Mission #3-4 Unlocking Your Creative Genius

Objectives:

• To acknowledge the limits of your advertising.
• To appreciate a smile and a pleasant manner as important business assets.
• To think public relations in conjunction with paid advertising as business builders.
• To build business interest, think free.

Background:

As you prepare to open your own business, you probably have a great deal more enthusiasm than money for promotion. It is very easy to spend money on advertising. It is very easy to waste money on advertising. The challenge will be to generate interest in your products or services without breaking the bank.

Welcome to the world of creative advertising and public relations.

Many small business owners think they know more about advertising than they actually do. This is not unusual since many people presume themselves to be experts at certain fields, such as public relations, customer service and advertising. In advertising, the usual mistake that most make is to expect advertising to do too much. They expect their advertising to serve the dual role of getting people into the store and/or getting the phone to ring as well as to make their sales for them. This is wrong. You will be much better served if you view the simple function of advertising to put you in touch with a qualified prospect. Then, the separate and distinct second step is for you to use your charm, charisma and overall expertise to make the sale.

In many local retail businesses, you can garner many new and repeat customers with as small a gesture as a smile. If you are an honest businessperson and you offer a solid value for your customers' hard earned dollars, you are operating at least on a level playing field with your competition. Now, add to that smile a sincere "Hello" and "Thanks" and you'll move ahead. If you can offer a personal greeting, "Hi, Kim" or "How's it going, Mark?" you'll be operating with the small business elite. Your own continuing observation of other small businesses will confirm the value of smile power.

If someone has the option of dealing with a nice pleasant person or a grouch, whom do they pick? How much more effort does it take to smile than scowl? Be sure that your competition can not beat you in the niceness department. It's nice to be nice and it pays.

Others may take their customers for granted but you never will.

It's the customers, stupid.

You will have business. You will have a successful business. You will make money. And, in large part, this will be true because you and your staff will make doing business with your company a pleasant and hassle-free experience. You will be the "breath of fresh air."

As simple and unfortunate as this may sound, your friendly personal interaction with your customers may be a bright spot in their days. You will give people a reason to smile back and come back.

Your advertising should have the single purpose of getting people through the doors or to call your office on the phone. Period. You know that your business or service is above average. Advertising gets you the opportunity to show off your product or service to many people so that they know what you know.

To build sales volume, the simplest thing to do is to give something of value at a reduced price.

Free would be even better.

You have a sandwich shop. On occasion, offer a free drink or free refill with lunch. Or, every once in a while give away a small dessert. Especially, don't forget to reward and thank your regular customers. The actual cost to you for the dessert or drink will be minimal but the perceived value to your customer could be very high. What happens? Your sandwich shop becomes special.

There is a universal human law of reciprocity. When you give something to someone, that person feels obligated to give something back. It could be new business. It could be media attention. It could be a testimonial letter. It could be a heart-felt "Thank you."

Here's another example. Let's say that you own a small jewelry shop. You meet a wholesaler at a trade show who's gotten stuck with a ton of earrings and he offers you a deal. Normally, you couldn't buy in the quantity that this dealer wants to sell but you've been looking for a good promotional hook. The great deal is that earrings that would retail for $6.00 a pair can be purchased in lots of 200 for $0.80 each. So, instead of purchasing another small newspaper ad for $160.00, you buy the earrings.

You put a sign in your window "FREE EARRINGS - No Purchase Necessary." Your foot traffic increases as people come in to see, "What's the gimmick?" You happily report that there is no gimmick. You explain that you simply want folks to have an opportunity to see the wide selection and fine merchandise values that you offer. Then, you finish with the request that they be so kind as to add their names to your snail mail or e-mailing list and that the beautiful earrings are theirs absolutely free.

Of course, if there's one person in twenty who asks for the earrings and won't leave their name and address for your mailing list, that's OK too. If there are people who say that the earrings are inferior and they'd never wear them, that's OK too. If a few people are from out-of-state, that's OK. Remember to play the odds; some will, some won't, so what, next.

