Build Your Business without Being a Bust

Business going bustIt’s an alarming statistic: Something like half of all startup businesses fail within the first five years after being created. 25% of them don’t even last out the first year. This means that if you are trying to create a small online business, you run a very real risk of going bust very, very quickly and taking a lot of money with you in the process.

Now I cannot promise you that building your business will happen if you follow these rules. The fact is that new businesses fail for a large variety of different reasons. However, these are some of the most common problems that new businesses face and if you can deal with these issues, you have a better than average chance of actually creating a successful business. Here’s what you need to know:

Find Out about the Competition

First and foremost, find out about your competition. Now I know this sounds like obvious advice but it’s not entirely obvious advice. You see, it’s not just about finding out if there is too much competition. Obviously, if every guy and his brother is selling TV sets online at razor thin margins or even losing money just hoping to undercut the competition, trying to do the same as they’re doing is going to be an uphill battle.

However, at the same time, if there is zero competition for your product or service, you need to ask yourself a very simple question: Is there a market for my product? After all, if there’s a market for something you want to sell, odds are good someone else thought of it before you did.

There are of course exceptions to this rule. A good example is the smartphone. Prior to the introduction of Apple’s iPhone, we really didn’t have anything on the market quite like it. Yes, there were Internet connected phones and yes, there were phones you could add apps to (Symbian was a popular OS prior to iOS and Android coming on the market). However, these kinds of phones simply didn’t do everything that an iPhone could do.

However, even in the case of the iPhone, there were phones that did offer some of the features that Apple was offering. It’s not like they were completely out there, creating a totally new category. They knew there was some market for phones that could connect to the web and they knew there was some kind of market for phones that could download apps. They simply took the concept to the next level.

However, if there is nothing even remotely like what you want to sell, you need to think twice and three times about why that is. Are you truly the first person to think of this idea or is it just that nobody would want to buy such a service or product to begin with? If you find yourself in this situation, see if there is any analog to what you want to create which might be considered like the precursor to the smartphone the way Apple did before they created the iPhone. Don’t just jump in and say, there must be a market because this idea is great.

Of course, if you happen to have developed a Star Trek transporter or warp drive then by all means – you can rest assured that you’ll find a market for your products even though no real competition exists for them. However, those will generally be the exceptions that prove the rule.

Have a Business Plan

This is another one of those things that sounds really obvious but which too many people either ignore or don’t do correctly. When I say have a business plan I actually am referring to two separate things. First and foremost, you need a formal business plan (which is outside the scope of what I’m writing about here – you can find numerous resources online for how to write these) for investors and for obtaining loans.

Formal business plans include market analysis, specific advertising plans and specific projected growth patterns. Mind you, these are all vital statistics and they should be prepared. However, when I say that you need  a business plan in this context, I mean something much less formal but just as vital to your business’ long term growth.

I mean that you need to have in mind a specific trajectory for how your business will grow. The reason I say this is because the barrier to entry for an online business is very, very low. Even if you don’t know how to build a website on your own, the average middle class person can easily afford to have a custom site built since they can be done for as little as a few hundred dollars to at most a few thousand, depending on the specific s of what you need done.

Thus many people assume they don’t need a formal business plan since they won’t be looking for loans and investors, at least not at first. However, even if you are one those people who intends to finance your new business all out of your own pocket, a less formal business plan is still vital. It is still important to know what the competition looks like (as above).

You also need to have a clear idea of where you’ll be spending your (likely very limited) advertising budget and whom you intend to work with for your SEO efforts (hint: we’re pretty good at that). You should have a clear plan on how you intend to service your customers if demand gets to be too high (for example, if you sell homemade cookies from home and suddenly get 1,000 orders in a day because some high profile blog wrote about you, how will you handle all those orders?).

These are details that you should have worked out before you start. Mind you,  it may be as simple as making specific limits. For example, with our cookie business above, you might figure out how many cookies you can realistically bake in a given day and then set a specific number of “in stock” cookies to be sold so that you are not overwhelmed all of a sudden. If you see that your “in stock” numbers sell out too quickly each day then you might consider hiring help.

