Smart Strategies For Taking Your Business To The Next Level

Smart Strategies for Taking Your
Business to the Next Level
From
CONTRIBUTORS
Contributors to this document include:
Barry Farber • Kim T. Gordon • Mark Henricks • David G. Javitch
Amanda C. Kooser • David Meier • Ivan Misner • David Newton
Gisela M. Pedroza • David Rye • David Worrell
© 2004 by Entrepreneur Media Inc.

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Pump Up Your Business!
Table of Contents
1. Where Do You Want to Take 1
Your Business?
2. Ways to Grow 5
3. Financing Your Growth 9
4.. Boost Your Business With the 14

Customers You've Got
5. Build Stronger Client Relationships 20

With CRM Tools
6. Hiring and Keeping the 23

Best Employees
i
ENTREPRENEUR’S SOLUTIONS FOR GROWING BUSINESSES
Pump Up Your Business! 1.
Where Do You Want to Take
Your Business?
"I f you don't know where you're going, you'll probably end up
someplace else," Yogi Berra said. A goal is a way to make sure you don't
wind up someplace other than where you want to be.
At its simplest, a goal is just something you aim for. But goals are pow-
erful contributors to successful business growth in several ways. To be-
gin with, the process of setting goals forces you to think through what
you want from your business and how growth may—or may not—provide
that. This process helps suggest directions for pursuing that growth,
which can greatly improve your chances of achieving your goals in the
first place.
Goals also give you a framework within which to work. This tends to
focus your efforts by helping you rule out actions that won't contribute to
achieving the goals you've set. A very important part of that framework is
a timetable. Any good goal has a timetable, and that timetable will influ-
ence your actions profoundly. For instance, if your goal is to retire by age
50, you'll know that any growth plan with a payoff that won't occur by
your 51st birthday is not one you should consider, no matter how attrac-
tive it might otherwise seem.
Evaluating Goals
But it's not enough just to have goals. They need to be the right goals
and ones that are appropriate to your ambitions and abilities. When en-
trepreneurs talk about their goals, whether they're for the past year—or
for a lifetime—the most frequent issue is whether those goals were the
best ones to have.
If your goals appear to be holding you back or directing your efforts

into unproductive areas, then there's definitely something you can do
about it. In fact, setting new goals for yourself and your business is both
easy and essential if you're going to grow. When looking at new goals,
make sure they have the following qualities:
1
Where Do You Want to
Take Your Business?
! Specificity. You stand a better chance of achieving a goal if it's

specific. "Raising capital" isn't a specific goal; "raising $10,000 by July 1" is.
! Optimism. Goals should be positive and uplifting. "Being able to

pay the bills" is not exactly an inspirational goal. "Achieving financial se-
curity" phrases your goal in a more positive manner, thus firing up your
energy to attain it.
! Realism. If you set a goal to earn $100,000 per month when you've
never earned that much in a year, that goal is unrealistic. Begin with
small steps, such as increasing your monthly income by 25 percent.
Once your first goal is met, you can reach for larger ones more easily.
! Thinking short- and long-term. Short-term goals are attainable in

a period of weeks to a year. Long-term goals can be achieved five, 10 or
even 20 years from now; they should be substantially greater than short-
term goals but should still be realistic.
! Income. Many entrepreneurs want growth to provide financial secu-

rity. Consider how much money you want to make each year when plan-
ning your growth.
! Lifestyle. This includes areas such as travel, hours of work, invest-

ment of personal assets and geographic location. Are you willing to travel
extensively or move if that's what it takes? How many hours are you will-
ing to work? Which assets are you willing to risk?
! Ego gratification. Face it—many people want to grow their busi-

ness to satisfy their egos. Owning a bigger business can be very ego-
gratifying. You need to decide how important ego gratification is to you
and what size business best fills that need.
! Honesty. The most important rule of goal-setting is honesty. Build-

ing a business with your eyes wide open about your strengths and weak-
nesses, your likes and dislikes, and your ultimate goals allows you to
confront dilemmas with greater confidence and a greater chance of success.
Creating a Road Map for the Future

The difference between a dream and a plan is that the first simply ex-
presses a desire to be someone or to achieve something, while the sec-
ond expresses a method for accomplishing the first. If you really want to
2
achieve your dreams, you need a growth plan or a map that's going to
show you how to get from here to there. A good road map for future
growth needs to have the characteristics of specificity and realism, just
like a good goal. It should also contain benchmarks to measure your
progress and tools to measure how well you're doing.
Setting Benefits
An important part of any growth plan is establishing a way to tell when
you've reached important points in the process. These mile markers can
be composed of any number of benchmarks. Overall sales revenue is a
common one. Many companies recognize the first year they topped
$1 million, $5 million and $10 million in sales. Sales is an obvious, impor-
tant, easily grasped benchmark. You can look at sales growth rates and
overall sales volume as valuable benchmarks.
Sales, however, are not the only benchmark. You can also look at
benchmarks for such critical variables as number of stores, number of
customers and transaction volume. Many industries have benchmarks
unique to them. For instance, air carriers think in terms of percentage of
seats filled and revenue generated per mile flown. E-commerce busi-
nesses measure Web page views and time spent on each page. Your
business may be concerned with even more esoteric benchmarks, such
as percentage of repeat customers or average sale amount per customer.
Not all benchmarks have to do with growth, however. You can also set
benchmarks related to cost savings, error rates, employee turnover and
many other aspects of your business. About the only characteristics all
benchmarks share are that they should be significant, relevant and
measurable.
Revisiting Goals
The value of a goal lies in the way it provides you with a relatively
steady, unblinking light toward which to steer in the fog of everyday busi-
ness life. But that doesn't mean a goal should be as immovable as a
lighthouse. You should periodically take a fresh look at your goals to see
if they need to be changed or, perhaps, dumped.
3
Where Do You Want to
Take Your Business?
Changes in your personal situation, such as a desire to spend more time

