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A Costly Cost Cutting Measure

cutting_costs.jpgBigg Success is life on your own terms. Today, we’ll focus on one of the five elements of bigg success – money.

We’re all looking for more ways to save money. That’s understandable. However, we need to think about not just survival, but “surthrival.”

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Many business owners and managers, small and large, are cutting back on their advertising. This cost-cutting practice can be very costly in the long run.

Could not advertising cost you $1.5 million?

A McGraw-Hill study, about the recession in the early 1980s, found that companies that maintained or increased their advertising had sales 256% higher three years after the recession ended.

Think about that … two companies, each with a million dollars in sales go into a recession. The company that holds tight on its advertising, or perhaps even increases it, will do over $2.5 million within a few years after the recession ends if the second company, the one that cut its advertising, treads water.

Signaling the end of your business

A recent study by Ad-ology found that 56% of the people surveyed thought that retail stores that cut back on advertising must be struggling.

In other words, your advertising sends a “signal” to both your existing and potential customers. Just like a company cutting back on its dividend, you’re telling the public you don’t expect your future to be bright when you cut back on advertising.

The signal is so strong that 15% of the people surveyed thought it meant that the firm who cut back on its advertising wouldn’t be in business much longer.

The time – money trade-off

One of the other elements of bigg success is time. If you’re a regular here you’ve heard it before, but it bears repeating:

If you don’t have money, you have to spend time. It’s part of the price of bigg success.

So if you really feel the need to cut back on how much money you spend on advertising, it will pay to spend more time promoting your business.

That means networking

Depending on your business, you may primarily build relationships offline or online. However, you will probably be well-served to do both. Integration is one of the keys to success in business today.

If you have employees with down time, make good use of it. Tell them that you want to keep spreading the word so you all surthrive.

What you ask them to do will also depend upon your business. You may have them put out door knob hangers or give away free samples of your product. Perhaps they can make some phone calls or send e-mails to your list of customers.

Where to place your focus

We stated it subtly in that last sentence. We should emphasize it – focus on your existing customers to get the best return on your investment (of money and time).

Research has shown that it costs between five to eight times as much to get a new customer as it takes to keep an existing one. So, at the very least, make sure you’re communicating with your existing customers at least four to six 6 times a year.

Find out what their problems are. Find a solution – even if you can’t solve it directly, help them find the answer to build your relationship.

The most cost-effective way to grow your business

Building relationships with your best customers is the most cost-effective way to grow your business. When you can “wow” your customers, they will …

  • buy more
  • buy more often
  • tell others

Segment & tailor

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marylynnWhile we’re talking about your existing customers, can you segment them into smaller groups so you can tailor your communications more precisely?

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georgeI used to own a heating and cooling service company. We got our technicians to note the age of the furnace or air conditioner when they were in our customer’s home or business. Then we wrote a letter specifically to this group. We generated over $300 of sales for every letter we mailed!

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This highlights another point we alluded to earlier – get your staff involved. Help them understand how it not only makes their jobs more secure, it also means you continue to grow as a company so there will be more opportunities for everybody. That’s bigg success!

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Thanks so much for reading our post today. Please join us next time when we discuss what the underlying meaning of “I don’t have enough time.” Until then, here’s to your bigg success!

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Profitable Passions – Part 2

career_renegade Today, we continue our conversation with Jonathan Fields, author of the great new book Career Renegade: How to Make a Great Living Doing What You Love.

Last time, Jonathan discussed why it’s so important, especially in tough times like these, to understand how to operate online because it’s an inexpensive way to swap work for money. Let’s get back to the conversation …

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georgeJonathan, I believe that really good entrepreneurs are masters at minimizing risk. I think one of the great secrets of being online is that you can test concepts with a relatively small amount of money compared to what it used to cost us in the real world. You find out fairly quickly whether or not that concept can get traction. If it doesn’t, you move on. If it does, you keep funding it.

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jonathanThat’s such a great observation. We were talking briefly before we started recording. You said that it seems like everything I do is a success. And I said, “No, everything that lasts that I do is a success.”

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Test, listen, adapt

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marylynnBecause you have two successful blogs, you have this book and then you have best yoga center in New York? You have the magic touch.

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jonathanI do a lot of different things. I’ve had failures offline and I’ve had failures online. I will continue to have many more failures in both worlds. I can tell you, hands down, that I have lost so much less money in my online failures. I’m able to jump back in to the next adventure in the blink of an eye online. Whereas when something goes wrong offline, you have a substantial amount more money, overhead or time invested in it. Everything is recoverable in my mind, but it takes longer. It may take months or years. In the online world, I’m sort of off and running. I have tried and failed online too many times to count, but that’s just part of being an entrepreneur. You’re constantly testing. The ability to listen and adapt are critical to survival, whether you’re online or offline.

