Prevention vs. Cure

In college I earned a Bachelors in Psychology. On the surface, it is the most ubiquitously useless degree you can earn. In reality, I learned things about human behavior that I have been able to apply since the day I learned them, to nearly ever facet of my life, including business. I make this point because no matter how good your idea, business plan, technical skills or charisma, the one thing you can never overlook or completely quantify is human behavior. For all of our intelligence we are also emotional and often irrational.

You can however infer patterns and learn how to think about human behavior so that you can direct it, or direct your business toward its tendencies so that you end up with the desired result.

What brought me to this seemingly off topic discussion was an e-mail I received from Perry Marshall today (whom by the way, if you don’t keep up with you should). Perry made the following point and it is an extremely important lesson to remember: People don’t buy prevention, they buy a cure for their existing problem.

In his own words regarding prevention: “if you want to sell it, it’s much easier to sell it as
part of a cure than trying to convince someone who’s never had the problem in the first place.” Let’s face it, if we have never been faced with the problem, we just don’t think about it.

Trying to convince someone to take action to prevent something from happening typically leads to counter-productive activities such as beating your head against a desk. Companies don’t think about e-Discovery until they get sued, most people start to workout once they feel the need to loose weight, not to keep it off in the first place (let’s be honest here), that is simply the overwhelming trend.

Of course there are exceptions, but most of them are easily contradicted by other behavior. We take vitamins to help us stay health but may still eat more than is so. Where does the exception become the rule? When the probability of an event and the cost of not preventing it from happening greatly exceed (think in terms of catastrophic loss/exponential amounts here) the cost of preventing it or managing the risk in a proactive manner (this is why we buy insurance); So tailor your product accordingly.

The point is, people are infinitely more likely to take action (i.e. buy) to solve a problem they have now, not to keep one from happening in the first place. So apply your ideas to solving existing problems and somewhere in there bundle your value added product or service to keep the problem from coming back or to drive operational efficiency. You’ll sell far more and your customers will love you.

A Consultant’s Greatest Weapon

If you are a consultant or aspire to be one, one of the greatest assets you can bring to bear for your clients is the ability to deliver fresh, good ideas that are relevant to their business. Your ideas may not be entirely new to you, but they often will be to your customer. Original thinking and the ability to create a blueprint of your idea followed by a roadmap from which to execute are, in my opinion, more powerful than the technical skills needed when first starting out. I don’t want you to think you can easily make a business out of being just an “idea” person; you can be “the idea guy” but you must remain grounded in your ability to execute. Regardless, good, relevant ideas can be the springboard to entirely new and immensely powerful revenue streams, efficiencies and satisfaction client for your client.

From the current reading “Guerrilla Marketing for Consultants: Breakthrough Tactics for Winning Profitable Clients”

“Clients and prospects have zero tolerance for marketing fluff, but a deep thirst for ideas that can help them. Selling services is not just about price, qualifications, or your firm’s long string of success stories (as thrilling as those are). It’s about the insights and ideas you bring to clients… if you can’t provide great ideas, you might as well stay home.“

Finding a Great Consultant

Early and often when starting a business it can be advisable to seek outside counsel. Hiring the professionals who know how to do what you don’t can make the difference between success or failure very quickly and the cost of hiring them should be a part of your business plan. The obvious help we run to are accountants and attorneys because we typically fear the IRS and lawsuits more than anything else (sometimes for good reason). But there are plenty of other disciplines which we are not masters of and can easily cost justify hiring the help. Sometimes we need a lot of help, sometimes just guidance. The part of hiring someone that usually concerns us most is whether or not they will really be qualified and deliver something that is worth the money they are charging us for their services. So with that, I’ll offer up a few things that make a good consultant and that you should be prepared for when hiring someone:

1) A good consultant will give you references. They let their track record speak for itself. If they don’t have references as an employee or consultant, or dodge the question, ditch them immediately.

2) They’ll be happy to meet with you at least once to see what your needs are and demonstrate that they are competent. They aren’t going to give anything away, but should give you enough so that you are comfortable with their level of expertise.

3) Good consultants are good communicators (or should be). Their ability to communicate effectively and succinctly is as important as their technical ability. If they speak in too much “fluff” or their explanation is always verbose, find someone else. Good consultants aren’t there to try to impress you with how big their vocabulary is but want you to clearly understand what they are saying.

4) Their rates aren’t too low. I know that isn’t what you want to hear but someone who is really good is going to cost. If it sounds too good to be true…

5) They will prompt you with a lot of questions. A good consultant knows what questions to ask. If they start asking you about things that are clearly important but you hadn’t even thought of yet (and probably wouldn’t have) then they are on the right track.

