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When Being Behind The Curve Can Be Smart

A BusinessWeek article points out that tech that doesn’t work won’t let us work. Well said.

Working 90% to 95% of the time is not working. When my company’s services fail to deliver, we don’t get paid—and our customers get angry. When a technology product doesn’t do what it’s supposed to do all the time, we’re stuck. Unfortunately, the technology my company buys fails way too much. But like everything else that makes me angry, I just deal with it. And so can you.

Something you should know:

  1. Technology sucks. Once you begin to depend on it, you’re confined by it’s inherent limitations.
  2. It won’t make you successful. That is, not unless you completely understand how it will help your business.

What Great Businesses Do

Have you noticed that so many successful companies are “behind” on tech’s latest trends? It’s because successful businesses relentlessly focus on creating incredible value for the world. They know that once you begin worshipping technology, you switch focus from providing value and then continue going downhill from there.

The Key: Exploit tech only when you know precisely how it can help accelerate your ability to get ahead.

“So, how do you exploit technology?”

Two steps:

  1. First, embrace low-tech. Spreadsheets can single-handedly kick the asses of pretty much any of the latest gadgets out there.
  2. Then, grow outward stubbornly. Improve your systems as you go. You will know you’ve outgrown your current systems when you understand precisely how to increase your efficiency.

And dont forget: Since the beginning of time (and up until a few years ago), most businesses didn’t need completely custom technology solutions. They used paper, spreadsheets, whiteboards… you get the idea.

Website Metrics 101: Conversion Rates

Oct 4, 2008 • Paul Singh

It’s interesting to watch an increasing number of mom & pop small businesses get online these days. There’s been no shortage of design shops and independent contractors that will charge a few hundred bucks to slap together some images and put up a website for you. Is it really worth it?

Unfortunately, most people have absolutely no idea how to determine whether they actually get any real value out of having a website. Let’s fix that today: read on for a crash course in measuring your website’s success.
What’s a Conversion Point?
Whenever a visitor to your website makes a choice, a conversion point exists that generates two metrics:

Cost of Conversion. For the sake of this article, we’ll skip over this particular metric — just realize that it exists and is an important metric to keep track of when you decide to start paying to generate traffic (via online and offline methods).
Rate of Conversion.
The key is to identify your business’ significant conversion points which, if chosen most often by visitors, will lead to the achievement of your goals. (More on this in future posts.)

Conversion Rate

Google’s dictionary defines a conversion rate as “the number of visitors who took a desired action divided by the total number of visitors in a given time period (typically, per month).”

Formula: Desired Action / Total Visitors = Conversion Rate

For example, if 1,000 unique visitors were driven to your website from a search engine and 10 of those visitors signed up for your newsletter, then your newsletter conversion rate would be 1.0%. (As a rule of thumb, you should be shooting for a conversion rate of at least 2%.)

In general, a conversion rate is calculated whenever a desired action occurs by a visitor to your website. The most crucial conversion rates are those directly associated with the achievement of your business’ goals.

Examples include:

A visitor types in their email address and clicks “submit” to join your newsletter.
A visitor subscribes to your blog via RSS or email.
A visitor clicks their browser’s “back” button to leave your website.
A visitor buys your product.
The most important metric: Sales Conversion Rate

For most businesses, sales are the lifeblood of the company. Without them, nothing else really matters anyways.

Formula: # of Sales / Total Visitors = Sales Conversion Rate

For example, if the 1,000 unique visitors generated 20 sales, then your sales conversion rate is 2%.

So, what does this really mean?

Rather than simply putting up your website and blindly waiting for customers, you should be constantly tracking your conversion rates. (Tip: Google Analytics is a free, easy way to automate the tracking and reporting.)

As a rule of thumb, you should constantly aim for a conversion rate of around 2% (or higher).Anything lower, it’s time to start testing new ideas to raise this number. If you’re already at 2%, it’s time to dig a bit deeper into the newsletter, RSS and other conversion rates and see where things can be improved further.