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Getting started online

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marylynnSo for our audience, Jonathan – they may be thinking, “This sounds interesting. I may like to explore this online world. But I have no idea how to build a web site. I have no idea how to get started with an online business.” What would be some critical, career renegade, first steps for someone like that?

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jonathan
Step 1 – Buy my book!

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marylynn
Ha-ha, good suggestion! Does your book help walk people through that?

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jonathanIt’s interesting. When I started writing this book, I didn’t intend for it to have so much online advice, but it turned into a massive encyclopedia of references answering that question. So, if you’re interested in blogging, starting an information business, or figuring out how to turn your knowledge into a revenue stream – not just little products but real businesses – the book offers a ton of information. It also offers a ton of links and resources to other places where you can go a lot deeper because I don’t believe any one book is capable of covering the entire space. Beyond that, though, there is so much free information when you start to explore the blogosphere. I would start out with an idea, with what interests you. Search on it. Find the blogs where people write on a regular basis. To me, one of the critical things for almost anybody who is trying to build a reputation as a leader in any field is blogging. That’s something you can leverage into working for someone else or starting your own business. To me, it’s an amazing way to position yourself as the go-to person in your field of interest in an astonishingly short period of time. Anybody can start a blog, probably in less than an hour, and it costs almost nothing to do.

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georgeI became a renegade because I couldn’t find anybody to pay me what I thought I was worth. Then I found out I couldn’t afford to pay myself what I thought I was worth. What do you do about that? I had to adjust the value a little bit, but over time it’s been just fine!

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A very special offer

Jonathan amazed us with a special offer for you. He’s put together a sixteen-hour video training course called Career Renegade Flight School. You could expect to pay $1,000 for similar programs. He’s giving it away for a short while with proof that you’ve purchased his book. Go to Career Renegade to learn more.

Thanks, Jonathan, for the great advice!

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Thanks so much for stopping by our site today. Next time we ask, “Is your idea worth your money?” Until then, here’s to your bigg success!

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Direct link to The Bigg Success Show audio file:
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3 Strategies Small Businesses Can Use to Gain an Advantage in Bad Times

A recent study by Intuit, the software giant behind QuickBooks, Quicken, and TurboTax, found that three-fourths of small business owners expect to grow this year, in spite of all the talk about a recession, corporate layoffs, and consumers cutting back.

Now, it’s probably safe to say that small business owners are a relatively optimistic group. Part of their optimism, though, comes from that fact that two-thirds of the people surveyed said they had survived a recession before. They’ve done it by putting their customers first and focusing on their finances.

georgeWhen I first started studying entrepreneurship, my perception was that large companies created the jobs. Our colleges train us to work in bigg business. It’s true that large companies tend to hire a lot of people during boom times, as do small companies. But during tough economic times, large companies cut back. Interestingly, small companies tend to pretty much hold their own.

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marylynn If you’re keeping an eye on the news, you see that a lot of large companies are cutting marketing and even customer service. They’re cutting jobs and even entire departments. They’re streamlining.

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As numerous studies have shown, the net effect of this is that, over the course of the business cycle, almost all new jobs come from small businesses.

Opportunities created by large businesses for small businesses in bad times

As large companies make cuts, astute small businesses can gain an advantage by using any or all of the following three strategies:

#1 – Turn bigg companies into your customers.
They’re reviewing their operations. If what they cut is what you do – it’s your service – market to them! They may still need that service in some capacity … take advantage of it!

#2 – Recruit their talent
A lot of the people they’re laying off are very talented. These are people that you may have never been able to get before. Recruit that talent. Provide them with a nice place to fall.

They may look for something more stable or some place where they feel more of a sense of ownership. Your business could be the answer they’re looking for!

#3 – Go after the large company’s small customers.
With the cuts they’re making, they have few resources to take care of their customers. It’s the old 80/20 rule – they’re likely to super-serve the 20% of their customers that constitute 80% of their sales. Then they may cut back on service for all the rest.

Go after these customers that are facing reduced service. They may be a small account to a large company, but they may be one of your biggest customers!

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Pages

Danger: 10 Warning Signs of Trouble Ahead for Your Business

By Bigg Success Staff
03-19-08

Bigg Success in Business

danger

We’re told that diagnosing a medical condition early greatly increases the chances of successful treatment. The same is true for your business – seeing the warning signs early gives you the opportunity to solve minor issues before they become major problems.

Cash to a business is like blood to our bodies. It has to continue flowing or we won’t survive. The bottom line is that you can’t run out of cash. So you have to know how to diagnose and treat the source of the ailment before it spreads.

With that in mind, here are ten signs that your business may be heading for trouble:

#1 – Lost market share
Your sales may be growing, but your share of the market may be falling. Market share is precious – among other things, it provides leverage to raise prices as your costs increase. As competitors enter your market, you have to work even harder to maintain (and hopefully increase) your share or your business may get into trouble.

#2 – Declining customer counts
Your sales may be holding steady, but fewer and fewer people are making purchases. Your remaining customers are spending more, possibly because of price increases. You have to find a way to attract new customers or your business is headed for trouble. 