6) A good consultant is very interested in building a long term relationship with you. They aren’t a snake-oil salesman that just wants one quick hit. They’ll be a mentor, teacher and coach. They’ll tell you when you are wrong and be flexible enough to work with the idea that is, after all, yours.

7) They are good listeners.

They are appropriately professional. That doesn’t mean you can’t become friends with them and enjoy beers after a long day of work, but they’ll bill you on time, deliver what they promise, respond to you in a reasonable amount of time and always extend to you a consistent level of professionalism.

The list could go on and on…

Following are a couple of other things to keep in mind.

If things don’t go well with a consultant it’s possible that you found a bad one, but it’s even more likely (in my personal experience) that you were the problem. Consultants are good at getting you to think about the things you should consider but aren’t miracle workers either. If you don’t know what you want or really need, the consultant probably can’t tell you. They’ll still happily provide what you ask for but if you don’t give them good info, or are a pain in the ass to work with (i.e. disorganized, thoughtless, slow to respond, ….), you won’t get your moneys worth from them, so do yourself a favor when hiring someone, get it together and know why you are hiring them. A good consultant usually has several clients at a time so if you are a pain, they will fire you as easily and more quickly than you will fire them.

If you are ever thinking about hiring someone in a consulting capacity and have questions, feel free to drop me a line for a little help. Accountants and lawyers aren’t the only ones you will need help from along the way so being open minded and a little savvy will do you worlds of good.

Update (1/26/2008): When I wrote this I overlooked a critical issue regarding your consultant, though indirectly touched on it when I mentioned them as a coach and teacher. That is that they should not only solve your problem/provide a solution, but should help you to ensure that solution is sustainable. i.e. they should be working them self out of that job. Then you are free to hire them to do something else as needed. If they don’t, then a dependency can build up and that isn’t why you hire a consultant. Pam, at escapefromcubiclenation.com, wrote a great post on this topic from the consultants point of view and I would highly recommend reading it.

Update August 22, 2008: Great article on experience with this from a conusltants point-of-view.

Marketing vs. Advertising

Understanding the difference between marketing and advertising is fundamental to any business owner but it’s surprising how few really know the difference.

Marketing is really a process, often a campaign which is intended to drive awareness of products, services and brands. Marketing is incredibly deep in it’s detail and subtelty, a combination of science (demographics, psychology, …) and art (creativity, emotional response, …). By crafting the marketing message to demographics and current consumer desires, the intent is to drive consumer behavior (be that retail or business consumer) toward those products and services the company provides. Marketing is a sustained activity which, in a very Pavlovian sense, is meant to condition buying behavior and build a relationship with the consumer. In another sense, Marketing is carpet bombing; broad and effective, though not always efficient or easily measured in it’s effectiveness, though usually necessary to some extent.

Advertising is the GPS guided smart bomb. A specialty of the broader marketing discipline, advertising is to marketing what the dinner bell was to Pavlov’s dogs. It is intended to invoke response (a purchase) often through a more immediate emotional provocation or call to action. The “immediacy” depends on the ad and the product or service but often the response desired by the advertiser is simply to make you aware of how to obtain the goods or how to use them so the next time it’s appropriate, you can easily take action, which is easier to do if you already have a familiarity or positive association with the company or product (the effect of marketing).

Marketing people out there are going to read this as somewhat of an oversimplification of the difference but the point was to get you thinking in the right direction and speaking the right language. Hopefully this will spring board more research into this area for you.

Entreprenurial Marketing

Unfortunately it’s not enough to come up with great ideas and then build them. We have to actually get out there and tell people about our service, business or product too if we ever expect them to buy. When we start we envision great ad’s from the likes of Budweiser, Coca-Cola and others, and recognize that spreading the words is essential for building a great brand, at least in terms of recognition. But we’re entrepreneurs, we can’t hire Madison Avenue or even a marketing person for that matter… or can we? There are great marketing people out there we can outsource to or hire as needed, though it behooves us to know a thing or two about what we need before we pay someone (the person you hire will appreciate that too, because a consultant worth their salt doesn’t want to B.S. you). Alternatively, we can bite off the marketing work ourselves (bad idea) or, ideally, a combination of hired help and personal involvement (best idea).

A few steps that might help (all of these assuming you already have a viable product):

1) Do your research. What kind of marketing do you need? Online? Magazine, Grass Roots?

2) Define your target market, well. Seriously think about carving out a niche, not just “the whole world” assuming volume will overcome all (because not much business will likely come to you). You’ll have better luck targeting “people who love German Shepards” than “people who love dogs.” You’ll save yourself a ton of money advertising to them too.

3) Find guidance. It’s worth spending to get someone who really knows what they are doing. Marketing/Advertising is an art and a science, and the pro’s are good at making it look easy, but it isn’t, and if you don’t know what you are doing it can cost you far more to try it on your own with less results than it will to hire a professional. (How to find someone good is Thursday’s post.)

