A new business quick fix — it doesn’t seem possible, does it? I’m afraid that’s because it isn’t.
Many small businesses find themselves in need of new clients and they are looking for quick results. But getting new business is about building relationships and that can take time.
The problem is that many firms fail to focus on new business until they are suddenly facing a drop in orders. That’s when firms tend to look for a magic quick fix. But a short-sighted approach can easily be perceived by the target audience as aggression and ultimately may be damaging to the reputation of a business.
The best approach is to work on new business relationships over time, showing potential customers what you can offer and gaining their trust. Then, when those customers need a service like yours, they are more likely to come to you.
A successful new business programme is based on a long-term vision and achieves a steady flow of good quality opportunities. There are a number of phases that need to be realised before optimum new business results can be seen. A new business typical cycle looks like this:
1. Groundwork: steady, focused and tailored activity to gradually warm up your target audience;
2. A pipeline of mid-term opportunity is developed: clearly scoped against targets and a timeframe;
3. Trust is won and doors are opened.
As with any relationship, there needs to be an initial chemistry before trust is won and that interest then needs to be cemented before you’ve won over your conquest. To get to this stage you need to ensure you have the right approach in place and make sure your message is appropriate to your audience to get you noticed.
Good new business development is a skill and it is also a perpetual and evolving cycle. Those that adopt a long-term strategy will enjoy the greatest return — assuming the approach is researched well, pitched well and managed closely.
I see it all the time. I even take advantage of it. Some businesses have too many discount sales and special offers — in fact it can seem like a permanent sale. I call this the DFS effect.
But what happens? No-one buys at full price.
Now it is, of course, very tempting to drop your prices when you have stock to move, and I am not suggesting that you don’t ever have sales, just don’t have them all the time.
If every email you’re sending out to your list is just what’s on sale, or that you’ve knocked so-and-so-many per cent off “this weekend only”, and if you send them often enough, it’s not going to take long to wipe out all your full price sales.
There is a certain children’s mail order company that I often use to buy things for my small people and I know that I only have to hang on for another week or so every time I want to buy something and sure enough a discount voucher will plop onto the doormat through the post. I am regular customer and so I know I don’t have to wait long. Now what’s silly about this is that yes I do buy when I get my discount voucher, but the business has lost my momentum, and also the cash I was ready to part with “on the spot”.
Now for a big mail order catalogue, or a large chain of furniture stores (ahem!) the continuous offers and discounting is part of a major marketing plan, but if you’re a small business you don’t always have the luxury of bigger margins and a constant flow of orders. If you’re a smaller business you value every sale, and all of those that are not at full price just mean you have to work harder or sell more (or both!). You also then set a precedent that your prices are not “real” but “inflated” (yes I know those DFS sofas were on sale somewhere for a week at £1500 but no-one was buying them, right?).
So stick by your guns and don’t be on sale all the time. Think about value-added offers instead, or extras you can include. Once you lower your prices (which is effectively what you do when you’re always on sale) it’s really hard to push them back up again to the same customers. Then you’re left with either finding new customers, or accepting that you’ll only ever be able to sell for less.
And don’t even think about offering five years interest free credit if you’re a small business either! Money up front thank you very much.
Phone and email for new business generation are still at the heart of all new business marketing programmes when reaching out to an audience; however social media is playing a growing part in these strategies.
Here are a few suggestions showing how you can widen your reach to be noticed, to persuade your audience, engage them and stand out from the crowd.
Join discussion groups — those your key targets are part of and active in. Get involved and offer your expertise, help solve their problems.
Follow key targets, including a sample of their targets, to get a feel for trends, issues, challenges and popular topics being discussed.
Independent expert status will deliver a deeper level of trust. Get involved with forums that will be most valuable to you and share relevant content across these platforms.
Have a close look at media in your sector, the angle taken, your targets’ positioning and the audience they are reaching out to.
Attend all key industry events and engage with your target audience. What are your targets showcasing, how strong and professional is their positioning, collateral, understanding of their audience?
You’re an expert. Share your knowledge and industry opinions.
Attend carefully chosen conferences and seminars, consider speaking at them, particularly those that are the benchmark for your specialism.
Your website needs to be interactive to allow your audience to connect with you. Make it easy for them to reach you through an online blog where they can post comments or find you through other social media platforms and connect with you there.
Week 5 of Dragons' Den signals the halfway mark in the current series.
If you missed last week's, catch up here and below you will find the highlights of episode five.
Quote of the Episode: “I never used to use salt until three years ago. Then I discovered rock salt” Duncan Bannatyne
Product: Black Nut Iberian Pig Feed - Manufacture of pig feed for rare species of pig
Investment sought: £100,000 for 20 per cent
Handling: Handled questions well but his answers were his undoing. Pitched as 'Organic' when it was not.
Outcome: No investment.
Verdict: Beyond the bizarre idea, this is also a weak business plan and more of a whim.
Product: Tree of Knowledge - Educational play resources
Investment sought: £100,000 for 10 per cent
Handling: Educational products often do well in the Den. Nice genuine and down-to-earth pitch but didn't do enough to convince more than one Dragon wholeheartedly to invest.
