Anatomy of a Pivot

As was reported in a July 20, 2020 post featured in the Harvard Business Review, companies are scrambling to minimize the damage caused by the COVID-19 shutdown. There is determination to survive and get in position for the expected recovery. Owners and leaders are taking a close look business models, to tease out a clever pivot that will first, start some cash-flow ASAP and second, open the door to sustainable long- term profitability and growth.

Talk of engineering a pivot always sounds impressive when discussed in a strategy meeting but as we know, not every pivot leads to success. One can pivot the enterprise into a ditch, unfortunately, if an unwise choice or sloppy execution take place.

The HBR authors explain that a pivot is a lateral move that creates a logical extension of the products or services that the venture is already known for, making it comfortable for customers to trust the updates.

Music streaming platforms such as I ♥️ Radio and Spotify have long provided loads of advertising-funded free online music and both companies were able to convert freebie loving listeners to subscribers with a pivot into podcasts and specialized playlists. Fees generated by those subscription services softened the blow caused by advertisers who vanished during the shutdown.

Barnes and Noble bookstores long ago pivoted into the coffee shop business through a hybrid franchise deal with Starbucks. Don’t we all love to sit down and have an artisanal coffee as we look over the new books and magazines we just bought?

My favorite pivot was pulled off at Diva by Cindy, a hair care products company based in Washington, DC. Founder Cindy Tawiah left the salon business, a field where she’d found only intermittent success, and dropped all hairstyling services. Tawiah’s company now focuses exclusively on what are normally salon revenue enhancers, hair products.

The reformatted business now sells the newly created private label Diva by Cindy line of hair care products. Her pivot also incorporated an innovative sales strategy that places the shampoos, conditioners, hairsprays and such only in vending machines and kiosks stationed in airports and malls.

Three conditions are required to set up a good pivot:

1. The pivot will align the company with one or more long-term trends.

A pivot that reflects how we’re living and working during the COVID-19 era may help to pull your organization through an immediate billable hours and cash-flow crisis and allow the company to survive long enough for improved business conditions to arrive.

When trying to envision your company’s pivot, think about how working from home has caused many to rely more on technology and spend more time at home. Think about how shorter supply chains have made the locavore movement, which began 25 years ago, still more attractive. Remember also the Do It Yourself and craft movements, which began a few years ago and are significantly increasing.

Can you see how your business pivot can make use of these trends, which are predicted to be with us for three years or more?

2. The pivot will be a logical extension of the company’s core products or services.

Your venture’s pivot must align with the company’s core products or services and add value for customers by creating or transitioning to a logical adaptation.

Diva by Cindy already had deep experience in the hairstyling sector and a roster of clients. The company already knew what customers valued and the acceptable product price points. Her breakout was to develop her own private label line, which was an extension of her brand, along with the daring and innovative sales strategy of using vending machines stationed at the Baltimore Washington Airport.

3. The pivot offers recognized value and opens a door to sustainable profits.

It goes without saying that the pivot is not successful unless it strengthens the value of the brand, as evidenced through increased market share and sales revenue. The HBR authors predict that while the COVID-19 crisis will not necessarily spell the end of entire industries, there will be a weeding out of companies unable to keep up with the trends of social distancing and virtual communication, remote work, shorter supply chains and an increased, more highly sophisticated use of technology.

Thanks for reading.

Kim

Photograph: Kim Clark. Canada geese swim into a pivot on the Muddy River in the Emerald Necklace, Boston, MA.

Moving Past Panic

Slowly, tentatively, businesses around the country are being allowed to reopen and at least partially end the COVID-19 shutdown that began in the U.S. in mid-March. Last week, houses of worship were allowed to hold services in some localities, with plenty of social distancing mandated by state legislatures. Restaurants in many cities and towns are now able to seat patrons for outside dining only, with tables spaced wide.

A theater company in the Berkshire Mountains of western MA, an area that for 100 years has featured high quality plays, music and dance performances during the summer months, is negotiating with Actor’s Equity, the powerful union, to get permission to hire actors and stage a production or two in July and August.

So we can finally shift gears from park to drive and the forward motion is a relief after 10 weeks of a mandated standstill. But do we know where we’re going now and how to get the show back on the road?

Businesses large and small are in agreement on at least one thing and that is, we cannot go back and pick up where we left off. It has been said that one never steps into the same river twice because it keeps flowing and changing before our eyes. In the post- shutdown world, those who lead a business must make some adjustments.

Reframe capabilities

Quite simply, business owners and leaders are now tasked with discovering and responding to how customers and prospects feel about and are inclined to use products or services in the reopening. How might your organization address the now reframed experiences and expectations of customers and prospects as they, too, emerge from the shutdown? How can you repackage what you sell? What should your marketing message be now? How can content marketing and social media tell your story in a way that resonates with today’s redefined customer experiences?

Reframe operations

It’s almost a given that you’ll have to retool. Must you change how you deliver services because so many of your clients’ employees now work from home? Are client meetings now videoconferences? Have you been invited to deliver a workshop virtually?

Communication with clients will be key as you learn how your organization can most effectively deliver the value of your products and services to the end user.

Reimagining how to deliver your services online is an operational paradigm shift that your company must make immediately. You must also make the delivery of your services frictionless and engaging, for maximum perceived effectiveness.

Reframe relationships

Relationships may be the most important segment of your organizational response to the new and evolving business environment. Without appearing to violate boundaries, position yourself to clients as a partner. Encourage honest communication and share information that could be helpful to clients. Be generous in your pricing and payment structures when necessary and possible for your cash-flow and revenue needs. Make referrals.

Thanks for reading,

Kim

Photograph: Kim Clark. The former Algonquin Club on Commonwealth Avenue in Boston has been reframed as The Quin, a private club set to open in Spring 2021.