with family, may cause some goals to become irrelevant to your true de-
sires. Of course, the best reason to scrap a goal is because it has been
accomplished.
The last thing you need to know about goals is that they are just that—
goals. They aren't preordained events that will occur whether or not you
work toward them. In other words, just having a goal of reaching $10 mil-
lion in sales doesn't mean you'll achieve it. Nor should the accomplish-
ment of a goal be considered absolutely necessary to your personal well-
being. Some goals are more important than others, but it's not wise to be
so committed to a given goal that, if you don't achieve it or it's not all you
hoped it would be, you'll be emotionally destroyed. Remember, as that
great philosopher Yogi Berra also said, "The future ain't what it used to be."
4
Ways to Grow
I f your business isn't growing as fast as you'd like, you may have
reached a degree of saturation within your existing target market(s). In
order to grow faster, you may be well-advised to look to new markets for
growth. The following are five examples of marketing strategies you can
implement to create sales for your business within new markets:
! Expanding your product line or service offerings. You can identi-

fy and access new markets that currently exist within your business's tar-
get market(s) by adding new products and/or services. By creating these
new products or services, your business can reach members of target
markets who were otherwise inaccessible to your business using its ex-
isting product/service mix.
! Using strategic marketing alliances. These alliances allow your

business to sell its products and services through other existing busi-
nesses. Your business will be able to access the target markets these al-
liance partners currently serve, without having to do any additional mar-
keting.
! Opening a new location. Once your business is successfully oper-

ating in and serving an identifiable target market area, it may be time to
consider expanding with one or more branch locations. The key to creat-
ing and successfully operating a new location is to be certain that a
strong demand already exists within this target market for your busi-
ness's products and services. It takes considerable time and money to
create demand where it doesn't currently exist. Additionally, you must en-
sure that these potential customers within this new location are in fact
new potential customers, not existing customers of your business.
! Marketing on the Internet. If your business's products and services

can be delivered to potential customers throughout the country and the
world, you can gain access to the largest target market anywhere: the
collection of potential customers you can reach via the Web. Although it's
difficult to rely on potential Internet customers to "find" your business's
Web site, using search engines for example, you can promote sales by
5
Ways to Grow
aligning your business with existing successful Internet businesses. You

can arrange for your business's URL to be displayed on a "click through"
basis by other Internet businesses. In this manner, you can generate
customer leads from people who click through to your business' site.
! Franchising or licensing your business concept. Once your

business has matured to the point where it's both easily duplicable and
doesn't rely on your presence in order to operate successfully, you may
want to consider creating franchise opportunities that you can sell to indi-
viduals and/or investor groups that wish to own and operate a business
similar to yours. A franchise of your business is, in effect, a copy of your
business that can be sold as a stand-alone entity. You must be certain
that your business can be operated in locations apart from the target
markets it's served; otherwise it won't be salable. Alternatively, you can li-
cense your business, whereby the right to operate a business like yours
is sold to other entrepreneurs, within a set of certain guidelines and oper-
ating procedures.
Going Global
The U.S. market for almost everything is huge, but it's not large
enough for many entrepreneurs. For these growth-minded business own-
ers, the rest of the world is their oyster. Seeking international growth by
going global as an importer-exporter offers opportunity aplenty. Some of
the specific advantages presented by successfully growing globally in-
clude these:
! You can extend the sales life of existing products and services by
finding new markets to sell them in.
! You can reduce your dependence on the markets you have devel-
oped in the United States.
! If your business is plagued by destabilizing fluctuations in your mar-

kets due to seasonal changes or demand cycles, you can even out your
sales by tapping markets with different or even countercyclical fluctuations.
! You can exploit corporate technology and know-how.
6
! By entering the global marketplace, you'll learn how to compete

against foreign companies—and even take the battle to them on their
own ground.
The overriding reason to go global, of course, it to improve your poten-
tial for expansion and growth. And there are too many international op-
portunities for us to catalog them all here—or even in a much longer
book than this one. The obvious opportunities are the markets in Cana-
da, Mexico, Europe and Japan. But those only scratch the surface. There
are many other fast-growing, less-competitive markets.
Like most long journeys, going global can be boiled down to a series
of steps. Here are the six basic steps to going global:
1. Start your campaign to grow by international expansion by preparing

an international business plan to evaluate your needs and set your goals.
It's essential to assess your readiness and commitment to grow interna-
tionally before you get started.
2. Conduct foreign market research and identify international markets.

The Department of Commerce is an excellent source of information on
foreign markets for U.S. goods and services.
3. Evaluate and select methods of distributing your product abroad.

