Monday, November 30, 2009

Why Getting a C Corporation Might Be Smart Business

Incorporating could be the perfect suit of armor for protecting your wealth.

By Bonnie Lee

Whether your business is small or large, incorporating is a worthy consideration under Obama’s new administration. Many think of Obama’s administration as small business friendly, however, there is a new mandate to close the $400 billion tax gap and empower the IRS to get every penny it is entitled. Now, more than ever, small business owners need to consider the concept of adding, “Inc.” to their name.

I often advise clients to consider incorporating their business once profits reach a steady $100,000 plus per year. Beyond the tax consequences, the legal aspects of incorporating should be discussed with one’s attorney. The tax consequences, as well as the ability to function within a more restricted structure, should be discussed with one’s tax pro. Employee benefit packages and retirement plans should also be studied for comparison with existing strategies.

Income Splitting
When it comes to the income tax picture, income splitting is the primary reason to incorporate as a C Corporation. As a sole proprietor, you are the business. You declare your sales and subtract business expenses on Schedule C of your individual income tax return. Then you pay both income taxes and self-employment tax (15.3 percent) at the individual level.

By incorporating as a “Sub S Corporation,” no tax is paid at the corporate level and all income flows through to your personal income tax return. Since the self-employment tax does not apply to dividends, you will also enjoy some tax savings.

Incorporating gives birth to a legal entity which will exist at arm’s length from your personal finances. If structured as a C corporation, this entity files its own tax returns and pays its own taxes.

Americans enjoy--using the term loosely--a progressive tax system, in which the more you make, the higher your rate and the more you pay. So if your income is cut in half and allocated between your C Corporation and your individual income tax return, you are likely to save a lot of money. You pay taxes on this income at the individual level when you draw income from the corporation in the form of wages, dividends, rents, etc. There may be other non-taxable forms of income, such as employee benefits and expense account reimbursements.

For example, the net profit after paying yourself a reasonable wage, is $100,000. You take a qualified dividend of $50,000 which is subject to a tax rate of 15 percent through 2010. The C Corporation pays corporate tax on the remaining $50,000 at a rate of 15 percent and you have no self-employment tax to worry about. The overall tax rate is 15 percent.

Same scenario but the business is set up as a sole proprietorship: Your tax liability would be about 25 percent on a profit of $100,000 plus an additional 15.3 percent for self-employment tax to fund your social security. Ouch!

Since you are taking wages from the corporation, the 15.3 percent self-employment tax rate will be built in to your withholdings and the employer’s matching share, all classed as payroll taxes, which is a write off at the corporate level. When a sole proprietor pays the self-employment tax, she cannot write it off as a business deduction.

Obama’s tax plan and new tax rates on those making more than $250,000 per year will be affective in 2011. Using income-splitting techniques these higher tax rates can be minimized.

Protection from the IRS
If a C Corporation gets in income tax trouble, the IRS can only go after corporate assets. Like any litigator, they may attempt to pierce the corporate veil, and tap into your personal assets. So make sure you follow the rules.

“There is no personal liability for corporate income taxes unless there is a liquidating dividend or the shareholders fail to maintain clear delineation between corporate finances and personal finances,” says Robert McKenzie, tax attorney for Arnstein & Lehr LLP. He added that if the company is operated properly and not a single member LLC treated as a C Corporation for income tax purposes, there is no personal liability for corporate income taxes.

But look out! If the C Corporation has an unpaid payroll tax liability, the IRS can hold you personally liable.

Why is this so important? Because the “newer and friendlier IRS” has left the building. Obama sees the $400 billion tax gap--unpaid tax liabilities, projected lost tax revenue due to nonfilers, cheaters, and the underground economy--as a potential source of revenue. His mandate to IRS Commissioner Doug Shulman is to “Sic ‘em!” So the IRS is retraining their keypunch staff (don’t need all those clerk typists now that more than 70 percent of the nation is filing electronically) for enforcement positions. The IRS is also adding an additional 3,500 positions in all areas of enforcement from audit personnel to special agents.

With this rocky economy, it might be wise to have a suit of armor to protect your personal wealth.

Consider these factors along with all the issues that pertain to your individual situation. Then sit down with your tax pro and your attorney to determine if incorporating your business is a logical next step.

Saturday, November 28, 2009

10 Lessons Learned From Using E-Mail Lists

How to run your lists and choose what to write about.

By David Strom

Last week's column showed you three different choices that you can use to create and manage your own e-mail list server. This week I want to talk about the "softer" side of things: how to run your lists and choose what you write about, what you send out, how you send it out, and why you bother doing it.

E-mail is the basic lifeblood of any small business communications. It is how you get and retain customers, how you find new prospects, and how you keep and motivate your staff. Even if you have a fairly non-Internet company, such as a hardware store, you can use e-mail to bring in new business and inform and amuse your customers.

Here are ten important lessons:

1. Self promotion is fine, but it takes a back seat to real information and advice. Limit the amount of self-promotional content to less than 20 percent of what you send out. Keep your e-mails information-rich and people will want to read them. This doesn't mean that you can't let people know about cut-rate specials, or certain accomplishments, or upcoming events.

2. Weekly is the best frequency. If you can't write something weekly, then every other week is also good. More than once a week is annoying, and less frequent e-mails tend to lose your connection. If possible, send out your e-mails on the same day of the week for consistency and predictability.

3. Brevity counts. Keep the e-mails to fewer than 1,000 words. About 600 words is optimal. People have short attention spans.

4. Make them original. Don't just cut and paste stuff that you have picked up elsewhere. Although it is fine to use a link as a jumping off point to provide your own point of view and commentary.

5. Don't pile on the web links. One or two links per e-mail is fine. Any more than that is annoying and doesn't prove anything to anybody, other than you have done a lot of internet research.

6. Good writing is essential. Have someone else edit your e-mails and check for spelling, syntax and grammar. Check the web links to make sure they bring up the right pages that you intended.

7. Check your facts, too. While your editor is at it, have him or her also check statements of fact and make sure they are accurate. Nothing dilutes your authority more than misstatements of fact.

8. Community counts. If you are going to start a successful web publishing venture, make sure you have a good idea whom your community is. This includes reader/viewers, information sources, and people and mechanisms for moving information around (other than yourself, that is). Are you talking to your customers, suppliers, partners, or staff? High-level management or in the trenches? Older or younger generations? Have a firm idea of who is on the other side of the e-mail and your messages will be more effective.

9. Notification is important. Use e-mail as a way to notify your list of what is new, what is different, what is on sale, what is something that you recommend. This is probably the best use of your list, and something that we often overlook. People appreciate hearing your news first from you directly, that is often the best way to build a community.

10. Have an archive. Think about archiving all your e-mails on your website. Mailman and Yahoo do this automatically, although both do it somewhat cumbersomely. You can also repost your e-mails to a blog format as well, which is one of the things I do with my Web Informant e-mails.

Friday, November 27, 2009

Calculate Your Ad Budget

Before you pour money into advertising, figure out exactly how much you should spend.

By Roy H. Williams

Q: I've never really done much advertising for my business; I've always relied on networking and word-of-mouth. Now I'd like to launch a small campaign, but I'm frightened it will cost a lot of money. How can I figure out where to start?

A: The first thing you must do is calculate your minimum and maximum allowable ad budgets:

Step 1: Take 10 percent and 12 percent of your projected annual, gross sales and multiply each by the markup made on your average transaction. In this first step, it's important to remember that we're talking about gross markup here, not margin. Markup is gross profit above cost, expressed as a percentage of cost. Margin is gross profit expressed as a percentage of the selling price. Sell an item for $150 when it only costs you $100, and your markup is 50 percent. Your margin, however, is only 33.3 percent. This is because the same $50 gross profit represents 50 percent of your cost (markup,) but only 33.3 percent of the selling price (margin.) Most retail stores in America (carpet, jewelry and so on) operate on an average markup of approximately 100 percent, some operate on as little as 50 percent markup and others add as much as 200. More expensive items, such as cars, recreational vehicles and houses, typically carry a markup of only 10 to 15 percent.