#3 – Low repeat and referral business
You need a healthy percentage of repeat business because it’s much less expensive to keep a customer happy than to get a new one. It also shows that your product or service is still meeting the needs of a core base of people who will refer other people to you. If your customers aren’t coming back, your business may face trouble.

#4 – Declining sales

If your sales are falling, you’re definitely headed for trouble. It may have nothing to do with you – it may be your industry that is experiencing trouble. Isolate whether it’s a problem with your business or the industry as a whole to know your best strategy.

#5 – Disproportionate sales to a small group of customers
Picture this extreme situation – all of your sales come from one customer. You’re totally at the mercy of that customer. It’s like being an employee without the safeguards that go with employment! Generally speaking, if more than ten percent of your sales are to one customer, you may face trouble at some point.

#6 – High employee turnover

When you lose employees, customers are affected – they deal with less experienced people who don’t know your business or the customer’s needs as well as long-time employees. The costs of training people so they’re fully productive are also significant. If you can’t retain employees, your business will likely face trouble.

#7 – Costs rising faster than sales (declining profit margins)
Costs rise for a number of reasons. As your sales rise, so will your costs. If they don’t, why do you need that cost at all? So rising costs are expected. However, costs that rise faster than sales means you will face trouble at some point because you’ll have less and less profit for each dollar of sales. 

#8 – Disproportionate purchases from one vendor

You don’t want to be dependent on any vendor for purchases in any category. That gives that vendor too much leverage in your business. They’ll be able to pass on costs to you that you may not be able to pass on to your customers. If you don’t have a diverse base of vendors (or at least a back-up plan), your business will probably face trouble sometime.

#9 – Unwarranted increase in receivables
It’s great to make sales, but not if you don’t get paid! That’s worse than not making the sale at all because it costs you money to make a sale. Slow paying customers also create problems because you can’t pay your bills with receivables. If you don’t control your receivables, your business may be headed for trouble.

#10 – Unjustifiable inventory build-up
Depending on your business, inventory may be even less liquid than receivables. First, you have to sell it; then you have to collect on the sale. Inventory that’s not turning over is dead-weight. So if your inventory is building up too fast, your business will likely experience a cash crunch at some point.

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Jungle Love – Living With Coopetition

By Bigg Success Staff
01-31-08

Career Builders

lion_love_pic

It’s a jungle out there. Survival of the fittest, as Charles Darwin said. You have to be stronger than someone else in order to win. 

If you want more, someone else will have to accept less. Your victory comes from their loss. We feel good about ourselves when we win. When we beat someone else. We’re better than they are.

There are some dangerous assumptions lurking beneath the surface of these thoughts.

Dangerous assumption #1 – Resources are scarce.

Let’s get this out of the way – obviously SOME resources ARE scarce and only getting more so. It’s also true that AT THIS POINT, you may face some resource constraints.

However, there are more resources in the world than there are great ideas by people who can bring them to fruition! If you have an idea that makes life better for others, you’ll find an abundance of resources flowing to you.

So are resources scarce? Not the ones you need to live your dream life.

Dangerous assumptions #2 – it’s a zero-sum game.
Once again, we recognize that, in select businesses, this is true. For instance, if you trade commodities, you’re in a zero-sum game. The profits and losses will equal each other, netting out to zero.

However, these are exceptions to the rule – most of time, everybody can win if they put their minds to it!

You can focus on getting a bigger piece of pie. However, you’ll find it’s usually more fruitful to find a way to make the pie bigger. You win … so do others. Is that so bad?

Dangerous assumption #3 – Comparing ourselves to others.
Ancient philosophers asserted that “comparison” went along with “pride” and “vanity”.

And we all know that old saying – “Pride goeth before a fall.”

Constantly comparing yourself to others is a recipe for constantly being unhappy. Every time your neighbor gets a new car, you have to have a better one.

You lose focus on what’s more important – striving for your personal best to get what you really want out of your life.

Dangerous assumption #4 – Not competing with yourself.
We should take a lesson from the athletes that competed in the early Olympics. They competed with themselves. They tried for a personal best every time out. They wanted to excel.

It goes along with our favorite definition of success, which comes from the great basketball coach, John Wooden.

You succeed by doing everything you can to become everything you can be.

You focus on you. Beating your own best performance. It’s not always easy to strive for that next level. But it is fulfilling and meaningful!

It’s true that it the world is more competitive than ever. It’s also true that people are seeing more and more opportunity to cooperate. You need to learn to live with coopetition – that is, cooperative competition.

Some people find it easier to compete; it’s cooperation that comes difficult. For others, it’s the reverse. Today’s world requires the ability to do both, sometimes simultaneously.

That’s easier to do when you think of the marketplace as more than a jungle. Can you feel the love? It comes from the joy of being your best and helping others do the same. Win – win!

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