Got Get Em' Scrappy!

If you're old enough to remember the 1930's popular cartoon Scrappy, well then, congratulations! For the rest of us, Scrappy was a cartoon ahead of it’s time. The main character, while still cartoonish, resembled a human boy. Odd and somewhat appalling to parents of the time period, Scrappy was embraced, thanks to his promotions department.

The most heavily marketed cartoon between the 30’s and 40’s, Scrappy marked a time in America when all was wrong with the world. Scrappy’s producer aimed at bringing comedy to an audience in a human form to alleviate the pains of the time. The promoters made their Scrappy debut while reminding America that: “4 to 5 million Americans are unemployed,” “The Empire State Building opens,” “Gambling is legalized….”

As you can for some, Scrappy go-ers, this was what they needed – someone to express their point of view. So what does lil’ Scrappy have to do with where our country is today? Well, he was the cartoon of his time – he didn’t just allude to the Depression is his TV shows, he flat out made negative remarks about it. And with that, came lines of t-shirts, books, posters, and every other kind of merchandise you can imagine to promote him. So, why don’t we take some of his advice and tell it like it is and let the “entrepreneurs of the world” get start getting “scrappy” with the big company executives!

"Right now, our country needs these scrappy small-agency entrepreneurs to keep doing their thing, because they will indeed dig us out of this mess faster than the holding companies and big agency networks," says Ad Age's Alex Bogusky.

Bogusky also reminds us that small business equate for 75% of our gross domestic product.

So...how can entrepreneurs save themselves?

The key is marketing. Marketing their small companies with all they got! Owners of small business need to take this time when big businesses are failing, to use their out of the box thinking and get those crazy, off the wall advertising campaigns out into the world. Something has to make a difference in this time of change and Bogusky believes is marketing. Marketing stems from innovation, which all us entrepreneurs know is what fuels us.

An excellent article that takes a closer look at small entrepreneur-lead advertising companies and how they are becoming the change that will save all the “big fish” in the sea.

SOURCES: http://adage.com/agencynews/article?article_id=135438; http://www.scrappyland.com/faq.htm

Sale the Seas…

A friend of mine works for a large department store and we often get on to the subject of how they do business internationally. It wasn’t until I poked and prodded her knowledge bank that I began to even feel comfortable with the idea of selling anything outside the U.S. Until now, I thought like most young entrepreneurs do: doing business internationally is difficult and expensive and who needs it if your business already does well here? If you really want to increase sales to another level, this is the direction you’re going to have to go. And with a little research, you’ll begin to see it’s not hard at all.

There are three main things to consider when making the decision to do business internationally:

Do you know those international customers well enough to market to them? Do you know what kind of direct marketing they prefer? Do you know if they’ve already seen your ad that runs on TV or will you be starting out as a new face to them? It’s so crucial to know how to market towards other countries, that you really have to buy a plane ticket and go do the research on-site, yourself. There are different trends in the fashion industry for instance – just because your brand of clothing is doing well in the U.S., does not mean sales will be golden overseas.

Another thing to consider is understanding their culture overall – what do they like to do in the spare time, do they listen to friends or family for buying advice, do they have better materials to make the item than you do, will they be able to understand your website as it stands currently? Chances are all of these will affect your decision. There are easy fixes to these issues though. A website can be shown in multiple languages with the click of a button. And depending on what your audience likes to see, you could have a movie, text, or the product you’re selling that pops up to get their attention.

Finally, the biggest issue you’ll face is learning about the shipping rules. How much will it cost for you to ship your items to other countries? How much longer will the shipping times be? Are there certain products that countries won’t accept? Does this culture use credit cards? And how does all of this affect your bottom line?

If you’re considering doing business internationally, take a trip there and really get to know your audience and their buying behaviors so that you can make the most of your sales efforts. While I’m not sure my pet-sitting or gourmet dog treat business ideas can work across the seas, I know my husband has looked at spreading his web designer wings across them in an effort to increase visibility and thus, sales. It doesn’t make me nervous now that I understand what’s involved. It’s simple but it really depends on if you have the right product for those markets.

Can you spare a square?

Admit it -- We’ve all ran into a store last minute buying toilet paper because we ran out at home. Your relief is overwhelming when you stand at the check-out line with the two 24+1 bonus larger than life packages. While embarrassed, you’re just excited that they actually had the brand you wanted and that there was more than one on the shelf. Your deep sighs of relief stem from a consistent history of the store always being out of what you need. Just because we forget and need something last minute, why does that matter? It’s an item that is in high demand – shouldn’t the shelves be overflowing with cute Charmin puppies by now?

Chances are you have visited a store that does not utilize an automated inventory control system, or does not use it effectively. One of these control systems is called “Just-in-Time (JIT)” inventory. This method of controlling inventory allows a store to know at any given time exactly how many of any item is on the shelf. This allows them to set up par levels, or minimum levels, and instructs the system to atomically order more of that item from the supplier when it gets below a certain point. This ensures the item will always be in stock. Management not only prefers this automatic inventory control system because it saves staff time and energy manually counting items each day, but it saves from having to pay the supplier money for inventory that isn’t in demand and just sits on the shelf. With lower production costs, more efficient employees, and automatic ordering, how could a store go wrong?

