Does Your Business Know When to Stop Selling?

Stop Selling

Everywhere we turn these days, online and off, we’re being sold. It’s a din of sales messages.

For business owners, everywhere you look there’s another course or Webinar or blog you should read that aims to teach you how to sell better. But after watching a preview copy of this week’s upcomingShark Tank episode, I wonder if entrepreneurs might do better to learn one overlooked skill: When to stop selling and close the deal.

On this Friday’s episode, one of the entrepreneurs blows a chance to have Shark Mark Cubaninvest in his business. (You’ll have to tune in to see what type of business it is…I’m sworn to secrecy.) After hearing his pitch, Cuban offers the business owner $90,000 in return for a hefty equity stake in the enterprise.

Investors don’t get much more influential. But instead of jumping on the deal, the entrepreneur doesn’t respond. Instead, he goes back to selling the other Sharks, no doubt hoping to get another offer that doesn’t involve giving up so much ownership.

But there are no other takers. And I bet you can guess what happens with Cuban.

While most business owners aren’t playing this level of high-stakes poker, I see blown salesevery day.

If your website doesn’t have an easy way for customers to contact you, you’re failing to close sales. They may love what they see, but frustration sets in when they can’t find your phone number and poof, they’re gone.

How often have you stood at a checkout counter practically waving your wallet in the air, but you can’t get the checker to notice you? Sometimes when that happens, people walk out. No sale.

I once had a salesman come to my home because I was considering using their bathtub-installation products. He said he had a 30-minute presentation to make. I told him I had 15 minutes, and I wanted him to get it done in that long. He couldn’t do it, and made me late for an appointment. No sale.

It pays to know when you’ve got a customer ready to buy, and to make the deal right then. Toss your proven system for selling and your 10-point feature plan you need to highlight, if you see that customer already gets it.

Sell a little longer, and you might end up with nothing. Let other prospects wait while you write up that contract, because this one is already in the bag.

 

Five Painless Ways to Raise Prices this Year

Five Painless Ways to Raise Prices this Year

It may sound odd, but small businesses are increasingly handing out pay raises. Unless they’re crazy, those business owners probably also plan to either simply sell more units or raise their prices in the coming year to cover that added payroll cost.

Apparently, the pay-raise trend is pretty widespread. A Pepperdine University/Dun & Bradstreet Credibility Corp. study showed 43 percent of small businesses have already hiked worker pay in the past year, and 42 percent said they plan to raise pay this year. Many workers have no doubt gone several years since 2008 without a raise, and we’re at the point where loyal employees who’ve stuck around need to be rewarded to keep them on board.

This may be a critical time to raise prices for many businesses in any case, as prices are risingor remaining high for many basic materials.

With the economy still so uncooperative, how can you sell customers on a price hike? Here are five ideas:

  1. Phase it in. Let customers know prices are going up next month, or next quarter. Drive some extra sales volume now, and then the party’s over and the new price goes into effect. Give clients a chance to buy in volume ahead of time to save money. It feels like a deal, but, sooner or later, customers still end up paying the new price. Personally, I like to give notice of a price hike for my writing business about six weeks before it takes effect, so clients have time to adjust to the idea.

    Related: More Small Businesses Plan to Push Up Prices in 2012

  2. Offer valued-customer discounts. Take a page from grocery stores and offer one price for your loyal frequent shoppers, and a higher one for occasional users. That way you can start grossing more without alienating your core customer base. Don’t make those customers haul around a loyalty card, either — keep the information on who gets the good prices on file yourself.
  3. Revamp or repackage old products or services. Add new features, bundle existing products to create a new one or redesign your packaging. Freshen it up, and you’ve added value — or at least created the appearance of added value — and can command a better price for it.
  4. Introduce new products. One of the biggest problems in retail is the lack of unique products. What can you sell that your competitors don’t? Add fresh items that can’t be easily price compared and you can charge a better markup on them.

    Related: Four Rules for Pricing Products

  5. Review and retool your product assortment. Do you know which of your products has the lowest margins, and which has the highest? If not, find out. Then drop slower-moving, low-net products and add more high-end ones. Also review competitors’ pricing to see whether some products are priced unnecessarily low. Small, strategic increases on a few popular items can add up quickly, while customers may barely notice the difference.