Spend your the vast majority of your time increasing conversion rates — this is the most effective use of your time. Simplify your decision making: If you’re working on something that isn’t improving your conversion rates, stop and move on to the next thing.

Screw hand-wavy strategies, focus on being sticky

Seems like everyone’s talking about innovation these days — isn’t it pretty much a requirement for doing anything that people are willing to pay for? Ditto that for quality, teamwork and strategy. Well, I guess it’s to be expected: it’s much easier to talk about hand-wavy things than to actually get into the bowels of the business and actually measure the stuff that matters so you can actually make educated decisions.Call it what you want: customer loyalty, customer retention or anything else under the sun. Stickiness transforms the average business from a transaction-based model to a more lasting, mutually beneficial one in which companies improve their own revenues and margins by maintaining a win-win relationship with the customer. It may sound like yet another hand-wavy strategy, but it’s really not — let’s run through a few tactical ideas:

  • You’ve probably got a website. So, why’s it so hard to subscribe to RSS feeds or newsletters? I may not be ready to buy anything today but sign me up for one of your lists and keep me updated with tips that are relevant to me. Do this right and it’ll be obvious that your product can solve my needs, I’ll buy it when I’m ready.
  • You probably sell a product. So, why don’t I hear from you after I’ve bought anything? If I’ve bought from you once, it’s reasonable to assume that I might be interested in buying from you again — talk to me! Stop being a product focused business and become a product-and-long-term-service business. Guarantee the benefits of your product to me over the long run and do stuff to help me get those benefits.
  • Your competitors probably sell something similar to you. So, go the extra mile and solve a particularproblem for me in a unique way. The Trunk Club sells clothes, just like most other clothiers, but they actually do most of the work for me.

Look, we’re not talking about rocket science here — in fact, you’ve probably heard tons of advice on how to build your business. The problem is that many entrepreneurs either do too much of the wrong thing or, worse, sit around as they figure out what to do next.

The key is to focus on doing something, anything, to actually build the business — for most people, improving the stickiness is the most effective place to focus your efforts.

Remember: Substance Before Style

It’s interesting to think about how many small businesses get suckered into “branding” themselves before actually doing anything. The sad part: I was one of them. I had incorporated my first company many years ago and was feeling great. Nevermind the fact that I didn’t have a single sales prospect yet — I had to have a business card and other sales collateral. A few days later, I was a couple of hundred dollars poorer with boxes of shiny new stationary sitting on my doorstep. Suffice it to say, that business never went much further than that.The lesson: Building your business creates the brand. The unconscious process of forming your brand comes out of unrelenting passion, not unending spin.

Ever heard of Starbucks? Contrary to what you may have heard or thought, Starbucks never sought to create a brand. Instead, the company passionately sought to create appreciation for a better tasting cup of coffee. It was, in fact, as basic as that.

Starbucks was too busy sourcing and roasting the highest-quality coffee beans to think about branding. Starbucks was too busy educating customers on how and why they should appreciate a stronger, bolder, more flavorful cup of coffee to think about branding. Starbucks was too busy creating a comforting and welcoming place for people to exhale than to think about branding.

Last week, I met Ryan Moede with Viget Labs (a web strategy firm based just outside of Washington, DC). He told me that before they accept a particular client, the Viget team asks themselves if they’d ever become employees of the client company. Unless the answer is yes, they won’t proceed. Rather than taking just any work that comes their way, they’re relentlessly focused on building their business with the right clients — the branding inevitably follows.

So, the first thing to do is to start ignoring all the “professionals” out there that advise you to spend hundreds, or even thousands, of dollars on “creating” a brand for your company. Instead, focus your efforts on being the best at what you do — the brand will follow.

So, tell me what you do again?

