Mike Michalowicz's Blog, page 97

Arguing With Your Business Partner (It’s A Good Thing)

I have had multiple business partners over the years, and realized that the most successful businesses came from partners that I argued with. I believe, in fact, that arguing is one of the most important determinate of a successful business. But only if the arguing is rooted in one foundational value: it’s in the best interest of the company.

When you and your business partner argue on ways to advance and improve the company, you are aligned. In fact, you will likely find middle ground that is even better than your own independent ideas.

But when your arguments devolve to personal attacks, that’s when you are in trouble. That’s when the business suffers.

So go ahead. Argue. Just keep the arguing limited to ways to improve your company.

The post Arguing With Your Business Partner (It’s A Good Thing) appeared first on Mike Michalowicz.

Episode 17: Profitable Tax Deductions With John Thomas

Show Summary

John Thomas “JT”, the CEO of Deductr joins Episode 17 of the Profit First Podcast. JT talks about the different ways small business owners can maximize their tax deductions.

 

Our Guest

John Thomas or “JT” is the CEO of Deductr. JT has spent his career in small growth stage technology companies. When he isn’t helping independent business owners save time and money, he enjoys running, hiking and cycling in the beautiful outdoors of Utah.

 

Show Quotes

There are 3 general categories any business can deduct from their taxes – Expenses (travel, meals & entertainment, office equipment), Milage, Time

It all starts with tracking certain things in your business – if you’re not in the habit of tracking you are either missing out, or you’re guessing – which means you’re missing out as well.

It’s important to take a few moments and go through the steps to see if you qualify for certain deductions, because you may be entitled to much more money  than the standard approach may give you.

Anyone running a small business out of their home needs to take the “home office” deduction. It has to be a specific area in your home that is dedicated exclusively for business purposes.

If I take a business partner out to lunch at a restaurant, typically I can take 50% of that expense IF I have it documented (who it was, the business purpose, the receipt)

Tracking your time isn’t just about time management and productivity, it’s about validating you as a small business owner.

Small business owners are 3 times more likely to be audited than a W-2 employee.

Tip for the Day: If you hire an employee that’s a cultural fit, they will improve the bottom line more than a person who is not a cultural fit.

 

Show Links

JT’s Website: Deductr.com

Deductr on Facebook

Deductr on Twitter

 

Show Sponsors

Nextiva – VOIP phone providers for small businesses.

Fundera – Single source online funding for entrepreneurs. Also offers an adviser program for CPAs, bookkeepers and business coaches.

TSheets – The #1 customer rated time tracking solution!

The post Episode 17: Profitable Tax Deductions With John Thomas appeared first on Mike Michalowicz.

5 Secrets To Increasing Your Prices

It’s inevitable. We all have to raise prices at some point in order to stay solvent. It’s also inevitable that we’re going to agonize over the decision, worrying about what the net effect on our business will be. Here are some tried and true strategies I’ve learned that make your prudent business decision even more effective.

1. Create a new label. Language is even more powerful than we realize, and if you’re using the standard, generic industry label for your product, then you’re going to have a harder time charging a premium price. When I owned my computer forensics business, “data imaging” was the term the industry used for retrieving and storing information from a computer. I wanted to differentiate my services from the rest of the pack – and I added some bells and whistles that the other guys didn’t, and I called my service “data encapsulation.” When you use a new term, you can get a client to ask “what does that mean?” That’s a huge opportunity – the chance to differentiate yourself from the crowd and justify your premium price.

2. Don’t charge by the hour. Think about it – if you charge by the hour, the better and more efficient you become in your field, the less money you make. Bad scenario. Charging by the project rewards efficiency, because as your skills and speed increase, you’re able to complete more projects, which makes you more money.

3. Packaging/bundling. I worked with a client on his business model, looking for a way to improve his profitability. His problem? He sold iPhones on eBay, and there’s no shortage of people who were doing exactly the same thing, and that inevitably drives prices down. Our solution? He created a DVD that shared insider secrets for the iPhone, and he included it with purchases of iPhones. He bundled his products, creating a unique package that no one else could offer, and he was able to raise his prices and improve profitability.