You can choose from a variety of means for distributing your product,
from opening company-owned foreign subsidiaries to working with
agents, representatives and distributors and setting up joint ventures.
4. Learn how to set prices, negotiate deals and navigate the legal
morass of exporting. Cultural, social, legal and economic differences
make exporting a challenge for business owners who have only operated
in the United States.
5. Tap government and private sources of financing—and figure out

ways to make sure you're getting paid. Financing is always an issue, but
government interest in boosting exporting and centuries of financial inno-
vation have made getting funding and getting paid easier than ever.
7
Ways to Grow
6. Move your goods to their international market, making sure you

package and label them in accordance with regulations in the market you
are selling to. The globalization of transportation systems helps here, but
regulations are still different everywhere you go.
Try Online Auctions

Fifty million registered users can't all be wrong. EBay is an empire that
was built on a foundation of individual sellers and raised up on the back
of collectibles and antiques. But if that's all you think eBay is, you proba-
bly haven't visited the site lately.
EBay isn't a cure-all for lagging business sales, and it can be a very
involved and time-consuming operation. It's had its share of complaints
from small businesses unhappy about fee increases and the site's poli-
cies. But eBay is still a valuable tool for many entrepreneurs, offering op-
portunities that can help your business grow to new heights.
While 50 million registered users is a sea of potential customers, com-

petition for this vast market is intense. Just as you wouldn't open up a
comic book store next to an existing comic book store in the real world,
you shouldn't place items up for auction if the site is already saturated
with similar offerings that aren't selling well. Don't waste your time.
Instead of just throwing items up on eBay to see what sticks, do some

research first to evaluate the competition, check pricing and popularity. In
the rare case that you can't find your item listed in current or closed auc-
tion listings, eBay can still provide a good barometer of customer inter-
est. Try running an auction and see what kind of attention it generates.
Adding a visitor counter to your listing will give you an idea of how many
people stop by for a look. Where else can you test-market a product for
under a buck?
EBay is also a hotspot for shedding excess inventory that's haunted

your shelves for too long. Price-conscious auction buyers love to snag
overstock or last-generation items at bargain rates. If a customer returns
a Zip drive to your store with the box open, you can't restock it as new.
Consider putting it on eBay instead.
8
Financing Your Growth
I s there a good time, vs. a better time, to raise money for a busi-
ness? When you factor timing into your funding plan, be sure to think of
these three issues:
! When do you absolutely need the money to come into your firm's
bank account?
! How linked is your company's upcoming sales and profit perform-

ance to the current economic climate?
! Where is your firm's best deal-making strength—in waiting and

playing possible funding sources against each other, or in closing out a
deal as soon as possible?
Time is always a luxury when raising funds—if you have it on your

side. But if your business is running out of cash and there are huge pay-
ments and deals to finalize this week or next, there's no such thing as
"timing" your deal preparation because you have to get funds now. How-
ever, if you're targeting 30 to 60 days out for one or two specific moves
you'd like to make with your company, your timing might allow you to wait
on that angel investor who's out of town until the month after next, or
postpone that presentation to the bank because the lending officer told
you they were very backed up.
And of course, if you're simply strategizing about an intermediate-term

investment six to nine months from now, you can back away from deals
that aren't right for you, keep a lasting dialogue going with a funding
group that has some initial interest, or wait on that great funding contact
who told you they'd be interested sometime during the early part of next year.
With regard to how your firm is linked to the economic environment,

your timing for pitching a deal might be tied directly to when your cash
flow looks its best, or when you land the biggest account you've ever
serviced, or when the wholesale buyers in your industry start to pick up
the pace on new orders. Certainly you're much better off asking for funds
9
after you sign up two new regional suppliers rather than before those
deals are signed. If inventory is turning slower than normal but you ex-
pect a solid rebound by the fourth quarter, then timing your funding pitch
to incorporate the good economic news coming later is probably better
than going after the funds now, while your product cycles don't look as
good and cash flow is weak.
Finally, where you locate your firm relative to the funding channels will
also affect your timing. This is a function of both when you need the mon-
ey and how your company stacks up relative to the current business cli-
mate. If you have very limited prospects for funding presentations, then
your firm can't play two or more funding providers against each other
during negotiations. However, if you're in a position where a few firms are
all showing interest in your proposed deal, your timing works in your fa-
vor, as you can hear from different sources, weigh various terms side-by-
side, and see if one of these wants to step up and make the deal hap-
pen, knowing there are other prospects.
Remember, you can't allow timing to be an excuse for not getting a

funding deal. Are there timing issues? Certainly! But many firms put fund-
ing deals together quickly and in tough economic times. And if you don't
need the money for six to nine months and your industry is doing well,
that still doesn't guarantee that the timing is perfect for closing a deal.
Why You Need a Growth Plan

If you're looking for growth capital, it could be tempting to dust off your
yellowing business plan and head right out on the road to find funding.
But be forewarned, the document you will need to secure growth financ-
ing may not resemble the one you made for your start-up-stage business.
First and foremost, a growth-stage funding plan is different in tone and

purpose from a start-up business plan, says Jim Horan, author of The
One Page Business Plan. "In start-up, we're in a highly chaotic, creative
mode," says Horan. "But creativity is overrated in most [later-stage] com-
panies." Instead, the growth plan should emphasize how you will repro-
duce your previous success.
10
"As soon as you find out what works, you want to move from creativity
to conformity," suggests Horan. Rather than hypothesize about potential
new markets or products, a growth-stage entrepreneur needs to think
about making his or her operation conform to rigorous financial and oper-
ating standards while implementing repeatable policies and procedures.
Where the start-up plan may have a few sections on research and de-
velopment, a growth plan should focus on your company's rollout and ex-
pansion. A fundable growth plan will be heavy on operational details such
as staffing, sales, marketing and production.
In the start-up phase, important financial ratios like gross margin are a
poor guess at best, and a happy fantasy at worst. A growing business,
however, has the advantage of using real operating results to project fu-
ture growth. Any growth-stage funding plan should reflect actual results
whenever possible.
Further, the level of financial detail available to—and expected from—

a growing business is beyond anything a start-up could dream. How
many prospects turn into customers? How many service staff does it take
to support 100 accounts? How much will the phone bill be? Specific an-
swers to these kinds of detailed questions are vital to the credibility of a
growth plan, and they should replace the broad assumptions inherent in
all start-up plans.
Early-stage investors are famous for playing long odds: An early-stage