Rather than having spent $160 on just another newspaper ad, you have invested $160 in a mailing list of about two hundred people who have visited your shop. There are now two hundred more people who know what you sell and where you are located. Many of these customers may be back to buy when you mail them a circular announcing sales or special merchandise promotions.

Let's say that you're a hairdresser or manicurist and you want more business. Rather than sitting in your shop, day after day reading magazines, why not give a free haircut or manicure to all new clients? What have you got to lose? As you go through the day, have your business cards at the ready. The manicurist can say, "My, you have lovely nails. Why don't you come to my shop and have me do them for you some time? No charge, of course. Here's my card." She writes FREE on the back of the card.

Average small business owners don't get it. How can you give something away for free if you are trying to make money? We are warriors. We get it. Yes, sometimes the end does justify the means.

You can pay for all the adverting your budget allows. However, some of the best advertising is free in the form of public relations which happens when a media outlet puts the spotlight on your business. What are you doing that newsworthy and interesting? Yes, definitely, don't be afraid to blow your own horn. Did you mow the lawn for free at the senior center? Write a press release. Do you have ten tips for driving safely in winter? Write a press release. Can you suggest the new bathing suit styles for next summer? Write a press release.

Start to build a media network in your local area. Who are the newspaper and television writers and producers and editors? A simple one page press release sent or email to a media outlet may spark a reporter's interest in your business activities. Remember, reporters are always looking for new fresh angles to present to their audiences, your potential customers. This is win/win/win. The reporter wins. You win. Your potential customers win by learning about your great product or service.

Naomi's Hair Loft

Naomi Grant buys a tired old beauty salon from a retiring operator, Mabel Dexter, who worked the salon for 35 years. As Mabel aged, her clientele aged. At retirement, Mabel had little business left. Mabel was happy and flattered that someone as enthusiastic and vivacious as Naomi would be interested in her shop. Mabel gives Naomi a great business deal and a great deal of sound advice.

The warrior is always thinking. I'll open one business and buy two other businesses. I sell one of the two I bought for a profit and buy two more and have four locations. How do small businesses get bigger? This is the way. How did Dunkin Donuts get 3,000 stores? They got them 1,2,3,4,5, 6, 7, ... You can do what Ray Kroc did at McDonalds's and Tom Stemberg did at Staples and Howard Schultz did at Starbucks.

Free is a good strategy to build business. At some point, when your days are filled with satisfied repeat customers, you can begin another strategy, raising prices.

The landscaping company can give a FREE mowing. The childcare center can give a FREE week of childcare. The auto mechanic can give a FREE oil change. The sporting goods store can give a FREE autograph session with a popular local athlete. The carpet company can give a FREE doormat. The health food store can give a FREE bottle of vitamins. The maid service can give ninety minutes of FREE cleaning. The tailor can give a FREE alteration. The stockbroker can offer a FREE wine and cheese reception prior to a local cultural event.

You should know your own business and you should constantly be on the lookout for FREE ways to increase your sales volume cost effectively.

Also be on the lookout for ways to get specialized groups to be interested in your business. You can offer specials for senior citizens, Elks, Moose, Boy Scouts, parents of children at the Hardy school, people living in the Henderson Heights neighborhood, members of the St. Clements church or the Beth El Temple or the Islamic Center. You get the idea. Make people feel special and that you are doing something for them because they are special.

What happens when you have all the sales traffic you want? You expand. You hire more people. You open another location. You raise your prices.

Story:

Andy, In And Out Of Trouble

After two years in the real estate business, Andy was a busy man but ready for his next challenge. Andy's second year earnings were $80,000. He had listed and/or sold $4 million dollars worth of investment real estate with commissions, totaling about $60,000. He had $8,000 in commissions from rentals. He earned just over $12,000, his 20% share, from property management and rental listings.

But all hadn't gone exactly according to plan. After months of effort, a deal on a $1,000,000 office building had collapsed. That single transaction alone would have paid Andy a $30,000 commission. And, there were more than a few other strikes. Hesitant unrealistic sellers and buyers with cold feet just had to be shrugged off and accepted as part of the sales business. Still, quietly, Andy moaned.