4. Just do it. Don’t beat yourself up; don’t lose sleep over your decision. Here’s a secret – your best customers will be surprised that you didn’t raise prices sooner because they value your work. It’s possible that you may lose a customer or two over your increase, but those clients who leave are likely to be your problem children anyway. Also – a tip on a hybrid method of increasing prices – depending on your business, you may be able to introduce a price increase for new customers only and see how it goes, before increasing prices for existing clients.

5. Explain. Robert Cialdini, in his groundbreaking book, Influence, illustrates the importance of explaining your actions by using an example of a woman in line at a library copy machine. If she simply asks to cut in line, sometimes she’s successful. If she asks to cut in line and explains that she’s in a hurry, she’s successful 94% of the time. In the absence of an explanation for your price increase, your customers will invent their own. They may speculate that you’re greedy and taking advantage of them. If you take to time to explain why you’ve increased prices, though, you’ll find that your customers will accept the change much more easily. Cite your increased expenses, your expanded staff, and your commitment to improve quality, and your clients will support your decision.

To sum these tactics up, you have a responsibility – to yourself and to your employees – to run a successful business, and the success or failure of a business is due in part to the revenue it generates. It’s not immoral to turn a profit, and you deserve to be paid fairly for the hard work you do.

How and when you pitch the price increase may end up being what matters most in terms of its success, and thoughtful positioning of your business decision can determine whether or not your staff and your employees accept or reject your pricing. I heard a tale once – from an industry that shall remain unnamed – of a CEO who announced a hefty price increase to a room full of salespeople, coincidentally enough on the same day that he drove his new custom Bentley to work. His timing left much to be desired because it left his sales force with a price increase to explain to their customers and the belief that they were funding the CEO’s extravagant new car purchase. Choose your moment, explain your good reasons, and you’ll be surprised at how little pushback you receive.

The post 5 Secrets To Increasing Your Prices appeared first on Mike Michalowicz.

5 Steps To Take When A Great Employee Has A Bad Habit

About fifteen years ago, I owned a company with a small telemarketing division.  Of the four or so employees we had in that division, Bill was far and away the superstar.  He scheduled more appointments than anyone else, and he did it effortlessly, with no complaints.  He was the standout in that division, but there was one problem.  Bill didn’t shower.  Like ever.  He had a horrible body and clothing odor problem.  I didn’t realize how bad the problem was until I was approached by some of Bill’s coworkers and I checked it out for myself.  Sure enough, Bill’s odor made the work environment exceedingly unpleasant, and I had to find a way to deal with.

Here’s the good news:  I followed the strategies that I’m about to share with you, and completely resolved the problem.  Bill was clean as a whistle, and his coworkers were much happier.  Here’s how we got there:

1. Clarify the story in your mind.  Specifically identify the bad habit and identify the consequences of that habit.  It’s important to make sure that the trait that’s driving folks in the office crazy is, in fact, a habit, and not just a personality trait, part of your employee’s identity.  Habits are relatively easy to break … identities, not so much.  Keeping the consequences of your employee’s habit front and center forces you to deal with the issue (because you have a problem to solve) and helps you focus on what you hope to achieve in confronting the employee.  Once you’ve clarified the habit and its consequences, you’re ready to more forward.

2. Ensure confidentiality.  Whether it’s the employee whose habit is causing problems in the workplace, or whether it’s the staff member who brought the matter to your attention, it’s essential to keep personnel matters private.  You want your employees to feel like they can approach you with problems, and you want them to understand that if you’re forced to address problems with them, that their habits or shortcomings won’t be broadcast for everyone in the office.  Be discreet.

3. Don’t confuse the symptom with the disease.  What’s important here is to get to the root of the problem.  My telemarketer, Bill’s, problem was that he had terrible body odor.  The cause of that problem stunned me.  It turned out that Bill was living in a shelter.  I had no idea.  Because he typically worked 9-5, he couldn’t get into the crowded bathroom he shared with other shelter residents, so he was forced to cheese between getting to work on time or taking a shower.  The cause of Bill’s odor was his lack of access to a shower.  We changed his office hours to 12-8, and never had a problem again.   Easy solution to a difficult problem.