I was visiting my home, just outside of DC, this weekend and met a number of great folks involved in a wide range of industries. As I sit here on the ride back to San Francisco, I’ve been thinking about one particular entrepreneur that struck me because I still don’t know what he and his small business do, even after chatting for 20 minutes. (To protect the innocent, I won’t call him out publicly but I’m working with him privately now make things better.)I met with him for a second time earlier this week and peppered him with some more questions before we discovered the problem: He shied away from picking a particular niche because he thought it would limit his profit margins or customer counts. He’s not alone — unfortunately, I see this far too often.Here’s the thing though — why be a small fish in a ginormous pond? It’s far smarter to be the big-ass fish in the tiny little pond. Less is more.

Mark Vadon, Blue Nile’s co-founder, was quoted in a recent BusinessWeek article:

I want to be the best in the world at one thing. I don’t want to be half-assed at a lot of things.

Most businesses suck when they try to do too many things — cut down the number of things you do and your margins shoot through the roof. Every small business that I’ve consulted has told me that once they narrowed their focus to a specific niche, their sales skyrocketed.

In fact, when my own construction company decided to stop actively looking for commercial work, our residential sales skyrocketed. Once we focused on the few things we did better than anyone else, everything got better — more clients, more money and, most importantly, less stress.

How do you define your niche? To start, determine one thing that you do better than anyone else. Not sure? Ask people who know you well. I bet they can come up with at least one thing that makes you a rock star. If you need more help, Geekpreneur has some tips on ways to find your niche and I recently included a few more tips here: the importance of being the best at what you do.

By narrowing your focus, you’ll start to be seen as the expert in your industry. Which instills confidence in your customers and brings even more people to your door. Doesn’t get much better than that.

When asking for a discount (or a raise) fails

I have a friend that recently bought a used car at full price. His excuse: “I asked for a discount but they didn’t give it to me so I gave up.” Sure, he could probably stand to learn a little bit about better negotiating but there is a better way to get a better deal.It’s no secret that most people have a hard time talking about money — just look at how many bloggers write about ways to ask for raises at work or save $100 on your next purchase. Sure, it’s great if people use the advice but most people won’t, so why keep beating the proverbial dead horse?

The point is not to avoid asking for the discount but to know exactly what to do when that tactic fails.

The art of asking for more

Next time you’re negotiating, try asking for more. I use this tactic when buying cars, dealing with vendors or bargaining with street merchants

and it works every time — despite what you might believe, most businesses would much rather give you something more than reduce the price. When your request gets shot down, don’t walk away pissed off —ask for something more: get them to throw in something else. (Tip: If you’re buying a car, you can usually get floor mats and your first few service visits absolutely free — ask for them after you think you’ve gotten the price as low as you can go.)

What businesses are thinking

At a 10% discount, a typical firm would need to sell 50% more units to keep the same profit on the bottom-line. Costs also increase in the “discount” game, so companies can literally discount themselves out of business. Instead of cutting cash out of the deal, they’d rather add value to whatever you’re buying — this “value added” proposition means they can “give away” something that won’t come out their profits. Done right, it adda to the customer’s experience and that’s the key to getting that customer back.

Oh, and one more thing

Use this tip when you’re negotiating your next pay raise. If the conversation gets bogged down before you get to the number you want, start asking for other perks instead — extra vacation days, telecommuting perks or educational reimbursements. It’s all fair game.

How to pick an accountant for yourself (or your business)

Before I say anything else, I want to clarify that I’m not advocating cheating or cutting corners, but I’ve found in my own experience that the difference between a good accountant and a bad one can cost you thousands of dollars. A good accountant recognizes all the costs of running a business, offers tips for good investments (in turn, reducing taxes), and offers advice on how best to grow your personal wealth. Bad accountants miss out on all those things and simply give you a large bill due every year — trust me, I’ve dealt with it.