4) Understand the difference between Marketing and Advertising. (Tomorrow’s post).

There are a million and one approaches to marketing and many of them are somewhat counter-intuitive so put your ego aside and get someone on board to help you or if you insist on doing it on your own prepare to spend a LOT of time learning, so get books, read on-line and study anything you can. Then be prepared for a painful learning experience. You can learn it, but the start is usually rough for most people who are brand new to marketing.

I personally know one marketing consultant and wouldn’t hire anyone else though I know there are other good ones out there. Most of them will probably give you a free 30-60 minute meeting to help you figure out what you need (at a high level, don’t expect them to give you all the answers) and some perspective. They’ll also be figuring out if you are serious or a waste of their time so be prepared.

As a Marketing Reference:
Wendi McGowan
Wendistry, LLP.
www.wendistry.com

Good Technology or a Good Idea

According to a recent article in Forbes, good ideas are more valuable than good technology.

That’s not to say that if you are an upstart company you should skimp on technology, but if you’re planning to get venture capital or expect a quick acquisition, a good idea is more significant. The fact remains that technology continues to become commoditized while it becomes ever more essential to doing business. As the barriers to implementing technologies lower, and the technology becomes easier to use, the technology itself becomes less of a differentiator and the validity (i.e. financial viability) of the idea behind the business ever more essential.

While the venture capital market continues to be difficult there is still and abundance of private equity looking for a place to grow. Before you land capital to fund your idea you can expect to be vetted on several issues. Have your house in order and prepare to be harshly critiqued on the following:

- If you are successful, how easily can competitors crash your party?
- How much does a big audience matter to your idea?
- What is the track record of your leadership?
- Do you have a business model?
- Are you focused on building a business or the exit strategy?
- …and of course a myriad of other things.

The take-away is to be sure you do your due diligence, perform market and competitive analysis, and most of all be realistic about, not married to your ideas.

Too Many Ideas?

I stumbled across this post on Behance recently which rather unfairly characterized idea generation in the following quote which first appears on the page:

“Idea generation is an addiction… an engaging, brain-spinning indulgence that must be practiced in moderation.”

That sounds downright fascist to me.

After reading the post a few times I think the intent was not so much to suggest we should restrict idea generation, though it certainly implied that, but rather was to remind us that we can get stuck in a vortex of only generating ideas and never executing them.

It is fair to say that idea generation is addictive and can be distracting, but to suggest that it is a “brain-spinning indulgence” is dead wrong. Perhaps my reaction to this article is more a matter of disagreeing with the writing style and word choice than the actual intent, which is clearly subject to interpretation. (Besides, you know what they say about good intentions).

———————————————————————————————————–
Here’s an Idea: Think about how you say things, especially when you publish them for the world to read. It is an exercise in learning to communicate clearly. Don’t expect people to correctly interpret things that aren’t clear.
———————————————————————————————————–

Ideas flow freely and sometimes uncontrollably. What we need to do is learn to focus that power, not suppress it. Further, we must execute, which means working the idea, but in doing so we will inevitably generate more ideas and again, suppressing that is a bad idea, not to mention an exercise in futility. Try to “stop” ideas from popping into your head, by the time you realize you have an idea to suppress it’s too late!

If so many entrepreneurs have experienced setbacks and utter failures because they lacked focus, tried to do too many things at once and executed poorly, how do we avoid that common pitfall and the idea “distraction-tornado” without abandoning good ideas?

By learning to focus our creativity and having an outlet for our ideas so that when they pop up in the middle of execution, we can capture them and then go back to what we were doing. Use a MindMap, a spreadsheet, or as one commenter posted a wiki, where collaborative ideas can be captured. Then get back to work. Whatever you do, when you have a good idea, EXECUTE on it (failure to do so is typically just laziness), but no matter what, don’t suppress your ideas or those of the people that work for you.

If you are a CEO or Manager don’t just be a “boss,” be a leader by giving people a constructive way to generate, share and develop ideas while you keep them on track with whatever they are executing on. (Google is notoriously good at this by allowing employees 20% of their time to work on their ideas and look where they are).

Find balance and you can have great new ideas and solid execution.

How To Kick-Start Your Creativity

It makes me laugh every time I hear someone say they are not creative or never have any good ideas. I think the real issue is that the don’t recognize their own creativity. Often, the best ideas are not some completely original, brand new “thing.” Rather, they are variations on a theme, a new take on an existing idea or a slight modification to a process or product. More money has been made from subtle changes to existing products and services than from some completely brand new invention. The odds are you see ways to improve things every single day. The real question is (and get honest with yourself here) are you willing to put in the work to develop that idea? For most, the excuse “I’m not creative” is synonymous with “I’m mentally lazy.”