Step 2: Deduct your annual cost of occupancy (rent) from the adjusted 10 percent of sales number and the adjusted 12 percent number.

Step 3: The remaining balances represent your minimum and maximum allowable ad budgets for the year. At this point in the calculation, you may learn that you've already spent your ad budget on expensive rent, or you might also learn that you should be doing a lot more advertising than you had previously suspected.

Now let's calculate an ad budget. Assume that my business is projected to do $1 million in sales this year, I have a profit margin of 48 percent, and my rent is $36,000 per year. The first thing to do is calculate 10 percent of sales and 12 percent of sales ($100,000 and $120,000, respectively).

Second, we must convert my 48 percent profit margin into markup, because markup is what we've got to have to make this formula work. Most business owners know their margin by heart, but never their markup. To make the conversion from margin to markup, simply divide gross profits by cost. Dividing $480,000 (gross profits) by $520,000 (hard cost) shows us that a 48 percent margin represents a markup of 92.3 percent. Bingo.

Now we multiply $100,000 times 92.3 percent to see that our adjusted low budget for total cost of exposure is $92,300. Likewise, we multiply $120,000 times 92.3 percent to get an adjusted high budget for total cost of exposure of $110,760. From each of these two budgets, we must now deduct our $36,000 rent. This leaves us with a correctly calculated ad budget that ranges from $56,300 on the low side to a maximum of $74,760 on the high side.

Most advertising salespeople will tell you that "5 to 7 percent of gross sales" is the correct amount to budget for advertising, but don't you believe it. It simply isn't possible to designate a percentage of gross sales for advertising without taking into consideration the markup on your average sale and your rent. Yes, expensive rent for a high-visibility location is often the best advertising your money can buy, since a business with a good sign in a high-visibility location will need to advertise significantly less than a similar business in an affordable location. To prove this, just look at the example above and change the rent to $75,000 per year. In this case, the ad budget would range from $17,300 to $35,760, representing just 1.7 to 3.5 percent of sales. The formula I've given you is the only one that reconciles your ad budget with your rent as well as the profitability of your average sale. Good luck!

Wednesday, November 25, 2009

Keep Your Regulars Happy

10 tips to keep your regulars coming back - and for picking up new ones along the way.

By Suzanne Driscoll

Some small business owners are so focused on attracting new customers they forget to take care of the ones they already have. And neglected customers will certainly be ripe for the picking by the competition. Bob Green, president of The Verdi Group, an advertising agency in Rochester, N.Y., offers some easy and inexpensive ways to make sure your regulars keep coming back--and get some more along the way:

1. Trade-ins for a good cause. Ask customers to bring in food, clothing or school supplies for the needy, and in return give them a discount off any of your products. People love to support a good cause as well as get a good deal. Cooks' World in Brighton, N.Y., asked customers to bring in old pots and pans to donate to soup kitchens, and in return offered a 20 percent discount for a new item. "The response was overwhelming and we got many new customers as well as the current ones," reports owner Chris Wiedemer.

Shoe stores all over the country participate in Soles4Souls campaigns where customers exchange their old shoes for a discount on a new pair. The exchanged shoes are then given to charities that clothe the poor all over the world. Mark Allard, who owns New Balance stores in Raleigh and Durham, N.C., believes "If you just run a lot of sales all the time it can affect the integrity of your brand. A campaign such as Soles4Souls helps a good cause as well as provides discounts for my customers."

2. Loyalty cards. A study by research firm Colloquy, found the average American household belongs to 14 different loyalty programs. It seems like just about every coffee shop and hair salon you enter offers something for free once you accumulate a certain number of purchases. Jerry Lewis, owner of Sports Clips barber shops has seen a high percentage of customers use their "get five haircuts and the sixth is free" card and believes his business has increased at least 20 percent because of this.

There's another way to capitalize on this trend--paid membership for discounts. Well-known names such as Barnes and Noble, Starbucks and f.y.e. charge customers an upfront annual fee of about $25, and the cardholder then gets a 10 percent discount or more on products every time they shop. Another benefit is every time the card is swiped the business can track what items customers are buying and build a member profile. Executive vice president of marketing and merchandising at f.y.e. Fred Fox says, "We can then send members customized offers via direct mail, e-mail or phone based on their favorite products."

3. Keep in Touch. Green believes it's very important to consistently keep in touch with your regulars to ensure your business stays on their "radar screen." One of the best ways is to send out an e-newsletter at least once a month. Here you can announce new products, offer money-saving tips, advertise upcoming sales or talk up recent accomplishments. Jim Timberlake, owner of Donnelly Euro Footwear in Mount Dora, Fla., reports he has "a 90 percent success rate getting people's e-mail address by telling them about the company's green practices and promising special offers." Customers respond to his invitation-only sales events and birthday coupons and Timberlake knows it encourages them to return to his store, as opposed to wandering over to the competition.

4. Follow up. The best sales people keep track of the customers who buy from them, and then frequently follow up. Jim Greene, sales manager of Closet Maid, reports his dealers always call the customer after three days to make sure they are satisfied with the work and ask for referrals. "30 days [after installation], we call the customer to find out if they need any accessories for their closets, and a year later, we call the customer about future work and again ask for referrals."

5. Get their opinion. Make the effort to invest customers in your business. At least once a year, send out a survey with your newsletter or have clients fill one out on site. Ask their opinion about the quality of your product or service and how they can be improved. And make sure you actually implement some of the suggestions; don't just conduct a survey for surveys' sake. When customers feel vested, valued and heard, they are bound to keep coming back.

To take it a step further, Green also recommends forming an advisory board. These hand-selected panels should consist of your big spenders, and can be asked their advice on future products or current marketing campaigns. Treat them to a dinner or breakfast meeting and you are sure to get good attendance as well as future loyalty.

6. Good ol' coupons. A simple coupon in the local paper, a direct mail piece or a discount offered on your website can help keep your current customers coming back as well as entice new ones. A study by the Manufacturer's Coupon Control Center found that 75 percent of customers who believe themselves loyal to a particular brand would consider switching to a competitor if they received a coupon for it.

7. Rewards for referrals. If a current customer recommends your product or service to someone else who ends up buying, give them a reward. That way you not only get a new customer, but you virtually assure another sale when the regular customer returns to use that reward. And most importantly, don't forget to send a thank you note.

8. Conduct on-site classes. Whether it's cooking lessons, car repair workshops or gardening tips, offer classes at your place of business. While customers are there they can peruse goods and purchase everything they will need in order to duplicate what they've learned at home.

Do these classes right and you'll also reap positive word of mouth. Owner Anne Clowe of The Topiary Florist in Pittsford, N.Y., offers flower arranging classes at her shop, and finds that "many of the attendees refer me to spouses and friends for future business."

9. Target local companies. Whatever your business, if you offer a service that busy, full-time workers could use, extend special discounts to the local human resource departments. Employees will appreciate being able to run some of their weekend errands on their lunch hour.

10. Offer a freebie. "Every so often, we give our clients something extra: a free taste--something exciting they would never have thought of by themselves--and something they neither asked for nor paid for," Green says. "It pays off, not only does it make our clients happy, they look forward to working with us. And more often than not, the 'free' idea we present inspires a project that does bring in some revenue for us, if not immediately, often in the future."

Hopefully you already know that the very best way to keep your regulars happy is to offer impeccable customer service. Do you greet everyone with a smile and make the effort to remember names? Does a human being answer your phone or do callers have to go through a maze of automated responses to reach someone? If there is a problem with the merchandise, so you cheerfully offer a replacement? Remember how you like to be treated when you shop--many times it's the little things that will keep customers coming back.

Monday, November 23, 2009

Eight Ways to Cut Back Without Sacrificing

By Kimberly Palmer

When times are tight—as they are now for many Americans facing declining home values, depressed stocks, and tighter credit markets—cutting back on indulgences can seem inevitable. But it might not be. U.S. News asked budgeting experts for advice on how to make ends meet during tough times without sacrificing too many of life's pleasures. Here are their top tips.

