Who should start their own small business? YOU SHOULD.
Will you succeed? Maybe. Statistically most small businesses “fail”. But… is going out of business necessarily failure? That depends on the metrics you use for success or failure. If you spend your life worrying and not living your life, that is honestly a bigger failure than going out and trying something new!
Most articles you read about starting a small business give you all this negative information about what you need to carefully do and if you don’t you will fail. Some have a huge list of questions that you should ask yourself first to see if you are “ready” to start a business, have the intelligence, the smarts, the tools, etc.
Let me tell ya!
Let me tell you honestly: You are NEVER ready to start a small business. Nor are we ever ready to get married, or have kids, or go to University, or any of the other big decisions we make in life. But we do make them. And sometimes they turn out well and sometimes badly. And we never know which way it is going to go no matter how much we plan or think ahead.
I have started many small businesses in my life and quite a few have failed. And some have succeeded and some should have and didn’t because I did something really stupid.
But I did it and I am proud of it and I provided employment and fought wars and battles and lost some and won some. And at the end of the day, I am still alive and much happier for having tried and have stories to tell my kids.
I’m proud of my Dad!
My father always was trying new businesses and frequently failed. But as a result, all his kids became entrepreneurs. My one sister had a magnificently successful restaurant and has been involved in some really intriguing businesses. My oldest sister, in my eyes, has been magnificently successful.
None of us have university degrees.
In fact 3 of us never graduated high school. But I can promise you that due to the volume of “stuff” we have read over the years to manage our businesses, we have a far broader and more useful education than most people graduating with MBAs!
My brother’s business is on the verge of a breakout success. I am proud of him!
So… what’s the verdict?
So, should you read all the negative hoola about starting a small business, all the warnings, all the negativity? Yes. You should. But should you allow it to affect your decision to start a small business? Resoundingly NO! Splurge! Do it! Go baby! Jump in! I’m rootin’ for ya!
If you succeed, you will feel great! If you fail, hey! That’s not the end of the world! Pick yourself up, dust yourself off, walk it off, stop crying, hey that’s life! Get a new idea and go again!
All too often I see Sales Agents in a HUGE hurry to talk to their next customer. They have no idea WHO that customer is, WHAT that customer Wants or Needs or WHY the customer might want or need it.
Not knowing anything about your prospect is a BIG sales mistake.
Slow Down and Smell the Roses
[bctt tweet=”Honestly, Sales is not a race.”]
I realize you might have sales quotas and a boss breathing down your neck, but it is not actually a competition on how many customers you speak to, but really it is about how many sales you get.Is it not preferable that you speak to 5 customers and sign up 4 rather than speak to 30 customers and sign up 1?
I often see it with rookie sales agents. They are in a tremendous hurry to knock on that door, or pick up that phone and they have no idea who they are calling or why.
If you read my earlier article where we discussed Newton’s Law, then you should know that when you rush headlong into a sale, you are going to get the equal and opposite reaction of the customer rushing headlong AWAY from the sale.
It is not a pretty sight.
Do your Research
Before you approach a customer, do your research. You need to know who the customer is, what he does, why he is there, why he might need your product and any other data you can glean about the prospect.
E.g. did he ever buy a similar product, did he hate it, love it, etc.
Does he have a wife, a child or children, what is his age, what are his likes and dislikes? ANY data you can obtain about the customer is going to help you to talk to him. Does he live in a big house, a small house? Is he frugal, is he a spender, is he married, divorced, etc.?
Why do you need all this information? Well, think of it this way; if you found out that 30 people were in a bus in some remote village somewhere in the world that you have never been to and never heard of and ran off the road and they all died, does it really ruin your day? No? Exactly!
But what if you found out that a bus that contained 30 kids from your kid’s school. You find out it ran off a road and they all died. Then that makes a HUGE impact.
Why? Because that school is YOUR kids school, you know that school, you have seen that school, you have walked the grounds, you may not know the kids personally, but you might have seen them. It is a completely different story.
