy a meal, get a free beer", "Buy two, get the next one free", "Free dessert with every family meal", "Buy three pizzas, get free breadsticks") By increasing the per head (dollars spent per customer) you are exponentially increasing the profit margin, and profits.
5) You MUST know your costs. What are your fixed costs? What are your incremental costs per unit? What is your shipping costs? What is your cost per sale to a new customer? What is your cost per sale to an established customer?
6) Your coupon must be an orphan. This means that it must NOT steal profits from the rest of your business, but must add profits by itself. If it does not, a coupon could put you out of business.
7) BUNDLE, BUNDLE, BUNDLE each service with another product/service to increase revenue. Always be thinking of giving a discount on the ADDITIONAL purchase, rather than the INITIAL purchase. $20 of revenue is better than $10 of revenue.
8) Take action NOW! Each coupon should have such an attractive offer that it brings people in the door.

If you use coupons correctly, each coupon will generate additional revenue...and be profitable. If you do it incorrectly, you will lose money on each sale, but you will make up for it in volume.