Take bubble baths. If soaking in hot water doesn't cheer you up, find out what does, because it could stop you from wasteful splurges after a bad day. "Especially in times like these, it's very important for find other ways [than shopping] to make themselves feel better, whether it's tantric methods, meditation, Chinese balls, or bubble baths—just do what will not break the bank," says Ken McDonnell, program director at the American Savings Education Council.

Host movie night. Going to the movies, especially if you're a popcorn fan, can easily cost $40 for two people. Instead, suggests Faye Griffiths-Smith, community leader for the American Association of Family and Consumer Sciences, rent a movie and invite friends over to watch.

Learn to cook. Not only does eating at restaurants add up, but so too does buying lunch. If you cook dinner at home, you can bring in leftovers to work the next day or take a few minutes to pack a sandwich. If mornings are always rushed, then try packing it at night before bed, suggests Jean Austin, family and consumer science educator for the Maryland Cooperative Extension Service. And when you shop for your ingredients, make sure you have a snack first. Going to the grocery store hungry often leads to impulse buys, Austin warns.

Use the library. Your taxes are paying for it, so take advantage of the free books and movies. Austin says that even her small library in Maryland's rural Kent County offers DVDs, audio books, and free Internet service.

Drink at home. Whether your beverage of choice is green tea, espresso, or beer, it's much cheaper when consumed in the comfort of your own kitchen. Going to a bar with friends can easily cost $50, McDonnell says. Instead, pick up a six-pack and hang out at a friend's house. The social interaction will cheer you up without the hefty bar tab.

Use your savings. If you squirreled away three to six months of emergency savings in advance of being forced to tighten your budget due to a job loss or other unfortunate event, now is the time to use it. "Everybody should be contributing to their own emergency savings fund where it's earning interest," says Austin, so when times are tight, the money can go toward monthly bills and even some small indulgences.

Decide what you really want. Most people can cut 10 percent of their spending within 10 minutes, says Ramit Sethi, author of the I Will Teach You to Be Rich blog. Just write down your major spending categories, such as food and loan payments, and then guess what percentage is going to each category. Make a second list with what you want the percentages to be, and then make a third list describing what they actually are. If the reality doesn't match up with your ideal, then adjust your spending.

Dress in layers. Turning your thermostat down a few degrees and wearing a sweatshirt to stay warm can save on monthly heating costs, says McDonnell, which adds up over time. Just don't skimp on your monthly mortgage or rent payment, or if you need to adjust the payment schedule, contact your lender. Keeping your home should be a top priority.

Saturday, November 21, 2009

Harness the Power of Suprise

Don't ask your prospects what they want - tell them what they need.

By Mark Stevens

I am always amazed when mediocre salespeople engage in their miserable excuse for selling. It's like they've slipped their prospects a pill and believe they can close by putting them to sleep.

Think about it: The Willy Lomans of the world walk in to see a prospect, turn down the lights, flip on the slideshow and everyone in attendance knows they are about to be sold.

The problem is that no one wants to be sold. As soon as their sales pitch detectors start to vibrate, they begin to turn off and put up the anti-sales shield. And the Willy Loman clone is a goner--shoeshine, smile and all.

So what to do? Never appear to be selling anything. Refrain from bringing any classic sales crutches with you. No catalogues. No portfolios. No price lists. No memos. These components of the traditional sales process are damaging for several reasons. They reinforce the expectation that you are just another salesperson and activate the sales guard detector. They deflect attention from you--and from the spell you must create to turn the sales visit into an experience. Most important, they deprive you of the element of surprise. And in the vast majority of cases, that's a deal killer. Here's how you can introduce and maintain the element--the power--of surprise.

Don't start by asking prospects what their needs are. That drivel is right out of the standard-issue sales coach playbook, and it's the polar opposite of what you should do.

What you should do is to control the agenda. Once you ask a question at the outset, you actually hand the stage over to the other party. You have lost it. Instead, start by providing a brief but highly compelling overview of what makes you, your product or company different and powerful. Instead of asking questions, do all of the talking right from the outset, telling a story that is engaging enough to captivate the prospect.

Case in point: I run a marketing firm that I believe is dramatically different from the standard aesthetics-focused firm. Instead, we're driven to grow businesses and to generate return on marketing investments.

I use the first 15 minutes of every prospect meeting to clearly and forcefully make this point. I don't "sell" in the classic sense. I educate. I do it with passion and conviction. I don't ask prospects what they need or want at this point. And they like what they hear because they have been frustrated by the standard-issue marketing firm that has failed to grow their businesses.

It's the element of surprise at work.

Once you begin to engage in a two-way conversation, don't automatically agree to meet your prospects' perceived needs. Why? In many cases, what they think they need isn't in their best interests. As the expert in what it is you're offering, you have experience and expertise that you need to share with your prospects.

Although it may seem counterintuitive, prospects respect you more when you say "no" to their requests--and provide them with more creative solutions--than if you simply provide what they ask for at the outset.

Every time you demonstrate that you're a solutions provider--an expert with the strength of your convictions as opposed to being an order taker--you rise in stature. And you reinforce the element of surprise.

Wednesday, November 18, 2009

10 Mistakes to Avoid in the Mobile Office

If you are running your business on the fly, these tips will keep you from crashing.

By Mark A.R. Mitchell

Small businesses face enough challenges in the pursuit of success, and those that operate a mobile office have it even tougher. Why make avoidable missteps? Here are 10 mistakes to avoid in the virtual and mobile worlds:

Failing to back up your data: This is a sure-fire way to destroy your business. It doesn't seem to matter how often people like me say to back up your files--most people just don't do it. But when you're working in a mobile office setting or by yourself from home, you risk losing everything you've built if you lose your data.
Solution: Back up your data daily, using an external drive or an online service such as one of those discussed here.

Skimping on connectivity: Connectivity with your team and with your customers is your lifeblood. If you cut costs here, you'll cut into your success.
Solution: Get the fastest broadband connection you can get--up and down.

Developing sloppy work habits: The virtual office is an office, even if you're dressed in your bathrobe.
Solution: Keep focused and remember that you are doing real work. If you forget that, so will others.

Isolating yourself: Not having a brick-and-mortar office doesn't mean you don't need to interact with your clients and teammates in a traditional manner--at least occasionally.
Solution: Face time with others is important, not just to stay current with your clients but to keep yourself from going stir crazy. If you're on the road for your company, you need to dock with the mother ship on occasion. It will help you remember why you're doing this together. If you're working from home, you need to get out and go to a professional conference or client meeting. You need to find ways to keep ideas coming in--and interacting with other people remains a powerful way to do that.

Working without an IT plan: In a virtual office, many people may come to the table with their own ideas about what information technologies they want to use. Some folks are Mac champions; others are PC lovers. Some love the BlackBerry; others the Palm Pre or iPhone. All this love, though, can lead to IT chaos.
Solution: If you're the boss, you need an IT plan. Trying to run a virtual office with technologies that don't work well together consumes time you could be devoting to doing real business. So set standards and expectations and be clear about why you've set them.

Micromanaging your virtual employees: One of the reasons people are drawn to a virtual office is flexibility. If you try to micromanage your employees' time, you'll run into difficulties.
Solution: In the mobile or virtual environment, you simply can't keep an eye on what everyone is doing at every moment--so don't even try. Mature mobile office workers--in contrast to immature slackers--will focus on getting the work done. They may do the work at 10 p.m., after a long day on a mountain bike, but they'll get it done. If you expect their attendance at a meeting or on a call, make sure they know that, but don't expect them to be at their desks working just because the clock says it's 10 a.m.

Failing to manage your virtual employees: While micromanagement is a problem, the absence of active management is equally bad. If you set unclear expectations, or none at all, you (and everyone who works for you) are bound to be disappointed.
Solution: Focus your mobile and virtual employees on goals, deliverables and milestones. Encourage them to ask for help if and when they need it, but otherwise leave them alone to do the work you expect them to do. They'll do it in the way that works best for them within the timeframe you've identified.