4. Pat on the back, kick in the ass, pat on the back.  This describes the approach you should take when you raise the issue with your employee with bad habits.  Start the meeting by taking the time to praise your employee and his or her importance to the company.  Then address the problem, while acknowledging that it may be a difficult, uncomfortable discussion.  Follow up by restating that the problem is minor, given the employee’s importance to the company, but that it must be resolved because they’re so valuable.

5. Make the connection between cues and routines.  Some habits are hard to break – harder than Bill’s problem.  Charles Duhigg’s book, Power of Habit, explains that habits actually have three parts – the cue, the routine, and the reward.  Disrupting this relationship can help when your employee is struggling to change.  Say one of your customer service reps is a stress smoker.  The routine is that a difficult client results in a relaxing smoke break (and temporarily decreased productivity.)  You have several options.  You could shift the employee to another area, one free of customer contact, or you could make the smoking area less relaxing, removing the positive reinforcement the employee currently gets.  The key is to break the routine.

At the end of the day, bad habits can be overcome.  It may be a frustrating and time-consuming endeavor, but it’s possible, especially for those great employees who are far too valuable to lose.

The post 5 Steps To Take When A Great Employee Has A Bad Habit appeared first on Mike Michalowicz.

Storytelling Can Kill Your Message

We tell stories because they paint pictures in people’s minds. When we get an audience – whether it’s one person or 2500 – thinking creatively and engaged in our story, then they’re active participants in our performance. Stories make our messages more memorable and persuasive, and they’re an essential element of public speaking.

We all know that there are times when stories fall flat, fail to convey a point, or even obscure a message. What’s gone wrong when the story kills our message? Keep reading.

1. When the story is all there is. Whether a speaker’s not properly focused or looking to stretch a speech, we’ve all experienced the flop that happens when a rambling story makes up the core of a speech. Even the most entertaining of stories is only effective if it’s used in support of some coherent, legitimate point. Stories should support a message, rather then being the entirety of the message, otherwise the speech becomes merely entertaining, rather than educational. When you’re preparing a speech, ask yourself what function each story serves, and if you can’t answer the question with a definite, productive function for a story, then the story may not belong. The story can’t be your core; it must play a supporting role.

2. When the story doesn’t compel the audience to act. The role of a story should be to illustrate or give an example of why your topic is important – why your audience should want to act after they’ve listened to you. A story should drive your point home in a way that simply stating the fact or listing reasons can’t do alone. Stories that fail to evoke an emotional response are a failure. Sometimes the solution can be as simple as making it clear why you chose to tell a particular story – what you want your audience to learn from each example you provide.

3. When the story overpowers the message. I’ve seen this problem crop up more times than I can count. Frankly, this mistake is typically the result of a lack of self control – when a speaker knows a story’s so compelling that he just can’t help sharing it … even though he knows full well that it’s somewhat off-topic, or worse yet, contradictory. Great speakers know how to cull through their stories and find the one that’s best suited to accomplishing a goal. Stories should support, rather than detract from a message, and when you’re polishing the final version of your speech, you must be ruthless. Cut any story that doesn’t serve a purpose.

4. When a story is disjointed or not meaningfully linked. Particularly in longer speeches, it’s essential to tie a story back into your message for your audience. You know why you selected any given story, but you have to make those connections explicit for your audience. Stand up comedians are masters at this tactic. They use call backs – references back to earlier themes or jokes – to weave a shared narrative for each performance. Move your audience through your speech, and connect all the dots for them. Pay attention to transitions between stories and your major points, and make sure that your audience’s journey is a seamless one.

5. When you’re the focus of all your stories. Yes, you may have been invited to speak, and yes, you may be the universally acclaimed expert in your field, but nothing turns an audience off quicker than the perception that a speaker is full of himself. Self-deprecation goes a long way, as does the selection of stories that don’t all feature you as the hero. Make sure you choose your stories carefully, pulling in, rather than alienating your listeners. If you find yourself saying “I” or “me” in every sentence, that’s a clue that your speech is too you-focused. Make sure your audience can relate to your subject by featuring stories that serve a purpose other than inflating your own ego.