Outcome: Peter Jones offered £50,000 for 20 per cent. No Dragon would match his offer and Dragons' Den rules require full value to be met for an investment.
Verdict: Good pitch but fell just short of being a 'Wow' product.
Product: Zigo - A combined buggy and bike invention
Investment sought: £225,000 for 6 per cent
Handling: Theo was shocked by the valuation of the business. The owners said this was due to the $400,000 invested into the business three years previously and further questioning revealed the Dragons' investment would be to cover a loss this financial year.
Outcome: No investment.
Verdict: Peter Jones saw the bigger picture. The product design, although aesthetically pleasing, was not practical.
Product: WedgeWelly - Stylish wellies with heels for festivals
Investment sought: £65,000 for 20 per cent
Handling: Name-dropped a few high street retailers and high-end fashion names to lure the Dragons. A weak grasp of their figures and need some astute business direction but they have a great product.
Outcome: James Caan offered the full asking price. Deborah offered the full amount but sought an additional 30 per cent. Theo offered the same and on the same terms as Deborah. WedgeWelly went for their Dragon of choice over retaining company stake: in the end they negotiated hard to get Theo down to 22.5 per cent. Theo countered with 25 per cent.
Verdict: Fun fashion product and a great deal secured for the business.
About a month ago, I attended a presentation and workshop on marketing where the presenter, Helen Dowling of Exceptional Thinking, said that the most important part of marketing is to have a way to follow up, and then to follow up. We all come back from seminars and networking events with pockets full of business cards; how many of us actually make use of them?
With the development of social media, the channels through which you can follow up have multiplied, and it is no longer necessary to email everyone you met – some people may warrant an @mention on Twitter, others a connection request on LinkedIn, while others will require an email, and lastly some will need a phone call.
This diversity of follow up opportunities means that you need to have a means to decide who gets what. Hopefully you will have an idea of how likely it is that you will do business with each of the people you met, and so you can use this to decide how you will follow up with them: the most likely you can phone; the least likely you can say ‘Hi’ to on Twitter.
Whatever means you use to do your initial follow-up, you need to have a record of what was said, where, through what channel, and by and to whom. As your business grows it will very soon become difficult to keep track using pen and paper, and so a Contact Management System on a computer and/or smart phone becomes essential.
Choosing a Contact Management System can be a difficult task, especially if you want it to work with Social Media. And Contact Management Systems can be expensive – though a lot of people are using the Outlook Contact Manager add-on successfully, which is part of the Microsoft Office Small business package. Other options include Gist, ContactZilla and Glasscubes, to name a few.
I am always on the lookout for solutions, and am in a position to help and advise you on the best solution for contact management with social media, should you need it.
A slight shift from Wednesday to Monday for the remainder of this series of Dragons' Den. It will take more than that to catch us off guard.
If you missed last week's, catch up here and below you will find the highlights of episode three.
Quote of the Episode: "If you were to wear glasses you'd look a bit like Theo" Peter Jones
Product: Tatty Bumpkin - ethical children's brand
Investment sought: £200,000 for 20 per cent
Handling: A confident start but confused the Dragons with so many aspects of the business. She demonstrated one of the classes when Peter Jones questioned what her business is about. An argument broke out when questioned about her brand and she became defensive.
Outcome: No offers
Verdict: Lots of ambition but not a strong enough brand and an unrealistic business model.
Product: Golfers' Mate - a pitch repair multi-tool
Investment sought: £100,000 for 12.5 per cent
Handling: A very shaky start, had to restart the pitch three times. Eventually recovered but was instantly faced with harsh criticism from the Dragons. He gave jokey responses to the Dragons' questions, which didn't impress them.
Outcome: James Caan offer: £100k for 30 per cent share – negotiated to 25 per cent with a proviso that they could buy back 15 per cent when James gets his £100k investment back, retaining a 10 per cent share – accepted
Verdict: Not a great pitch and quite blasé when questioned, however he managed to impress with his confidence in receiving bulk orders from large potential clients, which was enough to seal the deal.
Product: Aquatina - a collapsable drinks bottle that can be re-used
Investment sought: £100,000 for 10 per cent equity
Handling: A very confident pitch but the Dragons found it hard to see the point of the product. Duncan Bannatyne became quite irate and threw the product across the den. As the questioning continued, the Dragons became more hostile, accusing him of 'pulling the wool over their eyes' and misleading them in regards to the point of the product.
Outcome: No offers
Verdict: The Dragons struggled to see the point of the product and felt it was not a solution to the problem it was designed to solve.
Product: FGH security - Manned security company
Investment sought: £75,000 for 10 per cent
Handling: An excellent pitch, very knowledgeable and instantly likeable. They presented an excellent business proposition which was attractive to all of the dragons. James Caan made an offer within minutes and was soon followed by the others. Deborah Meaden said she was finding it hard to think of reasons not to invest.
Outcome: Joint offer – Peter Jones 50k for 10 per cent and Theo Phaphitis 50k for 10 per cent with 5 per cent of the equity given back to FGH when the investment is repaid. Offer accepted
Verdict: A highly professional pitch which offered the Dragons an extremely attractive business proposition.