For starters, their suppliers must be reliable. If their suppliers have long lead times or their shipping dates have been unreliable, it makes it a challenge for your store to order the quantity it really needs. If it’s an item that is difficult to forecast sales on, then the inventory level might never be right. But with the right reliable supplier and up to date trends analysis on certain products like games, a store can always have what you need, when you need it. Because when you run next door to your neighbor’s house and ask to borrow some toilet paper, I doubt they are going to take the excuse that “my store doesn’t make effective use of their inventory control system.”

Give a Dog a Bone…

If you’ve ever been late on a payment for anything in your life, the reoccurring phone calls from relentless bill collectors are enough to drive you mad…

But if it’s not you personally and it’s the company you own, who does the “Old Man” call? Unfortunately, he still calls you.

So how do you get the funding you need to start your own business? Or get the loans to make improvements to your current store? And how does a bank or VC decide if you’re worth it to begin with…

Before you begin to build your dream business, consider these four key elements that creditors will look at to determine if you’re worthy of giving money to:

They will look at your character and see if you appear to be an honest person with integrity. While these traits are difficult to asses, some firms will look at your past credit history to determine if you paid it back on time. They don’t want to just see that you have credit history; they want to see a good credit history.

They will look at your capacity – do they expect you to pay this money back on time. It’s here they will look at your other expenses such as other outstanding loans, credit cards, and other financial obligations. It’s also at this step that they will look at the stability of your employment up till now. If you’ve had a job here or there and the income has not been stable, what assurance does this firm have that you will indeed have the money to return to them one day?

In addition to your other bills, they will look at your capital: your debt to income ratio. This gives them an idea if you’ll be easy to collect on should the time ever come.

Finally, they look at any other conditions that might affect your ability to re-pay this debt such as the current sales of your company, the unemployment rate, trends in your particular industry, etc. This will give them an idea if you’ll be able to make payments in the future. There’s not much difference between banks looking your credit history as an individual versus a business owner. The business’s management team will be the ones whose credit history is examined and instead of a credit report from Equifax, the bank would use firms such as Dun & Bradstreet to review your financial statements.

The way you run your own company should easily align with how your run your own life: with honesty and integrity. When your buddy asks you to spot him $10 for lunch, you think about it for a moment…will he pay me back tomorrow or next week or not at all? And you judge this by if he’s borrowed from you in the past. The bank will treat you no differently. So do whatever you can to have good credit history and always be mindful of your current debts and upcoming industry trends before even asking for start-up loan. Or else the “Old Man” will be playing knick-knack-paddy- whack on your phone, disguised as a bill collector, until you repay.

"What's with all the racket?"

With company mergers on the rise and Wall Street officials charged with fruad, there's an awful lot of racket going on in the world. But is fraud really going to be an issue for you and your new venture? That depends. Statistics show that only 4% of unsuccessful business ventures are attributed to fraud. However, another statistic states that over 75% of fraud goes undetected. So, chances are, if you’re a small business owner, it could happen to you.

Fraud, at no matter what scale, is never good for a business. But it’s especially difficult when it hits a small business. Small businesses generally are not set up with the kind of internal controls that a large corporation would be. Internal and external audits are not done quarterly or even at all, like they are conducted at a large corporation. It is also difficult to find the source of the fraud in a small business. While the employees may be closely knit or even be family, the tactics used to cover up the fraud are harder to detect in a small business.

So as a Manager what can you do to protect your company? Can’t you just hire honest people? Studies show that even honest people can turn into thieves when faced with a strong enough need. In these poor economic times, it would be in the best interest of an employer to have these internal controls in place before any employee is even tempted:

Create an ethical workplace – punish fraudulent deeds and make no exceptions and let employees know this is the process

• Generate employee buy-in – the manager and his or her direct reports must make it known to employees that combating against fraud is a top priority of the company and that the employees ownership in the company is also at stake
• Provide a system of checks and balances – the employee who pays the bills should not be the person who collects the payments
• Hire an audit team – external audits may not always catch the mistake, but they can see opportunities where no internal methods of control exist to prevent fraudulent activity
• Supervise employees effectively – especially with positions of trust in a company, remain aware of what projects they’re working on
• Create an “employee watch” environment – most reports of fraud have come from other employees so ensure yours feel like they have someone they can go to anonymously with tips
  
  Incorporating these internal controls into your small business will help you be less likely to be a victim of fraud. You may not be a large corporation, but now you can play like one!

Picture Your Customers in Their Underwear!

By now, most of us have bought something online in our pajamas – maybe a t-shirt or a book or some last minute holiday gift we needed. This was typically a very easy and quick experience. You did not waste the time or gas to drive to a store. You did not have to find a parking space. You did not have to ask a clerk or go aisle by aisle to find the item. You did not wait in a long line at a register. And it didn’t matter what time of the night you made your purchase…as an online store is always open.