Taxes are a necessary evil in the course of life, but core to doing business or growing your personal wealth. Rather than dealing with all the good and bad advice on the internet, having an accountant handle the complicated state of my finances reduces the stress I get from doing my own taxes each year and wondering if I did anything wrong. Leave it to the pros so you can focus on the thing you do uniquely well — but, finding a great accountant isn’t easy and after going through half a dozen myself, I’ve got some tips for finding the right one.

What’s the point of having an accountant, can’t I just use software and advice from the internet?

After doing my own taxes through college, I’ve realized that most of the off-the-shelf software out there will get you pretty good results. In fact, most average accountants won’t do much better than the software you’re probably using — if you’re happy doing your own taxes and can take the time to research the latest tax laws, you’re a better person than I. Good luck to you.

For the rest of us, we’re pretty busy and we understand that leaving stuff like this to the right professionals can be the best decision you can make. Besides, you go to a doctor when you’re sick and you go to the lawyers when you get sued, why not go to a good accountant when you need to worry about taxes?

Taxes and the shades of gray

Take a look at a typical tax return and you’ll soon realize that there are thousands of ways to interpret the tax rules. It’s pretty clear that filing taxes can be more of an art than science.

Average accountants will take a conservative approach by default. In my experience, only one accountant I know mentioned deductions from retirement accounts or luxury vehicle purchases. (Incidentally, he’s been my accountant for years now.) Note: If you’re getting nervous at the very thought of bending tax rules to your advantage, you probably ought to stop reading immediately — this post isn’t for you. For the rest of you, what you need is a bulldog accountant that has creative ideas on how to bend tax rules to your advantage.

Sure, bending the rules might seem shady but the point is that bending the tax laws is beyond the comfort zone of most people, including me. That’s why you need to find an aggressive accountant to do the work for you (and sign his name at the bottom of the return) — aggressive, while staying safely within generally accepted accounting principles, of course.

Fishing for Accountants

The key to finding great people is to ask the best people around you for their contacts — this works especially well if you know a number of successful entrepreneurs. Even if they can’t give you the contact information for the person they use, they’ll surely have some dirt on the accountants to stay away from.

If this doesn’t work for you, the next best option is to simply start combing through the phone book and interviewing. Sure, this will suck up a lot of your time but desperate times call for desperate measures.

Loaded Questions: The Art of Interviewing Accountants

Interviewing accountants is pretty straightforward but you need to understand that they will charge you for their time. Don’t start setting up in-person interviews until you’ve whittled the list down to the top 1-2 that you like.

Keep it simple, your goal for the interviews is to understand two primary things:

  1. Do you get along with the accountant? You two are going to have a number of personal conversations over the next couple of years, make sure your personalities match. My rule of thumb: I won’t do business with you unless I can see myself drinking with you.
  2. On a scale of 1-10 (with 10 being the most aggressive), how conservative/aggressive is this accountant? Ask specific questions about your current financial situation — use real numbers. Better yet, bring in an old tax return and ask the accountant what they would do differently. You’re looking for creativity — is he asking good questions about what you might be able to deduct? When you ask about something the accountant disagrees with or warns against doing to save taxes, make sure his explanation makes sense.
  3. Be the bullshit detector: ask questions that you already know the answer to. (This is a big one, don’t forget to do this!) I usually ask about the deductibility of new vehicle purchases under my business entity. I’m not looking for him to agree with me 100%, I just want to gauge his response against my knowledge on the issue.

Get yourself the right accountant today and you won’t be repeating this process for years at a time. Better yet, you’ll save yourself tons of time and money in the long run — and you’ll have a trusted partner to bounce ideas off of down the road. Oh, and one more thing: the really good accountants just happen to know everyone — I’ve been able to get leads for future clients, early access to business owners looking to sell out and references for lawyers, doctors or anyone else I might need for my own plans.

What else do I need to tell you? Stop wasting time, dump your crappy accountants and start getting ahead.