Storytelling is how we preserved history before humans developed written language. Stories create the foundation and fabric of human relationships, and they’re key to creating connections among people all over the world. Storytelling is just one of the tools used by skillful public speakers, though, and the best speakers use stories carefully, deliberately, and with great effect.

The post Storytelling Can Kill Your Message appeared first on Mike Michalowicz.

Grow Your Business Faster By Paying Yourself

When I’m consulting with clients looking to invigorate and grow their businesses, one question I often ask is: “Who’s your most valuable employee?”  They inevitably give me the wrong answer.  They might wax poetic about their rockstar sales person or their dedicated assistant, but they’re missing an obvious point.  Entrepreneurs don’t realize that they, themselves, are their most valuable employee, and that is a short-sighted position.  You are your most important employee, and you need to treat yourself just as you would any other staff member who’s integral to the success of the company.

Entrepreneurs wear two hats (okay, it’s often more than that.)  You’re both an employee and a shareholder.  You produce the revenue, and you should benefit from that revenue.  Just as you’d nurture a star employee, and just as you’d expect a return on your investment as a shareholder in another business, you deserve – in fact, you’re obligated – to pay yourself for both of these roles.

Why should you pay yourself more?

To avoid being a crutch.

Make a list of your responsibilities and duties.  What would you pay someone to do all of that work?  If you’re not fairly compensating yourself, then you’re not running your business responsibly.  If you’re subsidizing your business by underpaying yourself, then your company is doing little more than limping along.  Paying yourself a fair wage forces you to run your business properly and profitably, and is inevitably better for your business in the long run.  Too many company founders suffer under the delusion that they must sacrifice income in order to start a business.  In fact, the opposite is true:  if you start a business and require it to be profitable from day one, you have a much better long-term outlook.

To make yourself replaceable.

Growth comes when you can hire an employee for part of your current workload and free yourself up for bigger and better things.  If you’re already paying yourself for the duties you’re hiring for, then it’s an easy transition.  If you’ve been volunteering your efforts, then you have to scrounge up the money for payroll – not an ideal scenario.  It’s not uncommon to see entrepreneurs running around like one-armed paper hangers, unable to see the big picture for all of their little daily duties.  You must be able to afford employees as you grow so that you can keep the big picture in sharp focus.

To keep from resenting your business.

I see it over and over: entrepreneurs who sacrifice their income to help their business limp along.  They end up caught in the perpetual cycle of the desire to grow and the frustration of seeing their unsustainable business be unable to support that growth they so desperately want.  If you’re getting paid fairly, you’re rewarding yourself for growth.  It’s responsible and sustainable, and it breeds success.

To become more efficient.

If you’re writing yourself a paycheck, then your business has to bring in money.  It’s that simple.  Without the pressure of expenses to meet, it’s easy to treat your business more like a hobby, rather than the entity that lets you afford to live.  As your business grows, you should also pay yourself more.  Your healthy business should pay you dividends that reflect your hard work, vision, and dedication.

Now you’ll notice that what’s absent from the list of reason you should pay yourself more is a fancy sportscar, or your impending 20-year reunion and your desire to impress the folks who sneered at you in school.  Don’t get me wrong, I get the appeal of success, however you measure that.

The reason I’m telling you that you must pay yourself fairly is because it’s better for your business, both in the short and in the long term.  Requiring your business to be sustainable is smart.  You’ll force yourself to find ways to economize and boost your efficiency.  You’ll find that you attract better employees if you realize the value of the work you’re asking them to do.  And you’ll realize that growth will perpetuate growth.  Creating good habits will yield benefits for the entire life of your company.

The post Grow Your Business Faster By Paying Yourself appeared first on Mike Michalowicz.

Episode 16: Tips for Starting A Profitable Business With Melinda Emerson

Show Summary

Melinda Emerson, America’s #1 Small Business Expert  joins Episode 16 of the Profit First Podcast. Melinda talks about what it takes to start a business, and how to successfully keep it going.