Defensive Marketing

In sports and in business, well-planned and executed strategies and tactics are necessary to win the day. Some sports or business plays or strategies come from the Offensive side. Those strategies are proactive—-the opening salvo, aggressive and attacking, putting out a direct challenge to the competition.

Introducing a new product and all the activities related to the launch are an example of Offensive Marketing. One might also think of push marketing tactics, e.g., email marketing that announces a new product or service.

Your company is in expansion mode, perhaps entering a new market or geography and battling for the attention and support of new customers.

In contrast, Defensive Marketing strategies and tactics, on the playing field or in the board room, are designed and utilized to protect your turf. Tactics and strategies are reactive. When responding to an attack, whether it’s the other team positioning itself to chip away at your lead or a competitor cutting into your market share, assume a Defensive stance and take steps to protect what has been achieved. Position your entity to maintain or reestablish dominance.

When a Defensive Marketing strategy is required, the company objective is to retain clients and market share, to refine product positioning messages, strengthen customer relationships, or enact other reparative therapy. Crisis communications, i.e., the response to a public set-back or scandal, is a classic Defensive Marketing move.

Depending on what a business needs to achieve, marketing strategies that work from an Offensive or Defensive stance can be employed separately or simultaneously. In the coronavirus business climate, that our politicians seem inclined to prolong, Defensive Marketing rules the day.

Everyone is hunkered down, if not outright shut down. Nevertheless, those businesses allowed to operate are doing just that, even if employees are working from home. The companies have budgets. Some are hiring Freelancers.

Just because many companies have curbed their spending doesn’t mean that they don’t have a modest budget available for certain types of high-value projects, as owners and leaders define it.

Put on your thinking cap—-What might motivate your clients to spend money these days? Chances are they’re working hard to protect what they’ve built up over the months that preceded the shutdown. It’s likely that your clients are shoring up systems and resources and reaffirming relationships with their customers. Your clients are probably positioning their organization for long-term success.

The question is, how can we Freelancers package, describe and promote our organization to effectively communicate to current and prospective clients that we can assist their Defensive Marketing campaigns?

To predict how your services might fit into the picture, take time to think objectively about the client’s business and what could be considered logical long-term objectives that could reap benefits over the next 5 or so years.

Nurturing and promoting their most important, biggest selling products or services is a safe bet, as is protecting and/ or upgrading business continuity processes and also insurance, disaster recovery systems in nearly every stripe, from hardware and software to the physical plant. However, some organizations might go on the Offensive and begin making some surprisingly aggressive moves as they pursue customer acquisition.

Keep in mind that scaling back on what is considered spending on nonessentials should not be mistaken for the cessation of spending. The organizations could be merely reflecting the economic or political climate and allowing their expenditures to reflect the new normal.

Good customer knowledge and relationships, along with agility and adaptability, will support proprietors of Freelance consultancies as we respond to yet another set of difficult business conditions. Our clients are either thinking of what must be done today to get their business back in motion, or looking at how the distant future might look and how they can engineer safe passage. Defensive Marketing strategies will predominate.

Thanks for reading,

Kim

Photograph: Kim Clark. The Boston Common tennis court.

Crowdfunding for a Business

What do you do when you need money to either launch or expand your business venture and the bank won’t give you enough money? For many entrepreneurs, crowdfunding is the answer. Originally used to fund charity drives or creative projects like recording music or film making, crowdfunding is now recommended as a business financing strategy by organizations that support aspiring entrepreneurs.

That said, I remain skeptical. I understand the allure of crowdfunding—people will give someone money to finance a creative project or business venture and that person will, ideally, achieve the goal without taking on debt. In exchange for the financial support, the entrepreneur, in many cases, will promise to give backers a reward, or even a small equity stake (ownership) for certain investors.

But ask yourself—why would a total stranger contribute to a crowdfunding campaign for a start-up, unless it’s a not-for-profit venture and I believe in the cause and would like to support it? Well, some folks are just of a mind to be a part of someone’s success and that’s the best reward. However, campaigners are advised to align the reward offered with the project.

If the campaign will fund the production of a big special event, for instance, the campaigner might offer free admission, backstage passes, or even a chance to hop up onstage and jam with the band. For consumer products, the most obvious reward would be to provide backers with a digital or physical copy of the item in advance, or offer a purchase price that is far less than the typical retail value. Bear in mind that creativity pays: among the most consistently popular rewards are those that offer personal or unique touches, or provide singular opportunities, e.g, lunch with the founders or the inclusion of donors’ names in the new software product’s credits.

Since there is growing interest in the entrepreneurial community about this nontraditional funding source, I decided to research. Here’s the first half of what I learned. Next week, I’ll follow-up and examine how one might create a successful crowdfunding campaign for a business.

WHICH PLATFORM IS FOR YOU?

CircleUp—Best for fitness, food & beverage, technology

  • Campaign types: Equity, credit
  • Industry focus: Early-stage consumer brands
  • Funds you can keep: All or nothing
  • Funding fees: N/A
  • Payment fees (US): N/A
  • Startup locations allowed: Worldwide

If you’re an entrepreneur working to get your consumer product on the market, CircleUp offers an excellent array of services, including a platform for connecting with accredited investors, insights from machine-learning technology and access to special lines of credit for start-ups. Accredited investors must have a net worth of at least $1 million and earnings of $200,000 a year or more, per SEC regulations. In other words, the investors are quite affluent and capable of writing big checks.

While the focus is on early-stage companies, the platform is nevertheless best suited for more established start-ups looking to scale, rather than companies in their infancy.  CircleUp doesn’t charge any fees for friend and family investments and provides special access to funding through partnerships with Procter & Gamble and General Mills. 