 

What’s Hot in Venture Capital in 2012

Whatâ??s Hot in Venture Capital in 2012

Raising money can be a daunting task. But it helps if you’re in a hot sector that venture capitalists like.

At Wednesday’s “State of the Union” Venture Capital Lunch Club, an annual panel discussion held at law firm Chadbourne & Parke LLP in New York, a number of investors offered their predictions for this year’s buzzworthy industries. Here’s a rundown:

Big Data Like last year, VCs will continue to be drawn to startups in the so-called “big data” space, according to Peg Jackson of Gridley & Co., a technology investment bank. In previous years, investors were keen on data companies that could collect and manage data; now, the attention is on startups that focus on “the predictive nature of data,” she says. In other words, ventures that help corporations analyze today’s mountains of data for patterns and trends will likely be in demand.

Along those lines, Ed Goodman of Milestone Venture Partners, an early-stage VC fund, predicts more investments in “big data companies that can make health-care information actionable,” such as startups that connect urgent-care patients to specialized doctors in their area, and social-media applications that can be used by businesses.

Machine-to-Machine – Goodman also sees more money flowing into “machine-to-machine” communications. As an example of a product in this sector, he cited sensors on home fuel tanks that will signal to oil-delivery companies when they need refilling.

“Internet of Things” – Owen Davis from NYC Seed, another early-stage firm, also foresees more interest in Internet-connected devices that collect and communicate data, something players in the space refer to as the “Internet of Things.”

Software as a Service – Jeanne Sullivan from StarVest partners, a technology VC firm, says “software as a service” or SaaS will continue to be in demand, as will financial technology, known by the buzzword “fintech.” She also noted that there’s a better chance for venture-backed companies to be acquired than to go public these days. “The M&A market is where all the fun is,” she said.

The panel was moderated by Lori Hoberman, who heads up Chadbourne & Parke’s emerging-companies/venture-capital practice in New York. Hoberman noted that clean or green technology, a sector that has received large rounds of funding in previous years, wasn’t mentioned by any of the panelists, possibly because the industry requires too-huge upfront capital outlays.

One other topic of discussion on the panel was Facebook’s expected initial public offering this spring. Randall Smith, a reporter at the Wall Street Journal who covers IPOs, said the chatter in coming months will be about whether Facebook – or other social-networking sites, for that matter – are “passing fancies” or sustainable businesses. “That will be the debate of the year,” he said

 

A SOPA About-Face for Members of Congress

A SOPA About-Face for Members of Congress

The tech community spoke. Lawmakers listened.

In the wake of several dramatic online and in-person protests, the authors of two anti-piracy bills announced today that any further action has been postponed. First, Senate Majority Leader Harry Reid (D-NV) said he decided to postpone today’s vote on the Senate’s PROTECT IP Act (PIPA) “in light of recent events.” Shortly after, House Judiciary Committee Chairman Rep. Lamar Smith (D-TX) issued his own statement indicating that the committee is postponing consideration of the Stop Online Piracy Act (SOPA) legislation.

The collective outcry from the tech community and others swayed members of Congress. Earlier this week, 80 members of Congress supported the PIPA and SOPA bills while 31 opposed them. As of Thursday, 122 members oppose the bills.

Related: NY Tech Entrepreneurs: Stop the SOPA and PIPA Anti-Piracy Bills

“I have heard from the critics and I take seriously their concerns regarding proposed legislation to address the problem of online piracy,” Smith, who authored the SOPA bill, said in the statement. “It is clear that we need to revisit the approach on how best to address the problem of foreign thieves that steal and sell American inventions and products.”

The moves follow several online protests this week from companies including Google, Wikipedia and Reddit, as well as in-person demonstrations around the country, including NY Tech Meetup’s rally Wednesday in Manhattan.

SOPA and PIPA aimed to punish “rogue” websites that publish or sell pirated content. But online companies such as Facebook and AOL argued that the bills could negatively affect the flow of information online and stifle innovation among internet entrepreneurs.

The postponements represent a major victory for the online tech community. But the issue of piracy is far from dead. Both groups have pledged to continue their efforts to find a solution that has wider approval.

 

Do Small Businesses Really Need the SBA’s Help?

Small Business Assistance Centers

I’ve sometimes heard from business owners that “nobody” uses the SBA’s 900 field offices known as small business development centers or SBDCs. Turns out that’s just not true.