 

Our Guest

Melinda F. Emerson, known as SmallBizLady, is America’s #1 Small Business Expert. Forbes magazine named her the #1 woman for entrepreneurs to follow on Twitter. She has been a thriving entrepreneur for nearly 15 years and is an internationally known keynote speaker. Melinda’s online small business advice is widely read, reaching more than 3 million entrepreneurs each week. A pioneer in social media marketing, she is the creator and host of #Smallbizchat, the longest running live chat on Twitter for small business owners. In addition to being a regular columnist for the New York Times, she is frequently quoted by other media organizations, including The Wall Street Journal, Fortune, MSNBC and Fox News. She is the publisher of her resource blog, www.succeedasyourownboss.com, which is syndicated by the Huffington Post. She is also a regular contributor to Essence magazine and the lead instructor for the Black Enterprise Small Business University.

 

Show Quotes

First thing you want to think about when starting a business is what you want, and why you want it. It’s really about your life plan first, and then building a business that aligns with it. You DON’T want to trade a soul sapping job for a business that becomes a noose around your neck.

Go work for a business similar to one you want to start so you can gain a sense of understanding for how the business works.

The average business takes about $25,000.00 to start. To start a new business you have to have a life plan, financial plan, honest skills assessment, marketing plan (know who your paying customer is), and you should launch while working. 

It takes 12-18 months for a small business to break even, let alone replace your corporate salary, so it helps to keep those paychecks rolling as long as you can.

People let their fear of math be the reason why they don’t know what’s going on financially in their business – there is no excuse for that. By the 15th of the month you better know how well your business did last month so that you can make adjustments; successful businesses are run based on up-to-date financial information.

30% of your first investors are going to be people you know. If people that know you are not going to invest in you, chances are strangers will not invest in you either.

The more of a specialist you become the more money you can charge. What is it you can do to become the “Cardiologist” of your industry, as opposed to the general physician?

The riches are in the niches (bitches)

Tip of the day: Get into a rhythm with paying your bills. Let your money accumulate for a period of time, and then pay your bills; then let it accumulate again (every two weeks is recommended).

 

Show Links

Website: www.succeedasyourownboss.com

Facebook facebook.com/smallbizlady

LinkedIn linkedin.com/in/melindaemerson

Twitter @SmallBizLady

Google+ google.com/+MelindaEmerson

Become Your Own Boss in 12 Months: A Month-by-Month Guide to a Business That Works can be purchased from www.succeedasyourownboss.com and on www.amazon.com.

 

Show Sponsors

Nextiva – VOIP phone providers for small businesses.

Fundera – Single source online funding for entrepreneurs. Also offers an adviser program for CPAs, bookkeepers and business coaches.

TSheets – The #1 customer rated time tracking solution!

The post Episode 16: Tips for Starting A Profitable Business With Melinda Emerson appeared first on Mike Michalowicz.

Never Be Caught Short On Taxes Again With This Simple Trick

Death and taxes … the two things that are certain in life … and it’s as much fun to talk about one as it is the other.  Getting your tax liability under control requires planning and discipline, and it’s impossible to overestimate the importance of handling it properly.  I’ve seen more than one business go under because they can’t pay their taxes, and while there are nearly always other problems in those businesses as well, a massive, unexpected tax bill can throw any entrepreneur for a loop … unless you’ve planned ahead.  The problem is that bank balance accounting – if your tax money is included in your bank account – isn’t realistic.   You must find a way to separate out the money that you’re going to owe Uncle Sam.  Here’s my solution:

I call my plan the Thanksgiving dinner approach.  Work with me here:  on Turkey Day, we don’t eat off the tray that holds the entire turkey.  We don’t shovel in mouthfuls straight from the casserole dish of your mother’s sweet potato recipe.  We allocate turkey from the serving platter to individual plates.  If you think of your revenue as the turkey, you need to allocate that revenue to different accounts that serve different functions.

1. Create a separate account for your taxes.  

Every time (and I mean every time) you make a deposit into your regular business account, deposit 15% of the total into your tax account.  Now most of us pay a higher tax rate than 15%, but after you deduct your expenses, 15% of your gross revenue should cover your liability.  If you want a more accurate figure, a short conversation with your accountant can give you an idea of the percentage of your income that you should set aside for taxes.  It’s impossible to overestimate the importance of physically setting aside your tax money.