Fundable

  • Campaign types: Equity, rewards
  • Industry focus: Healthy startups ready to expand
  • Funds you can keep: Whatever you raise for equity; all or nothing for rewards
  • Funding fees: $179 monthly subscription
  • Payment fees (US): 3.5% + $0.30 per transaction for reward campaigns
  • Start-up locations allowed: Must be headquartered in the US

Most crowdfunding platforms, whether equity or reward, take a percentage of funds raised. However, this platform just charges a flat monthly subscription fee. As long as you’re subscribed, you can create campaigns to raise money.

The flat fee makes it a great deal for many successful crowdfunding campaigns. The only problem is that campaigners must pay the fee whether or not one is successful. A failed campaign will lose you money, so Fundable is best for start-ups that have a high-potential business model.

But if you’d like a little extra help with your campaign, Fundable offers consulting services and will do everything from design assets to market your campaign. These consulting services do cost more than Fundable’s monthly fee; contact Fundable to obtain pricing.

GoFundMe—Best for not-for-profits and charitable causes

  • Campaign types: Reward, donation
  • Industry focus: People and causes
  • Funds you can keep: Whatever you raise
  • Funding fees: 0% for personal campaigns in the US; 5% for charities and countries outside the US
  • Payment fees: 2.9% + $0.30 per transaction
  • Start-up locations allowed: 19 countries

GoFundMe campaigns are donation-based and focus on not-for-profit start-ups and charities. If you operate a not-for-profit, or are trying to raise money for a cause, this is the preferred platform.

IFundWomen—Best for women entrepreneurs

  • Campaign type: Reward
  • Industry focus: Women-led businesses
  • Funds you can keep: Whatever you raise
  • Funding fees: 5% of all funds raised
  • Payment fees (US): 2.9% + $0.30 per transaction
  • Start-up locations allowed: 23 countries

Women entrepreneurs, who own a growing share of new startups, still face significant challenges in securing investment capital to get their businesses off the ground. iFundWomen offers a a solution to some of those challenges. The founders created the platform as a “fundraising ecosystem for women-led startups and small businesses.” It also provides coaching, marketing and other services for start-up owners.

Unlike some reward-based crowdfunding sites, iFundWomen lets campaigners keep whatever funds they raise. Of the money the site earns from funding fees, 20% goes back into supporting campaigns and services that benefit women business owners.

Indiegogo

  • Campaign types: Reward, equity
  • Industry focus: Tech and innovation
  • Funds you can keep: All or nothing; whatever you raise
  • Funding fees: 5%
  • Payment fees (US): 2.9% + $0.30 per transaction
  • Start-up locations allowed: Worldwide

A big plus is that Indiegogo allows campaigners to choose to structure either a fixed or flexible funding arrangement for your campaign. If you choose flexible funding, you still get the money even if you don’t fully reach your goal. Fixed funding is the same as all campaigns on Kickstarter. Reach your funding goal or the funds are returned to prospective backers (see below). Either way, campaigners must deliver the equity and/or rewards that you promised to supporters.

The site has millions of visitors and the traffic can, in theory, be great for your campaign. If you get featured in your category, your project will be exposed to a ton of people and possibly bringing in many backers. The problem with the mega-sites is that it’s difficult to get featured and your campaign can easily get lost in a sea of other aspirants.

Kickstarter

  • Campaign type: Reward
  • Industry focus: Creative arts
  • Funds you can keep: All or nothing
  • Funding fees: 5% of successful campaigns
  • Payment fees (US): 3% + $0.20 per pledge $10 and over; 5% + $0.05 per pledge under $10
  • Start-up locations allowed: US, UK, Canada, Australia, New Zealand, the Netherlands

Red alert people! Kickstarter campaigns are all or nothing. Meaning, if you can’t meet or exceed your funding goal, all the money is returned to your prospective backers. You had better know that you have enough check-writing friends to get your campaign to the first milestone and that the strength of your project, supported by a very compelling marketing outreach, will carry you across the finish line.

On top of that, the platform is highly competitive and carefully selects the projects allowed on the site. You cannot fund just any business on Kickstarter—you must “create something to share with others.” Your project also needs to fall under one of site’s curated categories, such as arts and crafts, fashion and design, film and photography, games, and technology.

Moreover, investors will expect some type of reward, so you’ll need something of value for the swag bag you must distribute to investors (and you must categorize rewards by their value, to correspond with the amount of donations). So if you’re trying to scale your Public Relations business, what might your reward be—3 years of free press releases? I dunno.

Kiva—Best for micro-loans

  • Campaign type: Debt
  • Industry focus: Startups interested in microloans
  • Funds you can keep: All or nothing
  • Funding fees: N/A
  • Payment fees (US): N/A
  • Start-up locations allowed: United States

If you will accept taking on debt, this not-for-profit style platform could be your most affordable option. Successfully funded Kiva campaigns give your start-up a 0% interest loan, the best of all borrowing options.

The loan must be repaid, but there are no funding or payment fees for you to worry about. Since Kiva requires that you prove your social capital by kicking off your campaign with donations from family and friends, that means convincing people you know to fund your business—but were’t you going to do that anyway?

Note that Kiva loans top out at $10,000; this is micro loan territory. But if you want affordable debt crowdfunding for your small fundraising goals, Kiva’s worth a look.

Publishizer

  • Campaign type: Equity
  • Industry focus: Book publishing
  • Funds you can keep: Whatever you raise
  • Funding fees: 30% of money raised
  • Payment fees (US): 2% – 4% per PayPal transaction
  • Start-up locations allowed: United States

Not all crowdfunding sites are giants, as are GoFundMe, Indiegogo and Kickstarter. In fact, most are smaller, niche-specific platforms, such as Publishizer, which was designed specifically to help authors crowdfund their books. Authors can certainly still use Kickstarter or Indiegogo, but this platform gives the benefit of having a specialized audience that supports authors and books.