Getting Past “The Wall”

The most common phrase I hear from entrepreneurs is, “Get me to the next level.” Within a few minutes of chatting with them, it’s usually very obvious that they have a very real feeling of being stuck.What “the next level” actually is varies depending on who you talk to but the good news is many of the factors that block reaching it are surprisingly the same. In almost every case I’ve seen, the elements that had fueled your earlier growth have run out or been forgotten.** You hit a wall.** **

There are no “magic bullets”

You need three things to keep your momentum going:

  1. A system geared up for the next level. Take a good, hard look at yourself today — are there manual processes or other tasks that can be automated, delegated or even ditched altogether? From Chapter 8 of 4HWW: Refine rules and processes before adding people. Using people to leverage a refined process multiplies production; using people as a solution to a poor process multiplies problems.
  2. Clear, specific and measurable goals. You need to put your goals in writing and systematically review your actions to make sure you’re heading in the right direction. (Download this worksheet to help you define your goals and track your progress: [download#2#nohits])
  3. Relentless execution. Getting ahead doesn’t happen by accident — it takes hard work to get there. Accept this fact and simply move on.

Combine these three things and you’ve got everything you need to keep moving to the next level. Just remember, getting ahead is a marathon not a sprint.

Quick Wins: Three ways to save money fast

I’ve consulted a number of small businesses over the past few weeks and, unsurprisingly, they seem to be concerned about the same things that most of my non-entrepreneurial friends are: saving money.

Here are three tips for cutting your costs immediately:

  • **Ditch the underused gadgets. **Knowing exactly what you have is the first step — classify things by how often you use them. It doesn’t have to be complicated, simply look for anything that you don’t use on a daily basis. Some examples of this would be old cellphones, DSLR cameras that you don’t use every day, old computer monitors, extra laptops, unused printers and scanners. Sell or donate these immediately.
  • Manual processes are your enemy. Filing receipts, paying bills, checking voicemails — there’s no limit to the number of administrative tasks we have to deal with every day. If you haven’t already, get yourself a virtual assistant and start offloading tasks. Why do something yourself when you can have someone else do it for you, usually for less than $15/hour. (Check out the Ultimate Virtual Assistant Guide for more details.)
  • Avoid overpriced (and unnecessary) contracts. First, take a look at your cell phone bill — you’re likely to have many unused features on there that are eating you up. I call my cell phone company at least once a year and ask them to review my past statements to see if it makes sense to modify my contract in some way. Most times, a small adjustment to the minutes or SMS credits on the account will save me at least $20/month. For the rest of your contracts, use the A La Carte method to save yourself some money or simply renogitiate your contracts — there’s no harm in simply asking for a discount.

So, take a few minutes to try these out for yourself — the people I’ve talked to have saved at least a few hundred dollars per month and freed up hours of wasted time each week. All it takes is a few simple things to make it happen.

Vacation scheduling and the little white lies that you need to tell

I have a secret: I tell people that I’m on vacation at least twice a month and it’s usually a lie because I’m actually just working from somewhere different to avoid distractions.Yep, now my secret’s out but I’m not worried. I’ll continue using it because most people don’t want to be known as the person that bothers people on vacation.

Learn to take advantage of a distraction-free day and work like your hair is on fire.

Do nothing except finish the project. Hey, you could have been on vacation, so it’s okay to neglect everything else, to put your email on vacation autorespond and your phone on voice mail and to beg off on the sleepy weekly all-hands meeting and to avoid the interactions with those that might say no…

And then finish it. Finish the website or the manuscript or business plan or the suite of tools. No, this isn’t a great week to do outreach or make a pitch. That’s not the goal. It’s to finish that project that’s been stuck too long. Finish it or cancel it.

The key to using this strategy effectively is to make sure you don’t overuse it and ensure that the right people know what you’re actually doing with your time. At the very least, make sure that your boss and/or your clients know exactly what you’re up to.

Now go enjoy a full day of productivity and don’t forget to take an actual day off from time to time.