2. Call the account “The Government’s Money.”  

This concrete reminder that one of your roles as an entrepreneur is being an agent for the government helps you keep your hands off the money that you’re going to owe in taxes.  You’ll be much less likely to “borrow” from your tax account if it’s labeled as not yours.  The whole point of setting the money aside ahead of time is that it keeps you from spending it and having to scramble to cover the tax bill.

3. Realize that income tax is a little like sales tax.  

Okay, we all know that sales and income taxes are different, but it can help with your perspective if you think of the 15% of your revenue that you’re setting aside as a tax on all the sales you make.  Separating your “sales tax” out from the very beginning means that you won’t fall short when it’s time to pay the government piper, and it forces you to look at your business’ financial picture more realistically.

4. We all have to pay for our sins.  

Don’t jump the gun here; you’ll never catch me saying that earning money is a sin.  Far from it!  What I mean is that for businesses that are currently using their revenue to pay off debts, it may feel like a double whammy to set aside 15% of the money that you’re using to cover expenses.  It can feel like the money that’s coming in isn’t really income if it’s all going back out, but it is, and you will owe taxes on that income.  If you try to find a way around setting aside the full 15%, you’ll get caught short, and the IRS will get their share, one way or another.  If you consider nothing else sacred, you must respect the power of the government to get what they’re owed.

This whole approach to handling your taxes so that you’re not hit with an unexpected bill that you can’t afford to pay fits into a larger accounting philosophy that I call Profit First.  It’s a simple, yet fundamental, shift in the way we think about the financial health and priorities of our businesses, and it guides us to build wealth consistently and responsibly.  Making sure that you can afford to pay your taxes is essential to the success of your business and frees you up to focus on the important task of growing your company.

The post Never Be Caught Short On Taxes Again With This Simple Trick appeared first on Mike Michalowicz.

Trusting Your Gut Can Be A Dangerous Move. Here’s Why…

For the record, I’m a big fan of trusting your gut.  There are more success stories than I can count that rely on entrepreneurs who trusted their instincts and profited handsomely.  When you start a new business, full of vision and lofty goals, often the only thing you have to guide your decisions is your gut, and I counsel folks to embrace that – follow your gut and be bold.  Seek your success and reap the rewards.

There’s a point at which things change, though.  As your business grows, you have data – specific evidence of trends, successes, and failures – and you should begin to use the data to temper your instincts.  Go with your gut when you don’t have evidence to the contrary, but when you get to the point at which you can rely on facts and figures to support your decision, you’re foolish if you rely solely on your instincts.

Imagine a major airline that decided – based on the instinct of its owner – that the new strategy would be to focus on servicing small and emerging airports, rather than major cities.  The president of the company decides to forego the urban center of New York City in favor of the grass roots appeal of a small town in Nebraska.  Sure, there might be an argument to be made for extending service to those communities that are underserved, but abandoning the markets that generate the most revenue would be disastrous.  A major airline would certainly have the data resources to prevent such a disastrous decision, but that didn’t happen overnight.

Whether you own an airline or an accounting firm, you’re going to have to make choices that affect the future of your company.  Whether you’re deciding to hire or fire an employee, or whether you’re weighing the risk of expanding your product line, basing your decisions on what’s been proven to work is your best bet.  You don’t have to abandon your instincts altogether, but neither should you ignore the facts.

The transition from gut-based decision making to data-based decision making should be a gradual one.  As your business starts to grow, you should begin collecting any information that you think will help you make better decisions in the future.  Now, this may sound like a common-sense piece of advice, but it bears repeating.  Malcolm Gladwell’s Blink has been widely misunderstood as a book that champions instinct over all other decision making methods, but in fact, the folks with the best “instincts” are the ones who synthesize data and use that information to guide their guts.

While you’re building your data, that doesn’t mean that you stop trusting your gut, because the best case scenario for decision making is verifiable data … with your gut to temper that data.