Republic

  • Campaign types: Equity, reward
  • Industry focus: Start-ups with a focus on diversity
  • Funds you can keep: All or nothing
  • Funding fees: 6% for the startup + 2% Crowd SAFE fee
  • Payment fees (US): 3.5% per transaction
  • Start-up locations allowed: United States

As an equity-focused crowdinvesting platform, Republic is the new kid on the block and with it’s highly selective curated selection of companies, it’s not for everyone. But for growing U.S. companies with large revenue potential, Republic’s 95% success rate for selected campaigns make it one of the most enticing platforms for connecting with willing investors. Furthermore, Republic also looks for organizations with diverse founder teams.

SeedInvest

  • Campaign type: Equity
  • Industry focus: Technology startups
  • Funds you can keep: All or nothing
  • Funding fees: 7.5% of successful campaigns + 5% equity fee
  • Payment fees (US): $0 paid by the startup; 2% paid by the investor
  • Start-up locations allowed: United States

Founded by MBA graduates and experienced investors, SeedInvest started as a way to give technology startups access to capital from people willing to make sizeable equity investments.

To start, you need at least a minimum viable product or prototype, proof of concept and two or more team members. If you make the cut, you’ll get access to both accredited and non-accredited investors for campaigns starting at $100,000.

SeedInvest’s biggest drawback is its expensive 7.5% placement fee on all successfully funded campaigns. Still, the site has a growing base of investors and successful companies, as well as a positive reputation in the entrepreneur community.

I’ll be back next week with information on how to set up your campaign. Thanks for reading,

Kim

Photograph: ©David Cairns/ Getty Images. Roulette at the Playboy Club in London, England early 1960s

Multiplication Table: Inclusive Interpretations of Business Growth

I’m not much of a gambler, but I’ll wager that at least 75% of those who aim to track the growth of their business or self-employment venture follow just two metrics—net profit and market share (or the length of the client list). The two are reliable indicators of business performance and so most will look no further. But if you think about it, limiting one’s assessment of a business to just two metrics is short-sighted and will not yield a comprehensive measurement of business performance. Furthermore, focusing exclusively on revenue means one is likely to overlook other metrics that demonstrate growth.

A business is a complex organism that consists of numerous variables that play a role in its success or failure. In order to thoroughly measure the performance of a venture, Freelancers and business owners would be wise to look beyond the usual suspects and broaden their view and understanding of what’s going on.

It’s a beautiful thing to regularly monitor Key Performance Indicators. It’s even better to know which KPIs, when considered together, will accurately reflect the state of the venture. Revenue and profit are the king and queen of KPIs, but forward-thinking business leaders also monitor less obvious but still powerful growth indicators.

Let’s consider two metrics that matter in every business, churn and referrals. Churn occurs when customers who could reasonably be expected to at least periodically do business with a company instead sever contact and take their business elsewhere, presumably to a competitor. The opposite of churn is customer retention. Referrals are recommendations of potential customers to a business, made by current customers of that business or those who are familiar with the business. A business leader should not only monitor referrals and the churn rate, but also create strategies to encourage the former and discourage the latter. Let’s talk about it.

Churn

A high churn rate indicates that the business is not retaining customers and this has an adverse effect on top line (and bottom line) revenue and profit. Now the type of business must be taken into consideration. Wedding planners, for example, can be expected to do business with a bride only once and repeat business is rare. But if customers are severing contact with a business and seeking out a competitor, it signals a big problem and an urgent need for corrective action.

Limiting churn has a positive impact on customer retention. It has been demonstrated by a number of researchers that it costs a business at least five times more to acquire a new client than it does to keep a client. Reducing churn is an indirect multiplier of revenue and profit and is therefore worth the effort.

A well-written customer survey that communicates the company’s commitment to meeting or exceeding expectations and creating a positive customer experience may yield a surprise or two and, most importantly, information that is actionable. Finding opportunities to have face-to-face conversations with customers who have remained may also surface information that will clue business leaders in on modifications that should be made.

Referrals

I am in business to help business leaders identify goals and strategies that will take their venture to the next level. I also frequently collaborate on the branding, marketing, content marketing and social media campaigns associated with that process. Reducing churn to increase customer retention, as well as bolstering referrals, supports both the top and bottom lines of a business.

A great way to pump up your referral numbers is to launch a campaign focused on referrals themselves. The simplest referral campaign is to just ask a customer to “tell your friends.” Another useful tactic that can motivate customers to make referrals is to offer a 10% – 15% discount off their next order, or a product or service upgrade, for every customer who is referred and makes a purchase.

The referral process can be taken online with an easy referral link in team members’ signature blocks. Offer incentives to existing customers, extra services that are valuable to those making referrals to you.

Referrals are a huge vote of confidence because they signal that the company is trustworthy, dependable and doing something right. Referrals are the warmest, most qualified leads a business will encounter and often little more than clarifying the choice of specific product or service features and confirming a delivery date and price are all that’s needed to close a sale. Yippee!

Happy Chanukkah, Merry Christmas and Happy Kwanzaa! Enjoy your favorite holidays and thanks for reading,

Kim

Photograph: © The School Run

How Freelancers Scale Up

According to the Small Business Association in 2018, there were 30.2 million small businesses (< 500 employees) in the US and 80%, 24.3 million, were one-person ventures, i.e., Solopreneurs. Although just under 6 million small businesses have paid employees, those businesses nevertheless employ 47.6% of private sector workers, 59 million of 124 million employed Americans (factoring out government and not-for-profit organizations—schools, hospitals, social welfare agencies, the arts, religious institutions). BTW, there are fewer than 20,000 large businesses in the country—19, 464 in 2018. 2017/08/04125711/Frequently-Asked-Questions-Small-Business-2018.pdf

I suppose it can be said that in American business small is beautiful, or perhaps more accurately, small is the reality. Many of those 24.3 million Solopreneurs attempt to turn what could easily be called a Weakness in the SWOT (Strengths, Weaknesses, Opportunities, Threats) strategic planning matrix into a Strength (me!) and use terms such as “boutique” to describe our business, along with marketing-spin phrases such as “personalized service” to communicate to prospective customers that the experience of doing business with us will be very positive and that no one is treated as a commodity.