Insufficiently vetting your employees: You need to know that your virtual employees can get the job done in an environment that may have few, if any, of the traditional reminders that they're at the office. How can you know this when you hire them?
Solution: A track record of working virtually helps, but in the absence of that you'll have to go with your gut when you assess answers to questions like, "Why do you want to work in a nontraditional setting like this?" and "How do you structure your work life?" and "How do you deal with the competing demands of home while you're in the office?" If you don't vet your potential employees with due diligence, it's going to be harder on you and your business in the long run.

Forgetting your boundaries: Traditional offices--even really hip ones with video games and foosball tables--are still bounded spaces. You leave home to go to them. But if you're working from home, that boundary, like everything else, can be virtual.
Solution: You need to find a way to keep a healthy boundary between your work and home life. If you don't, both will suffer. A door you can close at the end of the day is a wonderful thing.

Failing to enjoy the virtual office: Ultimately, a virtual or mobile office can be the office you've always dreamed of, so don't miss the opportunity to enjoy it.
Solution: You have a unique opportunity to choose the tools and technologies you use to get your work done, and to shape and control the environment in which you work. If you don't take advantage of that opportunity and build the world that works best for you, your employees, and your customers, you'll miss out on one of the best aspects of working in the virtual office.

Monday, November 16, 2009

Find a 'Tweet' Deal on Advertising

Banner ads aren't the only way to advertise online; take advantage with these affordable alternatives.

By Lydia Dishman

The first question you must answer before launching an advertising campaign for a new business, product or service is: "Who is my audience?" Once you determine your ideal customer, you can go on to produce successful, targeted ads.

Social networking as an advertising tool is a new trend, but it’s expected to represent more than 20 percent of advertising overall by 2014, according to recent studies. And Twitter is poised to lead the pack.

"Most advertisers are interested in reaching more prospects, especially new audiences, and getting direct return on investment," Brian Carter, founder of TweetROI says. "Twitter is a new place to [do that]. People are already talking about all kinds of things on Twitter--people who need what small businesses offer.

"TweetROI is one of a small but growing group of emerging platforms that leverage Twitter as a low-cost medium for companies to place ads that reach very specific targets. Basically, a business buys into the service and offers a cash incentive to those who tweet its ads. Each platform has unique features and benefits, so it's up to entrepreneurs to decide which suits their business best.

Carter believes social media has the potential not only to help entrepreneurs target consumers more effectively, but also to bring in bigger returns by taking a larger bite out of that web-based pie.

Businesses send TweetROI their suggested text and a link, then choose campaign settings such as how much they will pay per tweet, a maximum number of tweets, how often they can go out and how long the campaign will run. There’s a function for advanced bidding that allows businesses to pay more or less depending on the tweeter's influence and viral potential. According to TweetROI's website, Twitter users recommend stuff they like in their own words.

"Businesses should both build their own Twitter accounts and advertise via pay-per-tweet,” Carter says, noting businesses can expect a faster ROI from their TweetROI investment than their social media labor hours.

"Pay-per-tweet is cheap compared to existing online advertising channels." Carter says. "TweetROI averages $3 per tweet and its average cost per click comes out to about 50 cents." He recommends that small businesses start with $500 a month to test the service. "It's critical that sufficient web analytics are in place to measure the conversions and revenue that come from pay-per-tweet," he adds.

Founded by Andy Arnott, a startup veteran, this service is designed to appeal to users who want to make money on Twitter and share that money with causes they are passionate about while promoting socially conscious advertising. AdCause allows both tweeters and businesses to suggest charities and to make donations directly to charities through PayPal.

Businesses that want to advertise can match their ads to tweeters by searching by name, location or number of followers. Tweeters control which ads appear; if they select a network option, only businesses that match their subject matter will display. Then it's click to purchase via PayPal, or to negotiate a better deal. The message will automatically appear on the Twitter stream of the chosen person when the transaction is completed. Campaigns start as low as $1, but Arnott suggests an initial investment of $100 to test the waters.

Sponsored Tweets
Brainchild of Ted Murphy, CEO and founder of IZEA, Sponsored Tweets lets companies see the potential impact of each tweeter by offering a graded profile based on the tweeter's number of followers and how often that tweeter engages in conversation. The service also allows tweeters to manually select companies whose ads are most relevant to their personal preferences. Though Sponsored Tweets gives businesses a how-to for suggesting content, tweeters are free to write the content themselves.

Murphy, like Carter and Arnott, recommends starting a campaign with a few hundred dollars--Sponsored Tweets start at 50 cents to $1 CPC. "Remember, it's not all about clicks," Murphy says, "Engage a broad range of people with large and small audiences. Pick the best performers and re-engage those people in future campaigns."

The service is also appropriate for building buzz, Murphy says, adding "I would use the tool to build followers and anticipation prior to launch."

Twitter offers a kind of word-of-mouth marketing that works, Arnott says. "It's a perfect fit for companies looking to form a lasting relationship with their customers. By engaging users with relevant ads, companies are not only building their brand but engaging their customers in a relevant dialog."

Sunday, November 15, 2009

5 Key Traits of Great Leaders

Discover the five things you can do to attract and retain outstanding employees.

By Patty Vogan

In the book, Lessons From the Top: The Search for America's Best Business Leaders, Howard Schultz, the CEO of Starbucks, made the following observation:

"I think it's very difficult to lead today when people are not really truly participating in the decision. You won't be able to attract and retain great people if they don't feel like they are part of the authorship of the strategy and the authorship of the really critical issues. If you don't give people an opportunity to really be engaged, they won't stay."

As an entrepreneur with employees, one of your primary goals is most likely to attract and keep motivated workers. So let's explore the five key traits that will help you become the kind of leader people love working for.

Key Trait #1: You must have a vision. We've all heard the saying "You must stand for something, or you'll fall for everything." But what does that really mean? Standing firm when it comes to your company's policies and procedures is all well and good, but it doesn't speak to having a vision. As a leader, you have to learn to communicate your vision or the vision of your company to the people you want to follow you. But how can you do that?

Learn to paint a picture with words. Speak it, write it, draw it, touch it. Whatever methods you can use to create a picture, do it. As they say, "A picture is worth a thousand words."

Ask each of the other managers in your company to tell you, in their own words, about the vision of the company. How close is it to what you thought they understood? Is your team on the same page as you?

As you work, your company's vision should be in your mind every day, and you should reevaluate it occasionally so that it stays current with the changing times in which we live. And remember, your staff needs to be just as involved as you in keeping it up to date if you truly want them to buy in on the vision. Be sure to keep your key players involved.

Key Trait #2: You must have passion. Your employees want passion; in fact, they'll go to the ends of earth because of it, live and die for it. Think of the sailors who traveled with Christopher Columbus or Leif Ericsson to explore uncharted territory. Their leaders' passion inspired them to take on new and very dangerous challenges.

To build an extraordinary management team, you've got to light the "fire in their bellies," to get them to feel passion about the company and connect to the leader's vision. Passion is such a key part of being a great leader that if you don't have it, you simply can't be a great leader. Think of all the great leaders throughout the ages and try to name one that did not have passion.

And passion is infectious: When you talk about your vision for the company, let your passion for your vision shine through. Others will feel it and want to get on board with you. If you don't have passion for your vision, you need to recreate your vision or reframe your description of your vision so it's connected to your passion.

Key Trait #3: You must learn to be a great decision maker. How are major decisions made in your company? What is your process for making them? For instance, do you talk to your management team and create a list of pros and cons to help you make the best decision? Maybe you conduct a cost analysis. Or do you create a timeline for the implementation strategy, process and timing?
Some leaders have a set process, and others fly by the seat of their pants. But you don't want to be one of those leaders who consults no one before making a decision, announces the change the next day and then gets frustrated when no one follows it. If you're one of those, I urge you to implement a set process.

In fact, here's a system you can use to become a better decision maker. It's called the Q-CAT:

Q = Quick. Be quick but not hasty.
C = Committed. Be committed to your decision but not rigid.
A = Analytical. Be analytical, but don't over-analyze (Too much analysis can cause paralysis.)
T = Thoughtful. Be thoughtful about all concerned, but don't be obsessive.

When you use the Q-CAT, it'll help you to decide when to bring others into the process and what steps need to be taken to help you make better decisions.

Key Trait #4: You must be a team builder. To become a great leader, you must develop a great team or, one might say, a well-oiled machine. But how do you do that? You can start by handing off responsibility to your team and letting your team to run with it. Don't breathe down their necks and don't micromanage, but make yourself available if questions or problems come up. Teach your team to use the Q-CAT decision-making system and give them the freedom to work through their own decisions.

When projects aren't on track or your team is falling behind on deadline, it serves no one if you start pointing fingers. This is when you need to rise to the occasion and inspire confidence in your employees, to let them know you support them and ready to help. Be ready to alter plans and make new ones. Don't forget to use humor to keep your team's spirits up during a crisis. When an emergency hits, your team will look to you to be a tower of strength and endurance.

Key Trait #5: You must have character. Without character, all the other "keys" are for naught. That's because your innate character strengths and limitations play a critical role in your leadership style. The real question is, are you aware of just what role they play? All great leaders have taken steps to learn about their individual personality and what part it plays in their leadership style.

So what's your leadership style? If you don't know, there are many leadership style assessments available on the market. Two popular ones that have been around for many years are the Myers-Briggs assessment and the "360-Degree Feedback" model. There are dozens of other to choose from--the important part is that you "Just do it," as the Nike ad would say, and see how you rate. It's a good way to do a "character check" on yourself and your leadership skills.

Then, once you've done the assessment, the question to ask yourself is, do you feel your character matches what the assessments are pointing out to you?

If you feel the traits don't match who you think you are, then look a little deeper and be honest with yourself. Sometimes our first response is defensive. You might want to assess yourself with a different type of profile and then compare the results. Within the 360 Degree Feedback model, there's an opportunity to see how your employees and peers view you, too. In learning to be a great leader, the first step is to be open to feedback about yourself as a leader and separate it from you the person.

So are you a great leader? Or do you have the desire to become one? Remember, a great leader is someone who has a clear vision and can turn that vision into a vivid picture that others can see. When you speak about your vision, it should be with a passion you feel in your heart, a passion that creates so much enthusiasm that your team will want to jump on board. When major decisions need to be made, you should encourage everyone to use the Q-CAT system and be responsible for his or her own actions. And you should be continually assessing your own character and never stop growing, personally or professionally.

If you can apply the five keys to great leadership, you'll be well on your way to becoming a great leader surrounded by great employees!

Thursday, November 12, 2009

Grow Your Biz by Reaching More Customers

Want to start catering to a new demographic? Here's how?

By Mark Henricks, Entrepreneur Magazine

When Tiffani Kim noticed female customers of Tiffani Kim Institute Medical.Spa bringing in husbands and boyfriends, she started reaching out to the male market. After renaming men’s manicure/pedicure treatments “sports buffs,” instituting couples’ nights to encourage women to introduce men to the Chicago spa and otherwise exploring the new demographic, Kim, 47, reports that a significant portion of the 80-person company’s revenue now comes from men. “It will never be like the women’s spa business,” Kim says. “But it has gotten to be a good 30 percent of the business.” To bring your company’s offerings to a new demographic market, consider these tips.

1. Do no harm. “Don’t expand in such a way that it’s going to get you hurt,” says Clarkson University marketing professor Larry Compeau. Appealing to a new demographic requires changing something about your offering. Before doing it, make sure the changes won’t alienate the customers who got you where you are. Retail businesses should be especially aware of how a new group of patrons can change the experience for existing customers. Kim clearly had to make sure that having increasing numbers of men in her spa didn’t turn it into a boys’ club.

2. Look before you leap. “Do your homework first,” Compeau urges. “Make sure the new demographic market values your product.” Your market research could consist of hiring a research company, talking to potential customers in the demographic group or, as Kim did, just paying attention to what goes on at the front desk.

3. Go slowly. Kim modified her offerings incrementally over a period of years to make sure the effort and risk were worth doing more. That’s the way to go, according to Compeau. “I’d advise changing as little as possible at the outset to see how the market responds.” The last things to change should be the hardest to undo. You won’t know for sure if the new demographic will really be profitable, not to mention whether diluting your offerings will affect profits in other areas, until you try. And you don’t want the experiment to be irreversible.

4. Consider multibranding. It’s what Toyota does with Lexus and what countless other corporations do with their own brands. Entrepreneurs can reach new demographics without alienating old ones by giving new offerings different identities. It can be as simple as a restaurant using the same kitchen to serve two dining rooms, each with its own entrance, signage, pricing and demographic market, Clarkson says.

5. Look at everything connected with your business and its value proposition to see how it might be modified to enhance its appeal to a different demographic. While it’s easy and sensible to do as Kim did and change little more than the label affixed to new offerings, you might need to do more. Look at your pricing, associated services, promotional techniques and even distribution methods. Everyone knows Toyota makes Lexus, but you can’t go into a Toyota dealer and buy a Lexus, Compeau notes. The products have completely separate distribution systems, which helps keep them separate in the minds of completely different demographics.

Tuesday, November 10, 2009

5 Ways to Raise Money Today

With a little persistence and creativity, you can still find financing.

By CJ Prince

With banks still holding fast to their funds, credit remains scarce for businesses. But that shouldn't put you off the capital hunt. With a little persistence and creativity, you can still find financing. Here are five ways to get started:

1. Seek a microloan. Small businesses with reasonably good credit have a fair shot at getting a small line--usually up to $50,000--from a microlender, even if they've been rejected by a traditional bank. The Fox Valley Micro Loan Fund requires applicants to submit a turndown letter from a bank. While Fox Valley does consider credit history, it doesn't set a target credit score, focusing more on the circumstances affecting one's score.

2. Use your assets. As banks have pulled back on lines of credit, asset-based lending has leapt forward. At First Business Capital Corp., you can secure a line of credit against eligible receivables in which the lender fronts you 85 percent of the total, then forwards the remaining 15 percent after your customer pays in full. You'll pay about 1.5 points to 3 points over prime for the advance, but, says Michael Colloton of First Business, "that's how we can lend to companies that don't have the greatest creditworthiness."

3. Turn to the web. For a small amount of working capital, try peer-to-peer networks, which marry lenders and borrowers online. Though it's a relatively new concept, "over the next three to four years, peer-to-peer lending will take a significant leap in providing necessary capital to small-business owners," says Steve Bloom, an advisor and the former chair at SCORE's Atlanta chapter. Sites such as, and allow entrepreneurs to search for lenders and borrow up to $25,000, with three-year terms and widely ranging rates.

4. Go around the big banks. If you have good credit and a profitable business, research local banks to find a business-friendly lender that hasn't been caught in the mortgage maelstrom. When Marco Giannini, 33, founder of pet food maker Dogswell, needed some flexible cash, he beelined for California United Bank, which lends mainly to manufacturers and distributors. He received a $3 million line of credit based on receivables and inventory. Before applying, he increased his chances by scrubbing his balance sheet and making sure his P&L statements were in line. "You need to make sure your numbers are realistic," he notes.

5. Sweet-talk your vendors. Often overlooked as a source of credit, vendors are uniquely motivated to keep their customers' business going and will often work out a payment structure to help clients survive a rocky period. When Giannini first started out, he received favorable terms from his manufacturers, easing the cash-flow burden for his company. If you can show a vendor your profitability, says Giannini, they'll take a chance on you.

Monday, November 9, 2009

7 Steps to the Perfect Marketing Plan

Think about who you are, who needs what you do and how to get their attention.

By John Jantsch, Entrepreneur Magazine

One of the most powerful strategic planning tools your business can possess is a marketing plan. I'm not referring to an academic exercise found in college marketing textbooks. Your marketing plan should be a simple (in some cases, one-page) document that specifically answers who you are, what you do, who needs what you do and how you plan to attract their attention. It's a combination of the planning process and the completed action plan.

Follow these seven simple steps to build the perfect marketing plan:

Step 1: Narrow your market focus. Try to describe your ideal customer in the narrowest and most detailed terms possible, as though you're describing him or her to a referral source

Step 2: Position your business. Figure out what you do best and what your target market wants. Maybe it's how you serve a niche or package your products. If you don't know what it is, call up three or four of your clients and ask them why they buy from you. Craft a core marketing message that allows you to quickly differentiate your business.

Step 3: Create education-based marketing materials. Recreate all your marketing materials, including your website, to focus on education. Make certain every word in your marketing materials speaks of your core messages and to your target market.

Step 4: Never cold call. Make sure all your advertising is geared toward creating prospects, not customers. You must find ways to educate before you sell. Your target market needs to learn how you provide value in a way that makes them want to pay a premium for your services or products. You simply can't do this in a 3-inch-by-4-inch ad. Your ad must get viewers to ask for more information. Then you can proceed to selling. Determine all the ways you can get your education-based messages in front of your narrowly defined target market.

Step 5: Earn media attention. Create a list of journalists who cover your industry or community, and build relationships with each by becoming a reliable resource of information. Plan out an entire year of new items you can promote by season or event.

Step 6: Expect referrals. Create a referral marketing engine that systematically turns each client and referral network into a kind of unpaid sales pro. You must instill a referral marketing mind-set into your business's culture. Do this by making every customer a marketing and referral contact. Map every contact and build processes that focus on referrals.

Step 7: Live by a calendar. After you complete steps 1 through 6, determine what you need to do to put them into action. Then create an annual marketing calendar, noting the required monthly, weekly and daily appointments necessary to move your plan forward.

Saturday, November 7, 2009

10 Steps to Effective Copywriting

Don't waste your ad dollars with an over-the-top sales pitch. Well-written copy follows these simple guidelines.

By Susan Gunelius

Whether you're a small-business owner, a medium-size business owner, an eBay seller, or simply trying to break into the copywriting industry, understanding the fundamentals of writing sales-oriented copy and put you on a path to success. At its core, copywriting is another device in a business' marketing toolbox. Well-written copy can make or break an ad or marketing piece. With that in mind, copywriting can equate to either well-spent advertising investments or a waste of advertising dollars.

Many people misinterpret the uniqueness of effective copywriting. I can't count the number of times I've heard freelance writers say they want to shift from article writing to copywriting as if it's simply an extension of their existing abilities. Copywriting does come naturally to some people, but for most, it's a foreign landscape they do not know how to navigate. Copywriting is about more than writing the hard sell sales letter that many short copywriting courses offer. In fact, I cringe when I see those over-the-top sales letters, which do little more than provide an ugly representation of copywriting, sales and marketing.

Well-crafted copywriting doesn't need to beat a person over the head. It doesn't have to drown in bold typeface and capitalization. The message should stand on its own without an overabundance of heavy-handed sales language and design embellishments. I associate many sales letters that are guilty of this technique with a writer who doesn't truly understand the basic purpose of copywriting. However, successful copywriting can be achieved in 10 easy steps.

1. Exploit your product's benefits.
The first step of the copywriting outline is the foundation for your advertising campaigns. A benefit is the value of your product to a customer. In other words, a benefit is what the product can do for a customer or how the product can help a customer. You need to put into words the reasons your product is the best available and better than your competitors' products based on the added value it provides to your customers. The key to success is for you to fully understand all the benefits of your product. Only then can you ensure that the audience knows them and can relate to them.

2. Exploit your competition's weaknesses.
To write compelling copy, it is essential that you know what differentiates your product from the competition. Once you know your competitors' weaknesses, you must make sure your audience knows them and understands why buying your competitors' products would be a terrible mistake. Get started by thoroughly researching your competition and understanding what they offer in terms of products and services. Next, list the elements of their offerings that are inferior to your own. Feel free to tear the competition apart but be realistic in your comparisons. You want to be able to support your claims if you are challenged.

3. Know your audience.
Every person in the world is not going to see every ad in the world. Each ad has a specific audience that will see it, and it's the marketer's job to find the best placement to ensure the target audience will see it. For example, an ad for skateboards placed in a local senior citizen housing association newsletter is not likely to generate a lot of sales. In fact, it would be a waste of advertising dollars. The target audience for skateboards is teenagers or young adults. The vast majority of senior citizens do not use skateboards, and it is not a product category in which they typically purchase gifts. Before you buy ad space, make sure you're spending your money in the right place to get the biggest bang for your buck in terms of exposure and building awareness of your product or service.

First, take the time to research your customers thoroughly. In most businesses, 20 percent of customers are responsible for 80 percent of sales (this is called the 80/20 rule in case you're curious about the official marketing terminology for this phenomenon). That 20 percent represents your best customer, and your job is to determine who that 20 percent is. Evaluate your customers and put together a demographic profile of your most valuable customer, so you can advertise in the best places to find similar people who are likely prospects. If you're a small business owner, you probably don't have a budget set aside to conduct a thorough research study and analysis of your customer base, so you'll have to improvise by using your own communication skills and visual investigation. Remember, you're trying to develop a basic profile of your target customer, not a CIA profile of each individual who buys your product. Do your best with the information you have.

There are many attributes you can use to develop a demographic profile of your customers. Following is a list of examples of traits to help you start your own demographic profiling initiative:

• Gender
• Age
• Ethnicity
• Family Status
• Income
• Occupation
• Interests

4. Communicate W.I.I.F.M. (What's In It For Me?)
There are a variety of reasons to create an advertisement or marketing piece. Before you write copy for your promotional piece, you need to understand your goals for that piece. What do you want to get in return? The copy you use in each ad or marketing piece will vary based on your goals for that promotion. While this book does not focus on the development of marketing plans and strategies, I will offer some examples of different objectives for ads or marketing pieces that, in turn, will affect the copy you use:

• Communicate a special offer
• Share information and raise awareness
• Generate leads

Your customers need to understand how your product or service is going to help them by making their lives easier, making them feel better, helping them save money, helping them save time, etc. In this step of the copywriting outline, you'll build on the work you've done so far by taking your product's features, benefits, and differentiators and specifically describing how they directly affect your target audience members' lives in positive ways. Remember the first tenet of copywriting--your product or service is far less important than its ability to fulfill your customers' needs.

Answer your target audience's question "What's in it for me?" Remember, you're paying for your ad space and possibly graphic design too. Don't waste your money by placing an ad with ineffective copy that does not clearly tell your customers what they'll get by buying your product or service. Large companies with big advertising and marketing budgets can test snappy, cliché headlines and copy in an attempt to find the best way to catch their target audience's attention, but small and medium-size business owners typically have limited budgets. For smaller businesses that only have one chance to communicate their message, copy must be written so the message, including benefits and differentiators, is heard and understood by the target audience. There is no room in a small business owner's advertising budget to risk not getting that specific message across to the right people every time.

5. Focus on "you," not "we."
It is essential that you are aware of how you're addressing your customers in your copy. To do this, you need to understand pronoun usage. Think back to your school days. Remember your English teacher explaining first person, second person, and third person? As a refresher, first person (I, me, my, mine, we, us, our, ours) is the person speaking and second person (you, your, yours) is the person to whom one is speaking. It's essential that you write copy that speaks to your target audience and not at them--and not about you. Therefore, the majority of your copy in any ad or marketing piece should be written in the second person. For example, do you prefer copy that says, "Through our first-rate sales department, we can deliver cars within 24 hours" or "You can drive your new car tomorrow"? While the first copy example focuses on the business, the second example focuses on customers and speaks directly to them. It's more personal, and thus, more effective.

Remember, writing in the second person helps your audience quickly connect the points in your copy to their own lives and allows them to personalize the advertisement or marketing piece. This is how the ad is connected to an individual customer's own life. By writing your copy so it focuses on the customer rather than yourself, the customer can personalize the ad and product you're selling and act accordingly.

6. Understand your medium.
As you write your copy, be aware that each different medium where an ad is placed requires a different tone or style. Depending on where you're placing your ad, the copy you use changes based on the audience who will see the ad. Are you placing your ad in a local newspaper or on a billboard? Are you placing your ad in a woman's magazine or in a news magazine? Different media require different copy to most effectively persuade a particular audience to act. Furthermore, different types of marketing pieces require different types of copy. Remember, there are many ways to use copy to promote your business other than traditional advertisements. Use every possible and appropriate opportunity to communicate your marketing messages to your customers.

7. Avoid T.M.I. (Too Much Information)
Never risk losing the attention of your audience by providing too much detail in your copy. Effective copywriting tells your audience what they need to know to act and make a purchase or how to contact you for more information. Extraneous details clutter the minds of your audience, which increases the possibility of them forgetting the most important aspects of your advertisement or marketing program. Unless you're advertising a prescription drug, highly technical equipment, or an exceedingly regulated or complicated product, the best rule to follow is K.I.S.S. (Keep It Simple, Stupid). You're spending a substantial amount of your advertising budget on placing each ad. With each ad, you only receive a small amount of space to get your message across to your audience. Wisely use that pricey real estate to ensure you get the highest return on your investment.

8. Include a call to action.
The goal of any ad or marketing piece is to elicit some kind of response from the audience who sees it. A call to action is the element of copy that tells an audience how you want them to respond to your advertisement or marketing piece. Typically, the call to action creates a sense of urgency around a message and provides instructions on what to do next. For example, a call to action might tell the audience to call the advertiser or visit their store or website.

Including a call to action is by far the most important aspect of effective copywriting. It is essential that you make it easy for your audience to act on your ad or marketing message. You already persuaded them to want your product by following Step 1 through Step 7 of the copywriting outline and by writing influential copy. Now you must make sure your audience can respond easily to your ad and buy your product by compelling them to act.

To start, make sure the sentence structure of your copywriting is in an active rather than passive voice. The reason for this is simple. Copy that you write in the active voice is by definition action-oriented, while copy that you write in the passive voice talks about the action in a remote manner. To further explain, when you write a sentence in the active voice, the subject of the sentence performs the action of the verb in the sentence. On the other hand, if you write a sentence in the passive voice, the subject of the sentence receives the action from the verb of the sentence.

The second step in creating an effective call to action in your copy is developing a sense of urgency. Your goal in advertising is to create awareness of your product or service and, ultimately, boost sales. When do you want to do that? Do you want your customers to act tomorrow, next month, or next year? If you're spending money on advertising now, you most likely want your customers to act now. If that's the case, your copy needs to tell them to get off the couch and get into your store now. There are many words and phrases you can add to your copy to create a sense of urgency.

9. C.Y.A. (Cover Your Ass)
While large companies have legal departments that review copy to ensure it does not expose the company to potential problems, smaller companies don't usually have the budget to seek the opinion of an attorney for each ad they run or marketing piece they print. However, that doesn't mean small business owners have any less responsibility for producing ads and marketing pieces that are honest and not considered deceptive. Most small business owners are sole proprietors meaning if they lose a lawsuit, not only can their business assets be used to satisfy a plaintiff's claim, but their personal assets can be targeted as well. When you're writing copy, consider if claims that you can't prove in your copy (or can't provide appropriate disclaimers for) are worth it once you weigh the risk vs. the potential reward.

Aside from opening yourself up to possible litigation, exaggerating or falsifying claims about your product or your competition is unethical and a bad business practice. If you're caught in a lie (no matter how small), word will spread quickly, and your reputation could be irreparably damaged. Again, weigh the risk vs. the potential reward before you advertise using claims you can't prove.

Be careful of using words superlatives such as the examples in the following list:

• Free
• Guaranteed
• Best, lowest, fastest, etc.
• Or your money back
• Risk-free
• No risk
• No purchase necessary
• No cost
• No obligation
• No investment
• 100 percent
• Promise
• No questions asked

10. Proofread.
It is critical that you accurately proofread your copy. One of the quickest ways to lose credibility in advertising is to allow grammatical or spelling errors to appear in your advertisement or marketing pieces. Customers translate carelessness in ads into carelessness in products and service. They ask themselves, "If this company doesn't care enough to produce an ad without errors, how likely are they to care about taking care of me?" Professional businesses produce professional quality ads and ad copy, and that means their copy has been proofread again and again and is error free.

It Really Is That Simple
Copywriting is truly easy. If you do your research and prep work, your copy will shine. Don't be afraid to take calculated risks and learn from your mistakes, but don't waste your limited advertising budget. By doing the legwork first and thoroughly completing your copywriting outline, you'll have a working document you can use as a tool to produce all your copywriting projects now and in the future. Spend some time up-front to develop a first rate copywriting outline, and you'll reap the rewards later with a boost in sales and profits and a higher return in your advertising investments. Now kick some ass.

Friday, November 6, 2009

Shelling Out to Keep Your Business Alive

To what extent would you go to keep your business up and running?

By Carol Tice, Entrepreneur Magazine

Entrepreneurs typically have a passion for the business they've created. With the economy down, many business owners are facing tough decisions about how to keep their business afloat until sales improve. What would you be willing to do? For instance, would you liquidate personal assets to keep your business alive?

A recent study shows more small-business owners are contemplating doing just that -- dipping into their own funds to keep their business going. The Discover Small Business Watch survey of 750 small-business owners found nearly two-thirds--61 percent--of owners thought it likely they would tap into personal assets to stay afloat within the next year.

Forty percent said it was "very likely" they would use their own cash, while another 21 percent said it was "somewhat likely." These owners mostly don't plan to hit up friends and family, either--67 percent said it was "not very likely," or "not at all likely," that they'd get more operating cash that way.

Just a month ago only 46 percent of small-business owners surveyed said they were experiencing cash-flow issues.

Reading this study made me think about the businesses I see struggling in my own town. Some are trying hard, marketing everywhere--on city-specific online forums, sponsoring events, using Val-Pak. But many others have become invisible.

Right now the main strip mall in my town is home to a large, empty former Pizza Factory space that went independent, and then shut down--which no one has wanted to lease for more than a year. Next door is a crepes shop that went bust. Across the parking lot is a large empty space that was a mom-and-pop coffeehouse. And down from that, perhaps saddest of all, is a new yogurt shop that opened at the end of summer, too late to catch its prime season in my chilly Seattle-area market. I've seen zip in marketing from that new store, which also doesn't bode well.

Other local businesses I know are likely shoveling their own money in hand over fist right now to keep going. Which would you do--put in your own cash, or close your doors? Are you thinking about tapping your personal assets to survive?

That's always a risky proposition, as you don't know if you're throwing good money after bad. What are you willing to do to make it through the downturn? Leave a comment and tell us your strategies for keeping your cash flowing.

Wednesday, November 4, 2009

Should I Pay Myself a Salary From My Business?

Unless you have other income streams, yes, you should.

By Rosalind Resnick

Q: I started my business last year, and it's beginning to make some real money. Should I pay myself a salary or reinvest the money back into the company?

A: Unlike our friends and neighbors in the corporate world, entrepreneurs like us generally don't work for a paycheck. What gets us up in the morning is the desire for financial freedom, personal fulfillment and the hope that, one day, that sapling we've nurtured all these years will grow into one very valuable tree. That said, the bank, the power company and the supermarket probably don't share our entrepreneurial dreams.

That's why, unless you have investments or other income streams, you'll probably want to start paying yourself a salary from your business as soon as your company can afford it. You need to recognize that your company is a business, not a hobby, and that its goal is to make a profit.