VC fund may survive on one success from 10 investments. Later-stage
investors are unlikely to view risk through such rose-colored lenses, how-
ever, so a growth plan must be clear about how the company will mini-
mize risk. Banks are the epitome of risk-averse growth investors. They
may settle for a 10 percent return on their money, but they want to be
110 percent sure that they'll get it back.
Nontraditional Options for Nontraditional Businesses

If you've been in business for less than three years or have nothing to
offer as collateral, you might find traditional lending institutions unwilling
to finance your business. There are options, though—if you know where to look.
11
If you originally borrowed funds from friends and family, going back to
them—but making it a formal loan with a set repayment plan and inter-
est—might be a viable option, if you haven't already gone this route. For
instance, an institution like CircleLending—which administers loans be-
tween individuals by handling and storing all the documentation, creating
a repayment schedule, taking care of payments through debits and direct
deposits, and even handling collections if the loans go into default—can
make things easier for both you and your loved ones.
What if your need exceeds what you can borrow from friends and fam-
ily? When Paul Entin founded his first business, Fitnesslink.com, the
company grew rapidly, and he knew he needed to seek outside funding
to bolster the technology he was using to run the site. Unwilling to give
up control of his company to a venture capitalist—he'd been approached
several times—he instead got a microloan from an SBA-backed lender.
The infusion of funds allowed Entin to beef up the technology in his busi-
ness, which he subsequently sold.
So when it came time to find funding for his current business—epr, a

homebased Washington, New Jersey, marketing and advertising firm
specializing in industrial clients—he knew exactly where to look. "We had
talked to our bank and investigated other ways, like home equity loans,
but this seemed like the most effective way to go. It was a fair interest
rate, plus they were able to give us the loan without having a [drawn-out]
process upfront," says Entin, who invested the $27,000 from his second
loan into office equipment and materials.
If you lack funds on a short-term basis, think about creative forms of fi-
nancing, such as pre-selling. "We teach [our students] to use a customer
as the basis of funding," notes Professor Ken Proudfoot, director of the
Larry Friedman International Center for Entrepreneurship at Johnson &
Wales University in Providence, Rhode Island. "And the way that works
is by pre-selling the product or service—taking a deposit for the delivery
of the product or service in advance of actually delivering it," says Proud-
foot. You can then use the deposit to purchase the materials you may
need to deliver the product at a later date.
12
Another method of obtaining financing for supplies or materials is to

approach vendors of those products about opening a line of credit with
them. With flexible terms of payment, you can stock your inventory or
buy raw materials for your product without having to put the cash upfront.
Now before you go out and borrow from anyone, make sure you have
a bona fide need. Money won't solve problems in your business, warns
Proudfoot, and you shouldn't expand your capacity without first ensuring
you have the customer base to justify the expansion.
13
Boost Your Business With
the Customers You've Got
W ith the skyrocketing cost of customer acquisition, it makes sense to
focus on retaining and up-selling current customers. It can cost as much
as five times more to win a new customer than to keep an old one. Yet
many entrepreneurs remain fixated on prospecting—at the expense of
programs for existing customers that would build sales more cost -
effectively.
Customer loyalty programs (aka reward programs) have become es-

sential in price-sensitive arenas and where there are similar products or
services. About half of all Americans belong to at least one. Drugstore
chain CVS Corp., for instance, has 32 million "ExtraCare" card members.
And Regal Entertainment Group rewards frequent moviegoers with free
concession food and discounts.
Loyalty programs make sense for growing businesses, too. Entrepre-

neurs with successful customer reward programs enjoy increased sales,
have lower marketing costs and amass invaluable information. The bulk
of the data is gathered when customers sign up. Later, information is col-
lected through surveys and during transactions.
By tracking current customer data, you can discover opportunities,

better segment your customer base and identify the needs of different
groups. If you're a retailer, you can use this information to accurately
stock your store. And once you uncover your best customers' prefer-
ences, you can develop marketing campaigns that target prospects who
share similar characteristics.
Here are a few things to keep in mind when creating a reward program:
! Choose the right rewards. In-kind rewards are less costly and are
clearly associated with your business. Say you owned an ice cream shop
and wanted to reward customers who had purchased five cones. Provid-
ing the sixth cone free would be better than offering a discount on a
movie ticket because it would cost less and customers could relate it to
14
the C ustomers Y ou've G ot
your business. It would also convey a real cash value-while the free cone
might cost you 25 cents, customers would perceive it as a $2.25 gift.
! Entice your customers. Tell customers what to expect. This