Familiarity breeds affection.
If you discovered something killed your worst enemy you would be more shaken up than finding out something killed someone whom you have absolutely no idea about. You have more affection for your worst enemy strangely enough.
The more you know about the customer the more you will like him. And the more he will like you. Whether you like someone or not has a lot to do with whether you want to speak to them or not.
You are not really interested in speaking someone that you do not like. And how familiar that person is to you determines whether you want to speak to them as well.
By way of example, if you are Chinese and you are walking around in China where there are 1.4 billion other Chinese people, you are not inclined to go talk to everyone you see.
But if somehow you find your way into the middle of Africa amongst nobody but Africans and then one day you see another Chinese person there? You are going to have a huge smile on your face and immediately run over to talk to them. They will be just a happy to see you.
Knowing something about your prospect makes it a lot easier to talk to them and them to you.
Why Else Should I slow down?
Well, nobody appreciates being pushed into things. Taking your time, not rushing into the sale, and spending some time just getting to know your prospect s not only more fun, but pays handsome rewards. We all trust friends more than strangers, right?
Don’t just rush into the sale. Make friends with your prospect, be interested in him or her. I tend to not even talk about what I am there for until I know the prospect and I are getting along.
The Lady on the Porch
I was once training some door to door guys and I had them go and try sell our product to an African American woman. She was sitting on the front porch reading a book. She shot the first rookie agent down in flames. He went up and immediately started pitching the product.
After he came back defeated, I sent the second rookie. Of course he received an earful because she had only just managed to kick out the first chap. The third poor victim had it even worse!
I went in and closed the sale once they were all completely convinced that the prospect was impossible. First, I approached her and told her that I was sorry that we had disturbed her reading. I mentioned that it looked like a book about Africa and that I had been born in Africa. She said yes. She remained irritated.
I concentrated on the book and asked about the title, and the author and whether it was any good. Then I wrote down the information and thanked her. I then pointed out the broken drain from her gutter and suggested that the water might damage her foundation. I asked her if she wanted me to do a temporary repair.
Of course she did and I did a 10 second repair that would last a few months until she found someone to fix it properly.
I then asked her if she wouldn’t mind telling me why she thought the first three guys were so irritating. She happily obliged. We were friends before long and I told her why we were selling the product we were selling and she happily bought it.
It’s not magic
There was nothing magic about this. But the third biggest mistake I see sales people make is being in a hurry. Maybe it is laziness, maybe it is not. But in Sales, slow down, research, learn about your prospect and make more sales from fewer prospects!
“I used to have to walk uphill there AND back, in the snow, with no shoes…”
No, it’s not that kind of story, but really, back in the day when they wrote all the old sales books and sales advice there was one thing that they drilled into sales people’s heads … Always be enthusiastic.
Now, with all due respect and regards to those old sales masters, I am here to tell you that this is one piece of advice that you can just scrap. Yup… take that concept and hit the “delete” button in your head.
[bctt tweet=”“Always be enthusiastic” is the biggest lie in sales!”]
Back in the day, we had just won the Second World War, the economy looked great, employment was abundant and the future was just rosy! Of course people were happy. The news had no chance to depress them yet and so if you arrived all depressed trying to sell them something, you were not well received.
“How do you like them apples..?”
There is this lady sitting in her house mourning the loss of her husband and you walk in there all enthusiastically and say, “Let’s go party!”. How do you think she is going to receive this enthusiasm on your part? Not too well, right?
Likewise, if you just won the lottery and are “over the moon” about it and come home to see everyone in the house looking completely gloomy and depressed, what happens to your mood?
In this case, opposites do NOT attract!
People can handle someone being at roughly the same emotion that they are in. If your emotional level is too high or too low, you will receive a bad response.
So where is the Average Westerner today? Are they highly enthusiastic, or a bit on the gloomy side? Well, judging by the phenomenal sales of the pharmaceutical companies, especially of their anti-depressants, I am just going to hazard a guess that it is not enthusiasm!