With funding for SDBCs on the chopping block at both the state and federal level, the SBA has documented the SBDCs’ impact in a new report. It appearsentrepreneurs definitely visit the SBDCs — more than 500,000 of them in 2010, the study found – and the business owners report the resources there helped their businesses thrive.

One of the biggest advantages users of SBDCs gained was knowledge of how to get a business loan. There’s also good crossover with business education, as many of the centers are hosted on college campuses.

But the whole system is under threat, in part because of cuts in education at the state level. Supporters worry that no other organization will arise if the SBDC network goes away that would share the SBA’s commitment to minority and women business owners and distressed inner-city neighborhoods where new business creation is desperately needed.

The SBA has been trying to increase its support for minority-owned businesses. For instance, itsEmerging 200 entrepreneurial development program added 12 new cities in Native American communities in 2010. And earlier this month, the SBA introduced a new online course tailored for Native American entrepreneurs.

Critics say these special-help programs just coddle business owners who need to bootstrap their way up the same as anybody else. By contrast, members of minority groups say that they need the assistance, as they’re underrepresented in the world of business ownership.

Whether you’re pro or con, it’s uncertain whether these programs can survive the poor economy and resulting budget crunch. Just in case, if you want to take advantage of these SBA resources, do it soon.

 

10 Intriguing Business Books for Entrepreneurs to Read on Vacation

10 Intriguing Business Books for Entrepreneurs to Read on Vacation

Guy Kawasaki, the author of new business bookEnchantment

As the year winds down, one thing isn’t growing shorter — my nightstand pile of noteworthy business books.

I receive mountains of them, and most become instant library donations. But the ones that intrigue me keep hanging around, mocking my lack of free time. Eventually, I get to read them.

I hoped to do a post about each of these, but given that soon it will be time to talk about the hot business books of 2012, I thought I’d present my list of the business books I considered “keepers” this year. This is a highly individual list — several of these are by people I’ve met, so that may have influenced my thinking.

This is not a best-of or a ranking — these are listed alphabetically:

  1. Become a Franchise Owner! by Joel Libava. I know the “Franchise King,” and I can’t wait to read this one. Despite the upbeat-sounding title, Joel is known for his very frank opinions on franchise best practices. The book cuts the bull and helps would-be franchisees spot the problems as well as the opportunities. A must for anyone contemplating a franchise purchase.
  2. Business at the Speed of Now by John Bernard. The founder of consulting firm Mass Ingenuity discusses how to empower your people to deal with customers’ rising expectations in the always-on era.
  3. Enchantment by Guy Kawasaki. It’s pretty much all about how to influence customers in an ethical way. A key read, especially if you want to win in online sales.
  4. EntreLeadership by Dave Ramsey. The famed money-management guru takes on leadership, boiling down his 20 years of experience and tells you how to lead your team to glory.
  5. The Entrepreneur Equation by Carol Roth. Are you cut out to be an entrepreneur? No, really, are you? Roth dares to suggest that not everybody has what it takes, and explains the traits required to make it as a business owner.
  6. Evil Plans by Hugh MacLeod. Combine your capacity to work with your capacity to love — all while enjoying MacLeod’s fun cartoons.
  7. The Method Method by Eric Ryan, Lucas Conley and Adam Lowry. I got to know the ecological cleaning-products company Method a while back when I interviewed them for a story. This one’s for every entrepreneur who would like to crack a long-established category and bring a new twist to it.
  8. Share, Retweet, Repeat by John Hlinko. Want to know how you get a horde of people to a Facebook page? Hlinko’s book has some enlightening anecdotes from his time as a political promoter.
  9. The Thank You Economy by Gary Vaynerchuk. The Wine Library TV phenom shows where the return on investment is in social media — and offers case studies to back it up.
  10. Uncertainty by Jonathan Fields. I had a chance to hear Jonathan speak at SOBConNorthwest this year. His exploration of how successful leaders move forward despite their fears is fascinating — and inspiring.

 

Franchises a Draw for Minority Entrepreneurs

Franchises a Draw for Minority Entrepreneurs

Franchises appear to be an increasingly strong draw for entrepreneurs from minority racial groups.

A greater percentage of Asians, African-Americans and other minorities are buying into franchised businesses, as opposed to starting their own independent businesses, says a recent study from the International Franchise Association.