Also, the ISP program, although very successful, was taking a lot of supervision time.

However, Andy didn't verbally complain. At Taylor Realty, he realized that no one wanted to listen to his complaints anyway.

By any standards, Andy was successful. In October of the previous year, he thought he might have a $100,000 year. He made it 80% of the way and watch out next year. Also, with his income, he was able to buy his first property, a three-family house. He lived in one unit and rented the other two. Even after treating himself to a new car, new wardrobe and some state-of-the-art high tech electronic equipment, he was still financially positioned to make a second real estate investment for himself. He had saved $15,000.

Through Andy's sales efforts, Mr. Taylor seemed to be a revived man. He was sixty-nine years young. Mr. Taylor proved agreeable to giving Andy the tools he needed to build the business.

To solve the ISP problem, Andy asked Mr. Taylor to hire a third rental agent. This idea, of course, wouldn't sit too well with the two existing agents. Although they were already working to the bone, the hiring of a third agent was a threat. A threat might, indeed, take a third of their rental/management income.

The ISP was now costing the office $500 a week or $250 to each rental agent. As a proposal to Mr. Taylor, Andy suggested budgeting $700 a week to ISP, with $200 a week to the new agent. Also, in turn, the two established agents would have first right-of-refusal on any new property management business. As a concession, Andy offered to split the $200 extra per week for ISP with Mr. Taylor. But, Mr. Taylor declined, adding that ISP was the company's responsibility to fund.

Andy's second request was that an office secretary be hired. For years, Taylor Realty had the same secretary but when she retired two years ago, she hadn't been replaced. Mr. Taylor was in the office to take his own calls. Don Nardo had his answering machine. The other agents in the office didn't seem too concerned one way or the other.

Andy wanted the secretary to work for the office and to do all the regular secretarial things for everybody in the office. Andy expected the secretary to do at least three jobs well.

Over the next two months, Taylor Realty actually hired three secretaries. The first secretary lasted three weeks. She left mumbling to Mr. Taylor that he should do something about his little dictator, Andy. The second secretary broke down in tears after four days when Andy accused her of trying to sabotage "his" computer databases. The third secretary was working out a little better. In Andy's opinion, she was no ball-of-fire but she was managing to plod her way, albeit slowly, through the staggering workload.

If events had not transpired as they eventually did, Andy might have become a victim of his own early success, perhaps financially independent but certainly driven and unhappy. Nothing was ever enough for him.

There was no doubt that Andy worked hard but his attitude was becoming condescending to those who chose to work and live their lives differently from him. To Andy, it was obvious that he was a winner and just as obvious that most others were losers. Every chance he got, he'd tell his dwindling circle of acquaintances about the secrets and fruits of success. Work your tail off. Beat the competition. Look around you at all the losers. Buy real estate.

Just listen to Andy, the little snob. "Have you people seen the new Saab Turbo PX 735? This is a must-have car. My order's in. Sure, it's goin' to run me over 60K but in my business that's my end on one good deal. What's that you said? That's two years pay for you? You've got to get into a different line of work, my friend. Why, my three rental agents are bringing home more money than you."

Things were going to change for Andy and not for the better. Two bad deals combined with his lavish lifestyle brought Andy back to earth.

The first deal was a twelve-unit brick apartment building at 100 Washington Street that Andy had listed on an exclusive basis. The property was listed at $749,000 and had good condo conversion potential. If he sold the property, which he expected to do quite easily, Andy stood to collect a commission of $22,500. Actually, he felt that the property could have sold quite easily for over $800,000 but the building owner had said he wanted to net only $700,000. So, why, Andy rationalized, should he argue with the owner for a higher price? Andy wasn't stupid. The higher the price, the harder the building would be to sell. If the owner wanted less, that was fine. It would be an easier commission to collect.

Andy showed the building three times in the first two weeks it was listed and got two offers to purchase. The first offer was for $700,000 which would have netted the owner $658,000. The owner countered the offer at $725,000, if Taylor Realty would cut their commission to $25,000, which meant that Andy would have to settle for a $12,500 commission. Mr. Taylor approved the commission cutting offer but Andy said, "No way."