The fact is, today, mild interest or boredom is more easily tolerated by the public at large than enthusiasm.
Observe your prospect
When you approach that next prospect, take the time to see where he is and approach him at the same emotion or slightly higher. Don’t overwhelm him with enthusiasm. You will terrify the poor fella and make him not trust you. In fact, he just might think that you are out to kill him!
Have you ever observed a kid that is a bit on the timid side? If you approach that kid enthusiastically, he is making a bee line for his mother’s skirt to hide under!
On the other hand, a small and timid smile on your part followed by looking away, and then looking back shyly yourself and smiling again will draw the kid out. If you slowly raise your emotional level, he will follow along until the kid is happily interacting with you.
[bctt tweet=”Adults are just grown up kids!”]
We can learn a lot about adults by observing children. Don’t make this sales mistake!
Small business owners often make the mistake of trying to do everything themselves.
Let’s face it, starting or running a small business is a lot of work and keeping expenses down is always a critical factor. But trying to do everything yourself to save money is not always the best idea. But you can outsource overseas.
[bctt tweet=”It is better to concentrate on what you are good at. Don’t become a jack of all trades.”]
But outsourcing is often expensive. Is there a cheaper alternative? Yes! Do what the big boys do and outsource overseas.
Doing your own bookkeeping or paying an expensive bookkeeper in the USA to do it is not the best idea. With rates for bookkeeping services in the USA ranging anywhere from $50 to $100 an hour, sending that task overseas for $15 an hour just makes good financial sense.
Bookkeeping is a task that requires accuracy but does not require a degree in Finance. However, in the Philippines one can find a University Graduate to do your bookkeeping at a small fraction of the salary a worker at MacDonald’s receives in the USA.
Just like bookkeeping, payroll can also be outsourced overseas at similarly low rates. Doing payroll yourself is an expensive and time consuming endeavor. Not doing it properly can make it even more expensive. The IRS exacts heavy penalties for failing to pay payroll taxes.
Making a mistake in this department is not something you want so let someone else worry about it.
A professional outsourcing company will ensure that yo are meeting allet the current rules and regulations freeing up your time to do what you need to do – growing your business!
Marketing and Sales
All businesses live or die based on their ability to sell and market. But we don’t always have time to do all that is necessary to increase sales. You can outsource overseas Lead generation, Email Marketing, Website Maintenance and SEO, Inbound Sales Calls and many other aspects of sales saving you a lot of time and money.
You can outsource Invoicing, collections, data and order entry, maintaining your schedule, appointment setting, voicemail, email management, legal research, booking travel arrangements and a host of other tasks you are probably doing yourself right now for a lot less.
When you first start a small business the time it takes to do these tasks can consume a quarter of your day or more. Having someone perform these tasks for you gives you a lot more time to get things moving.
There are many administrative tasks to outsource.
Telephone Answering – you can also outsource overseas
It is very clear that a telephone answered by a live person is much better received than one answered by a machine. Outsourcing your phone answering overseas will not only improve customer satisfaction but also increase sales.
By outsourcing these tasks to an English Speaking country like the Philippines you can cut your costs dramatically and improve your sales.
We are now in a Global Economy. This self evident fact definitely affects Small Business as well. Fortune 500 companies have been outsourcing these tasks and becoming more competitive. Small businesses need to find a way to realise the cost savings of outsourcing overseas too. You can outsource overseas!
For every action there is an equal and opposite reaction.
Sir Isaac Newton said it best: For every action there is an equal and opposite reaction.
Funny how people will look at the laws of physics and never even wonder if perhaps the same laws might apply to them on a mental level. However, this one most certainly does. The Psychology term is “Reverse Psychology”.
Why reverse psychology? Why “For every action there is an equal and opposite reaction?
Well, look at it this way; Being approached extremely enthusiastically by a sales agent in the store, what is your reaction really? Is it returned enthusiasm? The answer is a resounding NO!