Operating a boutique business is all well and good, however “boutique” can easily turn into “broke” if the proprietor continues to just scrape along, trying to bring in enough customers to pay the rent and keep the lights on. In order to make a go of being a business owner/ operator, it is necessary to scale the business. A business has successfully scaled when it can deliver its products and services to a significantly larger customer base while maintaining or improving operational efficiency and quality control. Good strategy and execution are needed to scale, but it’s often do-able. Read on and learn tactics and inspiration that will help you decide how to scale your venture.

Scale the Brand

The process for scaling your Freelance business starts with knowing, articulating and communicating your Brand. To attract more clients so that you can double or even triple your roster over a 3-year period, for example, you must communicate in various ways—client testimonials, case studies, LinkedIn recommendations, social media, company website, your newsletter or blog and other marketing channels—that you are highly competent, trustworthy and dependable. You deliver every time and you meet and often exceed client expectations. You bring value. Invent a Branding tagline to help yourself stand out from the 24 + million Freelancers in America and add it to your email signature block.

Be advised that Branding doesn’t simply refer to the colors you use for your business card or logo. Branding encompasses all client touch points during which your client encounters or interacts with you and your company, from the initial contact with you, interaction with employees, the tone of emails, visiting and navigating your website, your payment and billing systems, social media posts, advertising and everything in between. Articulating and communicating your Brand not only enhances the perception of your know-how as a Freelancer, but also makes it easier to scale your business in the future.

Scale client acquisition

Freelancers tend to get stuck in a rut of competing for projects in the same way over and over. We find a tactic that works, whether it’s cold emailing potential clients or applying for jobs posted on sites like Upwork.com and Guru.com. One will eventually figure out how to get hired on those sites, but you’ll still leave a lot of work on the table. It’s been reported that 27% of Freelancers find assignments via referrals made by friends, family and clients; 24% find projects through online job boards, email marketing and social media platforms like LinkedIn ProFinder. How can you make the most of these sources?

You don’t have to chase down all possibilities but do get into the habit of exploring alternative client acquisition methods, to get your name and expertise in front of a wider audience. Your current clients are also a potential source of referrals (I’ve been lucky enough to have that happen). Get the ball rolling by making a referral for your client first, so that you will come to mind if one of the client’s colleagues could use your services. BTW, unless you’re in IT, job boards attract clients who low-ball the money. Not only that, but Upwork now requires Freelancers to pay to submit a proposal and then pay again 20% of the fee when one is hired. I will not pay to apply for a job and that service is off my list.

Scale your network

Networking can potentially deliver significant benefits that accrue from the relationships you build. Networking helps us meet new friends, find a future spouse, get invited to join a board, learn of a house for sale when we’re looking to move, or get a job referral. Networking will also bring to you potential collaborators, for those times that you need to bring in a Freelancer colleague in order to take on a bigger project, or the gift of community support when it would be helpful (and when is it not?).

Start building your professional network ASAP, compiling connections who are Freelancers themselves and maybe also potential clients. Try connecting with fellow Freelancers in the comment section of industry blogs and industry-related LinkedIn and Facebook groups and participating in relevant Twitter discussions.

Scale your skills

Whatever one does for a living there is always training and development involved, that is, if one is lucky, because professional development is an investment in you and no one can take it away once you have it. In order to find work, the Freelancer must be considered a trusted expert. To be considered an expert, one must be better than the rest and that means your knowledge and skills must be bleeding edge current.

When preparing to scale your business you have to grow as a person and a professional and that means learning new skills, keeping up with the newest trends and learning to use applicable tech tools. This can be challenging, as well as time consuming, but what you learn can perhaps lead to new business ideas, smarter planning for the future and implementing new systems and approaches. Online education sites like Coursera, Udemy and Codecademy are a good place to start. Serving on a board, teaching and even judging a business award (I’ve judged the Stevie Awards/ Women in Business category https://stevieawards.com/women for 6 years) are other ways to keep skills current and learn new competencies (and network as you do).

Scale your creativity

To effectively scale your Freelance gig and transform it into an enterprise, you need to break out of your service-based mentality and the best way to do that is to create a product to sell. Think about it—once you’ve created your e-book, course, or physical product, you can sell it over and over, whereas you’re limited to providing a certain amount of services per week to clients.

Not only does a product give you the ability to reach many more people, but creating a product also provides you with passive income, giving you more time to work on other areas of your business. Put on your thinking cap and see what you can dream up. An e-book or online courses are probably the most accessible products for B2B service providers to produce. I don’t have an online course to sell (yet), but I’ve been teaching business-related subjects for more than a dozen years.

Scale your systems

In order to grow, one needs the tools to keep revenue consistently coming in at a steady and abundant pace. To support opportunities for that business growth, it pays to systematize certain business functions and responsibilities. Outsourcing gives you the pleasure of employing a fellow Freelancer as you devote more time to the pursuit of lucrative clients or identifying another product to sell.

Invoicing, bookkeeping, newsletter or blog editing and social media account management are popular outsourcing functions because they do not require a deep knowledge of your business. Outsourcing (or automating) routine tasks gives you the time you need to work on your business, not in your business and that will enable you to scale.

