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The Easiest Way to Raise Money
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It’s simple: Don’t spend it. Here are 10 ways entrepreneurs waste their hard-earned capital.
If entrepreneurs could recover all the time and money they waste, our GNP would soar. I can’t prove that scientifically–researching the topic would be, well, a waste of time and money–but I’ve seen it often enough, in business plans on income statements (including my own), during bankruptcy proceedings and just looking around.
To win the startup game, you need to be a miser with your money. You need to spend it on things that will make you a success, not on what will simply make you feel or look like one. You need to pander to what your customer’s need, not to what you need.
So before you sign that check, swipe that credit card or sign that contract, ask yourself, “Will this bring me business?”
If the answer is no, consider it one less dollar you need to beg, borrow or spend. Based on my experience, here are 10 of the most common ways entrepreneur’s waste money.
1. Custom logos, fancy letterheads and other icons of success.
They may make you feel like an entrepreneur, but they don’t bring home the bacon. Instead, design your own with one of the many templates that come packaged with your word processing software. They include matching business cards, letterhead, envelopes and invoices. You can find templates in the Project Gallery of Microsoft Word or the Template Chooser in Apple’s Pages. If you need more choices, HP.com and Avery.com offer free templates for use with their specialty forms and paper.
2. Fancy offices. Speaking of bacon, maybe the dining room isn’t the ideal office, but working there beats not eating. If you don’t need a formal office, don’t pay for one.
3. A company car. The latest luxury car doesn’t make you a better business person, it makes you a poorer one. If the wheels you have already get you back and forth to the grocery store, new ones are a waste of money. Just be sure to log your business travel so you can deduct the usage.
4. A slicker-than-you-can-afford website, brochure, sign, ad, etc. In the beginning, good enough is often good enough.
5. Consultants. Sorry to say, many of them will borrow your watch to tell you what time it is. If it’s not rocket science, figure it out for yourself.
6. Falling for the pitch “You’ll be getting in on the ground floor.” You’re not in a position to be someone else’s venture capital. If a rep for a new advertising outlet gives you the hard sell about how wonderful it’s going to be, invite them to call you back when they can prove it. Leave the experimenting to others.
7. Starting a business because your friends love your idea. It’s one thing to like or even love an idea–it’s an altogether different thing to be willing to plunk down money for it. There’s no substitute for test marketing where real money changes hands.
8. Basing your marketing strategy on what you think is wonderful. Good chance your customers are nothing like you (or them you). Instead, research your market thoroughly. What do they read? What do they eat? What do they watch on TV? Then craft your message based on what appeals to them, not you.
9. Underestimating the competition. Or worse, thinking you don’t have any. Any business plan that proudly states it has no competition earns itself an immediate place in my round file. If you don’t understand your direct and indirect competition, you don’t understand your market. And if you don’t understand your market, you may be trying harder and harder to get better and better at something you shouldn’t be doing at all.
10. Thinking that your product or service is what sells. Here’s the sad truth: A great marketing strategy beats a great product every time. Business owners can (and will) go on and on about their wonderful products or services. The successful ones spend their time scheming about who’s going to buy it and how they’re going to reach them. Products don’t sell, marketing does. And Marketing costs money when you stay consistent and consistency is what wins.
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5 Unique Ways to Use Twitter for Business
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Customer service, recruiting, contests, giveaways and promotions — these are all standbys for businesses using Twitter as a medium to connect with customers and fans.
Given that Twitter as a platform supports nearly limitless applications for business use, we thought it time to highlight some of the newer Twitter-for-business opportunities that aren’t so obvious.
From pitching your followers and rewarding Twitter loyalty, to keeping a trained eye on the Twitterverse, targeting smaller communities, and adding metadata to tweets, here are some unique ways to use Twitter in your social business strategy.
1. Pitch Your Followers
As part of Mountain Dew’s DEWmocracy campaign, the soda company empowered Flavor Nations — fan communities for new Dew flavors — to own a flavor of soda that the company is now testing on the market. Mountain Dew literally ceded control of the go-to-market strategy for each of these flavors to the consumer communities.
As part of the creative process, Mountain Dew even made advertising agencies pitch the Flavor Nations with their creative. While this wasn’t done via Twitter alone, the notion of putting brand advocates in the position of power is pretty remarkable.
You could steal from the Dew’s strategy and find a way to give your biggest brand advocates creative control over your next event, campaign or company initiative. Spend the time internally to craft a few solid ideas and then pitch them to your followers. This should be much more than a poll or vote, and instead more akin to empowering your Twitter influencers as project stakeholders.
2. Reward Loyalty
Tasti D-Lite’s initiatives are defining the social media loyalty program. A huge part of their strategy is automatically rewarding customers with TreatCards when they tweet about the brand. It’s also an important part of their plan to build brand awareness so that they can open more stores across the United States. Starbucks has similar notions around loyalty and social media and is experimenting with Foursquare for that purpose.
Both companies have recognized that there is real business value every time a customer or fan shares their purchase behaviors with their friends. If you can find a way to automatically reward loyalty for Twitter-sharing, you’ll be motivating your audiences to spread your message for you. It’s a win-win for everyone, as long as you carefully consider the image of your customer and the message they push out to their followers.
3. Market Research
All too often, Twitter is used only for distribution purposes. But in fact, it’s a valuable tool for keeping tabs on your competitors, as well as your brand’s existing fans.
Power Twitter users have learned the advantages of keeping a careful eye on the network’s trends, and that they can perfect the market research capabilities of Twitter by using Twitter Lists. Business users should absolutely follow suit.
Invest several hours in building a few solid lists that you can easily track every day. Make sure that you track down innovators, influencers, those that break news in your space. Competitors and those that your competitors follow — both companies and individuals alike — are also key. Then remember to add to each list moving forward as you find more relevant names.
If you really want to use Twitter for market research, create a list of your biggest brand advocates and loudest brand naysayers and hang on their every word — even if that means reading up on their weekend activities. If you can get into the minds and lives of the people you’re trying to serve, you’ll have a better idea of what your customer wants.
On this front, get yourself a Twitter application that supports Lists in a way that works for you. I find Echofon for Mac ideal for this purpose, as there’s one list that I watch like hawk — I call it my “Stalking” list. It’s private, but it includes every person and company in the industry that breaks news relevant to what I write about. The application alerts me, with audio notifications if I so choose, any time there are new incoming tweets on the list I’m watching. Other applications are just as list-friendly, so don’t be afraid to try a few out.
4. Target Niche Audiences
The beauty of Twitter is that you can potentially reach anyone in the world with a single 140 character tweet. That’s powerful stuff, but with that kind of reach, business users often forget to narrow the scope of their Twitter presence and connect with smaller communities. While Promoted Tweets aren’t live for everyone, they will offer business users a highly sophisticated way to target their tweets to more niche audiences.
Take Virgin America for instance. The Twitter-savvy brand wasted no time targeting Promoted Tweets toward their inflight WiFi customers. On launch, the company put out three distinct tweets that they then promoted with carefully crafted keywords. Two of the tweets were meant to engage just their passengers at 35,000 feet. Just imagine how cool it would be to fly Virgin America and uncover a tweet that was meant just for you. That’s the power of talking to a smaller audience.
No brand or business should turn to Promoted Tweets or alternative Twitter advertising options for a cheap Twitter win. Your audience will only respect your Twitter presence if you demonstrate that your ultimate goal is to serve their needs (and not your own). If used wisely, targeting niche audiences with Promoted Tweets could be a powerful way to use Twitter for business on a whole new level.
5. Add Your Own Metadata
Beginning next quarter, Twitter will introduce annotations as a way for developers to attach any kind of metadata — tags, notes, location — they want to tweets. While we’ll no doubt see a number of developers build applications for unique purposes — some of them with the business user in mind — we see this as a prime opportunity for radical businesses to craft their own applications with metadata specific to their goals.
Used in combination with the simplistic developer tools available via @anywhere, this could be a powerful way to add Twitter integrations to your site, append notes about visitors’ on-site Twitter behaviors, tag tweets that originate from your site, or attach your own identifiers and figure out ways to reward actions (perhaps even loyalty). There’s definitely opportunity to be creative and better track Twitter-related data at the same time.
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