The second offer on the building was for $740,000 with the owner taking back a second mortgage of $200,000. The owner agreed with the stipulation that Taylor Realty cut their commission slightly to $40,000 and take the commission as a third mortgage on the property. Again, Andy didn't want to budge. Andy felt that he had a good building to sell at a good price and that it was too early to start compromising. Andy wanted his full $22,500 and he wanted it in cash, not a paper mortgage.

Andy grew up a week later.

At the monthly, "Taylor Realty Investors' Roundtable Meeting," Mr. Davis, the owner of 100 Washington Street, came up to Andy after the meeting. "Andy, I want to thank you for the work you did on 100 Washington Street but I'm taking the building off the market."

For a moment, Andy seemed in shock. "You can't do that to me. I've brought you two offers on the property and I'm working with both those bidders to raise their offers. I expect to close this deal by next week."

"I'm sorry, Andy." was Mr. Davis's reply. Mr. Davis remained the gentleman, "Andy, you're an aggressive young salesman. I advise you not to say anything else that could jeopardize our working together in the future. Now, I have a buyer for 100 Washington Street, Paul Petersen. You know Paul. He's here tonight. Paul is willing to pay $750,000 for the property direct to me. That's the end of the story. The building is sold."

Andy lost it, screaming, "Paul Petersen. Paul Petersen. You bet I know Paul Petersen. You met Paul Petersen at these meetings and you made a deal with him behind my back. Where do you know Paul Petersen from?"

Mr. Davis brushed Andy's amateurish comments off. "Let me ask you a simple question, Andy. If you didn't learn it in real estate school, then get yourself a lawyer to explain it to you. What is an exclusive listing, Andy?"

Of course, Andy knew, "An exclusive listing says that Taylor Realty is to serve as your exclusive marketing representative in the sale of 100 Washington Street. An exclusive listing says that if any broker or agent sells the property that Taylor Realty receives a full commission. That's what an exclusive listing says."

Mr. Davis said with a satisfied smile, "You are correct. Now, who sold the property? I did myself and not Taylor Realty. Whether I met Paul Petersen here or on the moon is irrelevant. Now, do you understand?"

Andy shook his head in disgust, "But an exclusive right-to-sell listing..."

Mr. Davis proved that he was not the naive owner that Andy had taken him for. "Andy, I didn't sign an exclusive right-to-sell listing. I signed an exclusive listing. If I had signed an exclusive right-to-sell listing then, yes, you would still be entitled to a commission because an exclusive right-to-sell listing gives you protection for any and all types of sales even a seller selling himself. But, that's not our contract, Andy. If you want me to take this up with Jim Taylor, I will."

Andy was practically pulling his hair out, "So, Davis, you're saying that I pulled out the wrong form and it's going to cost me $20,000?"

Mr. Davis delivered the final blow. "Andy, you've been in this business, what, about two years? I've been in this business 25 years. I only sign exclusive listings. I wouldn't have signed an exclusive right-to-sell contract with you. I always want to retain the option to broker my own buildings. Now, I realize that you're disappointed but our discussion is over and so is your involvement with 100 Washington Street."

Andy was livid. After the meeting, he gathered in the hotel lounge with a dozen of his "real loyal" clients and proceeded to question the ethics, morality and everything else he could think of regarding Mr. Davis. The clients listened quietly and learned more about Andrew Martin than Ben Davis.

Operational Limitations:

• FREE is a powerful word in business.
• Alert and aware, some people will do business behind your back if it is in there interest to do so.
• In real estate, all deals are in writing or they mean very little.

Seeds for thought:

• What common mistake do many small business owners make when it comes to their advertising?
• What are some simple things that you and your staff can do to make people feel good about dealing with your business?
• What is the easiest way to build traffic for your business?
• What are some of the smart ideas that Naomi is using to be successful?
• What do you think Derek is blaming for his lack of business?
• How did Andy ease the way for a third rental agent in the office?
• Do you think that Andy had any cause to be angry with Mr. Davis?
• How should Andy have handled his problem with Mr. Davis?
• What did Andy accomplish by bad mouthing Mr. Davis in the lounge after the Investor's Roundtable meeting?