The sales agent’s overly enthusiastic approach will definitely meet with you cringing and telling the sales agent that you don’t need any help thanks. And that is a big sales mistake.
Let’s look at it another way. If I tell you I have something in my pocket that can explain the complete mystery of why some sales people close almost everyone and some sales people don’t close anyone but I am not going to show it to you.
Sorry, no matter how much you beg, it just is not going to happen.
Now what happens is that you become very curious about what I have in my pocket. See? The equal and opposite reaction to me telling you that you can’t see it is that you very much want to see it.
[bctt tweet=”In sales: For every Action there is an Equal and Opposite Reaction.”]
Overselling vs. Taking it away
I so often see sales people convincing and persuading and pushing and shoving to get a sale. Sure, sometimes you can succeed using the tactic of completely overwhelming your customer and forcing him into submission.
But that sale is likely going to try cancelling later on and you will have to force the poor prospect into submission again.
Sales people are often despised because of this, and rightfully so. Nobody wants to feel forced into anything!
A good sales agent lets the customer think he bought the product on his own determinism, not because a sales agent forced him to!
Three Possible approaches to the customer on the sales floor.
Approach One: High enthusiasm: “Hello Sir, How can I help you today”.
Seems reasonable. So why is it so frequently met with the customer backing off and muttering “I am just looking thanks”? Or worse, the customer practically running out of the store!
Approach Two: Don’t even talk to the customer. Well, it is an option, but then the customer feels ignored and the boss is none too pleased either.
Approach Three: In a mildly interested tone: “Hi, I see you are looking at the stereo systems. If you need any help, I will be standing over there and so feel free to come ask me. I am kind of the expert in the store on the subject”.
And then walking off a few steps… and then in an almost curious fashion and kind of over your shoulder “By the way, are you looking for yourself or someone else?”
What’s the point here? First, the force of high enthusiasm is like a brick hitting something and the equal and opposite reaction is that something becoming thrown backwards.
A bored approach is not nearly as high energy and so does not create such a force hitting the customer. So while the customer will back off a bit, it is not nearly as much as he would back off if hit with high enthusiasm.
Second, when the sales agent delivers his pitch and then withdraws a bit, it creates the equal and opposite reaction of a reach from the customer. When the agent then asks a mild question, the customer is still on a reach and so is more receptive.
So what is the biggest mistake?
Well, the biggest mistake a sales agent ever makes is over-reaching. Back off, take it slow, don’t be afraid of losing the sale, and let the customer reach instead.
My goal in sales is always to reach at least an 80% close rate. Keep checking back for more articles about how to make that happen and more about sales.
So you started a Small Business – What to do about Bookkeeping?
One of the huge advantages of having your own business is tax write-offs. Tracking them is an entirely different story!
Without proper bookkeeping and record keeping, a lot of the expenses of running your own business will never be recorded and instead of deducting those expenses, you will be paying tax on them.
Many startup businesses are not keeping proper records and thus paying far too much in taxes.
Finding a bookkeeper
The average small business begins looking for an accountant and asks the accountant about bookkeeping. Of course, the accountant will offer to do that for you at prices far above what you need to pay. The average hourly rate for a bookkeeper in the USA is between $40-60.00 with some charging as high as $100 an hour.
What is the difference between a bookkeeper, an accountant, a tax preparer and a tax advisor?
Bookkeeper – a person who records the accounts or transactions of a business. A bookkeeper does NOT have a 4 year accounting degree.
Accountant – A person who is skilled recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results. An accountant has a 4 year degree.
Tax Preparer – A person who prepares the tax returns for a business or person. A tax preparer does not necessarily have an accounting or other degree. The IRS attempted to regulate Tax Preparers; however following losses at the lower court and the appellate court which held that IRS did not have the authority to regulate preparers, the IRS dropped the matter. A Tax Preparer is required to have a preparer tax identification number (PTIN).