tempts them to make purchases toward their goals. You can also use
your program to encourage customers to try other products and services.
Let's say your ice cream shop rewards customers with a double-decker
sundae following a dozen purchases. Tasting the reward will introduce
customers to higher-priced items, thus encouraging more customers to
buy them.
! Reward your best customers. Offering graduated awards with in-

creasing cash value is a great way to motivate your best customers. This
turns low-value customers into high-value ones, and it avoids the pitfalls
of other types of reward programs, which attract less-profitable price
switchers.
! Reward at enrollment. Programs that provide immediate rewards

encourage customers to register. One method is to offer a bonus at en-
rollment. And some retailers engage customers before they ever leave
the store by making an additional offer at checkout or by printing a mes-
sage on the sales receipt.
! Measure performance. Set goals for your program, and continually

monitor your results. Measure the increase in use of your products or
services, the number of transactions involving loyalty program ID num-
bers, and the growth of your enrolled customer base. Then you can fine-
tune your program and build on what works.
Other Up-Selling Strategies

If your business can effectively reach its existing customer base, you
have the advantage of marketing to those who already know and like
your business and its products and services. Your business's existing
customers are aware that your business can meet their needs and
wants, and with prices they accept.
The following are four major ways to up-sell your existing customers.
Note: For our example, let's assume you're in the media business.
15
! Sell more of what your customers are already buying. Each of

your existing customers has certain buying habits. Ideally you'll have ac-
cumulated data that allows you to reference both the specific items they
purchase as well as their frequency. With this information, you can offer
additional products and services in which the customer has already
proved to have an interest. For example, sell other music CDs featuring
your customers' favorite recording artists, or send your customers a
newsletter announcing new releases.
! Sell complementary products and services. Your business may

have products and services that can be sold in conjunction with other
products and services. These items are often an easy up-sell that can be
made at the point of purchase. For example, when a customer buys a
music CD, you could offer them a CD carrying case or a storage tower.
! Introduce noncomplementary products and services. Your cur-

rent customers posses a degree of trust in your business, and this can
be converted into sales of products and services that are not directly re-
lated to the customers' existing purchases. For example, a customer who
typically buys music CDs can be introduced to videotapes and DVDs that
provide access to the latest in recorded movies.
! Offer new products and services that your business has

added. As your business adds new products and services, these can be
offered to your existing customers. This can be done without your having
to convert these customers to your business, as they already like your
business and how it operates. For example, if your media business adds
media equipment to your product line, such as CD, video and/or DVD
players, these can also be offered to existing customers.
Follow Up With Your Best Customers

Another important tool for generating repeat business is following up.
Effective follow-up begins immediately after the sale when you call the
customer to say "thank you" and find out if he or she is pleased with your
product or service. Beyond this, there are several effective ways to follow
up that ensure your business is always in the customer's mind.
16
! Let customers know what you're doing for them. This can be in
the form of a newsletter mailed to existing customers, or it can be more
informal, such as a phone call. Whatever method you use, the key is to
dramatically point out to customers the excellent service you are giving
them. If you never mention all the things you are doing for them, cus-
tomers may not notice.
! Write old customers personal, handwritten notes frequently. "I

was just sitting at my desk and your name popped into my head. Are you
still having a great time flying all over the country? Let me know if you
need another set of luggage. I can stop by with our latest models any
time." Or if you run into an old customer at an event, follow up with a
note: "It was great seeing you at the CDC Christmas party. I'll call you
early in the New Year to schedule a lunch."
! Keep it personal. Voice mail and e-mail make it easy to communi-

cate, but the personal touch is often lost. If you're having trouble getting
through to someone whose problem requires that personal touch, leave a
voice-mail message that you want to talk to the person directly or will
stop by his or her office at a designated time.
! Remember special occasions. Send regular customers birthday

cards, anniversary cards, holiday cards...you name it. Gifts are excellent
follow-up tools, too. You don't have to spend a fortune to show you care;
use your creativity to come up with interesting gift ideas that tie into your
business, the customer's business or his or her recent purchase.
! Pass on information. If you read an article, see a new book, or

hear about an organization a customer might be interested in, drop a
note or make a quick call to let them know.
! Consider follow-up calls as business development calls. When

you talk to or visit old clients or customers, you'll often find they have re-
ferrals to give you, which can lead to new business.
With all your existing customers can do for you, there's simply no reason
not to stay in regular contact with them. Use your imagination, and you'll
think of plenty of other ideas that can help you develop a lasting relationship.
17
Finally, Let Them Work for You!

How many times have friends, family, associates and even customers
said "If there's anything I can do to help you, let me know"? How often
have you said "Well, now that you mention it, there are a few things you
could do"? If you're like most people, you aren't prepared to accept help
at the moment it's offered. You let opportunity slip by because you
haven't given enough thought to the kinds of help you need. You haven't
made the connection between specific items or services you need and
the people who can supply them. But when help is offered, it's to your
advantage to be prepared and to respond by stating a specific need.
Don't let the next opportunity for others to help slip through your fin-
gers! Being prepared with some simple requests can make a real differ-
ence in the success of your business. There are many ways your
sources can help you promote yourself and your business:
1. They can provide you with referrals. The kind of support you'd
most like to get from your contacts is referrals—the names of specific in-
dividuals who need your products and services. They can also give
prospects your name and number.
2. They can introduce you to prospects. Your contacts can help you
build new relationships faster by introducing you in person to people they
think need your products and services. Furthermore, they can provide
you with key information about the prospect. They can also tell the
prospect a few things about you, your business, how the two of you met,
some of the things you and the prospect have in common, and the value
of your products and services.
3. They can endorse your products and services. By telling others