Thanks for reading,

Kim

Photograph: (Reuters) Master Baker Bartolo “Buddy” Valastro, owner of Carlo’s Bakery in Hoboken, NJ and star of the reality television show Cake Boss (TLC)

Business Failure: Autopsy and Recovery

Failure and setbacks in a business venture can take many forms, from a botched new product or service launch, to cash-flow insufficiency, losing the lease on the perfect storefront or office location, to the appearance of an aggressive new competitor. Business failure is painful and humiliating.

Even if the pre-launch planning and start-up capital are inadequate, significant research and planning and usually a large sum of money (that may have been borrowed) are nevertheless invested with the hopeful intention of bringing a new product, service, or company to life. If things don’t pan out, it’s inevitable that those involved feel crushed and demoralized.

The intricacies of launching and operating a business can cause any venture to falter, even if the founder is not directly responsible for the downfall. The many moving parts of a new venture can cause the founder to overlook essential factors, resulting in a failed launch.

Yet, in some cases,  it’s possible to recover and relaunch after an autopsy has been performed and you and your team (if there is one!) have figured out why things unraveled and how to avoid that problem and maybe others, too, in a second attempt. Common stumbling blocks include insufficient operating capital, an ill- conceived business model, an inadequate assessment of what target customers value and improper pricing.

Many Freelancers and entrepreneurs, after allowing themselves to grieve the loss, are able to move forward with determination and a better plan (and additional resources, most likely) to do much better in the next iteration. Take a look at these common causes of business failure and make note of the lessons to learn:

Unanticipated start-up costs and low sales revenue

Whether you self-financed and bootstrapped your business or borrowed from a bank or investors, you can find yourself in financial quicksand if your projections of start-up costs were underestimated and expectations for customer acquisition were blue-sky optimistic. It’s very easy to rack up big credit card debt and then succumb to panic that leads to making reckless decisions, such as second- mortgaging your home or borrowing from friends and family, as you struggle to successfully launch and create adequate business revenue. Unfortunately, you might find yourself unable to repay as expenses mount and customers are slow to arrive.

THE LESSON IS, do your homework. Thoroughly research the amount of money that will be required to launch your new business, or new product/ service, and make a rational plan for how to acquire the funds, whether you go to the bank, self-finance, ask to borrow from selected family and friends, or take on partners.

Regarding target customers, your first task is to figure out who will buy what you propose to sell, whether products or services. Is there a viable and growing market? Moreover, can you access those prospective customers, something that can be a challenge in the B2B sector.  Realistic financial projections will protect you, especially a Break-Even Analysis, which helps you predict when customer sales can be expected to pull into profit-making territory.

Finally, develop a profit-making business model. You must anticipate the start-up costs, be able to access the targeted customers, you must have the right method of delivering the products or services and pricing must be acceptable to the customers and profitable for the company.

Receivables collection problem

“They’d take sometimes 3 – 4 months to pay and it was killing my cash flow,” she said. “I couldn’t pay my suppliers without difficulty. (The company) refused to pay with a credit card. I was trying to get paid.” Lara O’Connor Hodgson, Co-Founder of the NOWaccount

As counter-intuitive as it seems, a business owner can have orders flying out the door and be totally broke. The problem, as described above by Lara O’Connor Hodgson, is that customers can be slow pay and the difficulty in collecting accounts receivable has put many businesses under.

THE LESSON IS, healthy cash-flow is essential to sustaining a viable business. Investigate the NOWaccount, which guarantees that invoices will be paid on time and in full (both you and the customer must have good credit). Those in a service business (me!) are advised to ask clients who contract to pay a project fee for an assignment to pay 15 % – 20 % of the total fee at the contract signing and link additional payments to project milestones or specific dates (at 30 day intervals, for example). The final payment owed should be no more than 25 % – 35 % of the total fee. In this way, you will receive regular infusions of cash and be much less vulnerable to a payment default by ghosting.

Powerful competitor

Facing a big new competitor is scary, but take a couple of deep breaths and take heart. If you’ve been in business for at least a year and managed to attract customers and deliver your products and services adequately, then you have a chance to hang on and continue with a growth trajectory. Just don’t panic; shift your adrenaline to market analysis instead. In reality, your competitor probably does not offer better quality products or services but rather has resources (like a generous advertising budget) that your organization lacks.

THE LESSON IS to 1.) analyze your competitor’s operation and determine the obstacles you need to overcome or what you need to do differently, i.e. smarter; 2.) refresh your customer knowledge to learn how their expectations and concerns may have changed to make them susceptible to switching their business to the competition; and 3.) avoid competing on price, which is usually an unwise strategy for smaller operations.

Larger companies have more money to work with and that allows them to hire more employees, offer a wider range of products and services, roll-out splashy marketing campaigns, stock more inventory and more flavors or colors and also offer lower prices because they can afford to buy in volume from the wholesalers.

Your defense is to brand your business well and customers reasons to think twice about opting for the competitor. Because no two businesses are alike, you must define for current and prospective customers why they’ll do better by doing business with you.

The heart of branding is defining and constantly communicating a company’s unique selling points, so you must 1.) understand the competition’s unique selling points and 2.) learn to clearly define and articulate your organization’s unique selling points so that you can build on the attributes that set your company apart and potentially make you valuable to customers.

When you understand your competition’s unique selling points and update your customer knowledge to learn as many specifics as possible about what resonates with them, at least theoretically, about the competitor’s unique selling points, you’ll see how to tweak your offerings in ways that reflect your company’s “house style.”

New and small businesses should definitely put an emphasis on excellent customer service. The digital revolution has not meant that customer interactions aren’t essential, even though face-to-face communication has become more limited for many.  To the contrary, customer service is even more vital in today’s business world.  Present a customer first attitude and create a pleasing customer experience. Go the extra mile to surprise and delight and your business will quickly become trusted and loved.