Similarly, you can usually set specific spending limits on the amount of money you spend for advertising. AdWords for example allows you to set a monthly budget so that you don’t suddenly end up with a gigantic bill for the month that you can’t afford.

Speaking of Not Being able to Afford Things

Another thing that often sinks new business is (believe it or not) growing too quickly. Whether you are a one person shop or someone with more people working for you, you’ll often find that you need to add new staff rapidly if you become popular. This creates two problems. First, you have to be able to pay your staff even if your customers take up to 90 days to pay you for the work that gets done.

Limited budget

Second and more importantly, hiring and training staff takes a great deal of time. You need to have a plan for how you can rapidly add staff to your company without the need to sacrifice your standards (thus losing customers).

A third issue which is less of an issue today (at least for online businesses) is the problem of needing to rapidly scale your equipment. Start a popular website and you may quickly find that your webhost shuts you down because your “unlimited” account is using too many resources.

Fortunately, it’s easy to contend with this problem – you need to simply upgrade to metered service or even just use a service like Amazon S3 to scale to higher growth rates. Just make sure that the revenue stream is enough to cover scaling. Nothing is worse than having a very popular website which makes no money and costs a fortune to keep online..

Have Positive People in Your Corner

I started this blog post with a sad fact and sadly, I need to offer you another one: Most people will be jealous of you for starting your own business. So much so that they’ll discourage you from doing so and will even try to tear you down and tell you that your ideas are bad and that you should just get yourself a “real” job.

Mind you, they won’t necessarily say this openly to you. Instead, they’ll often couch their jealousy in endearing terms as if they “care” for you and are really concerned for your welfare. They may not even realize themselves that their constant criticism, which is mostly about their own feelings are not in fact helpful at all.

While it is important to get feedback from people who will give you useful advice on how to make your business better, you should stay away from the naysayers who insist that the only thing you should do is get a “real” job. These people will wear you down and make it that much harder to stay focused and become the success you want to be.

Again however, it is also vitally important to have people who can offer real, constructive criticism. The difference basically being, you need someone who will suggest a better way to run your business effectively as opposed to the person who will simply tell you that it’s hopeless and you should give up.

That Being Said…

That having been said, it’s also important to know when it’s time to throw in the towel.  I’ve written about this before but it’s still useful advice. Don’t rush to quit because your business wasn’t successful at first. You will likely need to tweak it and tweak it some more. However, if you’ve been trying for years and still can’t seem to gain any traction with your new business (which by now isn’t so new anymore), it may be time to try something else.

You Need to Love Your Job

love your job

I get annoyed when I see people on the Warrior Forum telling you about the latest and greatest business idea that’s sweeping the world and which you need to get involved with now. Sure, it’s often useful to know what the trends are but the fact is that this is a long slog. It takes a very long time to build a successful business and it’s not going to be an overnight thing. Thus, you need to love what you work in.

This means that even though writing about septic  tanks might actually make a lot of money, if you find it ungodly boring to the point where you feel like you want to tear your hair out if you ever hear the words septic and tank in a sentence, you are in the wrong business. You need to be able to run a business that you have an interest in because there will be many times when you feel like you want to throw in the towel. However, if you love what you do, you’ll be more likely to stick it out.

Do Be a Critic, But Not Too Much

As an entrepreneur, you will find that you don’t necessarily have a boss to report to and as such, it’s often easy to lose sight of the problems in what you are doing for your business. Thus, you need to learn to be self-critical and ask yourself honestly whether or not what you are creating is something that your customers are likely to want to purchase.

Don’t just think that you would like it so it must be useful. Honestly ask yourself – if I were spending money on a product or service, is this one that I’d be willing to buy? If the answer is yes then great, if not then you need to think some more about how to make your product or service appeal to the masses.

On the other hand, it is equally possible to be overly critical of yourself and to simply self-sabotage you efforts to build a business. Or as a friend of mine once said regarding successful book authors, they all have one thing in common: They finished writing their books (authors, especially of first books/novels are notorious for endlessly tweaking and never feeling their work is good enough, but at a certain point, you need to accept that you are done and send your baby out into the world to sink or swim).