Jargon:

Behind the eight ball – Having some trouble.

Best of the breed - Taking the best offerings of many vendors to come up with a solution that is the best available piece by piece, but might not be the best when everything is actually assembled.

Cut their teeth – Activities for rookies to gain experience.

Dead end job – A position with no future.

Exclusive listing - a listing which is solely controlled by one agency.

Exclusive right-to-sell - a listing to which the broker receives a commission if the property is sold even by the owner.

Follow-up - checking with customers to ensure that the product or service they received are satisfactory.

Mailing list - names and addresses of present and former customers.

Prospectus: A prospectus is a formal, legal document in which a company tells all to the public.

Public Company: A company with many shareholders.

Public relations - The business of generating goodwill toward an individual, cause, company, or product.

Reciprocity – Being reciprocal, giving back.

Questions and Answers:

I'm a retired Marine Master Sergeant in my mid-fifties. I know that sounds strange but I never had much use for a computer. In today's small business world, is a computer really as necessary as you imply?

Sarg, you already know the answer to this question. Today's business world is a world of rapid communications, and the personal computer plays an essential role. If you use telephones or fax machines or credit card machines or cash registers, the chances are that a computer chip is already at work in your business.

Today's computers are really non-intimidating, self-teaching tools. For a thousand dollars, you can purchase a good computer system capable of teaching you all you need to know about computer operations. When you buy new software programs, you will find that they also will teach you the basics to be up and running in short order.

For your daily correspondence, your newsletter, your accounting, your billing, and inventory control, there is no reason not to be using a computer. The world is going digital and wireless and you must get on board.

I learned cooking in the Navy. Now, I'm ending a six year enlistment and I'm anxious to open a bakery, but funds are lacking. Any suggestions?

With research, you can usually find a niche to start most businesses small or part-time, or to take in a partner or obtain a loan.

Maybe you aren't ready to open a full-service bakery, but you can start baking muffins and desserts at home which you sell to local restaurants. Maybe one of the restaurateurs would be interested in partnering with you. Perhaps one of your bakery suppliers knows of a bakery shop owner nearing retirement who would be willing to sell the business to you on favorable terms. Perhaps if you have a strong business plan, you can interest family or friends in investing in your venture.

In one of our stories, there was a woman who bought a floral shop from an owner who was planning to retire in several years. Continue to do your research, and keep talking your business, and you may be pleasantly surprised at the result.

Our local mall rents out aisle carts for a few hundreds dollars a month. Is this a good way to get started?

For certain businesses, this is an excellent way to test your product line while you begin to build a customer and supplier base. And, if your ultimate goal is to lease a regular store in a mall, an aisle cart is a good way to prove to mall management that you and your business are up to the task.

Is your particular business suitable to a mall aisle cart? You'll want to find other vendors to interview who are doing or have done exactly what you intend to do. See if your trade association can give you any leads. Also, ask the mall managers if they know of any similar businesses run successfully in other malls. Remember, if you can't find anyone who has done what you want to do, there may be good reasons for that, so sit back and take another look at the idea.

Is this particular mall a good place to lease a cart? That's easy to find out. Take a day and talk with all the cart owners on the premises. You will find that some, such as yourself, are testing a new business idea. Others will be using the aisle cart as a satellite location. Ask these vendors if their traffic and sales expectations have been met. Ask if mall management has been sensitive to their special concerns. Make a list of good points about a mall location and a list of negatives.

Action Plan:

• Look in the local newspaper or in magazines or in the Yellow Pages and pick out five advertisements that you think are effective.
• Look for five ads that you think are almost a complete waste of money.
• Look at ads for your industry. Are they generic or are there specific calls to action?
• List five stories about your business or industry that might be of interest to a media reporter.

Support:

• For salespeople: www.justsell.com/
• For information on direct selling: www.nfsa.com/
• For information on manufacturing: www.mninfo.com/
• For salespeople to learn what not to do: Salesautopsy.com/
• For articles on salesmanship: Thesalescoach.com/

Inspirational Insights: