Part two of a three-part series: How to grow your small business
Why do businesses sometimes falter? Let’s get the perspective of a retired longtime business professor and business counselor who is actively pursued for his opinions.
“One reason is they fail to understand their special niche or their market,” said the late Neil Delisanti, who passed away in late 2018 after enjoying a unique, long career as a business professor at the University of Puget Sound and The Evergreen State College. He also ran the Small Business Development Center (SBDC) in Tacoma, WA, where he advised more than 2,000 firms.
Mr. Delisanti said the mortality rate for small business is high in the first years of operation and it’s still true that 85 percent of businesses fail in their first year. The odds dramatically improve once you’ve survived for five years.
So, what can you do if you’re struggling?
He advised studying the emotions of consumers in their buying habits:
“Consumers want to visualize how your products enhance their families, personal lives or professions. Usually in household situations, women make 70-80 percent of purchases. They like hearing the term ‘security’ associated with their purchases. Other key persuasive words include: easy, good, healthy, new, own, proven, and results.”
Mr. Delisanti said businesses grow by developing core values, a vision, and a business plan:
“Don’t fantasize about what you think the market will be, or even worse, what you want it to be. Find out well before you invest your hard-to-accumulate capital, or take a financially irreversible action. Most businesses will fail, if they don’t understand the market niche they are trying to serve.”
He warned about the danger of cannibalizing your business:
“This often happens when a business opens another location or takes on an additional, but similar product/service. If your first store in Los Angeles has customers coming from Pasadena, when you open the Pasadena store, you will lose their business in Los Angeles. So you may see a sizable loss of sales from the first location or the original product.”
Whether you’re challenged by other small companies or so-called box stores, he emphasized the Internet is the easiest, most-economical way to check out competitors: their product descriptions, prices, customer lists, staff profiles, branding, and their target niches.
“One reason is they fail to understand their special niche or their market.”
He preferred Yahoo finance for free financial data on big firms. You can research the press coverage of competitors on search engines and sign up for Google news alerts for competitors and your business.
To see which Web sites drive traffic to your competitors, go to Google and type “link,” a colon, a space, and then their Internet address. You can request them to link to your site, too.
You can check your competitors’ marketing strategy for free by researching listings of trade shows at www.tsnn.com. Trade magazines and associations sometimes provide information and startup resource kits.
Above all, visit SBDC. SBDC probably has an office near you.
“Regarding your brand, which will help set you apart from others, make certain you give adequate thought to your name, logo, slogan, pricing, location, and anticipated level of customer service,” said Mr. Delisanti. “Next, research what you need to trademark to protect against plagiarism and focus on presenting a consistent message.” (In Washington, the Secretary of State’s office will trademark a name or slogan for a nominal fee.)
Because advertising by itself is no longer adequate, your strategy for growth should include stimulating consumers into talking about your company’s value at the water cooler while they’re at work. That means a strategy of buzz marketing, which basically consists of three elements: paid advertising, earned advertising, and developing centers of influence.
In paid advertising, try to accomplish two objectives – short term sales and long-term branding success. However, this makes budgeting for advertising a bit tricky; 2 percent of adjusted gross sales is the maximum for most businesses. Some suppliers have co-op programs and will pay part or all of your co-op, which is welcomed by newspaper, radio and TV sales people. Co-op ads are an economical way to drive traffic to your Web site, but remember a good-looking Web site doesn’t guarantee success because it often merely serves as an online brochure.
Given all the chicanery in cybercrime and competition, see the best practices to optimize your brand and manage your Web reputation.
If you can afford TV advertising, make certain your commercial airs regularly and is highly visual. Don’t underestimate the value of audio to help grab the attention of viewers.
Avoid the temptation to be too cute – concentrate instead on the benefits valued by consumers. Remember the Taco Bell Chihuahua dog? Sales actually dropped and the chain was forced to change its strategy.
It’s possible to dominate with a high frequency of TV commercials in off-peak hours. Understand whether you need a 5, 15, 30 or 60-second commercial. I like to air two 15-second commercials twice in the same break, at the beginning and again at the end. Known as bookends, they can accelerate your brand awareness. Be sure your messages don’t air adjacent to competitors.
If you create a video, make sure it has a professional look.
Radio is good, too. As I do with TV news programs, my preference is a respected all-news or news-talk station. You’ll reach an active, socially aware audience. Their listeners’ average net-worth is usually higher. A good classical music station is good, too, for reaching high net worth listeners.
Sponsor worthy events and local news coverage to become a magnet for community-minded consumers with good credit.
Think about public speaking. Here’s how to get more opportunities as a guest speaker and here’s how to obtain the most profit from speaking opportunities.
Direct mail coupons only attract price-conscious consumers once after each mailing. This means coupons won’t attract repeat customers to enhance your brand equity.
With the success of the Internet, people are using social media. See countless social-media tips here.
Also popular has been paid-advertising campaigns on the Internet, but you must evaluate online advertising options.
But they need to be synchronized with earned advertising – good press about your business.
Here’s how to leverage the news media for free PR. Note: journalists and bloggers also often take note of cause-related marketing campaigns that benefit the community.
Public relations is enhanced with video press releases.
You might benefit from unplanned PR opportunities by frequently advertising on TV news programs. Journalists will see your ads because they watch to evaluate their own reports as well as the work of their competitors to make certain they aren’t scooped on major stories.
A case study: After one of my clients consistently sponsored news programs for one year, a Seattle TV producer called me to request a live interview of my client regarding a new product; I hadn’t even submitted a press release. (The reporter is now an NBC newscaster.)
Developing centers of influence is a strategy of generating buzz with influential people to create referrals. Join professional, business, and civic groups (i.e. Rotary). Focus on value and customer service with strategic partnerships. For example, I’ve enjoyed synergizing clients, such as credit unions and car dealers. The credit unions advertised car sales in their newsletters, which resulted in credit unions loaning funds, dealers selling cars, and consumers happily driving home.
Don’t forget blogging informative articles. See the best practices in search engine optimization for a No.1 rated blog.
Other Delisanti reminders for growth:
- Develop multiple revenue streams and a new product line.
- Be pro-active, which means making old-fashioned cold calls.
- Maintain relationships by sending greeting cards, thank you notes, special offer notifications, and an occasional visit or phone call to just chat and not sell. Make certain your small business voice is heard – vote and make your business concerns known to lawmakers.
To check out the other two columns in this three-part series, how to grow your small business, see:
From the Coach’s Corner: To summarize the principles of marketing essentials for growth on a shoestring budget, consider the words of Theodore Roosevelt: “Do what you can, with what you have, where you are.” Note the eight best practices in small business marketing.