 

7 Important Tweaks You Can Make to Improve Conversions

tweak

Website design is really an important and overlooked area of online marketing. Most people tend to make something that looks nice to them or they decide to pay a professional to design their sites and advertising, simply hoping for the best. However, there are some tweaks that research has uncovered which can dramatically improve the responses you get from your customers. Here’s what you need to know:

Heat Maps and Eye Tracking

This post is based on research I found on a number of other websites which were the results of extensive testing using eye tracking technology (i.e. they set up sites which they paid people to look at and they actually were able to track where the eyes looked) and heat map technology (in this case, it tracks where the mouse cursor tends to rest).

Both of these technologies are an excellent way to ensure that you are gaining the maximum input from your existing customers so that they will make more purchases and pay more attention to the things that are important to you.

The Eyes Have It

Okay, I’m being a bit whimsical here but have you noticed how a great many websites tend to make use of stock photography which includes models in the advertising? These photos were rarely shot specifically for the use of the company who is using them. Instead, they purchase the right to use the photos from a service which arranges for professional photo shoots.

You can even find many such photos on free photo services though I tend to shy away from them because I cannot guarantee that they actually have a model release. Anyway, the bottom line here is that many, many people are using these stock photos of people incorrectly.

The results of extensive testing show that people tend to look where eyes on the models are looking. In essence, if the model is looking directly at them, the person who is looking at the ad will tend to look directly back at the model (kind of odd since so many people have trouble looking someone straight in the eye in real life).

However, if the model is looking at the product being advertised, then the people viewing the ad will tend to glance at the product they’re looking at, which is after all what you want them to do. I think it’s probably the same sort of thing as we see when looking at someone in person. We tend to glance at whatever someone else is glancing at which is why when one person starts looking somewhere, others tend to follow along.

Notice where her eyes are looking

Notice that the model’s eyes are looking to the right where the product is located rather than looking straight at you.

Video and Photos are Big

Much as I hate to admit it since I make my living as a professional writer, people tend to look much more closely at video and photos than they do at text. What’s really odd though is that this works even for very basic videos, like the kind where small bits of text are set against a background where someone reads it or against music.

This is likely a result of the kind of media saturation that we all live with today. I mean, the art of reading a book has become more and more blasé as people have continued to look at movies and TV shows. I’ve always said that sound bites are the death of intelligence and they are – people can’t be well informed about a subject in 30 seconds.

That having been said, you still need well written text to surround your video and photographic content. If you just have photos or video without any text to explain things, people often start to look elsewhere. It’s also useful to note that the super long videos which don’t allow you to move on and make a purchase are not always effective.

In general, most people will sit through a couple of minutes of video but will want to see a buy option or even just text to skim through after that. If you think that a half hour video is going to be watched all the way through before you show a buy button or anything other than text, you’re likely to be disappointed.

Most people simply don’t have such a long attention span (again, think about how long a typical news broadcast is and make your videos work accordingly – there’s a reason most news reports are about 30-60 seconds long).

Men are From Mars, Women are From Venus

This is the title of an old book on how men and women can relate to each other. It suggests that men and women fundamentally think differently from each other. A classic example is that men tend to be fixers (i.e. you have a problem, let me suggest a way to fix it) as opposed to women, who more often than not simply want to commiserate rather than fix the problem.

The same axiom applies when selling products though. It should come as no surprise that knowing who your potential audience is makes a massive difference in the number of products that you’re likely to sell. If for example you sell products which are primarily aimed at women and you use a female underwear model to sell the product, you’re less likely to make sales than if you were to use a different kind of model (unless of course you were selling lingerie in which case, carry on).

Men-Mars-Women-Venus-Cover

However, even when selling less obvious products, you need to keep this in mind because the women will tend to focus on a different section of the page than the men will. Men tend to be drawn to the areas that appear “sexy” whereas women are more likely to look at the practical things. I don’t mean to sound sexist here at all by the way. This is just a fact of how men and women think.

Make It Symmetrical

People’s eyes tend to move from top to bottom when they’re looking over an ad. This means that if you want to keep people’s interest in your products, your best bet is to make things symmetrical. This means that you need to have your model holding the product below their face and then the name below that. It shouldn’t look awkward but it should ideally be symmetrical with easy to follow lines.

Along those same lines is the KISS principle which I always talk about here – Keep it Simple, Stupid. You need to keep your copy and your design simple. If people can’t figure out where their eyes are meant to go, they’ll often just leave your site and go elsewhere. It’s easy enough to figure out how to make this work – if ten people you ask to look at your site can’t seem to figure out what to look at and click on, you have a problem.

Why does this iPod ad work so well? It's symmetrical, with clean lines and it's also simple, giving people a clear idea where to focus their eyes.

Why does this iPod ad work so well? It’s symmetrical, with clean lines and it’s also simple, giving people a clear idea where to focus their eyes.

Most People are Leftists

Okay, not really. If the polls in the USA are right, people tend to split more or less down the middle between left and right. However, one thing that every single study has found is that people tend to look at the left side of a website first. This means that your advertising and most important material needs to be there rather than on the right side.

The irony is that for some reason WordPress (which is the most popular content management system) seems to insist on keeping the ads in the right side of the page. At least, that has been my general impression of most WordPress based sites. Fortunately, it’s pretty easy to arrange to move your sidebar ads to the left within WordPress. Most themes let you do it without too much trouble.

You should however put less important things such as menus for your blog along the top or along the right side of the website in order to make sure that these things are not taking up the most valuable real estate. One exception by the way may be if you work in a language which is written from right to left (i.e. Hebrew or Arabic). In those cases, you’re most likely to see your best results putting important stuff on the right.

Hand Written Messages Add a Personal Touch

This is another one of those things that seem obvious but that too many people ignore. Handwriting style fonts often help to sell products. I’m not sure why that is, especially since these fonts are obviously just computer generated fonts which don’t seem to offer anything different but they have a visual appeal which people like.

That’s actually why you often see circles that look handwritten on professional squeeze pages and you also tend to see a lot of content written in handwriting. The most effective way to do this though is to actually have some text in regular fonts and “notes” pointing things out in a handwriting font.

This isn’t difficult to do using a program like Photoshop but many people don’t do it, either because they simply don’t realize how powerful this is or because they don’t know how easy it is to actually do the whole handwriting thing. You can easily add extra fonts to Photoshop and there are enough free handwriting style fonts that there’s no excuse not to do this.

Notice the hand written note and hand written style circle.

Notice the hand written note and hand written style circle.

By the way, on the same vein as this, you also definitely should consider putting in a photograph or yourself along with a signature. It needn’t be your real signature. A handwriting font signature will work fine. However, when people see this, it tends to give them a warm and fuzzy feeling as if they are buying from a real person rather than just a nameless, faceless corporation.

Money Back Guarantee

Okay this one is not strictly based on experiments using eye tracking or hot spots. It’s simply an observation that people tend to make purchases more often from sites offering an “iron clad” money back guarantee. The thing is, 98% of people will never actually take advantage of this money back guarantee at all. They simply want to know it’s there.

This is a matter of human psychology and I’ve written in this space in the past on this subject. People tend to notice if there’s a money back guarantee because we’re all afraid of getting stuck with a lemon of a product.

However, just as we’re all worried about being stuck with a lemon of a product, we also worry about not feeling foolish for having purchased a lemon to begin with. Thus there is this weird dichotomy going on where prior to purchase, we want the assurances that we can get our money back if it turns out this was not a good deal. However, once we’ve made a purchase, we tend to want to justify it and make ourselves feel good about the fact that we spent the money, making it very unlikely that we’ll take advantage of the money back guarantee.

The exception of course are the serial refunders, who will always do this in order to get the free stuff. However, you can easily identify these people and block them from future purchases of your products.

Obviously, not every product will lend itself to this model. Services for example generally shouldn’t be offered with no questions asked money back guarantees because the service has been performed and you can’t “restock” your time for having performed the service. However, in most cases, you can safely add a money back guarantee and know that it will increase sales without costing much in terms of refunds.

Have You Considered Free Tools?

free online tools

Quick – name the one indispensable tool that you use all the time for your SEO efforts. Maybe you named Google search. Or the Adwords keyword tool. Or maybe it’s Open Site Explorer or any of a large number of other free and paid tools that we all make use of every day in order to build our SEO profiles. We all use these things every day but few of us actually consider using them in a vastly different way.

Marketing By Giving it Away

I’ll assume that most of our readers here do have a business blog (and if you don’t, what are you waiting for? Pretty much every business on the planet can benefit from having a blog online). The odds are very good that you give away the content on your blog free of charge. By this I mean that you don’t have a pay gateway in order to access the material that you post there.

Ever think about why you do this? Of course, blogs are great for building your SEO profile since they are updated regularly and they also get you extra links which can increase the love you get from the Google gods. However, beyond that, blogs, at least if they’re well written and interesting can be great traffic drivers.

People come back to your site regularly to see what your latest blog post has to say and they may well stay to buy whatever it is that you have for sale. At least, that’s what most blog owners hope will happen. Some of us have blogs whose sole purpose is to sell the advertising that appears next to the blog posts in fact.

Now consider this: Almost every guy and his brother runs a blog these days. They’re ubiquitous and they can be difficult to attract traffic to since there is such a glut of blogs online. However, what you don’t see on every single website is a useful, even indispensable tool. Such items are typically the province only of the bigger websites, the ones that actually pull in a larger amount of traffic.

You Could Be One of Those Big Guys

I know what everyone is thinking – yeah, if I only had the money to build a server farm and to hire a team of engineers on the caliber of Matt Cutts, I too could have a powerhouse company offering all kinds of great tools to my customers. And you know what? Five years ago, you might even have been correct. It cost an awful lot of money to develop tools and to host them since you needed dedicated servers to do it.

However, today it’s possible to have a decent tool coded for you for just a few hundred to a few thousand dollars, depending on how complicated of a tool you want to create. Plus, you no longer need to spend thousands of dollars a month for dedicated server farms to host your tool. Amazon, Microsoft, Google and IBM are all offering cloud computing services which can be purchased on the fly.

This means effectively that you can work with your coder (I’ll discuss this in more detail shortly) to arrange for the new tool that you create to be hosted with one of the cloud computing services and then simply pay to scale it up as the need arises. Of course, it will still cost something but that’s where the advertising and freemium models come into play.

Making Money from the Tools

As I said, this isn’t going to be free. It’s simply affordable for the average business owner to do whereas before you might have needed venture capital to build a tool and get it hosted. However, you do still need to make money from your tools in order to make them worth your while. There are several options for doing this.

Option number one is simply to provide it for free and hope that people will stick around and purchase whatever else it is that you have for sale on your website. You might even include some advertising on your site for whatever those products may be. This is a risky option however since more and more people are becoming immune to advertising alone.

Option number two is what I like to call the freemium model. In essence, you give away basic services but then charge your customers who want more advanced services. A great example of this is the Open Site Explorer from SEOMoz. They allow you to do three searches per day for free but if you need more or more detailed information, you pay for it.

open site explorer

In addition to offering the freemium model of course, SEOMoz also offers their other services to people using the Open Site Explorer. This I believe is the best model.

Option number three is to offer an unlimited experience but have it heavily populated with annoyware. Pandora used to do something like this. They offered a free monthly unlimited listening plan but they included ads every few minutes and annoying pop ups to remind you how wonderful their premium service, Pandora One is (I quickly tired of it and am now a loyal Pandora One subscriber BTW. I can’t live without my Pandora radio).

Pandora today decided to make the system even more limited for the freebie seekers by offering a maximum number of hours per month.

Getting Ideas

I’ve discussed in the past how to get ideas for offline tools that you use to build your links up through shareware sites. This works pretty much the same way. The single best way to get ideas for tools that people would need in your niche is to visit forums dedicated to your niche and see what kind of questions people are asking. Find a way to create a tool to address their concerns and you’ll have your idea for a tool.

Getting It Coded

Finally, there is the question of how to get a tool coded. This again I’ve covered in greater detail elsewhere when discussing how to get offline tools coded. The best way to go about this is to visit a website like Elance or Guru and to find yourself a good coder from the third world.

Finding programmers

Just make sure their English language skills are adequate to understand what you need and make sure that they have some decent feedback already.  You can usually get your project built for a fairly small sum of money and have them set it up with an easy to use backend hosted on one of the cloud computing services which are now proliferating online.