"You should not be building a business if the model does not lead to sustainable operating income and cash flow out of which a salary can be taken in a reasonable period of time," says Frances Spark of Spark Consulting LLC, a New York firm that provides business consulting, operational restructuring and interim CFO and COO services to entrepreneurs and small to mid-size companies. There are also taxes to consider.

"If your business is structured as a sole proprietorship or an LLC, you are probably better off taking distributions from the company and paying taxes on an estimated basis during the year," Spark says. "If you have employees, you will have to set up a payroll and ensure that you withhold and pay the necessary employment taxes to the IRS."

Tuesday, November 3, 2009

Anchor Your Networking With Strong Relationships

Use strategic associations to keep your business afloat during economic storms.

By Ivan Misner

This summer, our family took a small-ship tour of the Great Barrier Reef near Australia. The first night we were on the ship, we noticed that the anchor used to secure our vessel in the middle of the Coral Sea was quite small compared to the size of the ship.

On the second night, very strong winds came up. Our captain started the engines and backed the ship up to let out more length of the chain connected to the anchor. Curious (and, I must admit, a bit concerned), I asked him how it was possible for such a small anchor to hold the ship in place with the winds blowing against it so strongly.

"It is the chain that is holding the ship, not the anchor," he informed me. After the anchor is lowered, the captain looks to the first mate, who signals from the prow the direction in which the chain is laying. The captain then maneuvers the ship into the right position and lets out the necessary amount of chain to hold the ship.

Well, I began to see how this dynamic was relevant to networking. The anchor of any good networking program is the system, the process of doing business through relationships. But it’s not the system or the process that has the strength--it’s the length of the chain (the relationships) holding the networking program in place!

As you take a look at the networking groups you may be participating in, think about the links, or relationships, you have formed with the individual members. How many links does your chain have? Do you have strong relationships with many of the other members of the group, or are you closely linked with a select few, but disconnected and detached from others?

So, how do you go about letting out more chain during times when the economic winds have strengthened against your businesses? I submit that it’s time to get serious about developing stronger relationships with each and every member of the networking groups you participate in. This includes people who you don’t think have the contacts you might want or perhaps are in a business that’s not exactly symbiotic with yours.

Have you ever thought to do one-on-ones with those people as well? Spend the time to do one-on-ones with each and every active member of your network--it helps you develop a longer and stronger chain. Think of each person in your network as one of the links that lengthen that chain.

The wisdom of laying more chain to strengthen the ability of the anchor to hold strong is critical for the success of your personal network.

Another important aspect of this anchoring process is watching the first mate. Look for networking organizations with leaders who are qualified to signal the direction the chain is lying as the dynamic in your group changes.

These organization leaders should be able to signal what adjustments need to be made to ensure your network is pointed in the right direction. At one point during our tour, the first mate literally dove into the water to loosen the chain where it had become hooked on a coral formation. You need qualified people in your personal network who are willing to dive in to help lead a network in the right direction.

Starting this week, try to make the development of your "relationship chain" within your personal network your primary focus. I guarantee those relationships will be what anchor your business and your networking efforts in the long run despite economic fluctuations. The old adage that a chain is only as strong as its weakest link is just as true for a ship as it is for a business network.

Monday, November 2, 2009

How to Sell in 60 Seconds

When selling you have one minute to pique your prospect's interest. Here are some tips to make the most of your time.

By Tony Parinello

Q: I've always equated selling with telling, and lately I've noticed that my prospects cut me off when I am giving them my pitch. What's the best way to get my point across and win the sale?

A: I would imagine that this month's question has value to all of us in sales and marketing. Let's face it: Buyers are more educated than ever before. What we sales and marketing types need to focus more on is understanding our prospect's world--and the best way I know of to do just that is to ask intelligent questions. Here's a rundown of the best questions to use and when to use them. My strong suggestion is that each and every one of us should ask a whole lot more questions and speak a whole lot less.

When interacting with a prospect, you must first seek to understand what's going on in the other person's world. Then and only then will your ideas be accepted and understood by the prospect.

The best way to do this is to set strict limits on your own "talk time." Keep it under 60 seconds. Yes, you read right: You must never, ever speak for more than 60 seconds without asking for approval to continue. This approval comes when you ask open-ended "prompting" questions. Generally speaking, these questions:

Cannot be answered with a simple yes or no.

Do not lead, control or try to manipulate the other person.

Enable dialoging.

Begin with the words "when," "what," "how," "why" or "where."

Require thought to be answered.

Encourage the other person to reveal feelings.

Build rapport.

The opposite of an open-ended question is a closed-ended question. Closed-ended questions, unlike the kind we've just examined, put an end to effective dialoging and will not get you any closer to a second appointment. Therefore, you should totally avoid this type of questioning as a means of getting approval to win another 60 seconds.

One example of a closed-ended question might be, "You're interested in attracting new customers, right?" The best place to use the closed-ended question is in a situation where you need to validate or confirm what you think is going on in your prospect's world. Generally speaking, closed-ended questions:

Are useful to give feedback during a dialog.

Can be used to obtain specific information and/or confirm facts.

During a dialogue, if you need to make sure that you've heard the prospect correctly, you can use what's called a clarifying question. These questions, too, can win you a fresh 60 seconds. A good clarifying question might begin with the words, "So, if I understand you correctly, you're saying that...". Warning: you should always preface your clarifying question with a statement such as this and then creatively paraphrase what you think your contact's main point is. It's a really bad idea to parrot back what you've just heard your prospect say. That approach may be perceived as condescending, sarcastic and disrespectful. Generally speaking, clarifying questions:
Secure the other person's approval and prove to a greater degree that you've got a good understanding of what he or she said.

Express in your own words what you just heard.

Clear up differences in the definition of words and phrases being used.

Clarify the meaning of "global" words (like "always" and "never").

Typically, once you clarify with your prospect, you can then use a developmental question to move the dialog in a desired direction to further understand the prospect's purpose and/or result he or she wants to achieve. These questions, too, can win you another 60 seconds of time to talk--once the contact has responded to your question, of course. Generally speaking, developmental questions:

Encourage the other person to elaborate on what he or she just said.

Begin to make it possible for the other person to show his or her true feelings about the topic at hand.

Obtain further definition of what's under discussion.

Optionally, you can also use a directional question to win another 60 seconds. These questions steer the dialog to a certain direction that a developmental question just uncovered. Directional questions are like a roadmap of your conversation and allow the dialog to take another path, one that's beneficial to uncovering the prospect's purpose and needs. Generally speaking, directional questions:

Move the dialog from one logical topic to another.

Invite the other person to participate in an informational exchange.

Can be used to replace a closed-ended question you were tempted to ask.

Important: Don't fall into the trap of using directional questions to control or manipulate the prospect in any way. This will destroy any business rapport you've built and reduce your chances of getting a second appointment.

Another question type you can use to earn another 60 seconds of talk time is called an opinion question. This kind of question is extremely helpful in revealing where a prospect stands on any particular issue, and it can be used to give you more insight into someone's unique needs. Opinion questions are also a nonthreatening way to ensure that the other person is actually engaged in the dialog. As a general rule, opinion questions:

Ask a direct question in a nonconfrontational way.

Get the other person to speak frankly and openly.

Allow the opportunity to share feelings.

Show esteem and respect for the other person.

Help to extend and prolong dialogues.

Finally, you can use what I call a social proof question to justify another 60 seconds of talk time. This is an indirect way of getting the other person to realize that his situation is similar to that of other people you've worked with. As with any other reference to a third party, there is the chance that your contact will respond favorably to what you cite within the question. On the other hand, there is a chance that the social proof you introduce will be looked upon as competitive or irrelevant to what's being discussed. So these questions can be tricky. Generally speaking, social proof questions:

Introduce a third party that is relevant to the discussion.

May increase confidence that you can address the purpose and needs of the other person.

Validate the other person's reasoning.

Can be used to address concerns or problems before they arise.

Intelligent use of each of these question types will encourage your prospect to begin to show his or her true feelings about whatever subject is under discussion. Build business rapport with prospects, and they'll be less likely to tune out while you're delivering your pitch.