And while white franchise owners remain dominant in the industry, their ownership percentage declined from 2002 to 2007 while minority representation edged higher.

“The rise in minorities is a reflection of demographic changes,” IFA spokesman Matthew Haller said. “As more minorities establish themselves in the U.S., they are looking to control their destiny through business ownership.” Franchising, he adds, “offers some stability that you may not get, going it yourself though a start-up.”

Many minority owners have become multi-unit franchise operators, Haller said.

In 2007, minorities owned 20.5 percent of franchised businesses, compared with 14.2 percent of non-franchise businesses, according to the report, prepared by PricewaterhouseCoopers, using data from the U.S. Census Bureau’s 2007 Survey of Business Owners.

In 2002, minority entrepreneurs owned 19.3 percent of franchises, the report said.

The survey defines businesses at least 51 percent owned by those from a non-white racial group or of Hispanic ancestry as minority-owned.

Franchises accounted for 3 percent of minority-owned businesses in 2007, slightly more than in 2002 and more than the 1.9 percent of non-minority owned businesses that were franchises in 2007.

White entrepreneurs, meanwhile, owned 73.3 percent of franchised businesses and 80.6 percent of non-franchised businesses in 2007. They owned 79.2 percent of franchised businesses in 2002, so their large representation declined.

Breaking the numbers down a bit:

  • Asians owned 10.4 percent of all franchises and 4.9 percent of non-franchise companies in 2007.
  • Blacks owned 4.9 percent of franchises and 3.6 percent of non-franchised businesses.
  • For Hispanics, the representation was roughly even, with ownership of 5.2 percent of franchised businesses and 5.4 percent of non-franchised businesses.

 

Lawmakers Seek FTC Scrutiny of Google’s Search Results

Google Search Results

Two U.S. senators fired off a letter to the Federal Trade Commission this week calling for an investigation into what they allege as bias by Google in favor of its own products and services in search results.

Senators Herb Kohl (D., Wis.) and Mike Lee (R., Utah), both members of the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, claim that by consistently pushing search results related to sites and services it owns over those owned and operated by others, Google is “undermining free and fair competition among ecommerce websites.”

In the five-page letter (PDF) to FTC Chairman Jon Leibowitz, Kohl and Lee question whether Google — which currently owns approximately 65 percent of the search market here in the U.S., according to the latest figures available from comScore — may be acting in an anti-competitive manner with respect to antitrust laws and the FTC Act.

Among the search engine results cited by the pair as ranking higher are those related to products and services delivered by Google Travel, Google Finance, Google News, Google Maps, Google Product Search, Google Flight Search and YouTube. The senators question whether Google can be an unbiased general, or “horizontall,” search engine while owning such Web-based businesses from which it derives substantial advertising revenues.

In the letter, the senators cite one of Google’s top executives admitting in a 2007 subcommittee hearing that the company did indeed coddle its own websites. The executive, Marissa Mayer, now Google’s VP of Local, Map and Location Services, testified that when it rolled out Google Finance, “We did put the Google link first. We do all the work for the search page and all these other things, so we do put it first,” adding that this practice is company policy.

In the subcommittee’s latest hearing, which took place in September of this year, Jeremy Stoppelman, co-founder and CEO of Yelp testified “Google is no longer in the business of sending people to the best sources of information on the Web. It now hopes to be a destination site itself for one vertical market after another… It would be one thing if these efforts were conducted on a level playing field, but the reality is they are not.”

The senators’ complaint is that Google shouldn’t be allowed to promote its own products and services above those of competitors like Yelp, calling it a conflict of interest. They concur that nobody can compete — big and small businesses alike — with Google, making regulation a logical step.

The letter concludes that the FTC should take the reins in an effort to determine if any antitrust laws have been violated or if harm has come to other businesses as a result of Google’s practices. I’ll be closely following this development with a promise to get back to you with ensuing details

 

Why Crowdfunding is Bad for Business (Opinion)

Why Crowdfunding is Bad for Business

Homeowners use peer lending sites such as Prosper.com to pay for a new deck, and artists use Kickstarter to pay for their next project. But so far, it’s been difficult for business owners to use peer lending or crowdsourcing, as it’s variously known, to fund their business.