Don’t get me wrong, not every idea is a bonafide moneymaker, but sometimes the most unlikely ideas do very well (Billy Bass anyone). You might go through few ideas to get to one that is financially successful but the other ideas you’ll develop along the way will start the explosion of inspiration that will make everyone else think you are a creative genius and will help you to start identifying niche markets that need your ideas. Take one idea and run with it. The next thing you know you won’t know how to shut off your idea machine.

Best of all, and here is the kicker, incremental changes in existing things are what really improves the lives of the people around you. Think about it:

- Can you make shampoo that doesn’t burn a baby’s eyes? (OK, Johnson & Johnson beat us to it long ago but the idea is they didn’t invent shampoo, they improved it).
- Can you make something more accessible to someone who is disabled? A lot of places, sites, … have to comply with making things accessible so you have a built in market.
- Can you make a home safer for small children?
- Can you make it faster and easier for a bartender to pour the perfect beer while reducing wasted beer from a keg? (Don’t underestimate the importance and financial viability of that one, your ideas don’t have to be totally altruistic). Such an idea might even spring board into a way to chill beer faster…

Those few ideas should be sufficient to get the idea across. Ideas don’t have to be revolutionary to be great but they may become springboards for revolutionary ideas and they will help you realize how creative you really are. So while you are at it (as your baseball coach would say) “stop trying to hit a homerun and just get your a$$ on first base.” Ideas that make you enough money to live on and set you free from your cubicle are worth as much or more than “the next big thing.” You’ll get to that soon enough. Walk before you run…

Company Examples:
BASF: Their tagline - “We don’t make a lot of the products you buy. We make a lot of the products you buy better.” Their whole business is improving what is already there.

Hennessey Performance Engineering: They didn’t invent the Viper but they’ll take yours and give it 1000hp (because 500ish just isn’t enough).

Assessing Ideas

When the flood of ideas for businesses starts to hit you, and if it hasn’t already it eventually will, you will be tasked with determining which ones to tackle. Getting through that process will be trying at times so here are a few suggestions to make it easier.

1) Remember not all ideas are good ones but don’t throw any of them away. Keep a running map or spreadsheet of your ideas with good descriptions. You never know when an idea has just yet to have it’s time, or might help out as part of a future idea.

2) Ask yourself honestly if executing the idea will fit the lifestyle you want. If you are the type that dreams of extensive travel and working from anywhere then starting a restaurant probably isn’t the right thing to do. You might have a great idea for one that would be hugely successful in your area but that doesn’t mean it’ll be right for you or that you will be happy doing it. Pass the idea on to someone who can and will enjoy it and do it right and be happy with a smaller but reasonable fee or percentage of ownership. And be seriously reasonable about this, if you aren’t doing the work, 3-5% is probably fair. 10% would be very generous, depending on your level of involvement.

3) Score your ideas. I created a detailed spreadsheet once to help me with this. In that spreadsheet I scored each idea on a series of criteria such as how easy it would be to execute, how much revenue it had the potential to produce, how steep the barriers to entry were and so on. I also included how satisfied I would be “doing” that idea. I then also weighted the criteria as well and came up with a composite score so I could objectively assess my ideas and see how they fit into my life. It seems a little type “A” but you’ll find that kind of objectivity invaluable. The results were somewhat as you would expect too, the easier the idea to execute and the lower the barriers to entry the overall lower the score generally was, though ideas in the middle were a little more mixed. I’ll blog the specifics of the spreadsheet next week and make it available for you to use.

Good Ideas Are Not Enough

Let’s face it, we all like to be “the idea person.” Coming up with creative ideas is fun, challenging and often exciting. But if you want to start a business that will support you, or even bring you wealth, even great ideas are not enough. We must learn to execute on those ideas and that, if we are not careful, is where the fun can end and the “work” begins. Though it doesn’t have to be that way.

One of the big problems I have with many business books and CEO interviews is that they tell us that we must constantly innovate, but rarely teach us how. Lot’s of people have great ideas but fail to execute on them. It is the marriage of those two thoughts gave me an idea (smirk), actually, it was a conversation over lunch with Wendi that sparked the idea and it is one that will help me further focus my writing for you.

My goal here isn’t just to help you get your small business up and running, though we’ll spend plenty of time talking about the “how tos” of doing just that, but rather, my ambition is to help you come up with great ideas, to share ideas and ultimately to cultivate and execute on those ideas, and all the while have a helluva good time doing it! I’m also going to pick one of my own ideas, and share it with you start to finish, in as much detail as I can stand so we can execute together.

Like most of you I have no shortage of good ideas, it’s making them real that is the challenge, and it is learning to do so, and in turn teaching how to do so, that is our commission.

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