Why is it so hard to get business owners to start collecting and analyzing data?  One of the reasons is that when your business is small – say under $1 million in revenue, you’re probably able to hold the information you need in your head.  But when you surpass that $1M mark, even the most astute entrepreneur needs some help in managing numbers, growth, trends, and results.

Also, when your business is small, it’s easier to land new customers (because they’re all new to you) and experience dramatic growth.  You’ll probably attribute your early success to your instincts, which isn’t necessarily wrong, but it can get you into trouble.  If you start believing that the same instincts that got you to $1M can also (without the benefit of hard data) get you to $10M, you’re probably overconfident.  The best decisions rely on the accumulation of information and the power of your gut.  Even if you’re certain that your instinct is about to lead you to fame and fortune, once you’ve owned your business for a while, the data exists that will support or counter your gut, and smart entrepreneurs use all of their available resources.

So here’s the takeaway:  start collecting your data immediately.  Today.  Figure out who your customers are.   Determine what your best-selling products are.  What trends do you see?  What marketing tactics have proven to be the most successful?  Amass your information and start your analysis.  If you find that you can’t answer the most pressing questions you face, then go collect more information and use the magic combination of great instincts combined with evidence to make the right choices for the future of your company.

The post Trusting Your Gut Can Be A Dangerous Move. Here’s Why… appeared first on Mike Michalowicz.

The Biggest Competitive Advantage Goes To Small Businesses

Every entrepreneur knows that starting and growing a small business is a challenge.  We don’t have the enormous resources – financial and otherwise – that the big guys do, and we don’t have the benefit of name recognition.  Being the underdog is tough, and there’s no denying it.

But small business does have one huge advantage:  we’re able to act much more quickly than a big business with layers of formal procedures that are required for any decision.  Small business can react with lightning speed, and while speed has long been an advantage of sorts, the current, rapidly changing business climate makes it not just a luxury, but rather a necessity.

Think about it:  if you’re not on Twitter and you decide that your company needs a Twitter presence, you could actually make that happen in a matter of minutes.  A big company would have dozens of hoops to jump through, and it might take weeks to actually get the account up and running.  You can act right away, and that’s to your benefit.

Consider the example of Kindle Unlimited, the new program for Amazon that lets subscribers read an unlimited number of books for a monthly fee.  While authors like me, with self-published books, can make the decision to participate in the program right away, the large publishing houses haven’t jumped in yet.  Decision making is a much slower process in a big business.

Being quick is also a huge advantage for small businesses when it comes to acquiring and using new technology.  There’s a new virtual trade show program, for example, that lets users interact in a variety of public spaces which fosters the exchange of ideas and sharing of new products, and also offers more private spaces for confidential negotiations.  Can you imagine how long it would take a big business to put together a training session and set of guidelines for using the virtual trade show program?  Again, the entrepreneur can be up and running in no time.

Given the increase in public feedback – in the form of reviews – that’s available for nearly every category of business, small, agile businesses who can respond to customer reviews can not only address problems right away, but they can also shape public perception of the company based on the skillful handling and resolution of complaints.  When you see a review of a restaurant and a thoughtful response from the chef/owner, you know that the restaurant cares about its customers.  A larger chain would have its managers busy recording the nightly levels in each liquor bottle – too busy to personally review and handle on line customer complaints.  As new forums for consumer interaction and review crop up each day, big businesses may be being reviewed on sites they’re not even aware of.  There is a conversation going on about your business.  You have the ability to get involved in that conversation.

What it comes down to is that speed isn’t just an advantage in our current business climate.  It’s a necessity.  A lumbering beast of a company who needs a committee and a month’s time to review, discuss, and plan every single change is at a marked disadvantage in a marketplace that favors flexibility, agility, and lightning speed.

Consumers love the underdog.  Big corporations headed by greedy CEOs who bring in $8 billion in bonuses don’t have the same consumer appeal as the small business owner struggling to get a fledgling business off the ground.  Establishing yourself as a productive member of your community and trading on your position as a challenger of the status quo will earn you attention and support.  Wielding your quick response time and ability to act on a moment’s notice will pay dividends that big business can’t hope to match.

The post The Biggest Competitive Advantage Goes To Small Businesses appeared first on Mike Michalowicz.