what they've gained from using your products or services in presenta-
tions or informal conversations, your sources can encourage others to
use your products or services.
4. They can display your literature and products in their offices

and homes. If these items are displayed well—such as on a counter or
bulletin board in a waiting room—visitors will ask questions or read the
information.
18
Some may even take your promotional materials and display them in oth-
er places, increasing your visibility.
5. They can distribute your information. Your contacts can help you
distribute marketing materials. For instance, a dry cleaner might attach a
coupon from the hair salon next door to each plastic bag he/she uses to
cover customers' clothes. Including your flier in the middle of their
newsletter is another idea.
6. They can publish information for you. Your contacts may be able
to get information about you and your business printed in publications
they subscribe to and in which they have some input or influence. For ex-
ample, a source who belongs to an association that publishes a newslet-
ter might help you get an article published or persuade the editor to run a
story about you.
Keep this list with you and add to it as other needs occur to you.
Knowing how to match your needs with the right sources is key to obtain-
ing the type of help you need. But remember—it's a two-way street.
These support activities are also things you can do to help your contacts
promote their businesses and generate referrals. Helping your sources
achieve their goals goes a long way toward building effective and re-
warding relationships.
19
Build Stronger Client
Relationships With CRM Tools
L et's take a quick pop quiz. CRM is a) customer relationship man-
agement, b) a type of software program, c) a philosophy and way of do-
ing business, or d) all of the above.
If you chose "d," congratulations. Customer relationship management

(CRM) isn't just a software package; it's a way of business life. We don't
mean to sound like a new age guru, but it really helps to take a holistic
approach to CRM if you expect to find success and avoid the pitfalls so
many companies have experienced with it. And as the owner of a grow-
ing enterprise, what you should be asking yourself is this: Can you afford
not to have a CRM strategy?
Recent studies indicate that growing businesses are the driving force
behind the growth of this type of software in North America. Inspired by
this trend, numerous software vendors have set out to develop CRM
tools that aim to meet the needs of this segment. In fact, a recent study
by Jupiter Media Metrix found that spending on CRM software by small
and midsized businesses (SMBs) would reach $651 million by 2006 and
make up 19 percent of the entire CRM software market, up from 10 per-
cent in 2001.
According to Jupiter analysts, as the relationships between SMBs and

their customers become more complex, and as the number of customer
touch-points increases, businesses will increasingly look to software and
services to help them manage those relationships.
"Nothing should be simpler than deciding that serving your customers

better is important. CRM shouldn't be so damn difficult," says Chris Sell-
and, founder and managing director of technology consulting firm Reser-
voir Partners. If it hurts that bad, you're probably going about it wrong.
Selland says that most of the failures stem from businesses approaching
CRM as a software project rather than a business process.
"CRM is not just a technology," explains Joe Outlaw, former research

director and small- and midsized-business CRM specialist at Gartner Inc.
20
Build Stronger Client
Relationships With CRM Tools
"It's a business strategy around interacting with your customers in a way

that brings them more value and is more profitable to you." By using soft-
ware to record customer interactions with sales and customer service
personnel, CRM applications can provide a 360-degree view of your
business 24/7. The goal is to boost revenue and keep customers happy.
Now who can argue with that?
Another reason to think about implementing CRM? "Small companies

[with few customers] don't have to have sophisticated systems in place;
it's easy to keep track of their customers and what they want," says Out-
law. "But once you have hundreds or thousands of customers, it's impor-
tant to have technology in place, such as a centralized database with up-
to-date customer information, [allowing] everybody in the company to
understand what each customer wants and needs. This is really the key
to CRM."
Once you decide to search for a CRM solution, where do you start?
Your first step is to develop a CRM vision for your business. Some com-
mon goals include making your customer service easier to access, gain-
ing a greater understanding of customer needs, reducing sales or sup-
port costs, retaining customers longer and getting new customers.
Determine where you would like to end up, and then develop a strategy
around what it will take to get there. Selland recommends gathering as
many high-level people in your business as you can to start a discussion
and including your customers as well.
"Put yourself in your customers' shoes," says Outlaw. "What do you

need to do to make your company easier to do business with?" Once you
know what issues need to be addressed in your company, it's time to lay
down the requirements and functional elements for the software applica-
tion that will address them. Whatever you choose needs to work with
your existing setup, whether it's a server, an e-mail program or other
software.
Some entrepreneurs go it alone when putting a CRM strategy togeth-

er. Others look for outside help from consultants or value-added re-
sellers. A reseller you've worked with before can be helpful if he or she is
already familiar with your hardware, software and systems. The down-
21
side is, most have ties to only a few CRM options, and they'll try to steer
you in that direction. So it might be good to choose a more neutral advisor.
When you do get around to the software component of your CRM