Bookkeeping – Profit and Loss Statement
Tax Advisor – (or tax consultant) is a financial expert specially trained in tax law. Tax advisers use their knowledge of tax legislation to provide advisory and consultancy services to clients, ensuring that they pay their taxes in the most efficient way and benefit from any tax advantages and exemptions. A tax advisor normally has at least an accounting degree and many have both a legal and an accounting degree. They keep up to date with changing tax laws and explain complicated legislation and its implications to their clients in simple terms.
Depending on your goals, you might use none, one, two, three or all of these professionals.
Most small businesses when they start off should be at least consulting an accountant to get advice about how to save on taxes. Additionally, a small business owner should know that there are a lot more ways to keep your records than the way your accountant may tell you. He wants to do your bookkeeping and your accounting. He also wants to get business just like you do. But having your bookkeeping done by your accountant is not necessarily a good idea.
There are many accounting resources available to a new small business and many accounting packages that will help you keep your books.
The 500 pound gorilla in the resource pool is Quickbooks by Intuit.
If you haven’t looked at Quickbooks, now is a good time.
Proper bookkeeping means properly setting up your books and Quickbooks makes that easy. It also means tracking your expenses and Quickbooks makes that very easy with an App that can be downloaded to your smartphone and used on the go to do many functions your business needs.
Quickbooks will also process your payroll for you and ensure that the proper taxes are paid keeping you out of trouble with the IRS.
Even without an accounting degree or a bookkeeping background, most small business owners can quickly learn Quickbooks, but it helps to have a trained bookkeeper who is experienced with Quickbooks to help you set up everything the right way first and keep track of everything after that is done.
Outsourcing your bookkeeping overseas
Many small businesses have found out that outsourcing their bookkeeping overseas is not only convenient, but saves them a lot of money.
While Tax Advice and Tax preparation is better done in the USA, bookkeeping can be outsourced at prices far below USA prices. Rates in the Philippines are as low as $15 an hour and your books are handled by a trained bookkeeper.
If your bookkeeper is doing their job properly then you will not need to spend more than $100 an hour with an accountant just to have proper records. Overseas bookkeeping companies should be working the same hours that you are and so are readily available. They will also speak excellent English and can be reached by calling an American phone number. You will begin to forget that your bookkeeper is even overseas.
Outsourcing the bookkeeping part overseas saves you money to spend on a better Tax Advisor or accountant giving you tax advice and filing your properly prepared tax return at the end of the year.
At the end of the day, if your books are properly kept and you are getting proper tax advice, then you are most of the way there. Outsourcing your bookkeeping and using solid proven accounting software like Quickbooks will not only save you time and money for bookkeeping and accounting, but save you more money on taxes as well.
Is Outsourcing our Jobs Overseas good for the Economy?
If you read the news today, Obama is hammering away at Romney for his role in Outsourcing jobs overseas.
According to President Obama “I want to build manufacturing jobs in this country again. You know, when Governor Romney said we should let Detroit go bankrupt, I said, we’re going to bet on American workers, and the American auto industry, and it’s come surging back”.
Yet at the same time the President is working diligently at opening up free trade with Asian countries. Is all this good or bad for the economy?
Job creation vs. Job loss.
A recent article in the Center for American Progress website by Alex Lach quoted Working America, “Manufacturing employment collapsed from a high of 19.5 million workers in June 1979 to 11.5 workers in December 2009, a drop of 8 million workers over 30 years. Between August 2000 and February 2004, manufacturing jobs were lost for a stunning 43 consecutive months—the longest such stretch since the Great Depression.”
Mr. Lach goes on to claim “Manufacturing plants have also declined sharply in the last decade, shrinking by more than 51,000 plants, or 12.5 percent, between 1998 and 2008. These stable, middle-class jobs have been the driving force of the U.S. economy for decades and theses losses have done considerable damage to communities across the country”
Further, the U.S. Department of Commerce showed that “U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers… cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million.”.
Losing 2.9 million jobs that apparently went overseas could not possibly be good for the country when unemployment rates have been so high, or could it?
Unemployment in the USA
All Americans have heard a lot about persistently high unemployment rates in the USA since the Great Recession. It is interesting to look at a graph of unemployment in the USA since the 1920s until last year. The trend towards higher unemployment is definitely up although nowhere near as high as just before World War II.
Companies really began outsourcing manufacturing jobs overseas around 1970. Many electronic manufacturing jobs were outsourced to Japan who took advantage of this new ability to manufacture electronics and quickly dominated the field.
Today we outsource those jobs to China who are also quickly becoming adept at copying the technology and have now started several companies that not only compete with American companies but with the electronics giants in Japan as well.
Anytime you send the manufacturing of anything somewhere else, the technology of manufacturing it must, by necessity follow it. Consequently, that technology will become copied and used locally to compete. Competition will result in further potential job losses in that field.
Technology, Job Loss and Unemployment
When America first gained independence, the vast majority of American made their living in the fields. America was a land of farmers and the supporting services that went around farming in the small cities and towns that dotted America’s landscape.
Slowly, as the technology of farming improved with the industrial revolution, there was no need for as many farm hands. A tractor could plow a field far more efficiently than a number of farm hands with an ox could do so.
These displaced workers found their ways into cities looking for employment. America became a manufacturing hub. As manufacturing brought more wealth to America, so farming became less of an industry and America began importing fruits and vegetables from around the world.
But if Americans are anything, they are innovative and entrepreneurial. Large corporations found that they could buy farmlands fairly cheaply and using the latest technology could produce higher yields and lower costs with vast farmlands. Farming came back to some extent, but in a different form. And so Farm production continued to increase.
Average Income in the USA
Much has been said in the press about American incomes not keeping up with inflation. A graph published by Advisor Perspectives based on data from the census bureau shows otherwise. Using inflation adjusted figures, it shows that American incomes have not really risen of fallen to any great degree since 1967. There is a slight uptrend, but nothing to write home about.
Of course the upper middle class and the top 5% incomes have risen quite dramatically, but the average American is earning about the same as he always has.
Yet, does this mean that the average American is suffering as a result?
Manufacturing technology has improved immensely. The cost of luxury goods has fallen however. Back in Henry Ford’s days he boasted that the average man could afford a car with just 2 year’s salary.
Today you can buy a car that is far more technologically advanced for a just a tenth of that price. Having 2 or 3 TVs in the house is normal and our kids all walk around with smart phones. Lives are longer, health care is better. All of these advances, while they have not raised the average salary have improved the average life.
What does it all mean?
When we, as a nation, hang onto work that we could send elsewhere for less, we actually decrease our potential productivity.
If you can go to work and earn $20 an hour and you can find someone to mow your lawn for $10 an hour and you would rather do your work at the office anyway, then why would you mow your lawn?
If you outsourced that job to the neighborhood kid and paid the $10 and worked that hour instead and earned $20, then you are further ahead.
However, if you normally gave that job to your own kid but he charged you $50 an hour and now you decided to give it to the kid across the road because you felt your kid was a bit spoiled, your kid would be upset.
And that is essentially the crux of the matter. That is essentially the critical point. Are you doing your child a favor by paying him more than what his production is really worth? Or would you be better off insisting that your child study harder and learn to produce a product that is worth $50 an hour instead of letting him continue to produce a product that is worth $10 for a $50 price?
When President Obama chastises Romney for outsourcing jobs, he is basically chastising him for not allowing the kid to learn that he has to compete.
Eventually, if we do not compete as a nation, we will fall behind those that are willing to compete. Nowhere is this more obvious than China. Chinese workers have no social services to fall back upon and they have to compete. They typically live frugally, save their money and then start enterprises.
On a recent trip to China I was amazed at the sheer volume of small businesses and small factories. Moms and pops over there had fully embraced competition and entrepreneurship. Most people I spoke to were saving their coins with the goal of starting their own enterprise and today the Chinese that have succeeded are buying up homes and businesses across America.
If America does not go back to that can-do attitude and start competing, we will quickly lose out to the rest of the world.