If you have employees, you also want to ensure you are the best employer in the industry. Having motivated and skilled staff will provide benefits for your customers and that will translate into benefits for your ability to successfully compete.

Some of the most successful entrepreneurs have suffered the frustrating experience of a business failure. For Scott Adams, creator of the world-famous Dilbert cartoons, life’s path wound through many jobs, failed startups, useless patents he applied for and countless other indignities. In his memoir, Adams shares lessons learned about keeping himself motivated, healthy and happy while racking up the failures that ultimately led to his success.

It’s fine to celebrate success, but it is more important to heed the lessons of failure.”  Bill Gates, Co-Founder and former Chairman and CEO of Microsoft Corporation

Thanks for reading,

Kim

Image: American Gothic (1930) by Grant Wood (1891 – 1942 Anamosa, Iowa, USA) courtesy of the Art Institute of Chicago. The painting depicts an Iowa farmer and his daughter.

Market Research: Social Media Sleuthing

How many articles have you seen that counseled business owners to “deliver value”,  “know the client’s pain points”, or “create a marketable business model”?  It’s great advice, but no one tells you how to do it.  How can a Freelancer or small business owner who is not armed with a 5-figure marketing budget unearth such information quickly and inexpensively?

You already know that it’s essential to communicate to clients, in a number of ways, that you understand their needs, the results they’re trying to achieve and that you’ve got the know-how to get the job done.  When invited to speak with a decision-maker about a potential role in a project, I recommend that you turn to the company’s social media feeds, ranking sites such as Yelp or Trip Advisor and the website and take notes on what you find—and you will find! Social media platforms and websites contain posts, newsletters, case studies, videos and/or audio reels that provide a treasure chest of information that you can use:

  • Marketing messages promoted to current and prospective customers
  • News about upcoming product and service launches
  • Indication of the products and services their customers prefer
  • Customer service complaints and compliments
  • Special promotional events
  • How the company positions itself against key competitors
  • Insights into whether customers skew male or female
  • The age range of customers
  • Job titles of customers if the company is B2B

Once you understand the prospect’s customers more completely, you can identify discussion topics and questions that will make you shine when you and the prospect meet. You’ll develop a winning sales pitch that speaks directly to the prospect’s needs, including perhaps matters that were not fully articulated when you first spoke with the prospect.

  • You’ll portray yourself as a highly competent, capable, trustworthy problem-solving professional who has the expertise to not only get the job done, but also to exceed expectations.
  • Your asking price will reflect the above conditions, meaning you’ll be able to command a premium price for your product or service (as determined by the client’s budget).

Now what if you are in the midst of writing a business plan to launch a new company, or conducting a business model refresh, perhaps in response to some inevitable disruption in the market place? Once again, social media sleuthing will reveal information that will ensure your business model will appeal to the evolving tastes and expectations of your target customers. You’ll be positioned to predict what factors will resonate for target customers, from their preferences regarding product or service features in your category, to the best way to express the perceived benefits and designing the ideal customer experience.

Social media postings will bring to light the big picture of your target customers and help you understand what makes them unique. You can then explore how your products and services can appeal to those distinctive attributes and conditions, in particular those needs and preferences that are either not fulfilled or are insufficiently served by competitors. Your product or service line, marketing materials, advertising and marketing campaigns, packaging, hours of operation, pricing and payment options will be structured to accommodate the distinguishing needs of your target customers.  You will capture your target market and your business will thrive as a result.

Thanks for reading,

Kim

Photograph: Peter Sellers in The Return of the Pink Panther (1975)

 

5 Ingredient Recipe to Make a Profit

It is useful to simplify and de-mystify processes that are prone to confuse or intimidate, frustrate or overwhelm.  Stripping complex processes down to their basic ingredients allows a clear picture to emerge and reveals how the gears and levers really work.  It is then easier to understand how to build out, alter, or sustain as needed.  A recipe (or formula, if you will) can de developed and codified.

Just like your favorite cookie or potato salad recipes, there are recipes that can be used to develop a profitable business enterprise. Let’s look this profit-making ingredient list:

LEADS

That is, prospects. Those individuals who consider doing business with you.  You may meet them in person anywhere and if they pose serious questions about your business that seem to make follow-up discussion appropriate, then consider that person a prospect.  If someone visits your website and pages through in search of information about your products and services, those visitors are also prospects.

CONVERSION RATE

Prospects who do business, whether they purchase a product or sign a contract for your company to provide a service.

AVERAGE DOLLAR SALE

You can calculate the average sale on a monthly, quarterly, or annual basis.  Divide the accounts receivable amount by the number of hours invoiced.

AVERAGE NUMBER SALES

Depending on your business, you may have only two or three projects in house at a given time.  Intangible service providers often have bigger ticket sales (projects) that are fewer in number than tangible service or product providers.

PROFIT MARGIN

This metric will be much easier to determine in a retail business, where wholesale acquisition costs or product production costs are readily verified.  Service providers must estimate their wholesale cost to produce that which is sold to clients.  If you provide graphics services or shoot videos, what does it cost you to provide the service? That estimated amount will be deducted from the hourly or project rate that you bill the client and that will reveal the profit margin.

  1. Leads X Conversion rate = Clients
  2. Clients X Average Dollar Sale = Revenue
  3. Revenue X Profit margin = Profit

Consider this example.  In your business, you, your newsletter or blog, social media accounts and your website make contact with an average 20 leads a month and you manage, on average, to convert one in every five of those prospects into a paying client, giving your organization a 20% conversion rate.