strategy, there are a myriad of choices to explore, different approaches of
varying cost and scale. Among the many choices, there are enterprise-
style CRM applications, on-premises applications and those hosted on-
line. Be sure to explore all your options, and then decide which one best
fits your business.
No matter what kind of business you're in, both Selland and Outlaw
make the point that CRM is an ongoing activity, a constant process of im-
provement. The CRM industry is maturing past the hype stage, recover-
ing from early mistakes and reaching a new level of affordability. No mat-
ter who you go with, there should always be room to grow with a
full-fledged CRM solution. Remember that the technology itself plays a
supporting role in the big picture of CRM, so rely on your vision, and let
your CRM strategy help take your business to the next level.
22
Hiring and Keeping
the Best Employees
T urnover can be a frustrating issue for any company, especially a
growing one. How can you avoid turnover? One simple answer is: Hire
better candidates. But that of course begs the question, how do you hire
better candidates? And why do so many companies make mistakes in
this area? The simple answer is that they weren't trained in the art and
science of hiring human beings.
Here are some chief reasons why new hires are frequently misfires.
First, knowingly or not, many interviewers are biased. The reason you
like someone or something is rarely based on rational thought; instead,
it's based on, "Well, I just prefer it this way." With candidates, you may
like the way they look, smile, dress, act or speak. Or they may remind
you of yourself or someone you like. They may have interests like yours
or know people whom you know.
Or they may be good at one or two aspects of a job, and you eagerly
assume or want to believe that they will be effective at other aspects. You
may accept as honest and true something a reference said about the
candidate. But keep in mind it would be highly unlikely for a candidate to
offer the name of a reference who would not offer positive information.
There are, of course, key methods for avoiding biases and making
successful hiring decisions. First, identify the most important knowledge
areas, skills and abilities the ideal candidate should possess. Human re-
sources people call these "factors." Next, create the same specific ques-
tions that you will ask of all candidates that will clearly and behaviorally
demonstrate to you that they have these critical factors. But don't simply
accept the candidate's word that he or she possesses a certain skill or
knowledge base. Ask that person to demonstrate the skill, solve a prob-
lem, or write or create something that clearly and concretely provides you
with the proof you need to make an informed decision.
Next, ask specific and measurable questions of the candidate. If you

ask if this person considers himself a success or a failure, do not simply
accept a yes or no response.
23
Hiring and Keeping
the B est E mployees
Probe for specific examples of both successes and failures. The latter is
especially rich in response material because you can then ask what the
person could have done to turn the failure into a success. In the process,
you are observing how the candidate analyzes situations, how rationally
or logically the situation is presented, and whether or not, to the best of
your judgment, the person is trying to cover something up or lie.
To ensure that you understand the individual as well as possible, in-

volve one or two other interviewers in this process. In that way, you can
all share your insights and impressions of the candidate. Furthermore,
one interviewer can add an aspect to a question that another one may
have overlooked. Two or three heads are often better than one.
Finally, make sure you know enough about a candidate before you
hire that person, and never, ever hire even a moderately qualified person
just because you need someone now. That rushed hire will likely become
problematic. And you know how long and painful it can be to terminate
someone and advertise, screen, interview and hire another person. So
take your time and make sure you have the best person possible for
every position. You and your company will be pleased with the results.
The Test to Give All Salespeople

If you were to ask most sales managers about the most important at-
tributes they look for in a candidate for a job, you'd probably hear adjec-
tives like motivated, disciplined, energetic or hard-working.
What's the central theme here? Effort! Most managers will hire a rep
without experience or industry knowledge as long as that candidate is
willing to give 110 percent effort. If we could measure a sales rep's effort
before he or she was hired, we would have one very popular product on
our hands. Although no one can predict the future, there are several
practical ideas that will dramatically increase your chances for success
by measuring candidates' effort, creativity and energy before you hire.
! The presentation. After the first or second interview with a candi-

date, hand that individual one of your product brochures. Explain that
you'd like him or her to return in a few days to sell you the product. Don't
give out any more information.
24
You want to see how much effort the candidate puts into finding out
about your company, product, needs and so on. Then, in the next inter-
view, evaluate the following:
! Amount of research, time and effort put into the presentation;

! How creative the candidate got with his or her approach; and
! His or her selling skills, from start to finish.
If you're interviewing an experienced sales rep, you might ask that
candidate to sell you the product he or she is currently marketing. You
can still use your own product as part of this exercise to measure prepa-
ration and effort prior to the next interview. The key in both situations is to
measure communication skills, sales skills and effort. Of course, if the
candidate doesn't come back to sell your product, you've got your answer.
! 30-day action plan. For the next interview, have the candidate
bring back a detailed outline of what he or she would do to ensure suc-
cess by the end of the first 30 days after his or her training. This will not
only evaluate the effort spent thinking and writing about activities and
goals, but also illuminate his or her thoughts regarding what it takes to
get the job done.
! Why them? Why us? Have your candidates list 10 reasons that
make them feel qualified for the job and what they can offer your compa-
ny. Then have them list several reasons why they want to work for your
company, why that specific industry, why sales and more.
! Field trip. After the second or third interview, have the candidate
spend half a day in the field with one of your experienced sales reps. Se-
lect one of your better reps and make sure that person goes through a
typical day of sales calls (canvassing, customer visits and appointments).
This is a great chance to expose the candidate to a realistic view of the
job-while simultaneously recognizing your sales rep as a role model. An-
other benefit: The candidate may open up to the sales rep, who'll be
viewed as a peer, about questions and concerns that might never come
up during the official interview.
Involving a senior sales rep in the employment process not only helps the
candidate make a better career decision, but also helps to reduce turnover.
25
Hiring and Keeping
the B est E mployees
Nothing's worse than investing lots of time, energy and money on an