As a business owner, all of these are pretty nice conveniences to be able to offer to your customers. And with the popularity of the Internet, you don’t have to do much work on marketing the pros of your online store. As a business owner, you’re also saving on monthly rent of store space and saving even more on wages for the lack of employees. With the Internet, you’re able to not only sell your product to a customer in another state, but in another country. While this web presence has been easy to set up and manage and the business rolls in, do you ever miss the Bricks & Mortar days? Wasn’t it easier to just take out a ad in a glossy magazine that you knew your customers read? Wasn’t it easier to just count the cash as they handed it over to you? Wasn’t it easier to hang returned merchandise back on the racks that very same day it was brought back?

While there are pros and cons to doing business entirely online, I think one of the most important things to remember is what you’re selling. If you are a clothing retailer, studies show that customers would rather buy in a physical store so that items can be tried on for appropriate fit and returned to that same place at a later date if they changed their minds. That’s not possible with an online store.

A very dear friend of mine bought a comic book store that was going out of business because the owner was moving out of state. Being an avid comic book reader himself, he knew the following of customers was loyal and would remain stable. He rented a storefront close to his home but certainly in an area suited to the younger comics crowd. While the store had well organized shelves and long boxes as well as figurines and posters, the customers were not coming in at a rate to justify the rent. He was a tech savvy entrepreneur who then wondered if an online comic business would do better…. He couldn’t afford the rent in town where he knew the customer base would be higher – so could he offer them online and reach more people? After all, that’s how the big wigs like DC Comics do it, right? Well, he closed the doors on this physical store and opened up an online store. While his operational costs were lower, his customer base was not growing. He quickly realized another big con to online stores: advertising. Advertising for an online-only store takes creativity and thinking outside-the-box. Web banners and email campaigns are one way he decided to go to reach his audience. But he also got creative and did a billboard, car magnets, and a personalized license plate to get his web address out there.

The benefits to running an online-only store are somewhat obvious: no monthly rent, no paying employees, no upkeep of the building, no space issues, and customers have it easy when they want to search your “store” and make a purchase. But I also think it’s challenging to keep a relationship going with your customers this way. You lose a certain kind of interpersonal connectivity that you had when were in a store face to face with them. The key to an online store is to remember that your customers come first – they will not want to send items back; they will expect to receive what you show them on your web page. You can reach a far greater audience but can you still deliver the same level of customer service that keeps the customers coming back?

Why would you buy something that is broken?!

Many entrepreneurs feel this exact same way when they look at purchasing an existing business as opposed to starting a new one. This alternative plan for becoming your own boss is often complicated and dangerous. An entrepreneur must consider many things when deciding to purchase a venture that is for sale: Why is this company for sale? Is there a demand for these products or services? Or were the employees just lazy? Or did they just have the wrong target market in mind? Either way, a new entrepreneur might not know until it’s too late.

Some entrepreneurs may think this is an easy way to start a business – that there may be an existing customer base so they would not have to re-market or “re-invent the wheel.” But without knowing that these customers are loyal and believe the company has a good reputation, this might be time AND money wasted. When I was looking for markets to start a pet-sitting service in, I came across what seemed like a great deal: a mobile dog grooming bus. Trust me, for avid animal lovers like myself, this bus was the most adorable thing I’d ever seen! And with a name like “Puppy Fresh Express” I thought it was brilliant. I had looked into this so I knew the original cost was far steeper than what it was being sold at. But for me to already have in my hands the key to a very attractive bus, with all the equipment already in it, it sounded like the easiest business plan ever! I could be up and running in no time…or could I?

Like most entrepreneurs, I knew to do my research. Turns out folks in the area where this bus was operating liked to frequent an upscale pet food store which had their own self-wash tubs in them. There was also the issue of you had to be home when the bus came to bathe your pets – most customers felt like if they had to block out an hour of their time, then they’d rather just do it themselves. While during the time of the gas crisis, I felt like the owners weren’t using the right message to advertise. I felt they should be advertising that they are trained groomers and would do a professional job that most owners could not do. I also felt they should have drilled home the message that this WOULD save the pet owners time AND gas. I felt like just because it failed for them, didn’t mean it would not be a success for me.

But I began to see…businesses sell for a reason. You wouldn’t treat a classified ad any differently – if you saw a used car or a computer or even a parrot in the newspaper, your first question to the seller is always: “Why are you getting rid of it?” Now, with a business, there may be some aspects that you see as valuable. In my case, I saw the actual grooming equipment and bus as assets. Would it behoove me to purchase the business as a whole and run it as it had been but with my ownership and new marketing tactics? Or would I want to purchase the assets and start from scratch with my own business? This takes us down the path of realizing the value of the venture. Would my sales in a market that hadn’t been receptive be enough to cover the cost of the van, etc.? There are business valuation formulas on the web which can help you calculate the value of a business you are looking at purchasing. For example, a mobile dog grooming business is valued at 2.5-3.0 times its revenues (www.daltonbusiness.com). From here you would weigh in what you would have as far as cash down, would you need the seller’s financial aid, what improvements would need to be done to the business, etc.

While it seems like an easier way to start a business, remember to ask one important question: Would you buy something that’s already broken?