Leads (20) x Conversion rate (20%) = Clients (4/month) 

A reasonable estimate of the wholesale value of your time —-considered your production expense—to provide one of your services is $40.00/hour.  You typically bill at $65.00/hour, meaning that your hourly net income is $25.00/hour.

To calculate your profit margin, determine the amount of revenue (before deducting expenses) that your business earned during the calculation period.  For this example, we’ll have you bill those four clients a total of 100 hours/month, as 25 hours each per month, invoiced at your usual $65.00/hour for a total of $6500.00 gross revenue (sales) earned monthly. You invoice each client $1625.00 a month. Your $25.00/hour net income amounts to $2500.00 in a typical month.

Clients (4) x Avg. Dollar Sale ($1625)  =  Revenue $6500.00

The profit margin is calculated by dividing the monthly net income of $2500.00 by the gross monthly revenue (sales) of $6500.00 to reveal a monthly profit margin of 38.46%.  The profit (in contrast to either gross or net revenue) is calculated by multiplying the profit margin of 38.46% X  the gross revenue (sales) of $6500.00, that equals $2500.00/ month profit. You may recognize that figure as your monthly net income!

Revenue ($6500.00) x Profit margin (38.46%) = $2500.00

So there you have it.  As you can deduce, proprietors of service businesses that see few clients each month can, after doing research that helps determine a reasonable wholesale cost of your labor when providing services, can really impact profit by appropriately pricing services offered.  An increase of just $5.00/hour will add $500.00/month to the four client, 25 hours/month per client, total of 100 hours/month scenario presented here.

You’d invoice each client at $1750.00 per month, rather than $1625.00, and your monthly gross revenue (sales) would be $7000.00, a nice improvement over $6500.00/ month. To account for the inevitable fluctuations in Freelancer earnings, I estimate that for 10 months/ year one can reasonably expect to earn at the projected level shown here.

Thanks for reading,

Kim

Photograph:  © Girl Scouts of America, circa 1960

Goal Setting Guidelines

Happy December! Here we are in the last month of the year and like the two-headed Janus, we’re simultaneously looking backward to count our successes and forward to finish the year strong and decide which goals appear to hold the most promise for seeding a successful 1Q2019 and beyond.

There is traditionally much talk about goal-setting at this time of year and many of us climb aboard the train out of a sense of obligation, or even guilt. But maybe we should first spend some time vetting the goals we choose to pursue? For starters, our goals should be tied to benefits that substantively improve our personal or professional lives.

SMART Goals—Specific, Measurable, Attainable, Relevant and Timely—are the accomplishments we’d be wise to pursue.  SMART Goals are worthy of the planning, money and other resources that we expend to achieve them. We owe it to ourselves to confirm that the goals we choose are within our capacity to reach them and that they will further our agenda to build a fulfilling professional and personal life.  Ensure that the goals you choose are right for you.

SPECIFIC   Increasing your client list is a worthwhile goal and you’ll have a better chance of achieving it if you define the industry, type, or size of the organizations you’d like to add to your roster.  For example, rather than randomly looking to work with larger not-for-profit organizations, specify your mission. You may elect to pursue not-for-profit organizations that have 100 or more employees and/or an annual operating budget of $1,000,000 – $5,000,000.

MEASURABLE   Identify metrics and milestones that will monitor your progress and inspire you to continue on your path.  The measurements need not be complicated. If you are able to meet with a coveted prospective client, that’s a milestone.  The size of your client list, the number of billable hours and the amount of sales revenue from quarter to quarter are also easy-to-follow and relevant metrics, if they document your progress.  Just be sure to measure that which demonstrates achievement. The last day of each quarter is a good time to examine and evaluate your milestones and metrics.

ATTAINABLE   If earning more money is your goal, give yourself a realistic figure to reach for.  If your average monthly sales revenue is $5000, think about how you can add $500 – $1000 /month.  Expecting to earn $10,000 /month is probably too steep, unless you have one heck of a competitive advantage or you’re about to sign a very big client who will give you game-changing billable hours.

You may be able to eventually earn an additional $500 – $1000/ month with a savvy new marketing plan that’s combined with other strategies, such as a new client acquisition plan, an exciting new product or service that seems to have good sales potential, or an initiative to win back certain lapsed clients.

RELEVANT   Your goals should make sense for your life and business. Keeping up with or surpassing your perceived rivals is not a valid reason to set a particular goal.  Acknowledge the objectives behind the goals and be honest about why you want to pursue them.

TIMELY   The desire to retire at age 50 is still in fashion, but it will be more realistic to start planning no later than age 40, to give yourself a decade to get in touch with what might make you feel fulfilled in your post-working life and understand how you’ll earn enough to make it possible.

What might retirement mean to you? Maybe it means you’ll leave your traditional job and start a home-based craft making business that will see you selling your wares on Etsy and at local Christmas Village markets. Or perhaps it means you’ll not work and instead devote yourself to volunteering and taking long winter vacations spent on the ski slopes? whatever your choice, you’ll need to plan your retirement money carefully. Should you buy investment property that will give you a steady stream of rental income, or invest more aggressively in the surging stock market?

The process of setting goals for yourself and/or your business enables you to define and recognize what success looks like and means to you.  You’ll learn to think strategically about how to grow your business and the resources needed to achieve that growth.  You’ll calculate the money needed for an expansion plan or new equipment, make notes for a first draft of the marketing plan you’ll need to devise, consider the relationships you may want to renew or develop and/or estimate the new staff you may need to hire.

“If you don’t know where you’re going, you’ll probably end up someplace else.”                   –Peter “Yogi” Berra, former NY Yankees catcher and Baseball Hall of Fame member

Thanks for reading,

Kim

Image: Academy Award winning actor (Best Actor El Cid, 1961) Charlton Heston (center) as Judah Ben-Hur in Ben-Hur (1959)