employee—only to see your efforts go to waste several months later be-
cause the person you hired lacks internal motivation. But by employing
these four methods in the hiring process, you'll be able to measure moti-
vation from the start. Think about it: When a candidate puts a lot of ener-
gy and effort into getting hired, you're likely to see those same attributes
demonstrated on the job.
Recognizing and Rewarding the
Great Employees You've Got
Some of the most effective forms of recognition cost nothing. A sincere
word of thanks from the right person at the right time can mean more to
an employee than a raise, a formal reward or a fancy plaque. Part of the
power of informal rewards comes from the knowledge that someone took
the time to notice the achievement, seek out the person responsible, and
deliver praise.
Informal rewards are spontaneous and include forms of recognition

that can be implemented with minimal planning and effort—and they are
often more effective and less expensive than formal ones. Studies show
that managers who actively use informal rewards to motivate their em-
ployees elicit the highest job satisfaction and performance. Informal re-
wards are usually easy to implement and should be an active part of your
daily management style.
! Invite the employee to your office. Invite an employee to your of-

fice just to thank him for a job well done. Be sure to tell him why he did
an outstanding job, and don't discuss any other issue that will distract
from this thanks. Involve him in the conversation by asking how he did
such a great job. Ask if he likes what he's doing. Where does he want to
be in the next year or two? Get to know him on a personal level. Ask how
his family is.
! Post it! "Thank you" is one of the most powerful phrases in the
English language. It almost always generates a smile from someone's
face. Carry some sticky notes in your pocket. Use them to put a thank-
you note on an employee's desk if she is not there to verbally thank in
person.
26
! Take the employee out. Everybody loves to go out for a free break-
fast or lunch. Taking an employee out to eat is an excellent way to thank
him for a job well done. Schedule the breakfast or lunch way ahead of
time so he can plan. Have fun while you're out and encourage the em-
ployee to discuss anything that's on his mind.
! Make a public announcement. Modest people will tell you they

don't like to be acknowledged in a public forum. This is a bunch of bull.
Most people love public recognition. Hold a staff meeting and announce
how proud you are of one of your employees for her outstanding job per-
formance. Keep it secret so she will truly be surprised. Award her a cer-
tificate or other token of your appreciation.
! Create a hall of fame. Take a photo of everyone who receives an

informal reward and post it on the wall. Add a photo collage that shows
people working together on a successful project. Put these photos and
records of achievement in a scrapbook at the end of the year.
27

Smart Strategies For Taking Your Business To The Next Level

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Smart Strategies for Taking Your

Business to the Next Level

Contributors to this document include:

Barry Farber • Kim T. Gordon • Mark Henricks • David G. Javitch

Amanda C. Kooser • David Meier • Ivan Misner • David Newton

Gisela M. Pedroza • David Rye • David Worrell

© 2004 by Entrepreneur Media Inc.

Reproduction or translation of any part of this work beyond that permitted by

This publication is designed to provide accurate and authoritative information in

Entrepreneur Media Inc.

3. Financing Your Growth 9

4.. Boost Your Business With the 14

5. Build Stronger Client Relationships 20

6. Hiring and Keeping the 23

If your goals appear to be holding you back or directing your efforts

! Specificity. You stand a better chance of achieving a goal if it's

! Optimism. Goals should be positive and uplifting. "Being able to

! Thinking short- and long-term. Short-term goals are attainable in

! Income. Many entrepreneurs want growth to provide financial secu-

! Lifestyle. This includes areas such as travel, hours of work, invest-

! Ego gratification. Face it—many people want to grow their busi-

! Honesty. The most important rule of goal-setting is honesty. Build-

Creating a Road Map for the Future

Changes in your personal situation, such as a desire to spend more time

! Expanding your product line or service offerings. You can identi-

! Using strategic marketing alliances. These alliances allow your

! Opening a new location. Once your business is successfully oper-

! Marketing on the Internet. If your business's products and services

aligning your business with existing successful Internet businesses. You

! Franchising or licensing your business concept. Once your

! If your business is plagued by destabilizing fluctuations in your mar-

! You can exploit corporate technology and know-how.

! By entering the global marketplace, you'll learn how to compete

1. Start your campaign to grow by international expansion by preparing

2. Conduct foreign market research and identify international markets.

3. Evaluate and select methods of distributing your product abroad.

5. Tap government and private sources of financing—and figure out

6. Move your goods to their international market, making sure you

Try Online Auctions

While 50 million registered users is a sea of potential customers, com-

Instead of just throwing items up on eBay to see what sticks, do some

EBay is also a hotspot for shedding excess inventory that's haunted

! How linked is your company's upcoming sales and profit perform-

! Where is your firm's best deal-making strength—in waiting and

Time is always a luxury when raising funds—if you have it on your

And of course, if you're simply strategizing about an intermediate-term

With regard to how your firm is linked to the economic environment,

Remember, you can't allow timing to be an excuse for not getting a

Why You Need a Growth Plan

First and foremost, a growth-stage funding plan is different in tone and

Further, the level of financial detail available to—and expected from—

Early-stage investors are famous for playing long odds: An early-stage

Nontraditional Options for Nontraditional Businesses

So when it came time to find funding for his current business—epr, a

Another method of obtaining financing for supplies or materials is to

Customer loyalty programs (aka reward programs) have become es-

Loyalty programs make sense for growing businesses, too. Entrepre-

By tracking current customer data, you can discover opportunities,

! Entice your customers. Tell customers what to expect. This