The reason is, people generally want to get a return on their investments. But federal law currently prohibits Joe Consumer from investing in a business startup. There are strict rules about who is an “accredited investor” for this type of high-risk investment. Right now you generally need at least $5 million in assets to qualify.

There’s been recent legislation that aims to change the qualifications required of investors in startups. Also entrepreneurs are hopeful that the law will change. Tom Szaky from Trenton, N.J., waste-management firm TerraCycle, for instance, recently opined in the New York Times that the rules should be changed to allow crowdsource funders to invest in startups.

I’m going to say I’m against the idea. Why?

Startups don’t just need money — they need expertise. In the current scheme of things, investors often provide that expertise. They became wealthy because they know something about how to run a successful business.

But in a crowdsourced model, no one investor has substantial money in the venture. So there’s no one who could insist on a board seat as part of their deal, or otherwise make an entrepreneur take their ideas seriously for how to grow the business.

That makes the startup a riskier venture, both for the investors and the entrepreneur. Maybe that entrepreneur will find mentors in other places. But nothing’s compelling them to do so.

Often, connecting with angel investors or a venture capital firm brings a business owner some high-quality expertise in the deal. It’s unclear if entrepreneurs would get the help they need to be successful if their funding comes from hundreds of individuals each putting up $50.

Crowdsourced funding sites thrive on successes — being able to state the high rate of return for investors. Would a business-oriented crowdfunding site be able to make a good claim here? Perhaps, but I’m betting no.

 

Women Entrepreneurs Put the Government in the Hot Seat

Women Entrepreneurs Put the Government in the Hot Seat

There’s no doubt that women entrepreneurs have come a long way. And while many have found success in business, some suggest that men have an upper hand with everything from accessing capital to finding business opportunities.

For insight into how women-business owners can both improve their company’s growth trajectory and take advantage of federal programs aimed at them, we asked the U.S. Small Business Administration’s Associate Administrator for Women’s Business Ownership, Ana Harvey, to field some of our questions. Here are her edited responses:

  1. During the latest economic downturn, has it been tougher for women to access credit than men? If yes, why? And what if any steps is the government taking to improve women’s access to capital?

    It’s a fact that women are more likely than men to be turned down for credit. However, small businesses owned by women are three to five times more likely to get a loan that’s been guaranteed by the SBA. That’s also true for minority small business owners. And this year was a record for us. We put $30 billion into the hands of small business owners — a lot of whom were women.

    In 2012, we’re going to expand our microloan program and that’s especially important for female entrepreneurs. A woman who is starting her business really doesn’t need a $1 million loan. She needs $50,000 to buy new equipment or $100,000 to renovate her building.

  2. The federal program that grants public agencies the authority to set aside 5 percent of contracts to women-owned businesses annually has received criticism for not meeting its goal. How is the government intending to make sure it meets this goal in the future?

    In the 2010 fiscal year, we made a big improvement. Four percent of government contracts worth more than $17 billion went to women-owned businesses. But we won’t be satisfied until the government hits its goal of five percent. That’s why we’ve implemented the Women’s Contracting Rule at SBA. Now for the first time, federal agencies can set aside contracting opportunities for small businesses owned by women in more than 300 industries where women are under-represented.

    So far, we have nearly 8,000 firms registered with the Women-Owned Small Business Program Repository and there’s more than $14 million in contract awards through the set aside program.

  3. The SBA is currently helping prop up high-growth firms through a number of programs. But traditionally women haven’t led high-growth firms. How, if at all, is the government attempting to counter this imbalance?

    Women are largely correcting this imbalance on their own. A lot of high-growth firms are now owned by women. Look at Flickr, Gilt Groupe, Bluemercury or Geomagic, just to name a few.

    To improve things further, SBA has launched a billion dollar Impact Investment Fund to put more equity in the hands of small businesses in underserved communities. Within the Small Business Investment Company program — which funds high-growth businesses that are in scaling mode — 34 percent of the small businesses that were financed last year were in low to moderate income areas or in minority or women-owned businesses.

Have your own questions? At 3pm EST today, you too will get an opportunity to get some answers from Harvey and Christine Koronides of the White House National Economic Council. The White House and the SBA is hosting a joint question and answer session, which you can view at WhiteHouse.gov/live. To submit questions, head to Facebook, use the hashtag #WHChat at Twitter or try this webform. You can also submit your questions below in Entrepreneur.com’s comments section.